Investing in Social Entrepreneurship: Non-Profit Capital Markets and Taking Things to Scale

Paul Grogan
CEO, The Boston Foundation

• America has a larger nonprofit sector than any other developed country. Also, more people give than vote in this country.
  
  
• Nonprofits provide the fluidity to try out new ideas for positive change without the burdens faced by the government or private sector.
  
  
• The government's role is not to implement ideas tested by nonprofits, but to provide supporting policy such as tax incentives.
  
  
• You can't do everything with just nonprofits -- you need a 3-way partnership with the government and private sector.
  
  
• The barriers to entry for social entrenpreneurship should be kept low to attract new ideas. Everything started out as an implausible idea.
  
  
• Money is usually given to religious or academic institutions, with which the donor has personal ties. However, people are now donating more to social entrepreneurships because they are starting to trust that the money will be used well.
  
  

Vanessa Kirsch
CEO & Co-Founder, New Profit

• Money in the nonprofit sector doesn't always flow to what works (e.g. Michelle Obama ran Public Allies in Chicago so efficiently that investors wanted the money to go to needier branches). Instead, fund what works, then more problems will be solved.
  
  
• To grow a nonprofit, one often ends up spending more time fundraising than doing the nonprofit work. Instead, leave fundraising to the specialists (e.g. New Profit).
  
  
• Money is not the only factor in growth -- more importantly, the nonprofit has to find talent, restructure, etc.(e.g. Monitor partners with New Profit to provide pro bono management consulting).
  
  
• The Balanced Scorecard helps to measure a nonprofit's success and to report results to investors. The transparent process and feedback help improve nonprofits over the years.
  
  
• Competition (for funding) may not be a bad thing -- it creates excellence. However, the terms of competition are often not very clear.
  
  

Chuck Harris
Managing General Partner, Harris Capital Partners
CEO, SeaChange

• Nonprofit funding should be treated like any other investment. Present a viable business plan and a good management team. The returns should be measurable social change. Choosing what to fund is the same process as when a company wants to buy another company.
  
  
• SeaChange raises money much faster than the typical nonprofit. They match money from private donors and foundations to organizations.
  
  

Social Entrepreneurship and the Power of Public-Private Partnerships

Jeff Swartz
CEO, Timberland

• Doing well and doing good are not mutually exclusive.
  
  
• Philanthropy seems contradictory to profit, but doing good, just like R&D, can translate to value added to the company. You sell people things they never knew they wanted.
  
  
• Changes happen at small retail moments -- a consumer at a point of sale, a voter at a ballot, etc.
  
  
• Create a hierarchy of your goals. "And" becomes a laundry list -- you don't have to eliminate the rest, but you must prioritize. (Remember that crisis is a great editor -- it makes people overcome differences to solve the imminent problem.)
  
  
• You must frame the conversation in an outcome worth fighting for.
  
  
• Everyone agrees with your cause intellectually, but how do you make people actually care about it? You need to get people to witness it personally (tipping point theory: you just need 5 people to come).
  
  
• One cannot create sustainable change unless one reaches across artificial barriers (e.g. public vs. private sectors).
  
  
• Make community service fun -- people have a desire to feel good, feel purposeful. Community service sometimes get a bad connotation (e.g. a judge sentences you to community service).
  
  
• The government needs to challenge more and dictate less.
  
  

Affecting Policy Change through National Service & Social Entrepreneurship

Gregg Petersmeyer
Founder & Vice Chair, America's Promise

• "Any definition of a successful life must include serving others." -- George H.W. Bush
  
  
• The president needs to be a national leader, not just a federal leader (e.g. lead the Cabinet and nation to making national service a personal priority; e.g. recognize a Point of Light daily to lend political capital to people doing good in the communities).
  
  
• Start with small cells to change people's lives, and eventually with enough people, the movement will push upwards.
  
  

Shirley Sagawa
Co-Founder, Sagawa/Jospin

• The National and Community Service Act idea became legislation in record time; national service gets bipartisan support.
  
  
• Book pitch: Common Interest, Common Good: Creating Value Through Business and Social Sector Partnerships.
  
  

Robert Gordon
Senior Vice President for Civic Leadership, City Year

• Current-day politics is so toxic and bipartisan because there is no (military) service bonding the baby boomers.
  
  
• Hold enemies close (e.g. win the military over when promoting national service).
  
  
• Build social capital. (e.g. How would the Iraq war be different if we had more social capital?)
  
  
• Presidents have great ideas and can lend political capital, but they need executers.
  
  

Social Entrepreneurship -- Practitioner Perspectives

Hubie Jones
Founder & Board President, Boston Children's Chorus

• One way to bring people from all ethnic and social-economic backgrounds together is through the arts (e.g. Boston Children's Chorus).
  
  
• An organization needs a good board to hold the visionary leader accountable.
  
  
• It is extremely important to gain the approval of existing players to allow you to come onto their social field.
  
  
• Invest in relationships -- it will be your social capital one day.
  
  
• Don't go out searching for work -- be ready to take on any challenge in which your skills will make a difference. You never know what great causes will come knocking on your door or resources you may amass from these opportunities.
  
  
• Most problems can be solved with the right people -- or else who needs you?
  
  

Dorothy Stoneman
Founder & President, YouthBuild USA

• Too many activists start dominating whether they should or not. Instead, immerse yourself in the community culture first and have the community correct your assumptions.
  
  
• Create a new generation of ethical leaders from underprivileged communities who know about the problems first hand (e.g. YouthBuild USA, where youth are trained to be leaders through both education and building houses for their communities).
  
  
• Don't always follow conventional wisdom, but do find really good mentors.
  
  
• Do not create adversaries who will eventually destroy you -- win them over with the good you are doing instead.
  
  
• Know yourself -- apply yourself where your passion and skills are.
  
  
• You have to commit the next 20 years to a project -- 5 years is not enough to build something.
  
  

Eric Schwartz
Founder & CEO, Citizen Schools

• Kids only spend a small fraction of their day in school, so out-of-school learning is extremely important (e.g. Citizen Schools, where kids are matched up with mentors in after-school apprenticeships). From personal experience, kids need lots of caring adults and 2nd chances.
  
  
• It's not always enough to just improve the status quo -- we may also need to change the entire paradigm.
  
  
• The brand of America means progress -- opportunities always grow, poverty always decreases. Unfortunately, this was always true until the last 30 years -- this is the fault of our education system. Before, one can just work hard and become middle class; now one needs a good education, which is not always available.
  
  
• To be a good social entrepreneur, you need to have telescopic vision, i.e. both the big picture and the nitty gritty details.
  
  
• It's better to prove something in living color before advocating it.
  
  
• There are 3 types of changes: political, social, and cultural; most organizations only manage to achieve 2 out of the 3.
  
  
• Journalists tear down things that are wrong, while social entrenpreneurs build good things.
  
  

Social Entrepreneurship and the Media

Jonathan Alter
Senior Editor & Columnist, Newsweek
Board Member, Donors Choose

• The future of philanthropy will eliminate the middleman, so that donors can know exactly where their money goes (e.g. DonorsChoose, where teachers post their wishlist for donors to choose from).
  
  
• Creativity helps mobilize people to achieve their goal (e.g. a competition between universities to reduce energy consumption got students excited as well as media coverage).
  
  
• Social initiatives can often be started by only a few people.
  
  
• There should be mandatory national service, so that everyone can meet people very different from themselves (e.g. 3-6 months of community clean up or homeland security training).
  
  
• Internet is changing the media. Local news travels up the food chain faster. There are more articles (i.e. more opportunities to publish) on newsweek.com than in the print edition of Newsweek. Anyone can disseminate information through a blog (e.g. Talking Points Memo).
  
  
• Media should force political accountability.
  
  
• To get publicity for your cause, you must come up with a news-worthy story, not just a press release.
  
  
• Don't be cynical -- be skeptical and optimistic instead.
  
  
• Book pitch: The Defining Moment: FDR's Hundred Days and the Triumph of Hope by Jonathan Alter.