Is it time to quit asking “what percentage of my donation is going to overhead?”


According to Dan Pallotta, it’s time to throw out the nonprofit rulebook and level the playing field if we are ever to see real social change.
This past week, Dallas Social Venture Partners had the extreme pleasure of hosting Dan Pallotta  for their 3rd luncheon in this year’s Social Innovation series. As a part of the DSVP goal to provide a forum for people to start talking about new and different ideas, this event did not disappoint. Comments made by attendees leaving the event included everything from “Holy Cow – I think I’ve found a new purpose in life….” and “We do need to reinvent the nonprofit sector” to “Did the Puritans really create “charity” to stay out of hell?”

Author of Amazon’s number 1 bestseller in the charity category “Uncharitable: How Restraints on Nonprofits Undermine Their Potential,” Dan Pallotta delivered his take on ‘Capitalism for Good’ and presented a compelling rationale for why today’s nonprofit paradigm needs to be not just transformed, but completely overhauled and turned upside down if we are to ever truly solve our social issues.

The sold out lunch crowd got an up close look at what Dan described as 2 rulebooks: one for charity and one for the rest of the economic world. “We blame capitalism for creating these huge inequities in our society. Presumably because capitalism is a very powerful thing - it would have to be powerful to create huge inequities in our society. Despite that power in our knowledge of it, we refuse to allow the nonprofit sector to actually use the tools of capitalism to rectify those inequities.”

In his interpretation, the charity rulebook discriminates against the nonprofit sector on five fronts:

1. Disparity in Compensation:

The nonprofit sector cannot compete with the for-profit sector when it comes to attracting top talent to lead their organizations. The for-profit sector allows for the payment of a competitive wage based on the value somebody produces without limit. Conversely, society does not like to see people earn a lot of money in charity. As Dan put it, “Interesting that we don’t have a visceral reaction to the notion that people want and do make a lot of money NOT helping other people. You want to make millions selling violent video games to kids, go for it and we’ll put you on the cover of Wired Magazine. You want to make a half-million dollars trying to cure kids with leukemia, you’re a parasite.”

2. Disparity in Marketing and Advertising:

The for-profit sector gets every advantage to maximize spending on advertising until the last dollar no longer produces a penny of value. But we don't like to see our donations spent on advertising and charity, even though by following the for-profit model, non-profits could create a market and demand for their products/services. The prevailing attitude is, if you can get advertising and marketing donated, that’s fine but donations should go to the needy. Almost as if the money spent on advertising couldn’t dramatically enlarge the amount of money to go to the needy. As founder of Pallotta TeamWorks, which invented the multiday AIDSRides and Breast Cancer 3-Days, Dan explained that had they not spent money for quality advertising and marketing to support the Aids and Cancer fundraising events, the half billion dollars raised for charity would not have ever happened. Another way he underscored this point, “Imagine if we told Apple, hey, the new iPad - you ought to advertise it but only to the extent you can get the advertising donated at 3 o'clock in the morning or on the last page of the sports section.”

3. Risk-taking

Not risk-taking in terms of program delivery, but rather, risk-taking in the pursuit of new donors to raise more money. Non-profits are terrified to try big, bold new community fundraising endeavors for fear that if it fails, it will be the end of them. Meanwhile, in the for-profit arena, it’s considered part of the business model to allow for a percentage of product endeavors to not realize their full potential. Unlike businesses, if a nonprofit does a large fundraising event and it doesn’t produce a 70% return to the cause in the first 12 months, the organization is called into question.

4. Time Horizon

The for-profit sector has an advantage when it comes to time horizon. Although a business, such was the case with Amazon.com, can go 6 years without returning a profit to investors in the simple interest of a longer-term goal to build market dominance, the same scenario would not be acceptable for a charity that had ambitions of building scale. As it exists today, for a nonprofit to go 5 years without any money going to the needy would be, in nearly all cases, unacceptable.


5. Capital
The discrimination between the for-profit and nonprofit in this area lies with for-profits being able to pay people for money in order to attract their capital. The nonprofit sector by definition cannot. This equates to the for-profit sector being in a position to monopolize a multi-trillion dollar capital market while the nonprofit sector is starved for growth and risk capital, which it is prohibited from spending anyway.

The effects of the separate rulebooks are sobering. To further underscore the rulebook issue, Dan pointed out, since the 1970’s, the number of nonprofit organizations that have grown to pass the $50 million annual revenue barrier is 144. The number of for-profits that have crossed are 46,136. In that same period of time, charitable giving has remained the same at 2% of the GDP. What does this tell us? Basically, that in the past 40 years, the nonprofit sector has not been able to take market share away from the for-profit sector.

So how are the rulebooks supposed to change? What should be the goal? Where do nonprofits begin?

Here are a few little hints from Dan:

The rulebooks can change when we think outside the box. In order to think out of the box, we need to understand the box we’re in. Digging into the 5 barriers is a great place to start.

The ultimate goal: “It's about giving nonprofit organizations enormously greater freedom to spend money on the things we typically demonize as overhead so that they can raise enormously greater sums of money and have some hope of achieving some fraction of the scale of the massive social problems they are chartered to confront.”

Nonprofits should begin by considering the nonprofit sector as a cause in itself.



Still hungry for more, check out Dan’s book.

Valerie Strong Knight is the owner of Sunshine Avenue, a full service multi-media marketing firm dedicated to illuminating the brand, products and efforts of socially responsible businesses and organizations.  Formerly a CSR executive for a Fortune 10 company, Valerie now focuses her time and energy on helping socially responsible organizations realize a greater return on their investments and partnerships.

TRM Says Thanks to DSVP

Trinity River Mission, TRM - also known as Tutor, Read, Mentor, has been a DSVP investee for two years.  Through after school academic programs, they prepare students for success in school and life.  In a neighborhood that graduates less than 50% of students from high school, TRM students have been graduating on time at higher than 98%.  Believe and Achieve is the program for middle and high school  students.  As part of that, they are Reading Buddies to the younger kids.  Marlenee and Melanie wrote us this letter.






DSVP Partners,
We are happy to hear that TRM has partnered with you.  Because of this partnership other students will have the opportunity to receive programming resources like Melanie and I.  I have been a Reading Buddy for over two years, and even though i have only been with Melanie for  one year, she has turned into a big part of my life.  We both look forward to seeing each other on Wednesday and enjoy reading together.  Knowing that someone looks up to me makes me feel good and encourages me to take better decisions.  Seeing Melanie read on her own also motivates me to continue this partnership.  As a new Believe and Achieve student, i am glad to have a place that offers many programs for all grade levels.  Your partnership with TRM is an investment for my future and Melanie's.
Sincerely,
Marlenee - 11th grade
Melanie - kindergarden

VMLC Says Thank You to DSVP

"Last year I made a goal to pass the U.S. Citizenship Test. Now I am a
citizen of the U.S. I am very happy.”

-Gloria D.
 
Gloria was one of the first students at VMLC’s new campus in West Dallas. Education is important to Gloria and her next goal is to attend Mountain View College to become a medical assistant. She sets an example for her 3 children(ages 1, 5 and 7) on the importance of reading. Watching television isn’t permitted after school – only on weekends!
 
DALLAS SOCIAL VENTURE PARTNERS has helped VMLC further their mission of improving English literacy levels among non-English speaking adults and their young children.

VMLC provides free, award-winning adult English literacy and early childhood education
programs giving families the opportunity to improve their lives and become independent

and productive members of our community. VMLC currently serves more than 1,000 adults

and 200 young children in Vickery Meadow and West Dallas.

DSVP IN ACTION

Since VMLC’s selection as an investee less than 18 months ago, DSVP partners have made a significant contributions to the advancement of VMLC particularly in the areas of:

• Development of new logo and brand identity package
• IT improvements including networking of multiple campuses and VoIP
• Strategic plan development
• Board Development and Training

Youth Village Resources of Dallas Thanks the Partners of DSVP!

YVRD has been in DSVP’s portfolio since 2008. Under co-Leads David Miller & Scott Chase, our Partners have engaged in projects including strategic planning, fund development planning, board training and program evaluation. Our financial investments, of over $142,000, have helped to underwrite a portion of salaries of both the executive and operations directors and underwrote a UTD to study on their program’s effectiveness.

Through your annual contribution to the Partnership, along with gifts “beyond” to our Children First Fund, you’re a vital part of Youth Village Resources’ mission and impact!

Executive Director Jerry Silhan has asked us to share gratitude from his staff and board through the following testimonial from a resident of the Youth Village facility, which demonstrates the powerful results made possible by working together:

“I first got in real trouble when I was 14. I was arrested for selling marijuana and having a gun at school. Around the same time I had learned that my girlfriend was pregnant. I spent 10 days in detention and was released. Five days later I got caught for skipping school and ran from the police. A little over a year later I got caught again with a gun at school but it wasn’t mine. My best friend’s sister had been raped by some of the guys at school and he brought a gun to school to take care of them later. I took the gun from him to prevent him from getting in some real trouble. When the school principal was alerted to a gun at school my locker was searched and I was arrested again. This time got sent to the Dallas County Youth Village.

I had no idea what to expect when I got to the Youth Village. I just surrendered to whatever was going to happen. Some of my toughest moments were my weekly 5 minute phone calls when my girlfriend would be crying and I could hear my daughter in the background asking where daddy is.

My Probation Officer at the YV told me about Youth Village Resources of Dallas and some of their classes I could take that could maybe help me get a job when I got out. I asked her to please put my name on the list for the computer class and the culinary arts class. I passed both classes and got certificates. I also got my food handler license and then heard about Café Momentum from some of the older guys who had already worked at one. I got chosen to be trained to work at the next Café Momentum dinner. I worked three CM dinners before my release back home. I was able to get my GED as well. I interviewed and got a job with the Conference Hospitality Group using the resume YVRD helped me create that listed my job skills and references.

I know I would probably already be back in trouble if I did not have this job and a future. I am taking care of my daughter, helping pay my mother’s rent and will marry my girlfriend after she graduates from High School this year.”

DSVP Social Innovation Lunch with Lucy Bernholz - Networked Philanthropy

I was watching a video recently that my college roommates and I’d made toward the end of our senior year in college. In it we treat the audience to such trivialities as a certain new DSVP partner who would don a black leather jacket, call himself the “Midnight Raider,” and, well… raid the pantry of snacks around, say… midnight. As the video embarrassingly progresses from caper to caper, a seemingly minor detail made a stark impression. In one scene, you hear my phone ring off screen. I go to retrieve it and the gadget I flip open hardly seems even a distant cousin to the sophisticated, sleek, touch screen devices that are frequently attached to our ears today. Compared to my two-toned LED phone, even the least of our current mobile teles seem space-aged.

Advancements similar to the hyper-evolution of our phones in technology have improved our ability to consume information, tether ourselves to friends and family thousands of miles away, and quite literally live and learn in an instant. This new world has also begun to have a significant impact in the way we enact to accomplish social good.



Lucy Bernholz came by to speak with over 150 attendees from DSVP and the Dallas community about just this development – new technologies of social good. A noted analyst of the philanthropic industry, author of “Disrupting Philanthropy: Technology & the Future of the Social Sector” and founder of Blueprint Research & Design, Bernholz consults with corporations and individuals who want their giving to be impactful. She serves as a Visiting Scholar at Stanford University’s Graduate School of Business, and her blog, Philanthropy 2173, has been called a “philanthropy game changer” by The Huffington Post and was named a “Best Blog” by Fast Company Magazine.

The first point Bernholz made very clearly was that we must expand our concept of technology beyond being a label for the gadgets, gizmos, and circuitry of our whosits and whatsits. Technological innovation in the world of social good also describes developments in systems of giving, rules that govern how we do good better (sound familiar?), and the new tools that expand the efficiency and reach of that work.

New Social Economy
The world of social good is now more complex than it was 20 years ago. Instead of simply operating under familiar terms of “non-profits” and “philanthropy”, we’ve made room for fancier tastes such as social investment dollars, B Corps, L3Cs, and microfinance. This expansion of ways to create social impact are the fauna of the what Bernholz calls the Social Economy. There are now more and more ways to become a Donor or Do-er. But the most important, and exciting, notion is that the best ways to function in the Social Economy have yet to be invented.

New Expectations
Technology is fundamentally altering the expectations of how we engage this new world. Whether its vastly increasing Reach (see: YouTube and Kony 2012), shifting the Roles of who are the funding decision-makers and where do they find each other (see: Awesome Foundation, Kickstarter), ratcheting up the speed of Responsiveness (see: Pinterest leverage in reversing Susan G. Komen decision), or reshaping the legal landscape for giving (see: Supreme Court decision Citizens United vs. FEC), there is a new status quo for our interaction with Social Economy. And it’s constantly evolving at the speed of possibility.

Data, Data, Data
Bernholz insists, “It’s about 1s and 0s”. The ability to capture things in digital representations is the key to what’s connecting us – the essence of Bernholz’s coined term, “the Internet of things”. Technological improvements have increased our sophistication in data collection. Consequently, this information from this improved data has become the currency of strategic and funding decisions in the social economy. “This century is the century of data, that’s the defining thing.”

Bernholz closes with the thought that these paradigm shifts that come with technology advancement have also created a host of questions that we have the fortune to begin to answer. An example: on the biogenetic horizon one of the most active emerging markets of the social economy will be in “philanthropy of the body”. Human tissue will become potentially the most valuable resource to help our fellow man through research or even transplants… but who will own that commodity? What are the legal implications of its transfer from one entity to the next? These conundrums and many more will require tomorrow’s enterprising minds to solve.

A wonderfully engaging and knowledgeable speaker, Bernholz asserted that her expertise was a direct result of engaging groups similar to the composites of the day’s audience – passionate and bright people who’ve dedicated their talents and treasures toward helping make their world just a bit better than it was the day before. DSVP Partner Jim Brewer, capped off the event, with words apropos from Martin Luther King, Jr., “There is an invisible book of time that records our vigilance or our neglect.” We truly look forward to continuing the Friday luncheon series with the vigilant as we increase our capacity to do good better… together.

Guest Blogger Byron Sanders

VP Group Excellence

For additional information, please check out these sites:

http://philanthropy.blogspot.com/2010/03/open-philanthropy-modest-manifesto.html

http://cspcs.sanford.duke.edu/publications/disrupting_philanthropy

http://radar.oreilly.com/2012/02/data-public-good.html

Impact Investing with Harvard's David Wood

On February 10, amidst a huge crowd of business, investment and nonprofit leaders, Dallas Social Venture Partners (DSVP) kicked off their 2012 Social Innovation Luncheon Series with a focus on Impact Investing. Hosting one of the field's leading voices on the subject, David Wood, Director of the Initiative for Responsible Investments at Harvard University, provided the attendees with an inside look at why impact investing is so appealing and where this "transformative philanthropy" is heading.





There's nothing like sitting in an audience and getting goose bumps listening to someone paint a picture for what, at one time, seemed beyond possible for investors with a social conscience - the ability to generate a financial return AND a sustainable positive social outcome from investments (click here for photos). As an organization that serves professionals and social entrepreneurs, the venue provided friends and Partners of DSVP with leading-edge insights for how they can make the most of their charitable contributions and business expertise.

Susan Hoff, board chair, summarizes the role of this Series, “DSVP is thrilled to be able to bring a distinguished group of speakers, including David Wood, to our community. We hope this Series will challenge our community to ‘think out of the box’ in order to maximize positive community impact through social innovation and cross-sector partnerships. Many thanks to The Dallas Foundation and our other generous sponsors for their interest in helping us share these ideas.”

The luncheon presentation was engaging, exciting and flew by entirely too fast for those that were hungry for every little detail about how to connect with the impact investing field. Being someone who isn't hardwired for "finance-speak", this presentation was surprisingly tasty thanks to David's humorous style of delivering the information instead of what could otherwise have been like eating dry toast.

For those of you that were unable to make the event, here are three key takeaways from the discussion:

1. The Impact Investing field is dynamic and fluid but the opportunities are real. Thanks to advancements in online technology and access over the past few years, investors have more opportunities and flexibility to create products that meet their needs. The field needs room to flourish and thus we shouldn't try to pin it down or set the bar too high for what we are trying to accomplish.

2. There is some skepticism about impact investing because it is challenging conventional wisdom and practice. Skeptics are wary to the newness of the field and have concerns for the amount of hype that is being generated. To ensure future success, the hype needs to be managed.

3. Impact investing holds the promise of attaining philanthropy's Holy Grail - SCALE and SUSTAINABILITY. Microfinance has become a metaphor for impact investing and is a model for what people are looking for in the field. Taking a closer look at Microfinance as an example, you'll find progressive and sustainable benefits, an emergence of a new financial industry sub sector and the best part, the model is delivering returns that are measurable.

There's no doubt that impact investing has become extremely appealing. Investors and philanthropists alike are highly motivated for what's possible - to be what you own, do more with less, deliver creative market-based solutions and leverage other resources to deliver a real impact.

Thank you, DSVP, for convening another great event to benefit our community in North Texas. The up close look at Impact Investing was empowering and definitely ranked high in the category of social innovation at its best. Oh, and the most important takeaway from the discussion - this is helping to make the world a better place for ALL of us.

For those interested in learning more about David's work at Harvard University's Initiative for Responsible Investment and other impact investing resources, please visit:

www.hausercenter.org/iri
http://www.moreformission.org/
http://www.thegiin.org/
http://www.ussif.org/
http://www.unpri.org/

To learn more about attending DSVP's Social Innovation Luncheon Series, please visit DSVP.org.


Valerie Strong Knight is the owner of Sunshine Avenue, a full service multi-media marketing firm dedicated to illuminating the brand, products and efforts of socially responsible businesses and organizations. Formerly a CSR executive for a Fortune 10 company, Valerie now focuses her time and energy on helping socially responsible organizations realize a greater return on their philanthropic investments and partnerships.


Photo Credit: Stephen Masker Photography http://www.stephenmasker.com/.

Social Innovation Lunch Series - Spring 2012

Dallas Social Venture Partners is excited, no ecstatic, to announce our third Social Innovation Lunch Series. What started as a monthly First Friday luncheon has evolved into a community gathering of change-agents who want to engage differently in advancing “good” in our region. The series will take place the first half of 2012, kicking of in January.

What is Social Innovation really?
Social Innovation is a theme that is not always understood. But in fact, communities and organizations are working differently to address some of our toughest challenges. What are the cutting edge ideas and tools that philanthropists, foundations, nonprofit leaders, and corporations can use to be a part of this exciting new frontier in the social sector?

What will I learn?
This is a must-attend series of thoughtful leaders who already have advanced the conversation in our nation around socially innovative ideas. Those who attend will have access to cutting edge ideas on mobilizing action, resourcing and financing innovative ideas, harnessing technology, and freeing nonprofits from restraints.

Who Should Come?
Those who believe that North Texas is a thriving region with strong businesses and socially innovative nonprofits that are effective. We recommend those who want to give back to the community, business and corporate leaders who seek a positive social impact alongside economic development, civic leaders who want to think differently, non-profit leaders who are innovative and anyone else who believes in the serious business of "good."

What inspired this Speaker Series?
DSVP leaders get to bump into all sorts of thought leaders at conferences and through our network. Many of these speakers have been selected for a particular book or article they have written and the ideas that they carry. We will post more information and links to the pre-reading that is not necessary, but recommended if you want to be a social innovation aficionado.

Where is this happening and how do I buy the Series?
The beautiful Tower Club at Thanksgiving Tower is where this series will be held. And you can buy your series tickets here!

Who are the Rock Star Sponsors who helped make this happen?

Boone Family Foundation
The Center on Communities & Education at the Annette Caldwell Simmons School of Education & Human Development

Commit!

United Way of Metropolitan Dallas