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.”
Monday, April 11, 2011
Friday, April 8, 2011
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.”
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.”
Thursday, April 7, 2011
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.”
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.”
Wednesday, April 6, 2011
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.”
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.”
Tuesday, April 5, 2011
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)
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)
Monday, April 4, 2011
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.”
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.”
Friday, April 1, 2011
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.”
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.”
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