Saturday, February 20, 2010

The Social Innovation Fund: What to Watch in 2010

The Obama Administration has set up the Social Innovation Fund with a view to replicating solutions to social problems that have proven effective. 2010 will be a pilot year for the Fund as the first $50m will be disbursed, actually $200m in total as the remaining $175m should come from matching private funds (not an easy task by the way in those tough economic times).

President Obama and his team have tapped into one of the characteristics of the social sector in this country when they designed the SIF: the very entrepreneurial nature of the sector has caused a lot of innovative initiatives to get off the ground. In Boston for instance there is a cluster of nonprofits that have specialized in after-school programs and have earned excellent programmatic and management reputation, such as Citizens Schools, Jumpstart, BELL, or Summer Advantage. Obviously, one has to wonder whether those guys talk enough to each other and partner on joint initiatives – but the proliferation of organizations surely multiplies the chances that new solutions to serious problems will be found.

Those programs or projects can thrive at a local level as it is usually not that hard to find enough funding to pay for activities at a limited scale. However, securing money to pay for a national expansion is a totally another ballgame and the process of expansion itself is complicated and full of pitfalls. That is why the Social Innovation Fund sounds like such a great idea.

This is how the SIF will work: $50m are going to be shared among 5 to 7 intermediary organizations that each will receive between $5m and 10m. This is actually a 5-year commitment, thus those intermediaries will receive the $5-7m amount for 5 years.

By choosing to work through intermediaries, the Fund does what would seem most efficient – no need to treat directly with the multitude of nonprofits on the ground that will receive its support. Also, the model of managing a portfolio of promising organizations and supporting them in their growth phase over several years is quite proven - it is actually called Venture Philanthropy (VP). The likes of New Profit or Venture Philanthropy Partners (VPP) were the pioneers of that “movement” about 10 years ago (not a lot of other VP shops have actually emerged and succeeded since then). Certainly, they know what they are doing.

Now, I do believe however that the SIF grant-making model presents a couple of potential problems. By subcontracting the selection of the ultimate beneficiary organizations to intermediaries (even though it will issue selection criteria) SIF runs the risks that the whole process will lack consistency from one intermediary to the next. Furthermore, if the Fund ends up working with New Profit or VPP, how can we be sure that they are not going to push their “protégés”? They have all the incentives in the world to do so. If they stick to the same organizations they already picked to join their portfolios as beneficiaries of the SIF money, intermediaries won’t obviously have to find the funding that those nonprofits would have needed in the next 5 years. Also, why not promote their “protégés” as VPP or New Profit will already have conducted thorough due diligence and established the social value and effectiveness of those entities’ models? Thus, the likelihood of the New Profits and VPPs of the world seeking out other nonprofits is pretty low.

What is more, even though I did not attend any kind of secret meetings or am in the know on this, I’ve heard enough in the last few months that New Profit, VPP, or Root Cause (another intermediary but one that does not do VP) have engaged in a serious lobbying effort towards the Obama Administration (where they know a bunch of folks) in order to make sure that 1) the money goes through intermediaries like them, and 2) they are the ones actually getting it.

I am not suggesting that they have lacked or would lack integrity but it is fair to say that there is some form of tug of war or rat race around and after this SIF money. I should add though that the press release relaying the news about the 2010 funding pointed out that new intermediary organizations are encouraged to apply for the funding available. We will see if that happens or not and if it does, who is behind these new intermediaries.

The last potential difficulty with the SIF set-up has to do with the challenges of replication itself. To take a community organization that is active at the local level and make it a national force is extremely complex. Scaling – without even going from local to national – is hard and history shows that there have been more failures than successes and that the process is very long. Thus, let’s be realistic and not wait for early miracles!!

In sum, replicating ideas and models that have been most effective at solving social issues is great and much needed. Obama likes to take the Harlem’s Children Zone (HCZ) as an example of an organization (founded and led by the charismatic Geoffrey Canada) that has changed the lives of so many kids (by investing in their early childhood development) and whose model should be replicated in every corner of this country. But my sense is that not all beneficiary nonprofits will be such an obvious pick...

Overall, I remain optimistic and positive about SIF because at the end of the day let’s not forget that dozens of organizations ($200m distributed with an average grant of at least $100k) will be able to ramp up their activities. But there are a few things that we’ll have to watch closely:
· To what extent can matching funds be raised to the level of $175m as planned?
· Will other intermediaries than the usual suspects like New Profit or VPP be selected?
· Among the beneficiaries that VPP or New Profit pick – if they are indeed chosen by SIF – how many will there be that are not in their portfolio currently or were not in the process of becoming one of their portfolio organizations?
· Will the beneficiaries’ management capacity be high enough - whatever support they receive from the intermediaries - to overcome obstacles of scaling up and replication?

Friday, February 12, 2010

The Right Side of History

I wanted to tell you about one of my former students, Brian Elliot, who founded The Right Side of History Campaign a couple of months ago. What prompted Brian to create that organization was the passing of Proposition 8 in California last year that banned gay marriage.

The LGBT (Lesbian Gay Bisexual Transgender) community still suffers from a number of discriminations in this country and the question of marriage is just the tip of the iceberg.

Brian has chosen to target the straight community to help spread the word about those discriminations and bring about change eventually. He drew an analogy with the civil rights movement in the US in the 60’s when the force that made the difference and caused the Johnson administration to pass sweeping civil rights legislation was not so much the activists or the African-American community (despite the obvious leadership of Martin Luther King or Robert Kennedy) but rather the non-militant white community who got absolutely disgusted and ashamed of seeing on the evening news footage of local police treating black protesters like animals in Selma and other places in the South.

Brian thought that the same rationale could be applied to the non-militant straight community regarding LGBT issues. If the outrage about unfair treatment of LGBT folks on many levels came from straight people, the probability of successful change would be much higher.

Straight Talks for Equality is an initiative launched by the Right Side of History Campaign. As its name indicates, it is about straight folks having conversations about what equality means to them and why some portions of the population, including LGBT people, are still discriminated against today.

Brian has relied on social networks such as Facebook to spread the word towards young people who constitute the Right Side of History’s target age category. He launched a group on Facebook called Give Brian Equality and in just four weeks over 19,000 supporters have become fans.

Brian and his team are working on their web site which does need improvements right now and they have already completed their business plan and raised about $30k.

Go Brian!! A lot of social justice issues are unresolved in the US and elsewhere around the world and it is great news that someone as gifted as Brian Elliot who could do pretty much whatever he wants in the corporate world and make a bundle of money has chosen to take on issues that are not necessarily popular with all Americans or figure prominently on their radar screens.

Friday, February 5, 2010

Haiti Earthquake: A Missed Opportunity for Large NGOs

The Haiti Earthquake is slowly drifting out of the headlines and as the number of casualties is said to top 200,000, there have been alarming reports that aid does not nearly reach the multitude of people in need.

I don’t know whether coordination is worse this time than it was in 2005 in the various areas hit by the Tsunami. It is probably easy to think that it should not have taken much to come up with some disaster plan ahead of time and then follow it when sadly the catastrophe happened. But I am pretty sure that this is not as simple when it is just chaos around as it was the case shortly after the Earthquake. It is also rare to see a disaster of that magnitude hit a capital city with high density and a large population. One has to remember as well that the Haiti administration ceased to function almost entirely overnight and that most of the senior UN folks died when their building collapsed.

However, a few weeks after the Earthquake hit, it must be extremely frustrating for the population – and for donors on this side – to see that aid is not reaching its destination.

Like in 2005 big humanitarian organizations are competing for people’s financial contributions to the relief efforts. As I pointed out in an earlier post a lot of those large NGOs realized that the emotion caused by the 2004 Tsunami provoked an unprecedented movement of generosity on the part of the general public. The last 2 years have been tough for those nonprofits on the fundraising side, thus it is not unrealistic to think that they are viewing the Haiti Earthquake as an opportunity to be helpful to the Haitian people and in doing so, fulfill their mission certainly but also raise much needed money for non-Haiti-related activities.

I did a search on Google of the term “donate to Haiti” and here is what I got: eleven (11!!) sponsored links, in other words ads, by humanitarian organizations, namely from the top of the screen to the bottom (3 in the top segment of the page and 8 in the right column), Red Cross, UNICEF USA, Habitat, Clinton Bush Haiti Fund, Save the Children, Hope for Haiti, Samaritans Purse, Food for the Poor, Doctors Without Borders, Charity Navigator (a tool to conduct due diligence on nonprofits), and IRC. The search results listed the following links on the first page (not including the news results): Red Cross, how to Avoid Scams (, Yele (Wyclef Jean’s nonprofit), the general Google page on how to donate for relief efforts that I mentioned in a previous entry, and four newspaper / magazine articles on where and how to donate (in order US News, NY Daily News, Huffington Post, and The Atlantic).

My reaction to this is twofold. As much as I applaud the efforts of the UNICEFs, Red Cross, and MSFs of the world, I think it is confusing to most folks out there to get messages from those organizations and many others asking to help them specifically. In a time of such a huge crisis, considering moreover that the vast majority of the general public knows very little about who does what in the social sector – and even less about who does what well – I don’t see the “greater good value” of sending those messages to the general public.

What the public wants is to contribute to relief efforts in Haiti. People want their money to get where it is needed, they want to see that their money is making a difference and helping those who are suffering right now. My guess is that they could not care less whether the money goes to Mercy Corps, MSF, CARE, or UNICEF as long as it reaches those in need.

That is why the concept of a Fund like the Clinton Bush Haiti Fund is appealing because it is equivalent to having a big bucket where people give to a cause vs. a certain entity and then the money is distributed according to the needs.

It is not surprising that most donations to date have gone to organizations considered as generic names so to speak like the Red Cross or UNICEF. I bet most think that the Red Cross has a particular status whereas in fact the American Red Cross is just another 501c3 like any other nonprofit in the same field. The Federation of the Red Cross and the Red Crescent housed in Switzerland does have international organization status but the national organizations don’t.

In this dramatic crisis, I would like to see nonprofit leaders do for once what they have been long criticized for not doing enough, i.e. BAND TOGETHER. Why don’t they raise money together and figure out a way the money should be distributed among their organizations depending on what part of the reconstruction or relief activities they are taking on?

An interesting NYT article recounted earlier this week how in other countries like Britain and Canada such pooling of funds has taken place on occasion in times of great catastrophes. But it has not been possible in the US yet – it should be noted though the American Red Cross did pass on 46% of the money it raised after the Asian Tsunami to other organizations, which was positive.

Thus, the idea has been around – actually brought up by those organizations that raised very little money obviously – but large humanitarian agencies in the US have not come through on this topic.

This is a shame and a major missed opportunity. For a sector that is widely known for its “planting the flag” mentality (i.e. I want my organization’s name on this project – as a result, the project’s very objective may take a back seat to the organization’s and its leadership’s ego), the Haiti crisis was an opportunity to do things differently, to “think outside the box” – if this cliché is ever to be used… – and to show the world that this is not about them.

And don’t get me wrong, I am not suggesting that it is actually about them but by acting this way, it seem awfully as though large NGOs and international organizations want to get our money because they know better and will do a better job with it than others.

Lastly, I believe that MSF’s co-founder and ex-president Rony Brauman was wrong (no newspaper article found) when he said the other day that people should keep donating to his organization, irrespective of the needs in Haiti because the needs are so enormous elsewhere. The needs in other countries are indeed huge. But as I already argued – and sorry for sounding repetitive, supporting MSF or the IRC is not what the public wants – not now.

This is what I think the NGOs should do: in case there is any money left after the relief and reconstruction needs have been met, all the nonprofits that received contributions should contact those who donated, giving them the choice to get the % of their gift that was not utilized for Haiti back or to allocate it to other programs of their choice (the nonprofit should list options) or picked by the entity itself (no earmarking).

I am afraid that by doing business as usual so far the big humanitarian organizations involved in the wake of the Haiti Earthquake have reinforced negative stereotypes about them and lost an opportunity to change the way they work and, in doing so, be way more effective and helpful to the Haitian people.