Inside Foundations

If you often approach foundations for funding, this excellent article from Stanford Social Innovation Review will be of interest to you.

An excerpt.

“Foundations often undermine their own efforts by micromanaging how social problems are solved. Two insiders explore why foundations have developed this way and what grant makers can do to foster high impact strategies.

“We would probably be better off as a society if the decision makers in the nation’s large private foundations took up surfing. Why? Because surfing is about letting go, and that’s what foundations must do to achieve higher impact. Surfing is incredibly humbling, an encounter with the enormous power, beauty, and unpredictability of the ocean. No surfer would attempt to change the shape of the waves or the schedule of the tides, because these forces are far beyond any one person’s control.

“But two common practices of major foundations—the design of specific solutions to social problems and the narrow focus on one pathway to a goal—are the equivalent of ordering the ocean to change shape. Just as men cannot control oceans, individual foundations cannot control social systems. Such an approach underestimates the vast power and complexity of the systems in which foundations are attempting to intervene.

“The strategic philanthropy movement has been a positive influence in recent years by encouraging foundations to clarify their goals and regularly evaluate their progress. But it has also fueled practices that undermine the nonprofit sector’s impact, rather than amplify it. Too often, funders insist on controlling the ways in which social problems are solved. This is a move in the wrong direction.

“To make steady forward progress solving problems in dynamic environments of complexity and uncertainty, foundations must shift from centrally planned, narrowly focused grantmaking strategies to more decentralized, diversified strategies that are better able to catch the waves of effective leadership, distributed wisdom, and innovation. There are two ways foundations need to let go. The first is to enable effective nonprofits to take the lead in designing solutions to social problems. The second is to diversify investments across multiple solutions or pathways to the goal. Let’s take a closer look at the problems with current practice in philanthropy.

“Problem #1: Foundation-Designed Solutions

“When solutions are centrally planned by people who are distanced from the real work in the field, the solutions are often poorly implemented. This is a classic principal-agent problem. The organizations tasked with implementation feel little ownership or passion for projects they didn’t dream up themselves. For example, in 2004 the William and Flora Hewlett Foundation made a grant to create the Legislative Education Project, as part of its California Education grant portfolio.1 The project was a response to term limits and the loss of institutional memory in the state legislature. It was intended to provide a nonpartisan professional development forum for legislative staff to learn about the history and current status of California education policy. The foundation developed the idea and then invited a respected university research center to implement it. Unfortunately, the researchers weren’t able to keep the legislative staff engaged and satisfied with the programming, nor did they respond aggressively enough to complaints from participants about an imbalance between liberal and conservative viewpoints. Eventually, the Republican legislative staff refused to participate, and those who did participate gave only lukewarm reviews of the sessions. The foundation considered the project a failure and did not renew the grant.”

Boards & Sustainability

A good article from the Nonprofit Quarterly, reminding us of the importance of boards working to keep the organization running as well as ensure it is meeting its financial oversight responsibilities.

An excerpt.

“Throughout the ten years prior to the recession, it seemed that whenever anyone talked about boards and finances in the same sentence they were making a point about accountability. They were warning us that our Form 990s were now on GuideStar, so we’d better make sure that our boards were reading them. They were telling us to have an audit committee and a “Conflict of Interest” policy. They were telling us that we should study Sarbanes-Oxley and apply whatever we could to our own boards. They were making constant reference to a handful of nonprofit fraud cases, suggesting that this was what awaited us if our boards did not get very serious about oversight and accountability.

“Now, as community-based organizations continue to weather the severe, and in many cases permanent, shifts in their operating environments caused by the recession, those accountability concerns seem downright quaint. The truth is that one of the roles that most decently functioning boards play quite well is providing financial oversight. Compared to other board functions, financial oversight is relatively clear: there is a dedicated officer role, the treasurer; nearly all boards have a finance committee; and there are tangible products such as an annual budget to approve, financial statements to distribute, and an auditor to select.

“The problem is none of those tangible products in and of themselves has anything to do with nonprofit sustainability. And it is sustainability that is keeping executive directors up at night, not financial oversight. In a new book I coauthored, Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, my colleagues and I define sustainability as being both programmatic and financial:

“Sustainability encompasses both financial sustainability (the ability to generate resources to meet the needs of the present without compromising the future) and programmatic sustainability (the ability to develop, mature, and cycle out programs to be responsive to constituencies over time).”

Innovation, Leadership & Funding

An excellent article from Harvard Business School exploring the intersection and articles like this always pose the question—though rarely in the article—what is truly innovative?

To be able to judge that, funders need enough expertise in their program areas to recognize a new idea, yet one based in the realities of the program environment, from a retread.

An excerpt.

“In order to garner the capital necessary to foot the bill for social change, nonprofits need to think less about traditional grants and more in terms of innovation--and so do the organizations that fund them.

“This was a key message from professional philanthropists as they explored "Social Investing: Emerging Trends in a Changing Landscape," a recent panel discussion hosted by Harvard Business School's Social Enterprise Initiative. They also touched on growing trends including venture philanthropy and social impact bonds.

"In general there's dissatisfaction with traditional philanthropy and a search for 'give us better practices,' " said Nancy Roob, president and CEO of the Edna McConnell Clark Foundation (EMCF). Joining her on the panel were Matt Bannick (HBS MBA 1993), managing partner of Omidyar Network, a philanthropic investment firm in Redwood City, California, and Mario Morino, cofounder and chairman of Venture Philanthropy Partners (VPP), based in Washington, D.C.

“Panelists agreed that the goal for philanthropy should be to help an organization scale to the point that it can sustain itself.

"I'm hearing an underlying common philosophy," said moderator Professor Herman "Dutch" Leonard, who serves as cochair of the Social Enterprise Initiative. "First, the focus is on impact. Second is taking that impact to scale. And the third element is that whatever is needed, that's what we'll do. Form follows function."

“The panelists explored the benefits and potential pitfalls of "venture philanthropy," the term for applying the techniques of venture capitalists in funding nonprofits and other socially focused organizations. The model differs from traditional grant-giving in that rather than simply writing checks to worthy applicants, venture philanthropists proactively find opportunities and develop them.

"A big part of the model is first seeking out the entrepreneur and the opportunity and then, and only then, figuring out what the capital mix is," said Omidyar Network's Bannick, a former senior executive at eBay. "We live in a world where entrepreneurship drives massive change in the private sector, and we feel that can be true in the social sector."

Nonprofits Hiring

As reported by Forbes and it is another sign that the economy is improving, though slowly.

An excerpt.

“Nonprofit jobs have a certain cachet with boomers looking for a career shift.

“I hear it all the time from job seekers, and I get it. It’s a time in life where you’ve made the bucks, climbed the ladder, and so on.

“If you’re fortunate, an early retirement, or nice severance package has given you the flexibility to unsnap the velvet handcuffs and get to work doing something that really brings meaning to your life–and those whose lives you touch. You can put your lifetime of skills and tools to work making the world a better place.

“And it looks like there’s no time like the present to take action. Hiring freezes at many nonprofits have been lifted, and new jobs are opening up, according to the Nonprofit Employment Trends Survey, a national study of nonprofit employment practices released last week. One-third of nonprofit outfits plan to create new jobs this year and nearly as many said they “might.” That’s promising.

“The largest piece of that job growth is expected to be at mid-sized and large organizations and primarily in the area of direct services. In other words, jobs on the front lines that involve working directly with people who need assistance, such as counseling, tutoring and mentoring programs. Continued job growth in program management/support and fundraising/development is also expected.”

Criminal Justice Program Funding

For programs who work to help prisoners reentering society, a major source of federal funding for those efforts appears to be on track to receive almost as much funding as last year, as reported by the National Reentry Resource Center.

An excerpt.

“On Thursday the House passed the continuing resolution (CR) for the rest of the fiscal year by a 260-167 vote. The Senate followed quickly with a 81-19 vote, avoiding a government shutdown.

“All Department of Justice (DOJ) programs were cut by 17 percent. Several programs were exempt from this cut, including the Office of Violence Against Women, National Institute of Justice, Bureau of Justice Statistics, Regional Information Sharing Systems, Justice for All, and the National Center for Missing and Exploited Children’s programs.

“Council of State Government Justice Center priority programs—the Second Chance Act program, the Mentally Ill Offender Treatment and Crime Reduction Act (MIOTCRA) program, and the Justice Reinvestment program—fall under state and local law enforcement assistance programs, which were cut by $434 million from the FY10 levels."

Homelessness & Sports

As this story from the UK Daily Record reveals, demanding a commitment to life change before being allowed to join a homeless-change program, works.

A very good thing.

An excerpt.

“IT is 10 years since Mel Young and his friend came up with the idea for the Homeless World Cup over a beer.

“They were looking for a way to bring together people from around the world and thought of using the international language of football.

“From the idea of a friendly bout between the homeless of Scotland and Mel's friend Harald Schmied's native Austria, it grew into a pioneering event.

“A total of 18 countries took part in the first competition in 2003.

“A Scotland team won the trophy in the Danish capital Copenhagen in 2007.

“Now the organisation has teams in 75 countries, with more than 30,000 people taking part in football training schemes and play-offs to reach this year's competition in Paris.

“Of those who have previously taken part, 97 per cent say the experience has had a positive impact on their life.

“Almost 80 per cent say they have made changes to their lives as a direct result of involvement. In Mexico, 4300 homeless men have applied to try out for this year's team.

“To qualify to take part, all they have to show is that they are committed to turning their lives around.”

Nonprofit Revocation

The IRS is preparing to issue the list of those nonprofits whose tax-exempt status has been revoked and Guidestar has published a report on what it means for nonprofits, as reported in this news item.

An excerpt.

“As the IRS prepares to publish the first list of nonprofits whose tax-exempt status has been revoked for failure to file an annual return, many nonprofits, funders, and donors are probably wondering: "How will the revocations affect me?" GuideStar gives you the answer in a new report available for free download.

“Written by GuideStar staff, "What Automatic Revocation of Nonprofit Tax Exemptions Means for You: A Review for Nonprofits, Grantmakers, and Donors," concisely but thoroughly:
• outlines the forces driving the revocations;
• analyzes by organization type the nonprofits the IRS has identified as being at risk;
• defines the impact the revocations will have on different audiences; and
• lists resources where readers can get more information.”

Leadership & Communication

An ongoing issue is effectively communicating to staff that something needs doing and having it done.

This article from Harvard Business Weekly notes that the more times that task-message is communicated, the more likely the task will get done.

An excerpt.

“It's the rare child who follows a parent's order to do an unpleasant task the first time she's asked. Upon second request, she might listen, but again ignore the prod. It's often the third time, a more urgent "Brush your teeth, now," that does the trick.

“Most parents understand that redundant communication, coupled with an escalating sense of urgency, is integral to communicating because it gets the job done. New research shows that getting employees to listen up and deliver isn't so different.

“In a paper forthcoming in Organization Science, professor Tsedal B. Neeley and coauthors delve into why many managers tend to send the same message, over and over, via multiple media to team members. At first blush, this strategy may sound like nagging or a waste of time. But as it turns out, asking multiple times gets results.

“Titled "How Managers Use Multiple Media: Discrepant Events, Power, and Timing in Redundant Communication," Neeley and Northwestern University's Paul M. Leonardi and Elizabeth M. Gerber found that managers who are deliberately redundant as communicators move their projects forward more quickly and smoothly than those who are not.

“Neeley's research evolved out of an ethnography of managers' use of technology used to persuade their team members to meet their deliverables on time and on budget. To do so, managers were engaging in redundant communication.

"We started to notice very quickly that some project managers were sending the same message three or four times using different media," she says, citing an example of a manager speaking to an employee face-to-face, then sending her an e-mail and later a text message about the same thing.

“Research showed that asking employees to do something multiple times, whether in person or via technology, is especially common for managers who are under intense pressure to finish particular projects.”

Philanthropy

A nice article from The Chronicle of Philanthropy about how the rich feel about philanthropy.

An excerpt.

“Three people who have signed the Giving Pledge—a commitment to give away at least half of their fortunes—spoke on Thursday about why they think rich people should donate more and what they hope the pledge will achieve.

“John Morgridge, chairman emeritus of Cisco, and his wife, Tashia, were joined by Lorry Lokey, founder of Business Wire, for an evening conversation at the Global Philanthropy Forum, an annual meeting for donors.

“The Morgridges were among a small group who attended the very first dinner organized by Warren Buffett and Bill and Melinda Gates in May 2009, even before the pledge idea was fully baked. Mr. Morgridge said that people at the initial dinner floated the idea of doing videos and interviews to promote the pledge to others but instead decided that hosting more dinners would be the best way to try to recruit other wealthy people to join.

“After that first dinner, the Morgridges said they took a little time to think over whether they wanted to sign the pledge. Mr. Lokey said he agreed while on the phone with Mr. Buffett, who called him with the proposal.

“I said yes right away, because the money was already gone,” joked Mr. Lokey, who has already given most of his fortune to education, medical research, and other causes. “When you pitch in and make it public, it encourages others.”
He continued: “We’ve got all kinds of billionaires sitting on their rear ends and doing nothing. [Mr. Buffett] said he wanted me to be an example of how far beyond 50 percent you can go.”

Nonprofits & Government Funding

As I have long advocated, nonprofits funded by the government should make the strongest effort to build a private philanthropic base to carry them over when political and budgetary decisions can—which they will continually—threaten their funding stream.

The current situation, as reported by The Chronicle of Philanthropy, is certainly one of those times.

An excerpt.

“As lawmakers and President Obama intensify their efforts to close the federal deficit, nearly every kind of nonprofit program financed by the government will have to fight to keep the budget scalpel at bay.

“This month’s battle over how much the government will spend in the 2011 fiscal year, which is more than half over, and a plan for the 2012 budget released by House Republicans both sent the message that programs to help low-income people, promote the arts, alleviate poverty overseas, and provide a range of other services will face a tough time preserving current levels of spending.

“In a compromise over the 2011 budget, Congressional leaders and the White House agreed to cut almost $40-billion from 2010 spending, leaving few non-defense programs untouched.

“In addition to an across-the-board cut of 0.2 percent, the plan--approved by both the House and Senate on Thursday--will trim money for the arts, community health centers, family planning, international aid programs, legal services for the poor, national service, and other areas that provide aid to nonprofits and the people they serve.

“The cuts were not as deep as the Republicans who control the House had sought, but many lawmakers have made it clear that their battle to cut the size of the federal government has only begun.”

Mission Accomplished

And once it is so, nonprofits should transfer any assets to another nonprofit and close up shop, as this article from the New York Times reveals, is actually happening.

An excerpt.

“A few nonprofit groups have recently announced plans to wind down, not over financial problems but because their missions are nearly finished.

“Most notable, perhaps, is Malaria No More, a popular nonprofit that supplies bed nets in malaria zones. Its goal is to end deaths from malaria, a target it sees fast approaching.

“The charity has announced plans to close in 2015, but it is keeping its options open in the unlikely event that advances against malaria are reversed.

“We never planned to be around forever,” said Scott Case, a co-founder of Priceline and vice chairman of Malaria No More. “We have thought of this more as a project than as an institution-building exercise, and the project is nearing its completion.”

“So far, the number of organizations opting to go out of business for mission-related reasons is too small to call a trend. It is still far more common for a nonprofit to close its doors because of financial pressure, which is increasing as governments continue to pare their budgets and donors maintain tight grips on their giving.

“Still, the novelty of organizations going out of business once their work is done has attracted attention.

“I don’t think it’s going to be a widespread phenomenon because there are a lot of groups taking on problems like alcoholism and domestic violence that aren’t problems that go away,” said Jan Masaoka, editor in chief of Blue Avocado, a blog for nonprofits. “But I do see that in some cases there is an opportunity for organizations to wind down gracefully and with their job done.”

“Out2Play, an organization started by Andrea Wenner in 2005, plans to close its doors next year. The group has put up roughly 120 playgrounds used by about 80,000 children in public elementary schools around New York City and is fast running out of locations, in part because the Bloomberg administration liked the idea so much that it took on some schools itself.

“When I first wrote the business plan, I thought about expanding it to other cities or into other types of institutions, like housing projects or hospitals, and we talked about those ideas and others when the board began seeing the end in sight,” Ms. Wenner said.

“Ultimately, though, the board decided that the model worked best for the purpose it had served and that anything else would require more than a simple tweak.”

Shy Leadership

An excellent article in the Harvard Business Review Blog about how to deal with an introverted boss, by an introverted boss.

An excerpt.

“Every time I've taken a Meyers-Briggs test, I score high on the introversion scale. As an introvert, I enjoy being by myself. I sometimes feel drained if I have to be in front of large groups of people I don't know. After I've been in a social situation — including a long day at work — I need quiet time to be alone with my thoughts and recharge. But as a CEO of a company with more than 18,000 employees, I've found myself particularly challenged because so much of my work requires me to be "out there" in front of others.

“So how do I manage this? And what advice would I have for other introverted managers — and for the people who have to work with us? Here are a few personal observations that might prove helpful:

“Introverts need thinking time. I tend to do my best thinking when I can carve out some "alone time" to reflect on important decisions that need to be made. So if I'm facing a big decision, I will create a process in which I can fully vet issues with others, and reflect on the choices before me. Of course, most decisions need to be made on the spur of the moment when I have incomplete information. However, I have found that I make my best decisions when I approach them in a way that feels comfortable to me as an introvert.

“Introverts aren't as aloof as they appear. In meetings, introverts can often be perceived as aloof, disinterested, shy or retiring. In my case, I often times prefer to listen to people than to speak and I find it very difficult to pretend that I'm naturally out-going when I'm not. When viewed from the outside, it may seem that I'm not openly contributing as much as I could or should, but that's just because I'm busy listening and thinking.

“One of the best ways I've found to help people overcome their discomfort around my behavior is to simply declare myself. I tell them, "If you see me looking aloof, please understand that I'm shy, and I need you to call me out." By declaring myself in this way, I've found other people quickly, and compassionately, adapt to my style.”

Wikipedia’s CEO

I use Wikipedia—a nonprofit company—all the time, a wonderful resource that only the internet technology could platform and this profile of the current CEO from Fast Company is terrific.

An excerpt.

“Millions of Wikipedians are familiar with the charismatic man who founded Wikipedia, Jimmy Wales -- it was his twinkling mug that was plastered atop the site during the recent 10th-anniversary fundraising effort, encouraging users to donate money to the "temple of the mind" that they had all built together. But few know Gardner, the 44-year-old former journalist who was brought in four years ago to right the foundation's worrisomely listing ship.

“At the time, the sprawling, collaborative reference site already had a visibility and reach that few sites can match. Yet when Gardner arrived, it was managed by just seven people from a strip-mall office in Florida -- and Wikimedia's finances were under intense pressure.

“In short order, Gardner began aggressively raising money, as evidenced by that triumphant anniversary campaign, which raised $16 million in 50 days late last year. (Before Gardner, the foundation's efforts at fundraising ran along the lines of, literally, "Let's buy Brion a laptop.") She moved Wikimedia to a downtown San Francisco building and bulked up the full-time staff to 56 employees, with plans to add 40 more positions in the newly created community-outreach and global-development departments. She implemented criminal background checks and expense policies -- basics for some businesses, but a level of professionalism Wikimedia had never before embraced.

“Three years into the job, Gardner remains one of only two women running a top-10 website. Under her watch, Wikipedia is now bigger and more stable than ever. A recent Pew survey revealed that 53% of adult American Internet users visit Wikipedia regularly. More than 400 million users visit it each month. It would cost $50,000 to print one copy of the 3.5 million articles housed on English Wikipedia alone. (Forget the 250-plus Wikipedias in languages ranging from Amharic to Tamil.) And that one copy would fill up 1,500 books at 1,500 pages per book.

“But Wikipedia also has real challenges to confront: a growing sense of insularity among seasoned editors who can set a punitive, unwelcoming tone for newcomers; a dearth of women editors (only 13% -- unacceptable, according to Gardner); and perhaps most alarming, a shrinking pool of overall regular contributors to English Wikipedia, down by one-third since March 2007.

“Still, Gardner's ambitions are huge. She is opening a Wikimedia office in India this spring, with future plans for offices in Brazil and the Middle East and North Africa. Determined that the site not consist primarily of white people in rich countries pontificating on behalf of the rest of the globe, she wants to focus on growing Wikipedia participation in the developing world. She aims to double the number of Wikipedia users to a billion within five years. "What could be better than people who don't have access to knowledge getting the ability to find out whatever it is that they want to find out?" she says. "And that's what I think is so gorgeous about Wikipedia -- it's this limitless space; it can be as big as it needs to be. It can actually contain the sum of everything that we know, right?"

Americans Give to Churches, Big Time

The State Journal reports on the increase in giving recently.

“ROCK BRANCH -- The State of the Plate survey of more than 1,500 churches across the country found 43 percent saw an increase in giving.

"We haven't noticed a considerable decline in giving here other than people loosing good jobs," says Reverend Delbert Hawley, pastor of Rock Branch Independent Church.

“He says energy efficient bulbs are one way the church has saved money. He remembers how retired church members also helped the church save money by helping build the current sanctuary.

"They just reported here for work," says Hawley.”

Nonprofit/Forprofit

Entrepreneurs are combining the two in innovative ways, which is the subject of this article—only free to read for a week—from Stanford Social Innovation Review, a wonderfully informative magazine I subscribe to and I'd advise other nonprofit leaders to do likewise, as it is a great way to keep informed of important developments and creative thinking continually occurring in our field.

An excerpt.

“Much to the chagrin of social entrepreneurs, U.S. law does not currently recognize any single legal entity that can simultaneously accept tax-deductible donated capital (charitable contributions and grants); invested capital (equity investment for which investors seek a market rate of return); and quasi-invested capital (such as loans or program-related investments [PRI] from foundations that are structured as investments but in which the funder has a strong philanthropic motive and neither expects nor demands a market rate of return). As a consequence, social entrepreneurs are typically forced to choose between for-profit and nonprofit models that require them to compromise their social vision and restrict their ability to finance and operate their ventures in a way that meets the founders’ own needs as well as those of their investors, customers, employees, and other stakeholders.

“Some entrepreneurs, however (especially the most intrepid ones), have found ways to combine the best of the for-profit and nonprofit models. They have done this by creating a hybrid structure: separate nonprofit and for-profit organizations that are bound together through governance or legal agreements. Hybrids, of course, are not new. They have been around for decades (consider Children’s Television Workshop, owners of the Sesame Street characters). For the most part, hybrids have been created by an existing nonprofit or for-profit to meet a new objective that could not be met under its existing legal structure. A for-profit corporation might create a nonprofit foundation to manage its philanthropic work. Or a nonprofit museum might create a for-profit retailer to sell posters, jewelry, and other merchandise.

“In recent years, however, social entrepreneurs have taken the hybrid model to a new level, crafting it into what is in effect a single structure that can operate as both a for-profit and a nonprofit. Social entrepreneurs are now creating complex hybrid structures from the start, ones that use contracts to intimately tie together the nonprofit and for-profit organizations. I call these new entities contract hybrids, to distinguish them from the hybrids of the past.

“NEVER THE TWAIN SHALL MEET

“To understand what a contract hybrid is and how it works, one must first understand that the entire legal and regulatory structure that governs U.S. businesses and nonprofits is designed to ensure that the charitable sector and the business sector stay fundamentally distinct. In a nutshell, charity is supposed to be all about mission and not about money, whereas for-profit businesses are supposed to be all about money and not about mission. As a result, business and charities are regulated and operated according to fundamentally different principles, and any crossing of the lines is viewed with skepticism by regulators and the public.

“As Dan Pallotta points out in his book Uncharitable, this divergence is not rooted in any law of economics or even politics. Rather, it is the result of historical accident. It is essentially the view propounded by the Puritans who settled in the United States in the 17th century. They believed that business and commercial activity was a sin, albeit a necessary one. To atone, one did charitable work, which had to be kept clean of any taint of commerciality. Although we have progressed in our thinking since then, Congress, the Internal Revenue Service (IRS), state regulators, the general public, and even nonprofit leaders remain locked into this outmoded mental model.

“Creating a hybrid entity that can serve both charitable goals and business objectives simultaneously may sound simple, but from a legal perspective it is actually quite complicated. For-profit businesses have as their primary objective the pursuit of profit for the benefit of their owners. The directors and managers of a for-profit business have a fiduciary duty to maximize shareholder return, and if pursuit of a social mission interferes with that primary duty, the directors and officers can face legal jeopardy.

“Nonprofits, on the other hand, have as their primary objective the accomplishment of a social or public mission. Nonprofit directors and managers must run the enterprise to further public rather than private interests. If they confer private benefits on individuals (other than reasonable compensation for services rendered, itself a touchy subject), they may face legal liability. And they generally cannot engage in profit-sharing arrangements with private investors or businesses. To put it another way, businesses and nonprofits are fundamentally single-purpose entities. Although the law allows them to stretch toward each other, a complete synthesis is not possible, and the further each model is stretched, the more legally uncertain the venture becomes.

“The three most popular stretched models today are the B corporation, benefit corporation, and low-profit limited liability company (L3C). The B corporation is a brand, certified by B Lab (itself a nonprofit), rather than a legal form in the eyes of the IRS. To be certified a B corporation, the owners and managers of the organization voluntarily submit themselves to a rigorous battery of questions and tests that measure their commitment to social values and socially and environmentally responsible practices. B Lab makes the results of these tests public, so that consumers can find out what these companies stand for and how their claims of social responsibility are put into practice. B Lab promotes B corporations as a group, which gives them a marketing advantage and provides further incentive for them to justify social mission as a business strategy.”

Leadership Without Micromanaging

It is always a problem for the hands-on type of leader, but this post from Harvard Business Review examines how not to do it.

An excerpt.

“One of the more vexing problems most managers face every day is how to get involved in the work of their people without doing the work themselves or micromanaging those doing it.

“You can resolve this challenge with the same approach that we described in our previous blog — the technique we call Prep-Do-Review. In this simple but often forgotten action model, you think of every activity not as one step — doing — but three distinct steps: prepare to act, act, and then reflect on the outcome and what can be learned from it.

“Last time, we focused on how you can convert everyday activities into tools for making managerial progress — moving toward goals, developing people, building a team, creating and sustaining a network, and all the other things managers are supposed to do but never seem to have the time to do.

“Here we focus on using Prep-Do-Review with your people. Start by expecting your people to use Prep-Do-Review themselves in their work. Not only will it make them more effective, but it will provide a way for you to become involved in their work as appropriate for the person and the situation.”

Powerful Leadership can Stifle Communication

In this insightful working paper from Harvard Business School Weekly, the ramifications of leadership that is so powerful that it actually makes communication within the organization less open, is examined.

This is a phenomena I have seen many times in the grassroots nonprofit sector, especially within organizations still being led by the organization’s founder.

An excerpt from the Executive Summary.

“History has shown that possessing a great deal of power does not necessarily make someone a good leader. This paper explores the idea that power actually has a detrimental effect on leadership, especially with regard to how it affects open communication within a team. Research was conducted by Leigh Plunkett Tost of the University of Washington, Francesca Gino of Harvard Business School, and Richard P. Larrick of Duke University. Key concepts include:
• Members of teams with high-power leaders are likely to keep quiet in meetings, both because high-power leaders talk a lot, meaning there's not much time for others to talk, and because of the perception—fair or not—that powerful people aren't interested in anyone else's ideas. This can result in a dearth of ideas during brainstorming sessions.
• Leader power has a negative effect on team members' perceptions of the leader's ability and desire to engage in open communication. Because open communication is vital to any project, these perceptions can hurt team performance.
• These negative effects of leader power can be virtually eliminated simply by clearly communicating the idea that every team member is individually instrumental to any given task at hand.”

De Tocqueville & Neighborhood Associations

The neighborhood association, one example of which we posted on yesterday, is an American venue remarked on by Count Alexis De Tocqueville, who came to America in the early 1800’s, met with many of the founders and wrote one of the most perceptive books ever written about America and nonprofit organizations.

Here is but a small part of what he said about voluntary associations—nonprofits, in the remarkable book he wrote, Democracy in America.

“Americans of all ages, all conditions, all minds constantly unite. Not only do they have commercial and industrial associations in which all take part, but they also have a thousand other kinds: religious, moral, grave, futile, very general and very particular, immense and very small; Americans use associations to give fetes, to found seminaries, to build inns, to raise churches, to distribute books, to send missionaries to the antipodes; in this manner they create hospitals, prisons, schools. Finally, if it is a question of bringing to light a truth or developing a sentiment with the support of a great example, they associate. Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you will perceive an association in the United States.

“I have since traveled through England, from which the Americans took some of their laws and many of their usages, and it appeared to me that there they were very far from making as constant and as skilled a use of association.

“It often happens that the English execute very great things in isolation, whereas there is scarcely an undertaking so small that Americans do not unite for it. It is evident that the former consider association as a powerful means of action; but the latter seem to see in it the sole means they have of acting.

“Thus the most democratic country on earth is found to be, above all, the one where men in our day have most perfected the art of pursuing the object of their common desires in common and have applied this new science to the most objects. Does this result from an accident or could it be that there in fact exists a necessary relation between associations and equality?”

Alexis de Tocqueville. (2000). Translation by H. C. Mansfield and D. Winthrop. (pp. 489-490)

Neighborhood Associations & Social Media

In an excellent use of technology to keep neighborhoods safe, as reported by the Sacramento Bee, using social media to keep track of neighborhood crime and inform fellow residents, is a wise strategy.

An excerpt.

“Meet Robert Earl Randall, or "Bobby," as he is known to friends and police.

“Randall, 44, has amassed a 12-page rap sheet that includes arrests on charges of burglary, driving under the influence, possession of controlled substances, impersonation, writing a phony prescription, receiving stolen property and taking a vehicle without permission.

“Last week, found sleeping in a broken-down camper parked next to his mother's house off Opal Lane in the Hagginwood area, he was arrested again as a suspect in two additional burglaries.

"I'm not trying to be a criminal," Randall told Sacramento County sheriff's Sgt. Chris Joachim as he sat handcuffed the patrol car. "I don't want to go to prison."

“Randall is one of the people you lock your doors against. But, increasingly, Sacramento-area residents are deciding that is not enough.

“Some are turning to online crime-tracking tools or creating neighborhood watch groups on the Internet that give them instant access to crimes reported in their neighborhoods and suspicious activity.

“Susanne Burns is one of them. The Carmichael resident decided she had to do something after her home was burglarized last May while her family slept.

“The family had left vehicles in the driveway to make room for a pre-prom party in the garage. The burglars apparently broke into her husband's truck and used the garage door opener to get inside the garage and then the house.

“When she discovered the burglary, Burns followed the traditional route, setting up a Neighborhood Watch group of homes in her gated community.

"We started emailing and this list grew basically out of control," she said. "It started with me emailing the 22 homes in our little community. It just mushroomed, and I think that's when it hit me."

"It" was the idea of harnessing Facebook. The result is Carmichael Watchgroup, a page on the social networking site that has 342 members and notifies residents of community meetings with the Sheriff's Department, crime-tracking websites and criminal reports.

“News about stolen bikes, garage break-ins and other crimes are posted regularly. At Christmas, video from one home's security cameras was posted showing a burglar breaking into a house and leaving on a bicycle with stolen property.

“Elsewhere, communities from Granite Bay to Natomas have set up email alerts to keep residents abreast of what is going on in their neighborhoods, and several area law enforcement agencies are contracting with companies to put crime data online and make it available to anyone for free.”

Giving Well

Being a philanthropist is often a challenge, and this article from the Stanford Social Innovation Review examines the various methods to giving well.

An excerpt.

“Strategic philanthropy has come to be used as a catchall phrase for effective philanthropy. However, I believe that there are three core approaches to philanthropy, each of which can be effective. Each type executes something quite different, and recognizing this distinction is critical to their success.

“Charitable giving seeks to buy nonprofit program execution that will accrue to beneficiaries. It is classic “buyer” behavior, as defined by George Overholser in Building Is Not Buying (PDF). The charitable giver is concerned primarily with the value of the programmatic execution relative to grant size and cares little about the nonprofit enterprise for its own sake.

“Philanthropic investment seeks to provide resources to nonprofit enterprises that increase the nonprofit’s ability to deliver programmatic execution. It is classic “builder” behavior, as defined in Building is Not Buying. The philanthropic investor, like a for-profit investor, is primarily focused on the longer-term increase and improvement in programmatic execution relative to grant size.

“Strategic philanthropy seeks to buy nonprofit goods and services in a way that aligns with a theory of change defined by the strategic philanthropist, or to invest in the growth of nonprofits needed for the theory’s success. Unlike philanthropic investors and charitable givers who provide resources to a nonprofit so that it may pursue a theory of change, strategic philanthropists are concerned primarily with their own theory of change.

“The charitable giver and philanthropic investor both transact with the enterprise but do not seek to be the agent of change themselves.”