The problem we'd all like to have...or would we?

There is always a bit of a wink and a nod when philanthropists, foundation staff, or foundation board members tell other people what they do - "We give money away" or "We put capital into making society better." Often the other person will wink and nod and say, "I'll take some" or "Gee, tough job" or something to that end. And then the philanthropist falls back on the old canard (credited to John D. Rockefeller), about it being easier to make money than to give it away, or, as was recently noted in the gossip column of the San Francisco Chronicle:

"I was doing all this philanthropic stuff, and then I just thought, f- it, it's just a lot easier to make money."
Man chatting with woman, overheard at Fillmore and Sacramento

But sometimes, as in the case of Kiva.org as reported in today's New York Times, the level of interest in giving money away actually does become a problem. Rob Walker's Consumed column in the Times Magazine is titled, "Extra Helping" and it looks at what happens when the "supply" of people that want to loan funds to entrepreneurs through Kiva overwhelms the "demand" side - the number of vetted entrepreneurs and their projects/enterprises.

Walker looks at the media attention that Kiva has received and seems to focus on the growth in supply as a result of a great system, good PR, and terrific media attention. He also touches on the fact that Kiva issued more than $2 million in gift vouchers over the holidays, and needs to make sure they have viable investment opportunities available when donors come looking to cash those in.

Walker hints at, but leaves us hanging, on a couple of other key parts of this equation, so here are my questions after reading the piece. They fall into two categories, demand and supply (for and of capital, that is).

DEMAND

• It is hard to find and vet "safe" investable entrepreneurial projects around the world - the due diligence is time consuming, has many layers of reporting, and involves real humans, not just "inventory" - are there more efficient ways to share information on these opportunities (in both Kiva's sweet spot - social enterprise - and the rest of the social good industry - meaning public benefit companies, nonprofits, NGOs, and in some cases public sector options - see donorschoose, for example)
  
• How can the system move to a next tier of funding for these enterprises - from initial angel funding such as Kiva provides to early stage social venture capital for SMEs, for example?
• Kiva's temporary solution - get more investors by capping the size of individual investments - is an interesting twist. Is it good for the enterprises in the long term or not? What does it mean for Kiva in longer term to have to package many more small gifts into investments? Greater diversity and reach of support, but much more work on each deal.....?

SUPPLY

• Why are donors so interested in this model? Is there something sustainable in their interest and, if so, how can it be expanded to other sectors?
• Does the interest rest on the global nature of the enterprises, or could domestic emerging markets be served by a Kiva-esque system?
• What do we know - and what do we need to know - about the capital suppliers who use Kiva that will help us better understand 21st century philanthropy and social enterprise ?

Last night I was on a panel with two venture capitalists talking to the board of a foundation. The topic was "philanthropic capital markets" - how they work, how they are changing, where this foundation might fit into them, and what else we need to know. Given the Kiva story and the great discussion last night, as well as lots of other interesting work, I guess it is time to update the book. Which I'd like to do through a wiki - (Code 2.0 is a model of what I have in mind). Anyone want to help?

Tags: socialentrepreneurs, philanthropy, kiva, nyt, socialcapitalmarkets, socialentrepreneurs

Making sense (or trying to)

Here is what today's news brought:

• Economic stimulus package in the U.S. - - $600 check is in the mail for American taxpayers.
  
• Additions to the list of private universities recalculating their own rules for financial aid and deploying a percentage of their endowments to provide tuition discounts and grants to lower and middle income families.
  
• News from Switzerland that Bill Gates is calling for companies to deploy their human talent to solve global social problems. This merits a new term - Creative Capitalism*
  
• The U.S. Senate inquiries into endowment practices continue to demonstrate the long-recognized trend - when the economy tanks, legislators/regulators look for nonprofit reform.
  
• This time, unexpectedly enough, even the kings of capital are calling for more/new/different regulation - here is George Soros on the need for new oversight of world financial markets.
  
• A French trader bets and loses $7 BB of his bank's money before anyone notices - ooops.
  
• The New York Times asks if Americans should reconsider tax preferences on philanthropy and floats some "trial balloons":
• "Perhaps the government should demand a role in charities’ allocation of resources in exchange for the tax deduction. Or maybe the deduction should go altogether."
• Nonprofit advocates and supporters get organized and ask candidates for the U.S. Presidency a series of questions about their stances on the sector.
  

How do you make sense of this kind of news? Here are some possibilities I've been thinking about:

1. "In times of recession, war, and vast income/wealth inequality major nonprofit organizations - which are part of the "public problem solving" sector - will get more scrutiny because both the needs are greater and the rest of the sector is struggling?"
2. "The regulators should regulate, the nonprofits should meet scrutiny, and the titans of commerce can say anything they want - at the end of the day their job is to provide jobs and economic growth."
3. "Increasing regulatory scrutiny over nonprofits - even those that (collectively) control 100s of billions of endowed dollars - is less politically risky than taking on multi-billion dollar corporations or ending multi-billion dollar military spending."
4. [Your analysis here]

Any of these options might fit, as might blends of them, and other I didn't think of. Then there is always the next question: why does any of it matter?

Here are three reasons I think the questions matter -

"While the corporate leaders gather in Davos and offer up solutions and strategies, and the political leadership does the same, where is the collective voice of the nonprofit or philanthropic sector on any of these issues?"

One also might ask: "Is all regulation reactionary or is anyone offering up new ideas about how to think across these issues?"

And then there is this: "In our information age, post-industrial global economy do these traditional roles really still hold?" Does the public sector regulate, private sector fund, and nonprofit sector advocate and act? And, if this is true, what happened to all the talk about blending, blurring and fourth sectors? Does that only hold during boom times? What will bust times bring to these sectoral roles? Can we get change if we play the same roles?

What do you think? How do you make sense of what is happening?


* I have another question about Gates but it is on a whole different topic than the rest of the post. I'll put it here as a placeholder - If the founder and leader of the leading company in an industry announced they were shifting gears and were about to devote more time to that industry than ever before, don't you think there would be some kind of visible/tangible/reported on "buzz" among his/her peers at other companies? Yet, we're only five months away from Bill Gates taking a full-time job in philanthropy (where his foundation is largest in terms of assets), and there is nary a peep from peers or others. What is that all about? Why not frame a whole new set of philanthropy-wide discussions about how to leverage his participation? Welcome him into the game and toss out some ideas about what his "human resources" bring to the table?

Tags: philanthropy, socialchange, publicsector, capitalmarkets

NYT Editorial on public/philanthropic spending

Today's NYT has an editorial that speaks directly to the intricate relationships between public spending, public policy, and philanthropy. I touched on this relationship in this post. It is at the heart of my book and is critical to my ongoing use of "philanthropy as regulated industry" analog.

The Times takes on the interconnectedness and strengths of each sector directly. Read the editorial here. These are critical issues to consider at all times, but especially during an economic downturn, a period of vast income/wealth inequality, and heading into leadership change. In other words, at times like these.

Tags: philanthropy, publicsector, socialcapitalmarkets

Funding Dr Martin Luther King, Jr.

(Cross-posted from The Huffington Post)

Yesterday in the U.S. was Martin Luther King, Jr Day. It was pouring rain in San Francisco, where I wrote this, but the several hundred people I marched with in Dr. King's honor were not deterred by the weather.

I think a lot about foundations and philanthropy and strategy. I've heard others ask, as they reflect on the increasing "professionalism" and "strategy" of today's foundations, if any of these organizations would have funded Dr. King's work in the late 1950s and 1960s?

As I walked and chanted up 3rd Street, I wondered if there were any foundations out there today that would fund Dr. King's 21st Century equivalent? And how would they know who he or she is? We'll all be the better if we can find positive answers to these two questions.

One can argue that the Civil Rights movement was stronger because it was funded from within - from the time and donations and sweat and blood and tears of the people making it happen. I think there is truth in that argument. And I think there should be a role for philanthropic foundations, outsiders, in supporting social movements, civil rights, and social change. Maybe there still can be.

Tags: philanthropy, socialchange, mlk, mlkday