Category Archives: Virtuous Capital

Solar Sisters

Expanding Your Reach; Empowering Individuals

 

One-year-old start up company Solar Sister is making big strides in improving the lives of African women and making a serious statement in the venture capital realm.  This venture is not traditional by any means. By using cosmetics company AVON’s model of “business in a bag”, Solar Sisters helps to provide and distribute solar energy in Uganda, Sudan, and Rwanda.  The organization empowers African woman, or “entrepreneurs” as they call it, by providing them a means of income through selling solar powered lamps to their villages, as well as providing rural African families a renewable light source.  As 95% of homes in rural villages in Uganda lack electricity this mission is clearly an important one.  It is clearly a catalytic change this company is providing as this organization is offering many people the most basic of needs, especially when considering Maslow’s higher archy of needs.

The business-in-a-bag model usually shares a common criterion. The organization provides entrepreneurs with ongoing training, offering financing or consignment models for entrepreneurs’ initial inventory.  It will have systematized promotion and marketing strategies, such as branded uniforms and strict protocols that incorporate penalties for rule-breaking. Lastly, it helps entrepreneurs develop a reputation as authoritative service providers within their community. Though some of this organizations use micro-lending and mirco-financing, Solar Sister does not.  They use micro-consignment meaning the entrepreneurs do not have to pay back and costs until they make a profit.  This model helps to encourage and elevate the women, opposed to causing more grief as we’ve seen with mincro-financing.

When considering the market for non-profits and areas of new social ventures we see the trend shifting in a more sustainable direction.  As The Wall Street Journal article “Strings Attached; Along With Their Big Bucks, Rich Donors Want to Give Charities Their Two Cents” validates philanthropy is no longer as simple as Warren Buffet’s style of “handing over tons of money to a trusted organization”.  This is now considered to be “an old-school way of charitable giving”.  So what are our other options?

In an interview Katherine Lucey, Solar Sisters founder, argues that the new market of non-profits is not just helping to improve lives, but providing the tools and the foundation needed for individuals to improve things themselves. This is a very basic structure of venture capital.  Throwing money at the problem often does nothing.  But providing funding or tools to help change the world may!  This model is more durable and sustainable, “we are providing woman the opportunity to be entrepreneurs” Lucey argues.  Solar Sister has developed 177 “entrepreneurs”, at least 50% of them are young entrepreneurs who will become tomorrow’s leaders in their communities and countries.

In organizations like Solar Sister, their business model has been designed for success.  As the major issues arising in non-profits and social ventures are largely funding and marketing, Lucey feels your organization should inherently assist with this.  Donations, fundraising, grants, etc can only go so far.  Working with the business-in-a-bag model, this allows the sustainability and some of the funding of the organization to be pumped through the organization’s missions and efforts.

Just as in the theory behind catalytic philanthropy when a need appears you don’t try to change it with money but you must kill the root of the problem.  In the example of Thomas Seibel, founder of Seibel Systems Inc, he did not just donate money to a cause, he started his own cause in a effort to change lives.  This model is inherently sustainable.  Just like Lucey, she saw a need in Africa and did not just provide money, but provided a platform by which hundreds could change their OWN lives.

The future and demand of social missions lies in addressing the root of problems, not just their effects.  In order to be considered real catalytic philanthropists it is important that your mission is offering basic needs to humanity.  I would argue that it is more important to provide say food for an African family than a library to an American university.  That is a change that is truly helping make the world a better place, no matter the scale.

 

REFERENCES

1. http://www.globalgiving.org/projects/solarsister/updates/

 

2. http://www.csmonitor.com/World/Making-a-difference/Change-Agent/2011/0701/Solar-Sister-wants-to-light-up-rural-Africa/(page)/2

 

3. http://www.nextbillion.net/blogpost.aspx?blogid=1878

 

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Draper Richards Kaplan Foundation

Jared Grant

SGM 5119

Blog Post

Draper Richards Kaplan Foundation

William H. Draper, III and Robin Richards Donohoe began investing together in the venture industry in 1994 concentrating on building companies in India.  In 2002, they created the Founders Fund which invested 14 million dollars from 2002 to 2012 in thirty non-profit organizations. Over the life of the fund, the portfolio of 30 organizations was able to generate an additional 270 million through philanthropic and revenue streams. (1)

One non-profit that was a member of this fund is KIVA, an internet based micro lending institution that petitioned Draper Richards Kaplan for grant money in 2006. After receiving the request, the fund responded by asking KIVA how they planned to grow and helped connect the non-profit with existing micro lenders.  Said one of KIVA’s co-founders of the fund, “They actually helped us shape our business model…They were just really really involved and engaged.” (2) With the fund’s help, KIVA has since become one of the prominent non-profit organizations in the world, and has facilitated the lending of $310 million in 210 countries around the world.

As with any venture capital firm, socially motivated or otherwise, some investments fail. In several cases, the organization realizes that it cannot realistically achieve the goal that it set out to achieve or that it cannot achieve the level of funding that it needs to achieve its goal.  In these cases, the foundation will discontinue funding and move on to another opportunity.

After experiencing this kind of success with KIVA and other organizations funded by the Founders Fund, the foundation wanted to continue its social mission on an even larger scale.  The foundation recognized that it had limited capital to invest relative to the number of social entrepreneurs in the market for funding.  So, in 2010, the foundation enlisted the help of ex-vice chairman of Goldman Sachs, among others to raise $36 million dollars to fund additional organizations looking to achieve social missions. This is significant because of the typically fragmented structure of the philanthropic landscape.  It is much easier for an aspiring philanthropist to start his own foundation than it is for him to find people to invest along with him.(2) The foundation is creating pool of funding that can be used for greater, more focused impact rather than fragmented funding that is often times ineffectual.

Another benefit of this model is that it not only pools dollars, but it pools experience.  The foundation is helping to create a network of non-profits that can depend on each other for support, and that provide insight into what makes an effective business plan in the non-profit world. The foundation uses this knowledge base to stretch the leaders of organizations to develop the right business plan and to think about metrics and a growth strategy…not things that traditional non-profits focus on.  Typically socially motivated organizations seek to achieve their social mission in the near term and lack focus to ensure sustainability.  The foundation helps them to make sustainability of their organization and funding a reality.

  1. http://drkfoundation.org
  2. http://drkfoundation.org/images/downloadable%20documents/DRKF%20Chronicle%20of%20Philanthropy-1.pdf

Shakira & Catalytic Philanthropy

SHAKIRA: A Celebrity for Hollywood a hope for 35 Million children in Latin-America.

Catalytic Philanthropy – Case example by Belsy Munive

In Colombia more than 9% of the population (approx. 4 million) has been forcibly displaced since 1985 due to its civil war; making it the second biggest internally displaced populations after Sudan. According to The Consultancy for Human Rights and Displacement (CODHES, 2010). 74.5 % of displaced children lose their families, their homes and access to education and health services Shakira Mebarabak Reapol is a Colombian singer-songwriter, dancer, record producer and choreographer. She is known worldwide for her dance moves and  “ Waka Waka (This Time for Africa)” official  song for the 2010 FIFA World cup. In addition to her singering career, she also had devoted her entire life to philanthropy. In 1997 at the age of 18, she founded the “Pies descalzos (Barefoot) Foundation”, dedicated to help Colombian children who have been victimized by poverty and displacement. The Barefoot Foundation support six schools in Colombia and more than 5,000 children receive nutritious meals, education and psychological support services (Barefoot Foundation, 2012).

While her singering career has been successful, she wanted to do a meaningful impact to break the cycle of poverty in Latin-America. After doing some research she found out that malnutrition and the absence of care in the early stages of life are the main mechanisms form the transmission of inequality.  Many experts agree that early childhood development is one of the most effective tools to end the intergenerational cycle of poverty. In Latin America and the Caribbean, nine million children under the age of five are malnourished and 32 million children under the age of six are not enrolled in pre-primary education (Center of Global Health and Economic Development- Columbia University, 2012).

Shakira decided to take a new approach, a powerful one, and action that can really change the future of Latin-american children. This includes gathering the commitment of business leaders, governments, and other philanthropists to help and devote their attention to ensure that Latin America’s children from 0-6 years of age reach their full potential.  On December 12, 2006 Shakira  with others Latin American leaders founded “ ALAS ( Latin America in Solidary andAction), as a not –profit organization. This new Shakira movement applied the four practices of “ Catalytic Philanthropy” defined by Kramer (2009)

  1. Take responsibility for achieving results:  Shakira took the challenge of using her fame and recognition to attract the attention and the commitment of other leaders in order to create ALAS. The movement attracted other known artists such as Juanes and Alejandro Sanz. The Nobel Prize winner Gabriel Garcia Marquez. Also world and business leaders including Brazilian President Dilma Ropusseff, Colombian President Juan Manuel Santos, British Prime Minister Tony Balir, Chilean President  Micvhelle Bachelet, Mexican Billionarie Carlos Slim, and philanthropist Howard Buffett (son of billionaire investor Warren Buffett) (Cobo, 2011).

 

  1. Mobilize a campaign for change: ALAS is aware of the need to stimulate cross-sector collaborations, mobilize stakeholders to create solutions and building alliances that provide the conditions for a solution (Kramer, 2009). In order to unify efforts in support of Early childhood programs ALAS generate alliances:

 

  • With UNICEF supporting education programs,
  • With the World Bank launched a $300 million early childhood initiative (The World Bank, 2012)
  • Cooperation agreement with the Iberoamerican General Secretariat (IBGS) and the Organization of Iberoamerican States (OIS) to promote the ALAS’ program  (Cobo, 2011).

 

  1. Use all available tools: In order to accomplish its mission Shakira has been creatively used different scenarios for getting attention and support. For example:

a)      Political and Business:

  • Shakira has made representation at regional and Global meetings such as the Summit of the Americas in 2012.
  • Shakira met with presidents of Colombia, Argentina, Chile and Brazil with successful outcomes. In the case of Brazil, the Brazilian government made them committed to building 100 centers for children up to 6 years old with ALAS (Douglas, 2012).
  • Shakira meet with getting Carlos Slim, Mexico’s wealthiest business man, obtaining $200 million for ALAS and he is involvement as a member.

 

b)      Educational:

  •  Shakira’s speech at Harvard University and Oxford Union with the goal to generate interest and debate on Early childhood programs.

c)       Entertainment and Fashion:

  • Fundraising concerts all over the world.
  •  Cartier’s LoveDay event where 10% of all sales went to ALAS mission’s projects.

 

  1. Create Actionable Knowledge:  ALAS gathered knowledge experts in early childhood welfare and education from international organizations such as the World Bank, The Inter-American Development Bank , The Organization of American States, UNICEF, the World Food Program and the Pan American Health Organization, and  The Earth Institute at Columbia University.

 

At just 6 years old, ALAS movement has seen reasonable success in its actions. Shakira efforts and actions is an example of becoming a catalytic philanthropist. ALAS’ challenges will be maintaining the interest of its members and increasing the commitment of the government and business entities. Overcoming these challenges will help ALAS to realize even greater success in reducing poverty and saving the lives of thousands of Latin-American children.

 

References

ALAS. (2012). Alas promotes Early Childhood Development in Latinoamerica. Retrieved from http://www.alasthemovement.org/pages/about/about_aboutalas_en.asp

Barefoot Foundation. (2012). Barefoot Foundation. Retrieved 2012, from http://www.barefootfoundation.com/about-us

Center of Global Health and Economic Development- Columbia University. (2012). Early Childhood Development. Retrieved from http://cghed.ei.columbia.edu/?id=projects_ecd

Cobo, L. (2011). Shakira: The Barranquilla bombshell moves easily between the worlds of entertainment and philanthropy. Retrieved from power 360: http://www.poder360.com/article_detail.php?id_article=6166

CODHES. (2010). Consultoria para los Derechos Humanos y el Desplazamiento. Retrieved from http://www.codhes.org

Douglas. (2012, March). Working to Give. Retrieved from The Barefoot Foundation Founder Shakira Nominated for Charity Award: http://www.workingtogive.org/shakira-barefoot-foundation

Kramer, M. R. (2009). Catalytic Philantropy. Stanford Social Innovation Review.

The World Bank. (2012, February). Latin America: Early Childhood Initiatives Improving Life Prospects for 5 million Kids. Retrieved 2012, from World Bank: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTEDUCATION/0,,contentMDK:23129072~menuPK:282424~pagePK:64020865~piPK:149114~theSitePK:282386,00.html

 

Virtuous Capital

Jim Menkevich

Virtuous Capital

The life-blood of a non-profit organization (NPO) is donations. Donations can come from individuals, institutions or foundations. Up to 50% of a NPO CEOs time is spent just raising funds.[4] If raising capital is the highest priority of a NPO, one would assume that spending it wisely is second. That, however, is not always the case. Innovation in delivery of program’s mission trumps organizational strength and longevity in most cases. What if there was a better way to achieve the long term mission of a NPO? What if their was a better way to make sure that ever dollar had a better bottom line impact? What if those foundations that donate funds want to demonstrate themselves to be morally excellent? Donors are now demonstrating their capabilities with NPOs to drive change. At the same time, they are transitioning from a passive to an active role in these donations. Want to increase the social benefit of your NPO? A new breed of capitalist may be the answer. 

Foundations that donate to non-profit organizations see their job as done. They already accomplished their intended goal – distribution of funds to non-profits that need it. Emphasis is put on how well a NPO is scaling access of their services. For example, the number of facilities opened and people that are using these facilities may be the a key performance indicator (KPI) of a NPO. These metrics are great in terms of efficiency. An organization can take it’s mission and goals and scale it. This, however, does not address effectiveness – the social return on donation. What if we changed the word “donate” to “invest”? Investing implies that you have skin in the game and are willing to incur a certain level of risk. Outcomes matter. How your money gets allocated matters. How you interact with those who have accepted your funds matter. From this perspective, it starts to look like venture capital.

So what can traditional philanthropy learn from the venture capitalists? First, cash is only one of an organizations many needs. NPOs need more to survive the next funding cycle. Structure, leadership, infrastructure and systems are required to keep the ship afloat. In order to discover these needs, donors need to maintain a more active relationship with NPOs. By being intimate, trust is developed and needs can be matched with donor competencies. In the case of Venture Philanthropy Partners (VPP) and See Forever, Dave Domnicki said of VPP, “They asked every single question about our school, our personal lives. They looked at every single record.” The result – $2 million, 4-year commitment which yielding an almost 3x increase in students (80 to 225) and double the number of schools. VPP was also able to offer “strategic assistance”, installing a new chairman of the board and offering financial advisors. [5] Through intimate knowledge, VPP was able to give See Forever what it needed most – leadership and fiscal discipline.

“Investing” in NPO doesn’t stop there. There has been a shift from traditional philanthropy to catalytic philanthropy. In catalytic philanthropy, donors take an active role in an organizations success. They see themselves as change agents and differentiators. They will use all tools available to make sure the investment is maximized. Funders in catalytic philanthropy don’t consider the NPOs responsible for success. They prefer to assume some of that burden. Take for example Bob Pattillo . He noticed that microfinance was not flourishing in the Middle East. Instead of writing a check, he decided to get to work. Bob took the initiative to get microfinance literature translated to Arabic, organized the first ever Arabic microfinance conference and built key support functions to catalyze this change. The result – microfinance borrowers in the Middle East grew from 40,000 to 3 million! [6] Good strategy and plentiful donations will get you in the door. At the end of the day, it’s ultimately action that drives results. Rolling up the collective sleeves of philanthropy will contribute to better return and value creation.

Lately, the dynamic of being wealthy is changing. The disproportion of wealth between classes has created a super rich elite producing 691 billionaires[1] according to Forbes. These new rich are ushering in a new era of giving. Their fortunes are being mobilized to solve the world’s biggest problems. And this quest is starting earlier and earlier. Typically, billionaires would start thinking about “giving back” in their 60s and 70s. Now it’s occurring it their 30s and 40s. Take for example, Bill Gates. Bill retired early as CEO of Microsoft to co-chair the Gates Foundation with his wife, Melinda. The Bill and Melinda Gates Foundation focuses on eliminating poverty. To achieve their goals, the following values are employed: Optimism, Rigor, Collaboration and Innovation. Under Collaborate it states, “we embrace risk and learn from failure, helping others to avoid the same pitfalls in future” [3] This doesn’t sound like your Grandma’s philanthropy. These types of values fly in the face of writing a check and just moving on. They covey that “we” are in this together. And the solutions they are attempting to implement for improvement of living conditions and economic activity in third world countries are unique. Take for example their project to reinvent the toilet. About 2.6 billion people don’t have the access to a safe and affordable way to “go to the bathroom”. By improving sanitation, economic conditions improve. Every $1 in sanitation investment yields $9 in economic activity.[3] It takes a new breed of foundation to go after these types of problems.

With the transition from traditional to venture and catalytic philanthropists, NPOs are left scrambling to adapt. Fundraising is primarily a static activity. You explain your mission, invite wealthy donors to champion your cause then cash the check. In this new era of virtuous capital, NPOs need to redefine themselves to survive. It’s a necessity. NPOs that have their business in order will win the competition for capital. My prescription for preparing this change is as follows:

  1. Know Thyself – This involves taking a good look in the mirror. Be critical of what you do well and where you need help. The sooner you are honest, the sooner adaptation can come.

  2. Focus on Longevity – To truly achieve your goals, you’ll have to be around for the long haul. Make sure there is a balance between keeping the machine running for the next funding cycle and existing in the next 5 years. This will differentiate you from the pack when looking to drop a dollar in your bucket.

  3. Be Willing to Let Go – Whether it’s leadership or board positions; whether it’s systems or structures, be willing to accept help. If you are truly dedicated to the social bottom-line, nothing else should matter. Venture and catalytic capitalists are looking to partner and invest. As with conventional organizations, knowing when to make a deal for the good of shareholders means you have to be willing to compromise.

NPO funding is undergoing a major disruption. Savvy virtuous capitalists are willing to go “all-in” to catalyze lasting change. Innovation in what and how donations are made is looking more like the for-profit world. NPOs need to change now. Because their donors already did.

References

[1] Bishop, Matthew, et al (Feb 25th, 2016). The business of giving. The Economist

[2] Bill and Melinda Gates Foundation (2012) Reinvent the Toilet Retrieved on November 10th, 2012 from: http://www.gatesfoundation.org/infographics/Pages/reinvent-the-toilet-info.aspx

[3] Bill and Melinda Gates Foundation (2012) Values Retrieved on November 10th, 2012 from: http://www.gatesfoundation.org/about/Pages/values.aspx

[4] Letts, Christine; Ryan, William; Grossman, Allen (March 7th 2001). Virtuous Capital: What Foundations Can Learn from Venture Capitalists – Harvard Business Review

[5] Conkey, Christopher (July 3rd, 2006) – Strings Attached; Along With Their Big Bucks, Rich Donors Want to Give Charities Their Two Cents – The Wall Street Journal

[6] Kramer, Mark (Fall 2009). Catalytic Philanthropy – Standford Social Innovation Review

Case Analysis

Kip Reybitz

Tom Cousins’ utilized his conventional managerial skills and business savvy to realize a vision and mission about which he so passionately cared.  His approach to charity transcended the traditional donation model of giving without regard to outcome and enabled him to not only donate the capital required to begin the change, but also mold the end result.  The East Lake community or lack thereof was given its share of funding and charity throughout the years, but without effective leadership, projects went unfinished and the original community plan fell into disrepair and despair.  Plenty of wealthy donors and government funds existed to aid those in need at East Lake, but a lack of direction ensured that any improvements would not remain sustainable.  Ideas and innovations at work in other communities have come and gone as the leaders who present them find themselves unable to hold them together.  East Lake always wanted a better way of life, but until Tom Cousins’ arrival, neither government or charity organizations were going to help the neighborhood achieve it.  Tom provided a strategic plan, a renewed sense of trust, strong financial guidance, a cross-pollination of stakeholders, and an innovative idea of community to build a thriving neighborhood and directly provide thousands of individuals with a sustainable higher quality of life.

The idea of “high engagement philanthropy”(1) that Tom Cousins practiced with East Lake stems from the need for results that any entrepreneur wants to experience.  Tom’s entrepreneurial spirit of  relentless drive and sense of mission as demonstrated by the Psychological Characteristics Entrepreneurial Model points to the trends that today’s philanthropists, especially the self-made wealthy, strive to be more involved with the organizations they are funding.  “Entrepreneurs have unique values, attitudes, and needs which drive them” (2) and they will draw on their previous experience to achieve a desired outcome.  The desired outcome of social change will take time inasmuch as growing their business took time. Similar measures that have demonstrated success for them in the past will be instituted in addition to their capital donations.  Tom’s successful experience in real estate development allowed him to tap into the foundations of his own success in order to develop a strong organizational infrastructure for the non-profits he created for his East Lake vision.

Cousins was not the only donor responsible for this transformation.  Tom was able to sell his vision for social change at East Lake to other potential donors.  Just as Tom desired results and visibility of his investment so too do others.  No current system exists in the United States to that of an “equity research firm for the philanthropic marketplace”(3) which can potentially lead to misguided, ineffective, or inefficient charities and causes.   Tom was able to present his social mission of East Lake to others in the Atlanta area thus ensuring that their investment would be effectively managed by a trusted partner versus the unknown alternative.  Luring donations to East Lake not only enhanced the project’s chances of success but it also kept the donations local thus feeding into “the multiplier” phenomenon (4).  Community enhancement required the support of all local citizens not just local donors.  Again, visibility was questioned this time by president of the tenants association who suspected that CFF and ELCF were pushing them out.  These proposed changes bred doubt as they echoed the previous attempts and promises of change from the housing authority and other well-meaning organizations.  As “systemic reform requires a relentless and unending campaign that galvanizes the attention of the many stakeholders involved and unifies their efforts around the pursuit of a common goal”(5), continuous engagement with local organizations established a sense of trust and, with it, absolute community support.

As the donations poured in, Cousins was able to effectively manage the use of funds based on the organizational structure which he put into place.  Funds were allocated to their strategic areas of need.  ELCF and CFF were able to avoid the pitfalls of traditional philanthropic organizations as noted by Michael Porter’s observation that “philanthropy is decades behind business in applying rigorous thinking to the use of money.”(6)

An early stage of Tom’s mission to fund the renovation of the East Lake Country Club to attract business and use those profits to support East Lake Meadows demonstrates the ever-important idea of sustainability.  Although our sustainability readings focus more towards conventional ideas of environmental sustainability, we can draw similar conclusions on how to achieve social sustainability.  Cousins achieved with East Lake precisely what the “Road Map For Natural Capitalism” recommends:  “change the business model” and “reinvest in natural capital”(7).  Tom hasn’t simply renovated, he has rebuilt and redesigned mostly all of East Lake.  The previous business model of structural layout and common areas was not working therefore he changed it.  Community commons spaces were part of Cousins’ plan; the public golf course is one example.  The golf academy classes held there represent a reinvestment of the natural capital.  Cousins’ goal of community support illustrates just how important the natural capital of people are.  Striving to gain autonomy over the school system and “encouraging the interaction between the market rate paying residents and the public housing residents”(8) shows just how important “community social capital”(8) is towards ultimate sustainability of the community. The citizens of East Lake now have opportunities for a better quality of life enhanced by this stronger community and its cross-functional ties.

The social mission of Cousins, CFF and ELCF has addressed the issues of innovation, visibility, localism, and sustainability and worked to ensure each issue’s effectiveness thus guaranteeing a successful model for other communities to follow.  As a result, Cousins has not only changed hundreds of lives within the local community, but potentially millions of lives throughout the world.

  1. Van Slyke, David M.; Newman, Harvey K. 2006. Venture philanthropy and social entrepreneurship in community redevelopment Nonprofit Management & Leadership, 16 (3): 347
  2. Class Handout from 10/16.  Summary of Approaches for Describing Entrepreneurship.
  3. Bishop, Matthew. 2006.  The business of giving: A survey of wealth and philanthropy.  The Economist, February 25th: 12.
  4. Shuman, M. 2005. The Small-Mart Revolution.  (San Francisco: Berret-Koehler Press.) pp. 41
  5. Kramer, Mark, R. 2009. Catalytic philanthropy. Stanford Social Innovation Review, Fall.  pp. 34
  6. Bishop, Matthew. 2006.  The business of giving: A survey of wealth and philanthropy.  The Economist, February 25th: 3.
  7. Lovins, Amory B, Lovins, L. Hunter & Hawken, Paul. 2007 (1999). A Road Map for Natural Capitalism. Harvard Business Review, Jul-Aug, 172-183.
  8. Van Slyke, David M.; Newman, Harvey K. 2006. Venture philanthropy and social entrepreneurship in community redevelopment Nonprofit Management & Leadership, 16 (3): 361

“How Do You Measure Success in Social Philanthropy?” Case Example

By Bareeq AlBarqawi

Last month, the Knight Foundation announced that it would be giving $1.3 million in grants to technology projects in order to get more people involved in developing their communities. The Knight Foundation decided to split this money into four different grants:

1- $590,000 given to Change by Us, a project of CEOs for Cities, to help expand their website so more citizens can suggest ideas on how to make their cities better and more livable. Also the money will help in integrating the website with social media and making it available for other cities to adopt.

2- $250,000 to Good360 which is an online marketplace for nonprofits to post their needs, find products, and communicate with sponsors, both individual and corporate.
3- $236,000 to DailyFeats which is a site that allows people to take small steps towards a goal that will improve their health and well-being. They plan on using these extra funds to expand its outreach and measuring results and seeing what works and doesn’t work for their site.

4- $225,000 to OpenGovernment.org, a project of the Participatory Politics Foundation. This site is a free, open-source website that assists people to track current policy proposals under consideration by city councils and helps to communicate with local elected officials.

In addition, the Knight Foundation published a new report titled, “Digital Citizenship: Exploring the Field of Tech for Engagement,” which outlines successful online projects while mentioning the challenges ahead for organization that had to work in implementing similar tools as the organizations mentioned above.

This is social philanthropy at its best, however, how will the Knight Foundation measure the success of its grants? Will they base it on the successful implementation of the projects that this money will help fund or based on the impact made on the community? If the latter, how will that be measured? Will it be based on website traffic, the number of donations, the number of donors, or how much closer the organization has gotten to its goal if outlined specifically? This goes to show that to measure success in this field, you may have to look at more than one variable or aspect of the work.

Personally, I believe that since these grants are focused on increasing civic engagement, then to look at that locally. Many of these websites are broken down locally into different cities and I believe that looking at these cities individually and gauging what impact they have had may be something to look into. It is hard to base the actions within a city on a website alone, but engaging their website visitors to get their feedback, perhaps through social media, will prove to them they are doing a good job or not.

It is a very tricky transaction to maneuver around when you are giving funds to an organization doing a great thing for the community and to know that your money is making a big difference. In addition, the Knight Foundation published a report to assist these organizations complete their projects, but how effective is this strategy? I do believe that, in comparison, catalytic philanthropy is much more efficient; however, this may be an easier way for the Knight Foundation to do their business. Many foundations out there do not have the manpower or time to provide these organizations someone who could help them on the ground in strategy implementation so this is a less involved method of aid. It is helpful, but

I do not feel that it compares with the impact that can be had using catalytic philanthropy which solves many problems as they arise.

Merck for Mothers

by Jeff Ferriola

In the reading by Kramer (“Catalytic Philanthropy”), I appreciated the practical guidance and framework for advancing from Conventional to Catalytic philanthropy.  The guidance was essentially a hybrid between a lifecycle maturity curve and a best practices summation.  Using Kramer’s framework, I wanted to measure the maturity / sophistication of a philanthropic endeavor my company has identified as a strategic priority: Merck for Mothers.

http://www.merckformothers.com/

http://www.merckresponsibility.com/focus-areas/access-to-health/merck-for-mothers/home.html

Merck has a clear mission to improve and save lives.  This should not be limited to only products in which Merck has an established or aspirational product.  Two of the UN’s Millienium Development Goals are tied to reducing the mother mortality rate from childbirth by 75% by 2015.  It is estimated that 287k mothers died in 2010, with the issue especially impacting developing markets which have a death rate as high as 1 out of every 31 births.  Merck has establish a comprehensive corporate program to focus on achieving this objective.  The three primary levers are focusing on new innovative solutions, improving access to quality health care, and building advocacy and awareness to this important issue.  It is important to note that Merck does not have any existing product line to address this challenge.

I applaud Merck for trending closer to the side of Catalytic vs Conventional.  In partnership with many other stakeholder groups, they are focused on addressing the issue at hand vs deciding where to place their money.  They find themselves personally responsible for achieving the UN’s MDG.  Their strategy and tactics are comprehensive in nature – they are not simply throwing money at the problem.  Information, at face value, would be shared to improve outcomes and increase advocacy / awareness.

Information is also a key strategic asset for Merck.  In the Economist article, they as if “Philanthropy is worth it” (pg 7).  The experience, insight, and relationships that Merck will build will be invaluable over the longer term.  They are operating in strict alignment with their core mission – and opening the door to a new market opportunity at the same time.  New product lines based on the information collected can be incorporated into the standard of care that will be defined by the same players Merck is currently partnering.  From a long term view, this program presents great social, medical, and financial value.  Shareholders and Board of Directors can and should be proud of the opportunity to grow the business through good intention.

As a final checklist, I compare Merck for Mothers against the Economist’s “To Do List” (pg14) for improving philanthropy.  First, the measurements and metrics (current state and objectives) are very clear as documented on their website.  This speaks to the second to-do which is openness and transparency.  Merck is completely transparent about the measures/stats, burning platform, approach, partnerships, and progress.  The combination of the previous two points speaks to the third which is accountability.  As mentioned earlier, Merck sees itself as responsible for achieving the 75% reduction.

Overall, I was very impressed (and admittedly a bit surprised) by this program.  I look forward to seeing the progress as the program advances into the more difficult diagnostic and problem-solving phases.