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Weekend Link Roundup (September 14-15, 2013)

September 15, 2013

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

Impact/Effectiveness

Lots of good discussion around impact investing, social impact bonds, and social capital this week. In Forbes, Jean Case, president of the Case Foundation, shares some findings from a 2012 listening tour conducted by the foundation with the help of Sonal Shah, former director of social innovation at the White House, and Sean Greene, former chief of investments and innovation at the Small Business Administration. What did they learn? The field, Case writes, is ready for less talk and more action; is looking for clarity around definitions; is hungry for more data around actual financial performance; is looking for a framework that positions impact investing not as an asset class but as a mindset; and would like to see the pipeline of organizations, people, and ideas worth betting on grow. Case and her colleagues also heard a lot of people talk about hope --

hope in a new class of entrepreneurs -- social entrepreneurs -- who are pointing the way to exciting and innovative solutions from the private sector. While most agree it's early days, it turns out impact investing might be the path forward that allows business-savvy investors to use their investment dollars to realize financial return while helping to solve critical problems with new solutions....

Ted Levinson isn't so sure. In an interview with Social Velocity blogger Nell Edgington, Levinson, director of lending at RSF Social Finance, a San Francisco-based leader in the social finance marketplace, tells Edgington that he is both "hopeful and deeply skeptical" about the future of social impact bonds. Hopeful because SIBs are "a clever way" to push the risk of solving some of our most intractable social problems on to investors who are willing to take a long view about the potential upside of those investments. And skeptical because he doubts that a social capital market can ever reach a stage where transactions costs drop enough to make such investments economically viable. "Bringing together the multiple parties...required for such a transaction," he tells Edgington, "just seems unaffordable to me."

Expensive, maybe, but not unaffordable -- if we keep are eye on the prize, argues Steve Goldberg, author of a fine book about social investing (Billions of Drops in Millions of Buckets: Why Philanthropy Doesn't Advance Social Progress), on the Pioneers Post site. While acknowledging that SIBs are (as Martin Brookes and others have argued) "complicated and expensive" to put together, Goldberg says there are good reasons for the added cost. For starters, SIBs "enlist all essential stakeholders in actively collaborating in delivering an integrated set of innovative solutions with fidelity to evidence-based models," and that

requires dedicated and skilled intermediaries to herd all those cats, collect lots of data and use it to manage performance over many years. Unlike philanthropy, outcomes-based finance requires accurate cost estimation, continuous quality control and rigorous evaluation. If investors don't think they’ll get paid back because they're not convinced their money will accomplish the contractual objectives, they won't invest.

But if investors do think a SIB can bring everyone to the table in coordinated support of multi-dimensional solutions that have proven effective against multi-dimensional problems, and if government payers agree to pay a fair return if, when and to the extent that those problems are actually solved and commensurate savings are actually realized, then they just might invest enough money to get the job done. Aggregating sufficient funds under vigilant management to make meaningful headway against pervasive social problems doesn't sound less ethical to me than giving away money that isn't large enough, disciplined enough or enduring enough to make a dent.

For a different take on the role of capital in the social sector, read Clara Miller's contribution ("Capital, Equity, and Looking at Nonprofits as Enterprises") to a four-article series in the Nonprofit Quarterly describing the practice of capital funding (click here for the first and second) articles in the series). In her piece, Miller, president of the F.B. Heron Foundation, writes that while she has "been hearing a lot of loose talk about capital in the nonprofit sector" and that it has "become axiomatic that unleashing untold trillions of dollars from the global capital markets (most of which are evidently panting for nonprofit action) will fix all manner of social ills," in her experience, "revenue, or income, is far more fundamental to enterprise and mission success than capital -- preferably reliable, repeatable net revenue."

Philanthropy

After five-plus years as CEO of the Bill and Melinda Gates Foundation, Jeff Raikes, a former top executive at Microsoft, announced last week that he would be stepping down from that position to pursue other interests. In a Q&A with Seattle-based health blogger Tom Paulson, Raikes pointed to the foundation's "focus on trying to make decisions based on data and evidence" as one of its distinguishing characteristics during his tenure and said that while the foundation's relationship with its grantees is getting better, it’s still "a work in progress."

On the McKnight Foundation blog, Kate Wolford, president of the Minneapolis-based foundation, unpacks the results of the foundation's most recent Grantee Perception Report, a tool created by the Center for Effective Philanthropy that provides foundation leadership with feedback provided anonymously by its grantees in areas such as grantmaking processes, communications, responsiveness, and field impact.

According to global financial services firm Barclays, the number of millionaires in the United Kingdom is expected to grow by a third by 2020, reaching 826,000. Meanwhile, a report released by Oxfam International predicts that the number of children living in poverty in the UK will grow by about 800,000 by 2020 -- a troubling prediction that prompted the folks at Edge Fund, a member-run venture fund that supports groups working for justice and equality, to ask: Does philanthropy just exist to protect a system which makes some people very rich?

A report based on a survey supported by the United Nations Foundation and conducted by the Women's Philanthropy Institute at the Lilly Family School of Philanthropy finds that that nearly nine out of ten American youth between the ages of 8 and 19 give money to organizations dedicated to charitable causes -- confirmation, argues Kathy Calvin, president and CEO of the United Nations Foundation, that today's "millennial generation is dedicated to donating time and money as a powerful force for good on global issues."

Who are these next-gen donors? That's the subject of the first episode in a new podcast series, Shaping the Future of Philanthropy: Voices from Next Gen Donors, launched by our colleagues at GrantCraft, a project of the Foundation Center and the European Foundation Centre, in partnership with 21/64 and the Johnson Center for Philanthropy at Grand Valley State University. How do these next-gen donors differ from their philanthropically minded parents and grandparents. According to GrantCraft director Jen Bokoff, they're pushing nonprofits to be more transparent and rigorous in terms of measuring and achieving their objectives; they're keenly interested in impact and evaluation; and they're eager to identify locally based initiatives that align with their own personal values as well as the missions of the organizations they support. What do you think? Are next-gen donors different? Do they bring something new to the philanthropic table? And if they do, is that something they'll be able to sustain as they get older?

Technology

The Guardian, in partnership with TechSoup Global and NetSquared, has issued a report, Technology for Good: Innovative Use of Technology by Charities, that showcases ten technologies -- mobile, GPS, mapping tools, social media, translation tools, and cloud technology, among others -- that charities and nonprofits are using to good effect in their day-to-day operations.

That's it for now. Drop us a line at mfn@foundationcenter.org if we missed something!

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