Stimulus Stimulates Some Tension

These past few weeks have been full of interesting commentary and analyses of the nonprofit sector’s place in the just-approved stimulus package. As is the case with these kinds of negotiations, it appears that there are a few organizations that are very happy about them and a few that are disappointed, but most of the rest are somewhere in between. And while it’s been a foil for some much-needed grappling with where our sector “fits” in the larger scheme of things, it’s also raised some tensions that, to some, could use some airing.

The first is the “big versus little” nonprofit debate. Todd Cohen, in Philanthropy Journal, has arguably been the most vocal on this issue (see post below, “Where’s The Nonprofit Agenda?”), but there are others out there (you know who you are) that are disgruntled at what they see as a power grab by groups that have the resources to get in front of legislators with their interests. And most of those are the “big organizations,” they say, that don’t comprise the bulk of the sector.

The second is the “service versus larger nonprofit sector” debate. There are some folks in the sector who perceive a smaller cohort of organizations—specifically, the organizations that benefit from national service funding through Americorps—“co-opting” or driving what they believe should be a much larger agenda. Because the service organizations are extremely well organized, politically savvy, and have the wind of previous Americorps/national service funding and Congressional support behind them, they are front and center in discussions about the Obama administration’s plans for a new White House Office on Social Innovation, as well as increased funding for the Corporation for National and Community Service. That’s raised the hackles of community-based and local nonprofits, particularly ones that are providing direct services to some of the country’s most underserved populations, and that tend to have limited access to powerful members of Congress.

The third is the “social entrepreneurs versus the traditional nonprofits.” (See post directly below this one…)

The fourth is the “MBAs versus the non-MBAs.” During the past decade, there has been a palpable infusion of business-oriented approaches, thinking, and concepts into the nonprofit sector. To some, this has been a welcome and much-needed breath of fresh air that has nudged some nonprofits (and funders) out of their complacency and view that “doing God’s work” is enough to validate their existence. It’s also helped to advance new ways of thinking about (and doing) management, evaluation, benchmarking, and strategic planning.

Others, however, have eyed these developments warily and been alarmed by what they perceive as arrogance and/or presumptions about business-oriented approaches as being superior. The penchant of the business types to throw a lot of terms around that only they understand only adds to the resentment among nonprofits not steeped in business lingo. And where’s the reciprocity? When’s the last time you heard of a private sector company asking a nonprofit organization to “help them” become more “nonprofit-like”? Is there nothing that the nonprofit sector might provide to the private sector as a “value added”?

Some people have dismissed the above as “exaggerated” and/or that believe that because “the sector is too diverse” to prevent these kinds of disagreements, we should just accept them. There’s some truth to that, of course, but there’s also a bit of a cop out behind it (the “why try since it’ll never work anyway?” view). Diversity can produce challenges to finding common ground, but I’m not convinced that those challenges are sufficient reason to give up trying. Unless we honestly acknowledge these kinds of issues and the assumptions (or biases) behind them , it will be impossible to find any kind of solidarity as a larger sector whose overarching purpose is fairly clear. And as times get even tougher, that solidarity will become even more important.

Perhaps it’s time for some of the folks who are able to see the big picture, as well as all sides of these contentious issues, to serve as emissaries who can pull together representatives of the various camps for more conversation or attend meetings of various subsectors groups to learn more about what each is doing and, ultimately, help identify areas of commonality that could be fed back into a larger conversation and action plan. The good news is that some leaders of these subsector groups are starting to do just that, and that bodes well for the sector, I believe, over the long term.

Social Entrepreneurism: Am I The Only One Who's Getting Confused?

The concept of social entrepreneurship has been around for awhile now (at least to my knowledge, when I first heard about it back in 2000), but it’s surprising to me how confused many are about what that term means. Most of us assume it’s an approach to “doing good” by using more business-like tactics such as benchmarking, being more “results-oriented,” using sophisticated financing strategies, and streamlining operations to ensure cost-efficiency.

So far, so good. I, personally and wholeheartedly support all of that and, frankly, have never really understood those who reject business-like approaches out of hand when some have proven to be quite effective in helping to strengthen nonprofits’ work and operations. And there are nonprofits that could benefit from then because, let’s face it, times have changed in ways that’s expecting from and demanding more of organizations—in no matter what sector they function.

At the same time, I’ve noticed that this term seems to have recently become as overused as “empowerment” and “paradigm” once were. Perhaps it’s because, young leaders tend to embrace this concept, which has been part of their vocabulary from the get-go. Or, perhaps it’s because the Obama administration seems to be interested it. Or, perhaps it’s because those in the business sector are more comfortable with being “entrepreneurs” than they are with being “nonprofit leaders.” Who knows?

All I know is that it’s making me a bit uncomfortable because the overuse of the term seems to be contributing to some tension in the nonprofit sector. Specifically, some folks have expressed their belief that there is relatively small—but growing—group of individuals and organizations being labeled as “social entrepreneurs” who don’t necessarily seem to fit the definition (or at least what is the most commonly held definition). As Rick Cohen outlines in a provocative article (that states publicly what many have thought or groused about privately), some of the organizations commonly touted as poster children for social entrepreneurship get a considerable amount of their funding from the federal government.

That’s ok, if one believes that an important part of being an entrepreneur is the ability to attract financing—whatever the source—for one’s cause or organization. But to many, “entrepreneurship” connotes something different: innovation that stems from and subsists on a more lean and mean model that derives much of its financing from earned income or profit-making enterprises. To them, an important measure of the entrepreneurial capacity of an organization might be its ability to subsist if its federal subsidies disappeared tomorrow. What better test of entrepreneurial ability is being able to quickly secure new sources of support and ensure the organization’s existence in the face of an enormous financial gap? As Giorgio Armani (a fashionable entrepreneur—we could use more of those!) recently said in the New York Times, “An entrepreneur shows his true colors in a period of crisis, not in a period when everybody is having success.” Indeed.

Others argue that social entrepreneurs have been around since the early days of the sector, pointing to individuals who conceived of and then launched what have since become some of the country’s most successful nonprofits such as Habitat for Humanity, Share Our Strength, Planned Parenthood, and many others. Is there a different between them and today’s social entrepreneurs?

And there are still others who think that just because groups are “more traditional,” that doesn’t necessarily mean they’re irrelevant or less entrepreneurial. As one nonprofit leader recently said to me, “We’re a ‘mature’ organization, but we still continue to pump new products and ideas into our system. Innovative ideas still need strong delivery systems, and that’s a role we can play well.”

And, finally there are some who take issue with the assertion that the efforts of organizations deemed to be socially entrepreneurial have become more efficient and effective organizations. What does effective mean, exactly? The ability to raise more money? To provide more services (and usually those that are concrete, direct services that can be easier to measure and seen as "outputs")? To move policy through advocacy (something that, arguably, may be the most powerful indicator of "effectiveness" but that is still relatively overlooked by social entrepreneurs and/or those who assess them because it's difficult to measure)? To go beyond their focus to help change the larger communities in which they operate by building a larger sense of social efficacy (through which communities are able to grapple with any issues that face them -- not just those on which the nonprofit focuses)?

And who’s to say that the same groups that are seen as entrepreneurial today won’t end up to be as bureaucratic, ossified, and/or sluggish as those they’re trying to distinguish themselves from? After all, we don’t have a lot of hard data about the longer-term performance, outcomes, or impact about these (or any, for that matter) organizations.

What’s clear is that it may be time for some clarity around this whole concept so that we can test it more rigorously and determine which of its components works best for broader incorporation into other nonprofit practices and functions. At the very least, can we please stop overusing the term?

The Stupidity of Crowds?

As a proponent of citizen-centered civic engagement (and philanthropy), I firmly believe that real people can and do have an important role to play in community problem solving and decision making. And that this role must go beyond merely providing input to experts to serving as full and active partners in making decisions about everything from budget setting and city planning to school reform and funding allocations.

Last year, as many of you know (see previous posts), I worked with the Case Foundation on launching a “citizen-centered” grantmaking program that asked “real people” to participate in every level of the decision-making process as to who received grants (and who didn’t). What made this initiative different from others was that, rather than providing the public with a pre-set list of possible grantee organizations and asking them to vote on who should get grants, the Foundation involved the public in setting the actual criteria and guidelines by which organizations would be selected for their list.

Despite this key difference, the initiative still tended to be lumped together with others that were primarily using public voting about grants as the “American Idolization of philanthropy” (the popular culture reference) and the “wisdom of the crowds” model (the literary reference). To be honest, I’ve never fully bought into James Surowiecki's thesis that the aggregation of information in groups can lead to decisions that are often better than could have been made by any single member of the group.

So, I was interested to see that theory challenged recently with the results of two very well-publicized initiatives that invited the public to vote on the issues that they thought were most important for the Obama administration to tackle. One was sponsored by the administration itself at the Change.gov website (now WhiteHouse.gov), and the other, by Change.org, an online community and media network for social issues in partnership with 50 other groups.

Both initiatives received hundreds of thousands of votes on more than 7,000 issues, but the eerie result was that both resulted in the same issue being the top vote getter: the legalization of marijuana. With all that’s going on in the world, this is the top issue on our minds (well, ok, on the foggy minds of what appears to be a nation of stoners)?

Some might point to these outcomes and say, “see? This is why asking people to vote on something as important as the allocation of resources isn’t a good idea and dilutes the process.” But what struck me is that these results underscore a central tenet of citizen-centered civic engagement (and grantmaking): That there is and should be a role for both experts and “real people” in these kinds of processes—not just one of the other. The trick is to find the right mix of these individuals for the task at hand, paying careful attention to a bias one way or the other. That will be difficult for traditional institutions—including government and foundations—to grapple with, but there is value to having both sets of folks at the table—not just the “crowds.”

Taxomony Please!

During the past six months, I think I’ve sat in about ten meetings during which nonprofit financing and capitalization—and new models of each—were discussed. The meetings included a mix of funders and nonprofit leaders and were usually led by someone with considerable background in finance and business. At a cursory level, the concepts and ideas put forward were intriguing and interesting. Any attempt to dig deeper, however, was a lost cause. Why? Because most of us didn’t (or don’t) have MBAs or have 20 years of experience as investment bankers or economists. But wait! Even the MBAs were confused, it turns out. After these meetings, some confided in me that they, too, “had no idea what all these terms meant” because “everyone uses them differently,” and it’s “mostly meaningless jargon.”

But few people want to admit that, especially publicly. So, no one asks basic questions or for clarity about key terms or concepts.

I have a suggestion that seems pretty simple on the face of it, but it’s never been done, to my knowledge. How about someone producing a basic “primer” outlining the spectrum of new revenue-generating approaches (as well as the terms related to them) for the philanthropy leaders and others who are not from the business/finance domains? Right now, we only seem to have monographs outlining very specific strategies and/or mind-numbing (mostly) theoretical treatises.

Providing a clear and straightforward summary about these approaches and clarifying terms in plain English would be a major benefit to the field and help philanthropic institutions and nonprofits—many of whom roll their eyes and tune out as soon as they hear the words “metrics,” “benchmarks,” “investments,” “capital,” and others—better understand what these mean and why they are important. With more understanding, in turn, nonprofits and philanthropic institutions might be more amenable to experimenting with these approaches, rather than throwing up their hands in frustration and walking away (as some funders have done).