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Integration: Networking the New Charitable Capitalists
by Brett Johnson
The unprecedented expansion of wealth in the 1990s has created an opportunity for leaders to rethink the nature of charitable ventures. Brett Johnson offers a new model of social investment that appropriates timeless ideals and timely methods. This article is purposefully provocative and will be a success if it stimulates readers to new dialogue and reflection.
Our Situation
A host of elements is deluging businesses and nonprofit service agencies today. Locally and globally, individuals and communities are stressed by new technology, unprecedented economic and social issues, natural calamities and political instability. In the West, corporations and charities feel compelled by this onslaught to rethink their core purpose. Corridors and cubicles are resounding with, "We used to do X, but now we should be doing X + information delivery... X + technology infrastructure... X + Internet .… If we only had the money."
An emerging band of social entrepreneurs is bringing a venture capitalist mind set to the world of charity and social transformation as wealth balloons in the hands of a relatively few. These successful professionals are asking new questions of nonprofit agencies:
"Who are your people? Have they done this before? What is your product? Who are your competitors? What are your core competencies? How will you make this venture self-sustaining?"
This new situation has created an uneasy dance between compassionate investors looking for worthwhile charitable investments and service-centered leaders with a mission they jealously guard. There is great opportunity for good, but old dichotomies between business (profit) and charity (nonprofit) threaten potential new paradigms. "New" organizations promise the "old" capitalists that they can become strategic social investors; however, few agencies provide a clear intellectual and practical framework for this to happen. With some notable exceptions, why have we not seen more success on this front?
Straining at Gnats
Throughout history people have "strained at gnats while gulping down camels." Leaders rich in religious heritage, steeped in wisdom, knee-deep in centuries of altruism and tradition have been "icky-picky" about the least important of matters! Instead of confronting social ills head-on with business acumen and wisdom, endless debates on budgets, committees and titles blunt potential impact.
In the world of philanthropy, fund directors sit on millions upon millions of dollars that go undistributed or are absorbed in overheads. Elaborate procedures for funding requests are crafted. Applications progress at a snail’s pace through committee meetings while people lie hurting in the streets. When word gets out about generous givers, they are quickly swarmed by folks needing money. They set up mosquito nets to avoid being choked by gnats. Committees have more sophisticated techniques of gnat-straining; they inspect fire buckets while the inferno rages outside the boardroom doors. At the same time, charity and social service directors feel like beggars or prostitutes as they bury their pride to get funding or, when they refuse to sell their souls, struggle along underfunded and poorly staffed.
What’s Wrong with this Picture? #1
First, the criteria for screening ‘worthwhile opportunities’ are different for business executives than for service personnel. A successful venture capitalist is accustomed to screening 500 to 1,500 business plans a month, sifting them down to five and then funding one or two. They have clear concepts of what they are looking for: management with good track records, novel products, predetermined rates of return, and a huge equity stake with upside potential. Shift gears to the charitable realm: The people are passionate but not necessarily experienced, opportunities are less professionally defined, and the market is diverse.
The Charitable Capitalist (CC) is left with options, but they are not always the best. The 21st century CC may think:
• "I will be my own CC." Here the giver develops a new set of filters that embody the highest principles, S/he may take lots of time assessing alternatives and choose to fund the best few.
• "I will become a Patron." In this model, the philanthropist picks a few sure investments - blue chip ventures - and is known as their patron saint.
• "I will start my own foundation." This limits the fund-drain by creating a charitable foundation, setting the operating rules and giving within these new bounds.
• "I will become a charitable fund manager." Here the wealth is spread across a diverse portfolio, returns are assessed and decisions made with a critical eye toward the best "bang for the buck." These approaches have problems
First, the line of people outside the door of those with "confirmed capacity" is long, very long. Second, while they have money, their most scarce resource is time, and all the approaches outlined above are time-consuming. Third, the world of non-profits is a world of its own that differs sharply from the commercial sector. Investors don’t always know the rules. Fourth, while many people asking for money present a good case, the CC struggles to see the competing requests in a clear context.
The net result is that CC’s go two ways: They pick the causes that they like, figuring that someone else will fund the others.
They look for an organizational solution with an infrastructure that can offset or at least organize the demands on their time and money.
What’s Wrong with this Picture? #2
Entrepreneurial values and habits are not necessarily transferable to the charitable world. Business "values" include the best few, the winners, the hottest and the latest. Competition reigns over community good. But the CC is torn:
• S/he has grown up with community and religious groups that are sub-optimized. The franchise mentality has prevailed and even charities compete for a pie perceived as limited and shrinking.
• Even within an individual community group, people are overwhelmed with options, and selectively involve themselves on an "a la carte" basis.
• Scarce resources have forced a specialization in charities and service agencies. There’s nothing wrong with having a clear target audience with programs focused directly to them. But this approach does nothing to look at society as a whole and launch the initiatives that will reform a city, county or state.
• Professional fund-raisers looking for optimal market positioning reinforce this fragmented view.
A Closer Look at the Tiers of Givers
My observation is that the world of philanthropy involves three levels of givers. Each has a different focus, scope and modus operandi. The tiers can be pictured this way:
Mass Givers
Major Givers
Mega Givers
The majority of income donated to charities has come from the Mass Givers - everyday people making regular (and usually small) contributions. A fair amount of attention has been paid to the Major Givers in recent years because there has been a dramatic rise in the wealth of ‘middle class’ people. But very little attention is paid to the Reformers. The Mega group, who are not only wealthy, but are Reformers, is largely missing-in-action. Why is this?
Wrong notions breed wrong results.
The M2 approach utilizes the notions of Investment, Portfolio and Risk Management from the business world. These seldom translate into meaningful concepts when you are bent on the transformation of society. The scarcity of transformational givers has other roots: a lack of hope and vision.
A lack of hope says, "I didn’t get where I am on pipe dreams. I was focused. This sounds like utopian pie-in-the-sky." Or put another way, "I don’t believe anything can really change."
Without vision we fail to see what could be done with a massive infusion of investments into a broad array of ventures. The aim must be the transformation of society and its return to essential principles that transcend time and tradition.
It is possible to see monumental change?
• In the 1720s Count Zinzendorf gave refuge to a religious community that awakened the social conscience of Protestantism. • After 50 years of tireless effort, William Wilberforce saw his efforts to abolish slavery in Britain rewarded. • Martin Luther King, Jr. led an army of volunteers in the Civil Rights Movement.
Other examples could be added. It takes all types of leaders to transform conscience and community.
Is there Hope Today?
I see several hopeful signs that broad, high-impact, strategic initiatives are possible:
1. Rapid social change: Some say society is reinventing itself every 3 to 5 years. Mistakes can be quickly corrected.
2. The bright side of Globalization: This phenomenon creates the opportunity to start small then export/roll-out quickly thereafter.
3. "A few good people": Key people are networking to form the nuclei of communities that could change the world. It only takes a few committed people to change the complexion of nations in the next decade. I am encouraged to see new leaders in pivotal fields. They are forming communities and networks, not traditional organizations.
4. A unifying purpose: There is a growing awareness that societal reformation is possible if present and emerging leaders are courageous.
5. A critical mass of resources: The last 10 years has seen an unprecedented creation and transfer of wealth. The potential for good is enormous, given sufficient will.
But what will it really take?
1. Broad, clear purposes: Great visions launch great people. I believe if we stop short of a full reformation of society we will sub-optimize and slide back into the trap of corporate/charity dichotomy.
2. Generosity that goes beyond current giving: Wilberforce and friends threw themselves into many social issues. They possessed a cheerful abandon to their causes. Not every venture was economically sound. Not every decision took years. They didn’t strain at gnats!
3. A supple attitude: We must be flexible and open to change. Needs and opportunities will change. Our values must be enduring, but our programs ever responsive.
4. Time frames that outlast business cycles: Not every social investment will have instant payback. Reformer investments will have a long-term payback, often outliving the investor.
5. An organizing principle: It takes a network to accomplish lasting change because no one organization or individual does the job alone. Good networks create and implement a framework for cooperation. Individual organizations are free to focus on their target audience or issue, while proactively fostering cooperation. Such "Impact Networks" can identify needs and respond quickly to meet them.
6. We need "network facilitators": Despite technology that aids communication between leaders and their organizations, facilitating and maintaining communications is a real job. Our complex society demands dedicated resources that serve a core community of leaders.
World-Changing Leadership
It takes quality leadership to effect change. The leaders of these new networks must:
• Be willing to "leave their egos at the door." • Have a broad, inclusive world view. • Focus on the important issues and not be distracted by minor points. • Represent key fields: the arts, business, education, faith communities, biological, information and physical sciences, legal and social services, media and entertainment, medicine and politics... just to name a few. Whatever the list, world-class thought leaders must represent the key portals of society. • Have a high commitment to relationships with accountability, communication, integrity, and issue resolution processes in place. • Be innovators who can create new solutions to new challenges. • Be motivators of others, able to galvanize and mobilize beyond their small group.
Starting at Home: Reforming Your Local Community
It takes a network to create lasting impact. Whether you are a for-profit or charitable sector enterprise, sustainable impact requires partnering.
I will describe a hypothetical community of reformers that operates in a networked model, much like the Internet. This group of reformers will be to the local community what a portal is to the Internet. To describe this, I will use The Institute’s 10-P Model™:
Purpose: To facilitate the systematic transformation of an entire community through the strategic investment of resources.
People: A committed community of 20-30 like-minded people given to common values and action. These are long-term thinkers.
Process: Defining and nurturing the Community Impact Network. Providing a platform for a limited number of world-changers to leverage their thought, time and influence across society at large.
Planning: Systematically attracting key leaders for every node on the Impact Network.
Products: Thought pieces, seminars, strategy sessions, financial resources, and specific projects that transform the community.
Place: Purchasing a large facility that can act as a hub for the Network. A library or chat area could be dedicated to each broad grouping of domains (e.g., science, technology, family). Key thought leaders could use it as a platform for sharing formative ideas.
Partnering: Utilization of partnering tools and methods to identify, profile, engage and manage relationships with Impact Network Partners. Remember, it takes a network to have Impact.
Presence: There would be no marketing. The establishing of Presence would be relational. The Community would deliberately keep a low profile.
Profits: It would be a for-profit structure that would own the PLACE and underwrite certain activities. This vision would clearly require focused investments by people in the category of M1 Reformers.
Positioning: The network would seed new social entrepreneurs, always seeking the good of the whole.
Conclusion
While this article suggests a scale and scope beyond our current thinking, perhaps we can begin a dialogue that leads us all to the real answers.
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