PhilanTopic

Weekend Link Roundup (October 30 - 31, 2011)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

When it comes to telling a good story about your organization, Katya Andresen recommends that nonprofit marketers follow the advice shared by Marvel Comics legend Stan Lee in this video.

Economy

On the Deep Social Impact blog, Joanne Duhl wonders what role philanthropy should play in fostering an opportunity-for-everyone approach to not just education but also employment.

GuideStar president and CEO Bob Ottenhoff wonders on his blog what philanthropy is going to do about Occupy Wall Street. "At its core," writes Ottenhoff, "[OWS protestors] are asking some fundamental questions: what kind of society do we want the United States to be? How do we give people the freedom and incentives to grow wealth, build a strong and resilient economy, create new jobs, and do it in a way that benefits the greater good?"

The Chronicle of Philanthropy and Council on Foundations co-hosted a real-time Twitter chat last week on the topic of what, if anything, philanthropy can do to help revive the limping economy. For those who may have missed the conversation, the council has "storified" the chat here.

Impact/Effectiveness

On the Stanford Social Innovation review blog, the Bridgespan Group's Matthew Forti and Peter Kim have a few tips for nonprofit organizations looking to "more intentionally find the 'natural funders' that align with their outcomes, and to determine how best to communicate their outcomes in a way that inspires and influences the decision-maker."

Leadership

In a series of posts on her blog, Rosetta Thurman takes a look at the kinds of nonprofit leaders we need now and identifies four types: true believers, ruthless innovators, ambassadors of diversity, and courageous advocates.

Philanthropy

On her About.com blog, Joanne Fritz weighs in with a positive review of Laura Arrillaga-Andreessen's new book Giving 2.0, which delivers, according to Joanne, "its juice through well-crafted chapters that address just about anything any of us needs to know about charitable giving with impact in today's connected, charged, globally knit landscape...."

After reviewing the results of a new study from the Center on Philanthropy at Indiana University which concluded that the Obama administration's proposals to reduce the charitable deduction from 35 percent to 28 percent for wealthy households and to increase the marginal income tax rate for high-income earners would have a modestly negative effect on charitable giving -- essentially the same conclusion arrived at by a 2010 Congressional Research Service study -- the Nonprofiteer writes:

So whether we take the IUPUI findings that charitable giving is likely to decline modestly if these tax reforms are enacted, or the CRS findings that it might actually go up, we should realize that everyone who's hyperventilating about the impact of these changes on their poor struggling private school, museum, or hospital should just take a deep breath. Given that the reforms will support many of the social programs, environmental protections, educational institutions, and health care options the nonprofits themselves seek to provide, it's about time for the community to stop whining and agree to pony up....

Transparency

At the Foundation Center’s Transparency Talk blog, Michael Remaley, director at Public Policy Communicators NYC and president of HAMILL REMALEY breakthrough communications, takes a closer look at Don’t Count Us Out: How an Overreliance on Accountability Could Undermine the Public’s Confidence in Schools, Business, Government and More (52 pages, PDF), a new report from Public Agenda and the Kettering Foundation that highlights how the public's take on accountability differs from that of leaders at public- and private-sectors organizations.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

-- Regina Mahone

5 Questions for...Carol Coletta, President, ArtPlace

Launched last month, ArtPlace is a public-private collaboration designed to drive revitalization in cities and towns by putting the arts at the center of economic development. During its inaugural funding round, ArtPlace awarded more than $11 million to thirty-four community-based projects across the country working to integrate artists and arts organizations into local transportation, housing, community development, and job creation efforts. Prior to joining ArtPlace, Carol Coletta served for six years as president and CEO of Chicago-based CEOs for Cities, a national network of "urban leaders catalyzing a movement to advance the next generation of great American cities." While there, Coletta and her team worked to convince urban leaders of the importance of "quality of place" and the attraction and retention of talent. When tapped to help establish ArtPlace, Coletta said she thought it was an opportunity "to work directly on quality of place, which I knew to be such a key element of what makes communities successful."

Philanthropy News Digest: ArtPlace has been described as an initiative to accelerate “creative placemaking” in the United States. What is creative placemaking, and why is it important?

Carol Coletta: That's a good question. It has been used as a very broad umbrella to describe many things, but it all boils down to this: a portfolio of strategies with art and culture at the heart aimed at changing the trajectory of community.

For the past six years I've been running an organization called CEOs for Cities, and prior to that I ran the Mayors' Institute on City Design, an NEA program. While I was at CEOs for Cities, we came to the point where we understood that much of what makes cities successful is talent. The quality of place becomes really essential to the attraction and retention of people, and that’s the most important thing you can do for community. So, I think what makes creative placemaking and ArtPlace so important is that it's not an add-on. It's not a nice to-do. It really becomes an essential part of a community's economic success.

PND: The ArtPlace approach is based on the idea that the ability to attract and retain talent depends, as you say, on quality of place, and that the best proxy for that is "vibrancy." How do you plan to measure the vibrancy of a place?

CC: By examining the changes that take place in the people, the activities, and the value created in a community. We're actually developing a new set of vibrancy indicators -- including a transparent analysis of data collected by others on a regular basis -- that can be updated inexpensively and used by anyone. We expect to make it available through our Web site by the second quarter of 2012.

PND: The idea of a creative class serving as an engine of economic growth and prosperity figures prominently in the work of Richard Florida and others. But the context for their work is almost always urban. Is ArtPlace doing anything to promote the concept of creative placemaking in suburban and rural areas?

CC: Absolutely, because we think it has the same impact there. Let me just say as an aside that the creative class is a very broad term. It defines a very broad group of people, essentially those with college degrees, but I think in many ways the more useful measure is that of human capital. To your point, however, we are interested in what happens in rural and certainly suburban communities. One of the greatest challenges in rural communities is how they retain people. How do you make those places more appealing to keep people there? We are seeing some exciting reinventions happening in rural places, including the Wormfarm Institute in Sauk County, Wisconsin, the Vollis Simplson Whirligig Park in Wilson, North Carolina, and the Art and Agriculture project in Yolo County, California. And, while we still have some testing to do, we believe our vibrancy indicators will work in different parts of the country.

PND: Given that artists, designers, and arts organizations are engaged in creative activity by definition, what are you and your colleagues looking for as you review applications from potential grant recipients?

CC: In many ways we're looking for places where there are real partnerships happening -- not just endorsements or letters of support, but real partnership among artists and other organizations. So when you look at the outcomes, you can imagine one plus one equaling three. Let me give you an example. I think the work we funded in St. Paul, Minnesota, for a project called Irrigate represents a solid partnership of the City of St. Paul, Springboard for the Arts, and the Local Initiative Support Corporation. Since a new light rail corridor is being developed in the same area, you could even include the federal government and the Minnesota Department of Transportation in that partnership. What's interesting is that any one of these organizations could have done their work and it probably would have turned out well, but the fact that they've formed a strategic alliance makes the potential of the work much stronger. That's part of what we'll look at, whether there’s real collaboration and the opportunity to leverage the impact of the work.

We are also looking for work we believe has the opportunity to change the trajectory of the community and generate vibrancy. Not all artistic work is intended to do that. It doesn't make that work less worthy or less valuable. We're just not in a position to fund everything, so we've chosen to fund for this purpose to see if we can make a difference. Frankly, we believe that if we can demonstrate that investing in the arts in this way actually does contribute to vibrancy and to changing the trajectory of a place, that will result in a whole lot more money for arts and culture.

PND: Is it your hope that ArtPlace becomes a permanent feature of the arts landscape in America?

CC: What I hope is that funding for these kinds of initiatives becomes a permanent feature in the landscape of civic decision making, whether that involves a city or county government, a metropolitan planning organization or the federal government, a community foundation, or individual philanthropists. I will consider ArtPlace a success if we are able to influence the field in such a way that people begin to act on the belief that creative placemaking matters to the success of communities.

-- Regina Mahone

Talking Philanthropy: Phil Buchanan, President, Center for Effective Philanthropy

In the latest installment of their Talking Philanthropy podcast series, hosts Larry Blumenthal and Bill Silberg talk to Phil Buchanan, president of the Center for Effective Philanthropy, about the current state of foundation assessment. A recent survey by CEP, which helps foundations do a better job of evaluating their work, took an in-depth look at the current thinking around assessment of philanthropic work and revealed some interesting trends.

 

Running time: 00:15:44

(Right-click to download mp3)

What do you think? Are foundations moving too far in the direction of data collection and assesment at the expense of innovation? Is the recent passing of Apple CEO Steve Jobs a reminder, as Buchanan suggests, that there's a "real difference" in the way consumer products are developed as opposed to finding solutions to social problems? And where do you think foundation assesment is heading?

Have a topic you'd like to hear Larry and Bill address? Let us know in the comments section below, or drop us a line at mfn@foundationcenter.org.

This Week in PubHub: Affordable Housing

(Kyoko Uchida manages PubHub, the Foundation Center's online catalog of foundation-sponsored publications. In her previous post, she looked at four reports that explore the role played by the arts and culture in our civic life, community economic development, and sense of place.)

The collapse of the housing bubble and the ensuing recession have affected renters as well as homeowners, with the supply of affordable housing shrinking even as incomes have fallen. This week in PubHub we're featuring four reports that examine the impact of the Great Recession on rental housing and what philanthropic institutions are doing to address the crisis.

According to Rental Market Stresses: Impacts of the Great Recession on Affordability and Multifamily Lending (69 pages, PDF), a report from the Joint Center for Housing Studies at Harvard University, the proportion of renters paying more than 30 percent of their incomes to cover "gross" rent (rent plus tenant-paid utilities) increased from 41.2 percent in 2001 to 48.7 percent in 2009, mostly due to falling real incomes and rising rents and energy costs. Moreover, as of 2009 only sixty-four affordable rental units were available per hundred low-income renters. And making matters worse, loan delinquencies among multi-family rental property owners also were up. Funded by the Annie E. Casey, Ford, MacArthur, Kresge, Rockefeller, and Surdna foundations, the report notes that a major risk for financially stressed renters is deteriorating housing quality due to lack of maintenance and investment.

In New York City, the share of multi-family properties in physical and/or financial distress increased from 3.3 percent in late 2009 to 5.5 percent in early 2011, a report from the University Neighborhood Housing Program finds. Based on UNHP's Building Indicator Project database, New York City's Multifamily Housing in Distress (39 pages, PDF) examines demographic trends and levels of distress among multi-family properties in the Bronx as measured (in part) by the disconnect between sales prices and net operating income. Funded by the Charles H. Revson Foundation and Enterprise Community Partners, the report calls for policy reforms to include such data in evaluations of loan quality and in banks' responses to distressed properties in their portfolios.

What is philanthropy's role in addressing the affordable housing issue? Based on interviews with foundation leaders, The Potential for Public-Private Partnerships: Philanthropic Leaders Considering Housing as a Platform (49 pages, PDF), a report from the What Works Collaborative (whose partners include the Brookings Institution, the Furman Center for Real Estate and Urban Policy at New York University, the Urban Institute, and the Joint Center for Housing Studies at Harvard University), found little consensus on theoretical models for and approaches to supporting housing as a platform for programs and services designed to improve quality of life. Funders also expressed concerns about forming public-private partnerships with government agencies, citing the need to maintain their independence and grantmaking priorities, and emphasized the potential of targeted collaborations. A case study of a partnership to develop a ten-year community plan to end homelessness in the Minneapolis area highlights a number of accomplishments, including doubled prevention efforts, a street outreach system in collaboration with the local police department, and new housing opportunities for low-income families, as well as lessons learned.

What about supporting affordable homeownership through shared equity programs? Balancing Affordability and Opportunity: An Evaluation of Affordable Homeownership Programs With Long-Term Affordability Controls (41 pages, PDF), a report from the Urban Institute and NCB Capital Impact, examined the outcomes of seven programs that enable low-income families to purchase homes at below-market prices with resale restrictions and found that they succeeded in helping families accumulate assets while also creating a sustainable supply of affordable housing. The report also found that very few "shared equity" homeowners in the programs ended up being foreclosed on and that a large majority were still homeowners five years later, with two-thirds of those who resold their homes moving into owner-occupied market-rate housing. Funded by the Ford and Surdna foundations, the report suggests that shared equity programs could play an important role in advancing sustainable homeownership for lower-income families.

What are your thoughts on the philanthropic and policy responses to the shortage of affordable housing in the U.S.? Are you aware of any programs or successful public-private partnerships that have worked to boost the supply of affordable housing, especially for low- to moderate-income home buyers? Feel free to share your comments below.

And don't forget to visit PubHub, where you can browse more than seven hundred reports about community improvement/development and nearly a hundred specifically related to affordable housing.

-- Kyoko Uchida

Key Facts on Mission Investing

Using foundation assets to provide a public benefit has been called many things over the years: mission and mission-related investing; social, socially responsible, and responsible investing; environmental, social, and governance investing; and impact investing. There are differences in terminology and methodology, but the goal remains the same: to use foundation assets -- as distinct from foundation grants budgets -- to advance the public good while earning a market- (or below-market) rate of return.

This isn't new. Indeed, a small number of foundations have been making below-market-rate program-related investments (PRIs) for more than forty years. These investments, which often take the form of loans, loan guarantees, or equity investments, are derived from a foundation's corpus and count toward its charitable distribution requirements.

More recently, there has been an increased focus on market-rate mission-related investments (MRIs). This type of investment may broadly support a foundation's programmatic goals but it does not count toward its charitable distribution requirements.

In an attempt to benchmark the level of foundation engagement with mission investing, the Foundation Center included a series of questions on the topic in its January 2011 Foundation Giving Forecast Survey. Close to 1,200 independent, corporate, and community foundations with approximately $215 billion in assets responded. Of those, 168 foundations with $119.2 billion in assets indicated that they currently engage in some form of mission investing.

Here are some of the key findings from the survey:

• About one in seven of the surveyed respondents (14.1 percent) currently engage in some form of mission investing (i.e., PRIs and/or market-rate MRIs).
• Among the foundations that engage in mission investing, 50 percent hold PRIs, 28 percent invest in both PRIs and MRIs, and 22 percent hold only MRIs.
• Larger foundations are more likely to hold mission investments, with about one-third (32 percent) of foundations that reported total giving of $10 million or more indicating they hold such investments, compared to 16 percent of foundations that reported total giving between $1 million and $10 million and 7 percent of foundations that reported less than $1 million in total giving.
• Among foundations that hold mission investments, less than half (46 percent) have a formal investing strategy and/or policy statement in place.
• Of the 82 respondents that make market-rate mission-related investments, just over a quarter (26 percent) have chosen to commit more than 50 percent of their assets to MRIs.
• The most popular assets classes among foundations that hold MRIs were fixed income, public equity, and/or cash equivalents.
• The majority of foundations have been making MRIs for five years or less, with just over half of these foundations starting within the last two years.

The survey also revealed that the financial crisis and recession which followed appears to have had minimal impact on the number of foundations making greater mission-related use of their assets through MRIs. Indeed, only two of the twenty-three foundation respondents that started making MRIs within the last two years did so in response to the downturn.

To download a free copy of the report (4 pages, PDF) based on the survey, click here.

And to learn more about the burgeoning field of mission investing, be sure to check out these excellent resources:

Bugg-Levine, A., and J. Emerson, Impact Investing: Transforming How We Make Money While Making a Difference, John Wiley & Sons, 2011.

Global Impact Investing Network (GIIN) and Impact Reporting and Investment Standards (IRIS) Initiative, Data Driven: A Performance Analysis for the Impact Investing Industry, 2011.

Godeke, S., and D. Bauer, Philanthropy’s New Passing Gear: Mission-related Investing: A Policy and Implementation Guide for Foundation Trustees, New York: Rockefeller Philanthropy Advisors, 2008.

LaVoie, V., and D. Wood, Handbook on Climate-Related Investing Across Asset Classes, Boston, MA: Boston College Center for Corporate Citizenship, 2009.

Lawrence, S., "Doing Good with Foundation Assets: An Updated Look at Program-Related Investments," The PRI Directory: Charitable Loans and Other Program-Related Investments by Foundations, 3rd Edition, New York: Foundation Center, 2010.

Lindblom, L. E., and L. S. Campos, Changing Corporate Behavior through Shareholder Activism: The Nathan Cummings Foundation’s Experience, New York: The Nathan Cummings Foundation, 2010.

Nissan, S., and M. Bolton, Opportunities for Mission Connected Investment, London: New Economics Foundation, 2008.

Richter, L., Guide to Impact Investing, Grantmakers in Health, 2011.

Viederman, Stephen, Investing As If The Future Mattered, Capital Institute, 2011.

Viederman, Stephen, Investing As If The Future Mattered: Harmonizing Giving and Investing as a Necessary Step for Foundations to Meeting the 'Public Benefit' Test, 2011.

Wood, D., and B. Hoff, Handbook on Responsible Investment Across Asset Classes, Boston, MA: Boston College Center for Corporate Citizenship, 2007.

5 Questions for...Hugh Hogan, Executive Director, North Star Fund

Created in 1979 by a group of young donors who had come of age with the activism of the 1960s and ’70s and had "means beyond their immediate needs," the North Star Fund is a public foundation that works to support grassroots movements for equality, economic justice, environmental sustainability, and peace. Earlier this month, PND spoke with Hugh Hogan, who in May celebrated his ninth anniversary as executive director of the fund, about the Occupy Wall Street movement.

Philanthropy News Digest: What's driving Occupy Wall Street? And are you surprised it's been able to achieve as much traction as it has in a relatively short period of time?

Hugh Hogan: I'm not surprised. Nor am I surprised that people are waking up to the fact that the political-economic system in this country seems to be prioritizing the needs of the top one percent of income earners. We see it at North Star, which for three decades has supported grassroots leaders and organizers who are working to address the underlying factors that have left so many people in this country stuck in poverty. For example, we funded Domestic Workers United for eight years as it worked to get a Domestic Worker Bill of Rights through a very dysfunctional state legislature here in New York State. We've also supported a variety of community-based organizations that are helping workers in the informal sector to recapture wages stolen by unscrupulous employers. And we've helped groups that are working to re-focus our criminal justice system on rehabilitation instead of criminalization. Thanks in part to those efforts, I can say with confidence that even before the emergence of Occupy Wall Street there was a broad-based understanding in New York City -- and the country as a whole -- that the system was failing too many people on the one hand while excessively rewarding people who put personal gain ahead of everything else on the other.

PND: What, if anything, does the OWS movement have in common with the Tea Party and the Arab Spring uprisings?

HH: What all these movements have in common is a recognition that the current global system does not work for the vast majority of people. The difference with the work that we, as a public foundation, have supported for thirty-plus years is that our grantees are on the ground with the people facing disenfranchisement and injustice. They are working every day to help those people advocate for laws and policies in both the public and private spheres that prioritize the needs of people, communities, and the environment over the rights of a small percentage of people who seem to care mostly about profit and speculation.

PND: How do you respond to critics of the Occupy Wall Street movement who say it's too ad hoc and unfocused?

HH: My feeling as a funder of grassroots organizations and activists is that all strategies are good when it comes to social change. Look, in order to retain their vitality and legitimacy, democracies need to get resources to people who are willing to stand up to the status quo and make their voices heard. In that sense, Occupy Wall Street is a kind of pressure valve, a way for people with legitimate grievances to make their voices heard and to advocate for a society that is more just, equitable, and fair.

PND: Does the movement have legs? Will we be talking about Occupy Wall Street after the weather turns cold?

HH: Absolutely it has legs, and it has legs because it's a movement in the best tradition of progressive reform. That's something we really need right now, because more and more people are suffering, more and more middle class and working people are feeling the squeeze and facing the prospect of slipping into poverty. It's also a call to action to people within philanthropy and folks who have resources beyond their means to find and invest in new leadership committed to building an authentic grassroots democracy. And it's a call to the average person out there to open his or her heart, to give his or her time and dollars to help sustain and spread this movement, because it's a responsible movement.

PND: Would you like to see more foundations and more philanthropists align themselves with the OSW cause?

HH: I would like to see more philanthropists and foundations align themselves with the people who are hurting the most, and that's poor people, who are very often people of color, and, increasingly, immigrants and their kids. I mean, it's no secret how one goes about supporting this kind of work philanthropically. If we are going to have a robust democracy that responds to the hopes and desires of all people, not just elites, and if we're ever going to successfully address the profound and deep inequities that exist in our society, we have to equip people with the resources they need to organize and get their voices heard in the public square. You know, the name of our foundation comes from the abolitionist newspaper that Frederick Douglass founded in Rochester in the 1840s, and what Douglass said at that time is as true today as it has ever been: "Power concedes nothing without a demand," and "there is no progress without struggle." I think more funders have to get on the leading edge and begin to experience how the constructive use of organizing and advocacy really makes the system better for everyone, not just the privileged few.

-- Mitch Nauffts

'Calvin & Hobbes' Explain Occupy Wall Street

First published twenty years ago and as relevant today as it was then (h/t @thaler and the folks at FearLess Revolution)....

(Click on strip for larger image)

Weekend Link Roundup (October 22 - 23, 2011)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

Writing on her Non-Profit Marketing blog, Katya Andresen suggests that at this time of year fundraisers need to ignore the cliche "it's fundraising season." "The problem with that framing," says Andresen, is that "time of year is not a reason to give, unless it's the last week of December, in which case there is a tax year deadline relevant to donors. We may live by the campaign calendar, but our audiences do not...."

Guest blogging on the Tactical Philanthropy blog, Communicate Good founder Rich Polt has a few suggestions for funders and their grantees facing conflicts of interests in their communications campaigns. Writes Polt:

This tension in funder-grantee communications mirrors the already documented tensions between funders and their grantees in other areas: program efficacy, mission drift, boardroom relations, etc. In a study by the Center for Effective Philanthropy on funder-grantee relationships, a key finding (detailed on the bottom of page 10) is that the "pressure grantees feel to modify their priorities in order to receive a grant" is an important contributor to the measure of the overall relationship. We know this is a very real issue. So it stands to reason that this also impacts the realm of communications.

While I am looking at this problem from the lens of the nonprofit, it is equally possible for the reverse situation to hold true. When smaller foundations, ambitiously working to create their own brand in the market, make grants to powerhouse nonprofits, they run the risk of having their messages eclipsed by that of their steamrolling grantees....

Diversity

On the White Courtesy Telephone blog, Greater New Orleans Foundation president Albert Ruesga wonders what "would be the understandings and principles that would make for a good discussion about racial inequity."

Fundraising

After examining three recent surveys that highlight the highs and lows of the current fundraising climate, About.com's Joanne Fritz concludes that "[p]robably, the bottom line is that things are turning up for some organizations, and that sticking to one's knitting is the best way to get through a still turbulent environment."

Nonprofit Management

On the Stanford Social Innovation Review blog, Taproot Foundation founder and president Aaron Hurst offers five examples of "best" practices every nonprofit leader should ignore. His list includes recruiting and managing volunteers, customized Web design, and a social media presence.

In a post on his blog, GuideStar president and CEO Bob Ottenhoff advises nonprofit human resources directors to "embrace adaptability," especially during times of economic uncertainty.

Philanthropy

"Philanthropy has a role in the ecosystem of funding for public goods," writes Lucy Bernholz on her Philanthropy 2173 blog. "It is one key way in which we use private resources for public goods -- volunteering and impact investing being two others. [But claims] that philanthropy can replace public funding fail to understand its actual scope and potential. Counting on it to provide core public services is, among other things, simply undemocratic...."

Guest blogging on the National Committee for Responsive Philanthropy's Keeping a Close Eye blog, Philanthropic Ventures Foundation executive director Bill Somerville looks ahead to 2014 and shares six predictions for philanthropy.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

-- Regina Mahone

Paths Out of Poverty: Microfinance and Social Entrepreneurship in the 21st Century

(Amit Shah is a Massachusetts-based digital and print entrepreneur, co-founder of Green Comma, and an observer of microfinance possibilities and solutions. In a previous postfor PhilanTopic, he wrote about literacy for a new generation.)

In September, I attended what was billed as North America's largest microfinance conference, the Toronto International Microfinance Summit (TIMS), at the Allstream Centre in Toronto. In addition to the conference, TIMS also held a fundraising gala, with proceeds going to support domestic and international microfinance projects and an educational scholarship.

The inspiration of the Rotarian Action Group for Microcredit(RAGM) and Rotary International's District 7070 Microfinance Committee, the event is run entirely by volunteers. And for the second year, the MasterCard Foundation provided financial assistance for the first hundred college and university students who registered to attend the conference.

The theme of this year's event was "From Microcredit to Financial Inclusion: Making a Difference in our World," and the conference program featured more than forty presenters from thirty organizations.

Of course, the origins of microfinance are familiar to many. In 1974, in the midst of a terrible famine in Bangladesh, Bangladeshi economist and Fulbright Scholar Muhammad Yunus made a $27 loan to a 42-year-old woman who made cane chairs; she had borrowed the money originally from a local usurer at an astonishingly exorbitant rate. The loan was repaid in full -- and the seed for what eventually became Grameen Bank, a "bank for the poor," was planted.

Today, Grameen is known and admired around the world, and Yunus and his revolutionary idea have been recognized with the Nobel Prize Peace Prize. More importantly, Grameen has lent some $5.7 billion to more than six million Bangladeshis, and his idea has spread around the world.

But while terms such as microfinance, microlending, social business, and social entrepreneurship have become part of our 21st-century lexicon, they are frequently misunderstood by people for whom these activities and issues are a central concern. That may be changing, however, as the microfinance conversation increasingly enters the mainstream. (See, for example, this recent Sunday New York Times Magazine profile of Diana Taylor, the high-visibility board chair of Accion, one of the largest MFIs in the world.)

Given the growing interest in the topic, I spent a good deal of my time at TIMS speaking with other participants and presenters about the overarching issues in the social investment sector. Those I spoke with included Thomas Haubenreisser, vice chair, TIMS 2011 Planning Committee and the founder of Invest 4 Impact, an advisory firm committed to the advancement of impact investing; Beck Pryor, project manager, Community Enterprise Solutions; Joyce Kaplan, associate, Solar Ear, which manufactures a low-cost hearing aid charged by solar-powered batteries; Joseph Appalsamy, director, social ventures, Dream Fund Holdings; and Mignonne Spiegelman, associate, WiUS Remittance, Inc.

Their answers to some of my questions follow:

Amit Shah: What are the most challenging issues in the microfinance and social entrepreneurship spaces?

Beck Pryor:In my opinion, the top three challenges in microfinance and social entrepreneurship are scalability, impact measurement, and profitability. The effective scaling of the solutions that are at the forefront of social entrepreneurship is key to global impact, but growth in this sector is very difficult. You are working in a field where money is almost always limited, and for some reason, fierce competition, as opposed to collaboration, is the norm. Instead of organizations with similar goals working together, they fight each other for donors and international attention. So for social entrepreneurs, finding a way to scale -- in part by finding sources of funding that allow growth on a truly impactful level and partnering effectively with those around the world who are working toward the same goals -- is both a challenge and a requirement for success.

Another challenge in social entrepreneurship is impact measurement. Finding quantifiable ways to measure the impact of a model or an activity on a target population is integral to the health and growth of an organization: it allows you to test what is working and what is not, it proves to the community that your work is important, and it attracts the attention of donors/investors. But in this work it is often difficult to measure impact. Take the example of a large microfinance institution. Let's say that in a given week this MFI gives out a hundred loans. Its primary goal is to ensure that these loans are paid back. Can the MFI measure its "success" in number of loans administered? Sure. But what does this really mean? If all one hundred of these loans lead to the creation of successful new businesses, then yes, this has been an impactful endeavor. But what if fifty go to non-income-generating activities, such as taking a sick child to the hospital? What if fifty people have to take out another loan to pay back the first? Is the MFI still successful? For the MFI to really understand its impact, it needs to know how each and every loan it administers is used — in both the short and long term. Perhaps this is feasible, perhaps it is not. But if an organization values its impact, and it should, these are important issues to consider.

The third challenge I see is managing profitability. With the increasing focus on the concept of social business, how do we balance financial and social return? An organization has to be financially viable in order to be sustainable, but a development organization should not be so focused on increasing its financial return that it sacrifices its social impact while doing so. In my opinion, as the sustainability and viability of social entrepreneurship organizations come increasingly under scrutiny, the challenge of profitability and managing this double bottom line will become ever more important.

Thomas Haubenreisser:The challenges in microfinance that are also common in social enterprises to some degree include the following: Shifting the mind-set from "charity" or "not-for-profit" to thinking of business as something that can add value to society and be profitable/self-sustaining without being seen as "usury." Building scale as a path to sustainability is also a critical issue for microfinance and social enterprise start-ups. In microfinance, a significant challenge is to do more with less and become a legitimized financial institution that can offer full financial services that include savings, insurance, and money-transfer services.

Joseph Appalsamy:With millions of microcredit deals by thousands of MFIs taking place, it's time for the MFI industry to convene around such issues as establishing standards, adopting best practices, and enforcing a code of conduct like that of most professional industries. Microfinance is too important an innovation and yet too fragile a mechanism to be left to the mercy of government regulators. A starting point in consensus building would be to agree about what constitutes social performance. A free and easily adoptable framework available to MFIs and donors by the Social Performance Task Force is a good place to start. 

Another question is "What's next?" for the borrower who has repaid her loan and moved up a notch on Maslow's hierarchy of needs. Such a person would need bank and financial services that before she never had a need of. She would need more "options," such as expanding her business, hiring workers, franchising, even becoming an exporter herself. As all first-year business students are taught, 80 percent of your business will eventually come from 20 percent of your clients. MFIs should not create a no-next-level or closed-second-floor scenario for their enterprising clients. MFIs then need to deliver financial literacy, personal and professional skill development to make the entrepreneur successful.

And, finally, the MFI industry, needs to look at the "cost of money" to make more funding available through venture philanthropy and the emerging field of impact investing.

AS: What panel discussion really got your attention?

Thomas Haubenreisser:If I had to choose, "Financial Access Through Mobile Banking and Technology" would be the one, since it clearly demonstrated the potential of technology to help lift people out of poverty. The fact that 90 percent of poor people in developing countries don't have access to financial services, while many have access to mobile phones, presents a unique opportunity for microfinance institutions to increase the value they offer the poor. The session did an amazing job of sharing the vision of the Bill and Melinda Gates Foundation in this regard, while also demonstrating what is actually happening at FINCA in Uganda, where they have introduced mobile technology as part of their service platform.

Beck Pryor: The panel that was the most enlightening for me was "Investment Funds That Have Impact." Referencing my third point above, an interesting aspect of the panel was how the different funds handled financial return. Oikocredit, for example, caps its financial return to investors at 2 percent, meaning that any return on investment (ROI) above 2 percent goes back into the organization. Sarona Asset Management, on the other hand, aims at a much higher financial ROI of upwards of 8 percent to 10 percent.

The logical follow-up here is, again, much to the third challenge I mentioned above: How do you balance financial and social return on investment (SROI)? At the Social Good Summit in New York this week, Muhammad Yunus stated that any MFI looking to generate revenues of more than 15 percent above costs is not in fact microfinance, as he defines it, and should call its model something different. Obviously there is space enough for the Oikocredits and the Grameens and the Saronas of the world to fulfill different goals and create different types of impact, but a discussion of the different approaches to this issue would be quite interesting.

Joyce Kaplan:I attended "Local Microfinance: Learn the Process and Meet the Clients," where the panelists were entrepreneur clients, a volunteer mentor, and an executive from Toronto-based Access Community Capital Fund. It was enlightening to realize there is a need right here in Toronto. It was really interesting to see how the policies and processes of the fund were applied to building real-life businesses from scratch, business that might not otherwise have had a chance.

Joseph Appalsamy: I found "Social Enterprises: Transforming Lives by Linking Markets" to be the most enlightening, engaging, and even frightening. One panelist was just starting out, another had built a modest business that created jobs, and the third -- well, let's just say it knocked my shoes off with the level of social impact and market sophistication required to sustain it.

What I saw was the past, present, and future of social investment -- a metamorphosis that affects all of us involved. I learned about the essential role the donor-based MFI played in the larval stage, where the need, survival, is purely personal; the role of an expanded-service hybrid MFI facilitating the transformation from newly minted borrower to seasoned entrepreneur; and, lastly, the role investors can play now that blended-value returns are possible.

AS: What issues and challenges require further exploration?

Beck Pryor: As impact investing becomes an increasingly larger and more global field, I think there are a number of different approaches necessary to create an engaging discussion surrounding the sector. I would like to see a focus on investors and investees from a financial perspective: Who is interested in funding social businesses? What sort of returns are they expecting, and how do they expect them to be achieved? What do investment funds mean to social businesses? What social businesses are looking for investments, and what types of returns do they believe they can provide? Why become a social business instead of an NGO? I would love to see those questions covered in another conference setting featuring projects that are operating in the impact investor and impact investee space.

Thomas Haubenreisser:I would welcome greater focus on evolving areas such as insurance and payments, to show how microfinance is actually evolving. Controversial areas that are rarely talked about include, for example, the role of charity/NGOs in the sector and when do they transition from nonprofit to for-profit? Interest rates also are controversial, and we need to get better transparency and understanding of the whole risk-reward, cost-profit picture of microfinance organizations.

------

In my next two posts, I will focus on the needs-analysis process and development and delivery mechanisms in the microfinance space, as well as the always-critical sustainability plans for specific projects with a demonstrated track record of success.

In the meantime, feel free to share your own thoughts about pressing issues and challenges in the microfinance and social investment spaces. Here are a few that were surfaced at the conference: Is there a crisis of identity in the MFI sector? Have the scandalous lending practices of profit-seeking MFIs in Andhra Pradesh(in India)  accelerated the need for self-regulation in the microfinance space? Are notions like "museum of poverty" a pipe dream without proven sustainable financial models? And how does Kiva, the wildly popular person-to-person online microlending powerhouse, impact economic behavior in a region? Is it a form of unregulated philanthropy?

-- Amit Shah

Introducing WASHfunders.org

Exciting news from the Foundation Center, which today launched WASHfunders.org.

Designed with philanthropic donors in mind, WASHfunders.org gives funders -- and others interested in WASH-related issues -- a "one-stop shop" for the data and information they need to improve water access, sanitation, and hygiene around the world.

The site's central feature is an interactive mapping application that shows where foundation grants are going, to which organizations, and for what purpose. WASHfunders.org is the first and only site with this critical data. What's more, foundation funding flows are shown within the context of international aid funding and key development indicators, providing a robust picture of the WASH landscape in any given country or region.

WASHfunders.org also provides free access to a broad set of knowledge resources, including:

• funder profiles documenting the WASH strategies of leading foundations;
• case studies that illustrate the successes and challenges of WASH projects around the world;
• tools and resources for assessing project outcomes; and
• a searchable archive of research reports recommended by sector leaders.

The Inside View section of the site is the place to go for updates on new content and features, and/or to share newsworthy events in the WASH sector. Go to the home page and you can register to get Inside View posts delivered to your e-mailbox.

Take a few minutes to look around the site. Then tell your friends and colleagues.

And let us know what you think of WASHfunders.org and how we can make it as useful and user-friendly as possible.

[Infographic] How the Top 50 Nonprofits Do Social Media

We love a good infographic -- especially when it relates to things that interest us, like nonprofits and social media. This one, from craigslist founder Craig Newmark and the folks at craigconnects, kept us busy for a while.

Based on an informal audit conducted in August and September, the infographic is intended to answer questions like: Do the highest-earning nonprofits use social media more effectively than nonprofits that earn less? Are those same nonprofits the most "engaging"? How are people using social media to respond to and interact with large nonprofits?

Here are a few key findings:

• 92 percent of the top 50 nonprofits promote at least one social media presence on their homepage;
• PBS has the most followers (840,653) on Twitter;
• The American Cancer Society follows the most people/orgs (200,522) on Twitter;
• Food for the Poor is the most "talkative" nonprofit on Facebook, with 220 posts over the two-month survey period;
• The nonprofit with the highest net income, the YMCA, only posted 19 times to Facebook over the two-month survey period but has more than 24,000 fans.

(Click for larger image)

Notice anything that surprises you? Confirms your hopes (or fears)? In general, what do you think of infographics as a way to present this kind of data? We'd love to hear your thoughts....

ANNOUNCEMENT: Funder-Only Event With Rebecca MacKinnon, Author, 'Consent of the Networked'

Back in March, we chatted with Helen Brunner, director of the Media Democracy Fund, about social media and the Arab Spring uprisings, net neutrality, and the role of nonprofit advocacy groups in ensuring that every American continues to benefit from an open Internet.

This Wednesday, October 19, at 11:00 a.m., MDF is hosting a funders-only talk featuring Rebecca MacKinnon, author of the soon-to-be-published Consent of the Networked: The Worldwide Struggle for Internet Freedom. In the book, MacKinnon argues that freedom in the Internet age depends on whether we defend our rights on digital platforms and networks in the same way that people fight for their rights and accountable governance in their actual communities and nations. It's time, in other words, to stop thinking of ourselves as passive "users" of technology and instead act like citizens of the Internet -- as netizens -- and take ownership and responsibility for our digital future.

Interested funders can sign up for the event here.

Weekend Link Roundup (October 15 - 16, 2011)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Corporate Philanthropy

On her Non-Profit Marketing blog, Katya Andresen shares some advice from a new Network for Good eGuide on how corporations can best support nonprofits in times of crisis and natural disasters.

Impact/Effectiveness

In a guest post at Beth's Blog, Kari Dunn Saratovsky offers a few takeaways from a recent report on lessons learned while hosting a virtual summit, the Millennial Donor Summit. "While some will argue that an online convening could never replace the value of the relationships built and the networking opportunities that stem from being in the same physical location at the same time," writes Saratovsky, "there is a strong argument to be made for keeping costs and travel expenses at a minimum and involving individuals from a wide spectrum of backgrounds and industries who may not be able to otherwise participate...."

Leadership

"Leaders in the nonprofit sector must help develop and share the story of the community needs that their organizations address," writes Todd Cohen on his Inside Philanthropy blog. "They must develop partners and supporters who care about community and can work together to identify critical assets and resources, and put them to productive, innovative and collaborative use. Sadly, many nonprofits lack true leaders and themselves fail to lead, stuck in the mindset that they and their causes are victims...."

Nonprofit Management

Future Fundraising Now blogger Jeff Brooks takes issue with Uncharitable author Dan Pallotta's most recent Harvard Business Review post, a post in which Pallotta argues against capping executive compensation in the nonprofit sector. Writes Brooks, "I mostly agree with Dan. We should pay effective people in nonprofits salaries that are at least in the competitive ballpark with the for-profit world....But he's missing a couple of important things: There are other form of richness than having lots of money....and [s]etting out to get rich isn't a good way to succeed...."

Philanthropy

On the Deep Social Impact, Maureen O’Brien looks at the Center on Philanthropy at Indiana University’s new project, the Million Dollar List, which "tracks publicly reported charitable gifts of $1 million or more and provides data and resources about giving at that level."

Guest blogging on the Tactical Philanthropy blog, GiveWell's Holden Karnofsky revisits the "room for more funding" debate.

And on her Philanthropy 2173 blog, Lucy Bernholz shares a few thoughts about building movements and Jeff Jarvis' new book, Public Parts.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

(Illustration credit: Indian Summer, Pamela Cisneros)

-- Regina Mahone

Is the 'One Campaign' Being Unethical?

(Nick Scott is assistant to the publisher at PND. In his previous post, he chatted with Barbara Ibrahim, director of the Gerhart Center for Philanthropy at the American University in Cairo, about the situation in Egypt.)

Choose the better tagline to promote disaster relief efforts in the Horn of Africa: "The situation in Somalia is complicated, but we'll do our best." Or, "Let's put an end to famine." It's the latter, of course, even though the first is a more accurate characterization of the situation on the ground.

Does it matter?

With contributions from American donors for famine relief lagging well behind previous disaster appeals, and the UN reporting a significant gap between the amount of aid pledged and the $2.5 billion it says is required to address the crisis, U2's Bono has pulled out all the stops, recently enlisting a Who's Who of celebrity spokespeople for his One Campaign, which bills itself as "the campaign to make poverty history." Mike Huckabee, Michael Bloomberg, Arianna Huffington, K'naan, Clive Owen, Jessica Alba, Idris Elba, Colin Farrell, Liya Kebede, Annie Lennox, Justin Long, Rob Lowe, Ewan McGregor, Evan Rachel Wood, and Kristin Davis -- all make appearances in the campaign's famine relief video appeal, The F Word - Famine is the Real Obscenity.

According to Sam Worthington, president of InterAction, a coalition of 190 international development NGOs, aid groups have raised some $60 million in private contributions from U.S. donors. "This is sharply lower than the $1.29 billion that...InterAction members raised for Haiti," he told NPR, adding that Americans tend to be especially generous after singularly dramatic events like a major earthquake or tsunami, but that it is harder to generate that kind of response for a slow-motion disaster like a famine, in which solutions to the problem tend to be elusive.

Aiming to send the message that there is a solution to the famine in East Africa, the One Campaign tells us:

Now we know how to stop this. Early Warning Systems. Food Reserves. Better Seeds and Irrigation. More Peace and Security. Drought is an Act of Nature. Famine is Man-Made. Go to One.org. Let's put a *bleep*ing end to famine....

That is strong messaging, for sure, but it's also somewhat misleading. Food reserves, agricultural development, and early warning systems have done an excellent job of staving off disaster in neighboring Ethiopia, which suffered its own devastating famine in the mid-1980s. But in Somalia,

• the weak central government can barely maintain control over Mogadishu, Somalia's capital, let alone the entire country;
• Al-Shabaab, an Islamist militant group, controls large swaths of the country’s southern region and is unpredictable and loosely organized; its central leadership doesn't even control the actions of regional commanders. And even in neighboring countries, the situation for foreign aid workers remains dangerous;
• complex clan-based divisions complicate the situation further, as do secessionist groups that operate in and control semi-autonomous regions (see map).

Indeed, last month the president of Médecins Sans Frontières (MSF),
Dr. Unni Karunakara, caused a stir when he criticized other aid groups for ignoring the reality of the situation in order to solicit donations. "We may have to live with the reality that we may never be able to reach the communities most in need of help," said Karunakara.

MSF has been working in Somalia for twenty years, and we know that if we are struggling, then others will not be able to work at all. The reality on the ground is that there are serious difficulties that affect our abilities to respond to need. There is a con, there is an unrealistic expectation being peddled that you give your £50 and suddenly those people are going to have food to eat. Well, no. We need that £50, yes; we will spend it with integrity. But people need to understand the reality of the challenges in delivering that aid. We don't have the right to hide it from people; we have a responsibility to engage the public with the truth....

Regardless of the level of resources commited, the sad fact is that no one -- not even Bono -- can guarantee that you and I acting together can "put an end to famine" in Somalia. This is never going to be a case of "sufficient resources + the correct plan = problem solved." That said, we can do more -- a lot more -- to support the excellent relief work being done in the region.

What do you think? Does it matter that the One Campaign's famine-relief messaging is overly simplistic and somewhat misleading if it manages to catalyze action and raise awareness of the situation? Does the campaign have a responsibility to engage the public with the truth of the situation on the ground, or is it more important to secure the donations and support that is so vital to saving lives in the region? Is effective but misleading messaging okay when the stakes are so high?

-- Nick Scott

This Week in PubHub: Arts and Culture: Arts in the Community

(Kyoko Uchida manages PubHub, the Foundation Center's online catalog of foundation-sponsored publications. In her previous post, she looked at four reports that explore how school discipline policies affect students' academic performance and involvement with the juvenile justice system.)

October is Funding for the Arts Month, and this week in PubHub we are featuring four reports that explore the vital role that arts and culture play in our communities' civic life, economic development, and sense of place.

Much has been said about the role of social media in the Arab Spring uprisings. But in Egypt youth activists were using public spaces -- both virtual and physical -- dynamically to spur civic action well before the January 25 Revolution, according to Youth Activism and Public Space in Egypt (48 pages, PDF), a new report from the John D. Gerhart Center for Philanthropy and Civic Engagement at the American University in Cairo and Innovations in Civic Participation. Along with blogs and outreach by youth organizations, artistic expression -- in the form of stencils and graffiti, for example -- was an essential element in calls for change by the Egyptian people. Funded by the Rockefeller Brothers Fund, the report uses photographs of art works around Tahrir Square to explore the role of public art in the revolution and as expressions of collective identity, dignity, and solidarity.

If the arts can help galvanize a revolution, it shouldn't surprise anyone that they can also reveal and help strengthen a community's sense of place, values, and identity. The American Planning Association report How Arts and Cultural Strategies Create, Reinforce, and Enhance Sense of Place (8 pages, PDF) suggests that identifying, assessing, and mapping a community's arts and cultural resources enables us to better understand its historic, cultural, economic, and social contexts and values. Such assets include not only arts, educational, and religious institutions but also architecture, signage, specialty stores, and street markets and fairs. The authors also suggest that a vision for celebrating a community's legacy, diversity, and identity can be implemented through master plans, arts and cultural programming, and public investment. Funded by the Rockefeller Foundation, the report calls for programming that inspires creative ideas, community engagement, and the integration of arts programs with other community plans.

The integration of the arts into the community is the focus of Building Community: Making Space for Art (20 pages, PDF), a report from the Urban Institute and Leveraging Investments in Creativity. Neighborhood residents tend to value not only traditional cultural institutions, the report argues, but a broad range of amateur and professional activities in unconventional venues. And they yearn to create art themselves. Indeed, a community's artistic vitality is associated with its health, social, and educational outcomes as well as economic development and civic engagement. In other words, the more accessible and integrated arts spaces and artists are, the better off the community. Funded by the Ford, Kresge, and Surdna foundations, the report profiles organizations that train artist-educators, produce theater pieces about social issues, and provide mobile arts programming in renovated transit buses.

Last but not least, Blueprints: Bringing Poetry Into Communities (319 pages, PDF) argues for bringing poetry into communities -- especially those that are geographically/economically isolated or otherwise disadvantaged -- in the form of readings, festivals, and other projects. Through essays by poets about their experiences organizing events in schools, bars, libraries, and refugee camps; the impact of poetry on our notions of community, language, and history; and the need for wider access to poetry, the book explores the role of poetry in community development. Funded by the Poetry Foundation and published by the Harriet Monroe Poetry Institute and the University of Utah Press, the report also provides guidance on designing and sustaining poetry programs as well as insights into the place of the poet in the community ("[T]he poet reaches out to reveal our shared humanity out of which the spirit of community rises").

Where do you stand on the role of arts and culture in fostering collective identity, civic engagement, and healthier communities? Do you know of any programs that use the arts to address social justice issues? And what are some of the things your community does to encourage art making and appreciation? Feel free to share your thoughts in the comments section.

And don't forget to visit PubHub, where you can browse more than four hundred reports related to arts and culture.

-- Kyoko Uchida