1. Be humble – The philanthropic sector is realizing that isolated efforts to solve social problems are not creating long lasting social change. During the conference, I observed many leaders accept with humility that their organizations can’t solve social problems alone. There is a clear need to step back, understand the system your organization is part of, and collaborate with other organizations. The ability to reflect and better understand your limitations, and the implications for collaboration appears crucial for emerging leaders in philanthropy given the resource constraints and increased need in the sector.

2. Know who you are not – Increased collaboration in the sector is requiring leaders in philanthropy not only to be aware of what they bring to the table, but also to understand what they don’t. During a session supported by The Allstate Foundation and facilitated by Deborah Meehan of the Leadership Learning Community around the concept of collective leadership, participants expressed that the ability to put yourself in other people’s shoes will be essential as we move to more collaborative philanthropic efforts. This applies at many levels: if you have experience as a funder, you may not fully understand the experience of the nonprofits you are collaborating with; if you are a man, you need to hear the opinion of a woman sitting across the table; if you are white, reach out to people of color to understand their perspective; if you work in a city, hear the experience of organizations in rural areas before making any assumptions. The notion that there are many things we don’t know about the organizations we work with and the people we serve will be crucial for emerging leaders in philanthropy.

3. Listen – Realizing that there is a lot we don’t know gives us the opportunity to step back and listen. Many of the conference participants working in foundations were very vocal about the need to work more closely with their grantees, develop long lasting relationships, and create avenues for legitimate conversations and feedback. Participants also recognized the need to listen and learn more from program beneficiaries, particularly from women and other underrepresented groups that are frequently ignored. As we move to increased collaboration in the sector, emerging leaders in philanthropy will have to actively listen to the organizations and individuals participating in their organization’s philanthropic efforts.

4. Learn and adapt – During the conference, I noticed that more and more organizations are moving away from traditional linear approaches to social change and are starting to engage in social innovations. As funders start embracing complexity, leaders in the philanthropic sector are going to need evaluation and learning tools that can help them reflect on their experiences, learn from others, and adapt the program’s strategy in real time. Emerging leaders in philanthropy will need to create learning organizations where data supports learning and informs future strategy. 

Finally, if there is something I heard loud and clear during the conference, it’s the notion that we are all in this together and we need to find better ways to collaborate – we need leaders that are willing to listen and give everyone the opportunity to participate and be heard. We need to come together if we really want to solve the most challenging social problems.  

I invite you to learn more about the EPIP community and also to share your thoughts below. What are other elements of this emerging leadership manifesto?

One quarter of the field read or heard us talk about Do More Than Grow in September or October.  This work takes a deep look at the strategic value of donor advised funds (DAFs).  DAFs are a significant part of the community foundation field accounting for over 1/2 of all grantmaking. My colleagues and I have appreciated the thoughtful feedback this piece evoked and look forward to working with the field to help realize the full potential of such a powerful grantmaking vehicle.  

In partnership with the Council on Foundations and the W.K Kellogg Foundation, CF Insights worked with cohorts of community foundations in New Mexico and Mississippi to help them individually and collectively discuss their role in philanthropy, their unique business models, the myriad of different choices they face. 

My aspirations for 2013:
Ten years ago, FSG authored Strengthening Community Foundations:  Redefining the Opportunities, which introduced the idea of looking at a community foundation strategy and economics at a product level.  Since then, CF Insights and FSG have examined over 80 community foundation business models through Activity Based Costing Analysis.  This exercise, which allows foundations to understand key products and activities, has been regarded as “transformational.”  A tool like this helps focus conversations about “what revenues fuel our work to promote philanthropy?” to “here are the changes we need to make to align our business model with strategic priorities.”

In 2012, The Global Philanthropy Forum partnered with the National Volunteer & Philanthropy Centre (NVPC) of Singapore, Resource Alliance and the Community Foundation Singapore to launch the first Philanthropy in Asia Summit, a gathering of Asian philanthropists and those they support throughout the region. Asian philanthropists gathered there to teach, to learn, to reinforce one another so that philanthropy in the region, like bamboo, can grow and flourish.

The Summit came on the heels of a smaller Beijing gathering of professionals in the field—the China US Strategic Philanthropy (CUSP) workshop—sponsored by the China Philanthropy Research Institute at Beijing Normal University and the East West Center in Hawaii. The workshop was co-moderated by FSG partner Jeff Kutash and was designed for to share best practices on strategic philanthropy in the region.

Much of Asia has enjoyed extraordinary economic growth. Yet, for the most part, that growth has not been broad-based and development has not been inclusive. FSG, the Global Philanthropy Forum and Western grant-makers like the Rockefeller, Gates and Ford Foundations, have found that indigenous philanthropists are eager to respond. But, these local donors believe that existing NGOs lack the capacity to effectively absorb or deploy their funds. And so, rather than create grants programs, many Asian philanthropists opt instead to start their own non-profits, or "operating foundations."

Many Asian societies have a culture of giving that dates back millennia. And there is no dearth of wealthy individuals and businesses willing to play a significant philanthropic role. While the tax laws in many countries have not kept pace with the philanthropic impulse, Asian philanthropists at the Summit agreed that the larger barrier is lack of confidence in grantee organizations, whether government-sponsored or independent. This deficit of trust remains a primary barrier to giving.

Faced with small, under-resourced grass roots organizations, local donors lack confidence that nonprofits will be able to deliver on their missions. And so, a handful of strategic philanthropists have risen to the challenge, by systematically investing in the strengthening of potential social partners. They are both importing and inventing models, and their potential for impact is great.

They have launched infrastructure organizations that generate knowledge, build skills, promote transparency, and assure accountability, to unlock philanthropic dollars that would otherwise stay on the sidelines. This includes organizations such as the China Foundation Center, modeled after its New York namesake and mentor; Singapore's Lien Centre for Social Innovation; and India's Center for Advancement of Philanthropy and others. Beijing Normal's Philanthropy Research Institute receives both private philanthropic dollars and the government support other university programs enjoy.

Asian philanthropists built NVPC and other supporting organizations so as to transfer knowledge among centers of learning, communities of practice, and sources of giving. To build the capacity of philanthropy itself, they have joined organizations like the Global Philanthropy Forum that transfer knowledge between staffed and unstaffed foundations, upping the game of each. And they've engaged groups like FSG to generate research, develop local case studies, and offer models that leverage the private as well as the social sector.

With their emphasis on sustainability -- and a desire to bring solutions to scale – Asian philanthropists are also leveraging the capacities of commercial actors. Asia Venture Philanthropy Network, India’s Dasra, and others not only connect investors to small and growing businesses that provide goods, services and income-producing opportunities to the poor, but also assist with business plans and help shepherd micro-businesses through their proof-of-concept phase.

At the same time, FSG is working to ensure that the capacities of large corporations are brought to bear, encouraging and documenting “shared value” strategies, in which private sector leaders put their own companies to the service of social goals, strengthening local communities in the process. Examples include Eli Lilly and Company, which has developed the Lilly NCD Partnership, to provide local healthcare clusters in India with better trained and resourced professionals. FSG has also advised India’s Godrej Group, a $3.3 billion global corporation led by successive generations of the philanthropic Godrej family. The company plans to train one million rural and urban youth for skilled jobs by 2020, helping to close the employment gap among the young.

Not only do Asian givers hope to build the capacity of both the civic and private sectors to advance social goals, but they also wish to build the capacity of local governments as service providers. Singaporean foundations like Temasek have forged effective tripartite and transnational partnerships with local ministries of health and education, as well as Singaporean universities and on the ground organizations that train future health workers and educators in their respective countries. Over the long term, these partnerships will build capacity, reduce dependency and improve lives.

It is easy for us in the United States to see ourselves as having unique purchase on the philanthropic impulse and organized giving given the role philanthropy has played throughout our history and the robust civil society that our democracy enjoys as a result. But, as we debate the tax deductions associated with charitable gifts, we are mindful that charity is not new on the other side of the globe, and strategic philanthropy is on the rise.

To foster these green shoots, Asian philanthropists are working to strengthen the fledgling non-profit sector, socially conscience businesses, accountable governments -- and one another. As a result, they have every reason to believe that, like bamboo, Asian philanthropy will be flexible, strong and self-propagating.

Jane Wales is President and CEO of the Global Philanthropy Forum, a community of philanthropists, donors, and social investors committed to international causes, and to inform, enable and enhance the strategic nature of their work.

The Bill spells out much detail about which companies will be required to comply with the guidelines, how to calculate the 2% based on a rolling three year average, and how corporate governance will oversee the spend. However, many of the most important questions remain unanswered, including: Who within the organization is responsible for implementing these programs? Who will be considered an approved third party evaluator to measure the programs’ validity? And, most important of all, what will “count” as CSR activities under this new law?

As a consultant at FSG working out of our Mumbai office, these questions continually arise in the many conversations I have with corporations when the topic of the Companies’ Bill arises. A couple weeks ago, FSG co-founder Mark Kramer visited India and the volume of these questions got turned up during two shared value workshops we co-hosted with The World Bank, the Indian Institute of Corporate Affairs, and the Ministry of Public Enterprises.

The workshops were split into two days: one day each for the private sector and the public sector. With the public sector already facing requirements to spend a mandated percent of profits on CSR and the Companies’ Bill pending for the private sector, participants were eager to hear how shared value fits into India’s evolving CSR landscape. The morning session included keynote addresses from Mark as well as many other CSR thought leaders in India – the World Bank’s Country Director Onno Ruhl, Member of Planning Commission Arun Maira, the Minister of Heavy Industries Praful Patel, the Joint Secretary of the Department of Public Enterprises A.K. Pavadia, the Secretary of the Department of Public Enterprises O.P. Rawat, and Dr. Bhaskar Chatterjee of the Indian Institute of Corporate Affairs. While presenting slightly different perspectives, the speakers all agreed on three areas: (1) that India needs a new approach to solving social problems and fostering inclusive growth, (2) that companies have an essential role in doing so, and (3) that the government wants to build companies’ capacity to do so successfully.

FSG's Mark Kramer, in his presentation, challenged companies in the audience to leverage the mandate to achieve the three-fold objectives mentioned above. He also highlighted that companies could view the government mandate as a tax or as an investment. If the money is spent on philanthropic projects unrelated to the business, he said, then it is really just a social tax on profits. But if companies can use the 2% for philanthropic and shared value projects that create new business opportunities, reduce costs, or strengthen their industry cluster, the same expenditures would become an investment that brought benefits back to the company. Mark gave many examples of Indian enterprises that have developed profitable shared value strategies that address critical social needs in India, such as rural healthcare, financial services, and livelihoods for smallhold farmers.  (These and other examples can be found in FSG’s report Creating Shared Value in India).

However, the closing session yielded the most rewarding results. Mark and select representatives from the opening session opened the floor for closing comments and questions. Participants were fired up, asking to revise the current CSR mandate to allow companies to take on more shared value initiatives within their spending requirements. Another participant stood and said “What I’ve learned here today is that what we ‘spend’ on CSR doesn’t actually matter – but it is the impact we have on society and the sustainability of these efforts to our business is what we need to focus on. When will the government change its mandate to hold us accountable for our impact, rather than our inputs in terms of rupees spent on CSR?”

Incorporating shared value initiatives into the CSR mandate raises a considerable challenge: If companies can include profit-making initiatives that address targeted social issues in fulfilling their obligation, it becomes harder to distinguish shared value investments from other investments the company makes. As the participants observed, it shifts the reporting requirement from social spending to social impact.  At the same time, it unleashes new and more powerful opportunities to meet the many social needs India faces, a future vision the participants were eager to embrace. 

Overall, it was an enriching and rewarding experience to see how our ideas are not only influencing the practice of CSR, but also the dialogue between companies and the Government of India as to how to increase impact and accountability of these efforts. We see great promise for the concept of shared value to become further embedded in both corporate strategy and government policy as a sustainable way to solve India’s vast social problems.

Recently, CF Insights and FSG had the privilege of working with 31 community foundations across the country to develop a field-wide sense of trends in the fastest growing area of giving and grantmaking – Donor-Advised Funds (DAFs). We brought to bear information on critical questions about DAFs which have hitherto continued to go unanswered. Questions such as:

• How should community foundations define the strategic value of DAFs?
• To what extent are DAFs creating strategic value at community foundations today?
• What policies and practices will best lead community foundations to realize strategic value from DAFs both now and in the future?

For the data and the answers access the Do More Than Grow report through CF Insights. For a flavor of how this information is already affecting the community foundation field, keep on reading.

Community foundations are responding in a variety of ways:

• Telling us they value the information and the data. “FSG strikes again. LOVED this session because it brought new data to bear, challenging a huge and mistaken assumption in our field” said one attendee at the Council on Foundations presentation in New Orleans. We’ve received good feedback on the value of the information on the session and during interactions at the Fall Conference, at recent regional presentations such as the one in Washington, and from a range of follow-up conversations.
• Holding discussions within community foundations – at multiple levels. Examples include discussions with executive staff about the gap between aspirations and the reality of policy and practice, discussions with boards about DAF aspirations and the impact of DAFs on communities. Several foundations have noted that this research is important to share with Boards. 
• Absorbing the implications and interpreting the information. Generally findings are not seen as shocking but rather “jive” with what people see going on. The data is affirming and helps people get beyond anecdotes. The most provocative specific findings are about the role of leadership and the data about planned giving. Identifying “the gap” between aspirations and practice – although not shocking – seems to be provoking a lot of internal conversations and some foundations (which have not participated in the study) are interested in collecting data for their own foundation.

Community foundations are also articulating new questions and asking for more information:

• What do donors think?
• What is the social value and impact of DAFs on communities? 
• How do community foundation leadership activities and Donor-Advised Funds interact?
• What about endowed funds – are they fundamentally different?

Over the next few months CF Insights and FSG will continue to share the report, listen to the field and hold discussions with community foundations to understand their needs and the possibilities for further exploration and follow-up to this field-building study. We encourage you to share with us your reactions and questions.

It is estimated that India’s economy will create 500M jobs in the next decade – 75% of which will be skills based. Today, workers with vocational education only comprise 2-4% of the trained workforce ; this large gap between existing supply and projected demand will pose a large challenge in the coming years, driven by two main factors:

• The training industry faces capacity constraints, placing an upward bound on how many skilled workers are available to industry; according to the Ministry of Labour’s estimates, the current vocational education system can only train 25% of those workers joining the workforce each year
• A mismatch exists between industry demands for skilled labour and current development programs, which can be traced back to program design and quality control

To be prepared for future skilled job growth, India must improve the skills of the existing and future workforce by increasing the capacity of skills training providers while simultaneously making programs more employer-driven to ensure higher quality, more appropriate training at scale. Matching this supply-demand issue at scale makes workforce development an incredibly complex issue. Through our research, we have seen real progress against complex social issues when stakeholders come together and employ the five conditions of collective impact (as described in our previous post ) – a common agenda, a shared measurement system, mutually reinforcing activities, continuous communication among stakeholders, and a backbone organization to support the effort.

Collective impact offers a powerful potential approach for the various stakeholders – government, nonprofits, the private sector, and social enterprises – working to advance India’s workforce development. Only through coordinated efforts will the skilled labour supply-demand gap be closed at a systemic level and ultimately improve India’s competitiveness.

During the first phase of collective impact, an important step is to understand the landscape of key players and the existing work underway in order to identify gaps and opportunities for more effective coordination. India has many examples of isolated success in the workforce development space that should be celebrated and which can inform future systemic change, including:

• Private sector training programs. In some industries, the private sector has taken training into its own hands to ensure competitiveness in the face of the projected labour supply shortfall. Larsen & Toubro (L&T), a major construction company, improved its workforce quality by providing vocational training through Construction Skills Training Institutes (CSTI) . Over 5,000 youth were trained in topics critical to construction (carpentry, masonry, welding) through CSTIs in 2009-10, with future targets set at 15,000 trainees annually. With 100% placement rates, trainees are guaranteed higher-earning jobs than unskilled alternatives, while L&T secures a high-quality, consistent labour supply.
• Nonprofit training programs. In many communities, nonprofits and social enterprises have played a critical workforce development role. Lend-A-Hand-India (LAHI) complements secondary schooling with skills education to ensure employability of rural school children. LAHI leverages existing school infrastructure and complements academic education by honing vocational skills (e.g., carpentry, fabrication) and encouraging entrepreneurship.

While these are successful efforts that demonstrate the critical roles that employers and social sector actors can play in workforce development, they fall short in achieving system-wide change.

A more coordinated, collective impact approach could enable the various stakeholders to significantly expand access to training programs, and ensure that training is closely aligned with specific industry demands. This might include developing a clear common agenda around access and quality of workforce training, with clear shared measures that are tracked by industry or region. Government, the private sector and nonprofits could more actively coordinate their currently fragmented efforts, and ensure that training programs are designed to meet specific industry needs. In particular, this would require greater coordination between industry and the vocational education system and nonprofit training providers, so that training programs are high quality and remain directly aligned with the evolving needs of industry.

One emerging example of collective impact is the Government of India’s (GoI) recent launch of the National Skills Development Corporation (NSDC) – a public-private partnership to develop skills programs at scale per industry requirements. For example, NSDC is working within the manufacturing sector to ensure that the 100M new high-quality jobs that are projected by 2025 will be filled by trained workers. In order to tackle an industry as colossal as manufacturing, NSDC has developed Sector Skills Councils (SSCs) which will coordinate activities of all actors within a sub-sector of the manufacturing industry such as textiles and food processing. Acting as a “backbone” organization, the SSCs proactively coordinate actors within specific industries, work with employers to understand needed skills, research current workforce supply, improve the quality of training providers, and accredit training programs per industry standards.

Greater coordination among the various players of the workforce development landscape will enable the vast masses of India’s unskilled labour to have access to the tools necessary to not only increase their individual income, but contribute to India’s overall poverty reduction, economic growth, and global competitiveness.

We invite you to contribute your thoughts on what it will take to achieve the training required for India’s youth that will fuel future economic success.

What does the experience of five school operators have to say about the future of blended learning?

Over the past few weeks, the foundation and FSG released five case studies of leading blended learning operators and published a series of fantastic blog posts from the operators themselves. The examples represented have spanned from elementary schools to high schools, from California to Louisiana, from year one startups to mature schools models. With blended learning, these operators have unlocked a range of innovations. They’ve responded to cuts in state budgets, better served special populations, forged new roles for teachers, developed tools for learning, and built a culture of continuous improvement.

Each of the school models is detailed in the case studies. But just as important as their individual innovations and programs is the shared approach the five operators have taken to implementing blended learning as a means to whole-school reform. Their integration of blended learning into an overall model stands out from prevailing approaches to school improvement, and indicates how other practitioners and reformers might better realize the potential of blended learning in the future.

As a case in point, consider Summit Public Schools. At first glance, you see an innovative math program that uses Khan Academy. But dig deeper and the “program” is about more than math. Teachers are using data to make more informed decisions across subjects.  Students are taking more ownership of their own learning. Network leaders have learned from the blended learning pilot, and are reshaping the entire school experience.

At Rocketship, the story is similar. Blended learning is a tool to raise academic achievement, but it has also opened new communications channels with parents, informed how the CMO identifies and trains high quality teachers, and helped create a financially-sustainable model. Alliance, FirstLine, and KIPP Empower have likewise found blended learning to be a key that unlocks many doors, reshaping not just a student’s approach to learning, but the surrounding structures and culture that support it.

Of course,  whole-school improvement is not a new aim. Multiple “ingredients” need to be in place to make a great school, and these ingredients work best together. Yet school reform in the U.S. has the habit of extracting one ingredient and treating it as a cure-all. From teacher quality to better data to class size to school choice and beyond, every few years brings a new reform du jour. This approach may be well-intentioned, and schools and school systems should absolutely set priorities.

But too often pressures from in and outside of the system make reform a zero-sum game, where a focus on teachers might come at the cost of engaging parents, or emphasizing class size overlooks financial constraints.

Blended learning has the potential to address this dilemma. In each school we studied, blended learning enriches multiple ingredients that go into a great school, thereby easing the either/or challenge of reform. Extending this approach nationally will require others to likewise see blended learning as a new paradigm for how schools are structured and learning delivered – rather than a bolt-on program.

This can be challenging amid today’s buzz over blended learning. It can be tempting for school systems, funders and policymakers to rush into blended learning, and end up with little more than a new computer program that’s disconnected from the broader school system's needs and likely to gather dust alongside other would-be reforms.

The lessons illustrated by these five operators can be a useful guide to avoiding this risk and pursuing blended learning as part of a whole-school design. While the list below is by no means exhaustive, it provides a starting point for shifting blended learning from a new program to a new school paradigm:

1. Start with Your Vision – Blended learning should support the vision for a great school. At KIPP Empower Academy, for example, blended learning helps enable the school leader’s goal of quality small group instruction for all students. By placing the vision first and the technology second, KIPP and others have seen more clearly the strengths and limitations of online learning even as they expand it within their model.
2. Embrace the Unexpected – Each operator profiled shifted its model considerably over implementation. In some cases blended learning started in just one grade or subject, but over time rippled to other areas of the school – sometimes in unexpected ways (Alliance, for instance, has attributed a considerable spike in student engagement and ownership to blended learning). The most successful blended learning operators will be open to changes to their Day 1 model, and will see this adaptability as a key element of the school’s culture and ability to continuously improve.
3. Re-Think Assumptions – After months of iteration and working with blended learning, several of the operators profiled have questioned historical assumptions about education. Summit, for example, has piloted a mixed-grade, competency-based blended math program. KIPP Empower and Alliance have further varied class size, time, and type of instruction based on each student’s needs. While in early stages, the experiences of these operators suggest that this experimentation will not just integrate blended learning further into schools, but will alter the fundamental structures of schooling in potentially exciting ways.

In the future, the benefits of blended learning will accrue to schools that can integrate it across their instructional, operational and financial models. And while blended learning holds the potential to reshape the bedrock structures of school as well, we are still in the first steps of a longer race.

More models are needed to drive innovation. More evidence can shine a light on which models and approaches are effective. Existing knowledge about what works in schools will need to be combined with new advances (FirstLine, for instance, has coupled a strong focus on building school culture alongside more novel technology-driven reforms). We hope that these case studies can deepen the national conversation on blended learning through their focus on practical experience, and we look forward to the journey ahead.

To learn more, please read Justin Bakule's blog post, Launching the Shared Value Initiative: A Community for Practitioners.

Click to learn more about The Shared Value Initiative, and our 2012 Commitment to Action.

FSG’s recent report on social and economic equity in the food and agriculture system, developed in partnership with the Rockefeller Foundation, found that workers in the food and agriculture system usually work in very low-paying jobs and face significant challenges in terms of economic opportunity and safety. For example, 75% of food workers do not have paid sick days or do not know if they do, and 83% lack employer health insurance. In addition, 61% of food system workers live below the poverty line due to chronic underemployment and pay that is below the minimum wage level. The work environment is also unsafe with 57% of workers suffering an injury or health problem on the job, compared to 4% across industries as reported to OSHA. This data from the Food Chain Workers Alliance's The Hands That Feed Us report underscores the many challenges facing food workers.

• Support advocacy efforts to improve working conditions through federal policy (e.g., minimum wage legislation) or through corporate policy (e.g., paid sick days). Improved equity will certainly depend on shifts in federal policy such as immigration reform and minimum wage legislation, but in the meantime, there are opportunities for foundations to support groups that are encouraging corporations to recognize the benefits associated with improved job quality for their workers.
• Encourage the good jobs and good food movements to align their activities by exploring opportunities for these movements to collaborate. While the “good food” movement has realized much success in recent years, it also represents a potential platform on which to expand efforts to drive “good jobs”. Funders can support groups from both movements as they explore mutually beneficial opportunities to partner.
• Fund demonstration projects to improve social and economic equity within the food and agriculture system. While many niche programs are in place, promoting and supporting the proliferation of successful models is still needed.

1. The J.W. McConnell Family Foundation’s YouthScape program tested strategies for involving excluded youth in the community development process, in part by encouraging traditionally adult-focused organizations to examine and re-design their values, structures, and processes.
2. The John S. and James L. Knight Foundation’s Community Information Challenge (KCIC) funded 76 community and place-based projects, to create and support new news models, online information hubs, citizen journalism activities, youth media outlets, advocacy campaigns, and civic engagement activities, in an effort to keep communities informed and engaged. 
3. The Bill & Melinda Gates Foundation’s Community Partnerships portfolio focuses on improving postsecondary completion rates for low income young adults through the activation and coordination of a number of diverse stakeholders. Community partnerships use data to inform their strategy, they seek to build commitment among stakeholders, and they tackle policy and practice change.

As solutions to social problems have become more complex and challenging, the philanthropic and non-profit sector has been experimenting with a variety of approaches such as systems building, policy advocacy, cross-sector collaboration, movement and network building, and collective impact, as a means to affect change more rapidly and effectively.

Many of the McConnell foundation-funded initiatives work in uncertain territory, developing and testing their strategies as they proceed; there are no blueprints for empowering youth, attacking poverty, or promoting innovative approaches to solve entrenched social problems. What is most useful for such efforts is not an ex post facto assessment of success or failure, but constant feedback from a critical, supportive observer.

This month, FSG and the Center for Evaluation Innovation, will be releasing a new report titled, Evaluating Social Innovation. The paper is the result of a collaborative research study that sought to understand and identify the critical role evaluation plays in initiatives that are innovative, situated in dynamic and complex environments, and are being designed and implemented simultaneously. In the paper, we describe and make a case for the use of developmental evaluation for evaluating collaborative, emergent, system change processes.

Originally conceptualized and described by evaluator Michael Quinn Patton, developmental evaluation asks evaluative questions, applies evaluation logic, and gathers and reports evaluative data to support project, program, product, and/or organizational development with timely feedback.

To this end, developmental evaluation typically focuses on the following kinds of questions:

• What is developing or emerging as the innovation takes shape?
• What variations in effects are we seeing?
• What do the initial results reveal about expected progress?
• What seems to be working and not working?
• How is the larger system or environment responding to the innovation?
• How should the innovation be adapted in response to changing circumstances?

The answers to these questions help program designers and implementers reflect on the data, challenge their assumptions, and make decisions regarding staying the course or shifting tactics and strategies in timely ways (not at the end of a year or two or three).

In Evaluating Social Innovation, we explore ways that common evaluation approaches and practices constrain innovation and consider the following questions: What kinds of grantmaking strategies should funders consider using developmental evaluation? What organizational conditions are necessary for developmental evaluation to work? How can grantmakers grapple with the challenging questions that developmental evaluation raises about innovation, accountability, rigor, and adaptation?

Drawing on the reflections and insights of foundation staff and evaluators who have experimented with developmental evaluation, we call on philanthropy to re-envision the role, purpose, and processes of evaluation so that social innovations may have an even greater chance of achieving their ambitious goals.

For example, if you’ve been following FSG in the last few years, you will have noticed that we’re increasingly organizing our thinking, writing, consulting and field building around four approach areas that we believe are critical to creating large-scale change: Catalytic Philanthropy, Shared Value, Collective Impact and Strategic Evaluation. As we work with partners around the world to explore and implement these approaches to change and to bring new insights to the field, I can’t help but notice that we’re following the principles of “Do More Than Give:”

• Commit to your Cause: Our cause is to discover better ways to solve social problems and we have found our unique calling in deepening knowledge and practice in the four approach areas we believe are so critical in solving challenges in education, health, development and the environment.
• Advocate for Change: We are not content with just implementing these approaches with 100 client organizations each year. Rather, we are constantly out in the field so that together with key partners we can actively change mindsets across all sectors so that the four approaches can take hold, leaning on a variety of advocacy tools.
• Blend Profit with Purpose: We are organized as a non-profit - or social enterprise if you will - meaning that our economics and our mission are inextricably linked. Every dollar we earn and spend is designed for purpose, whether it is helping a single social sector actor strengthen their strategy so they can better impact their constituencies, or inspiring the hundreds of nonprofits, for-profits and public sector agencies that engage with our ideas and knowledge tools in any given year.
• Forge Nonprofit Peer Networks: If there is one thing that all four approaches have in common, it is the idea that you cannot have impact in isolation. There is always someone smarter and more experienced than you that should be part of the solution. So it is with FSG, too. We are actively forging networks and communities of practice to deepen knowledge and practice and enable actors to learn from each other.
• Empower the People: In our case, the “People” are the social change actors in all sectors that we’re seeking to support. As such, we rely heavily on their input when we develop new field building papers, workshops, tool-kits, etc. We actively seek this input before we create new knowledge and actively seek critical feedback from consumers of our work so that we can improve. Indeed, we even go out of our way to get input from people that are critical of our thinking, because we know this will sharpen and strengthen our ideas.
• Lead Adaptively: Having said above that we’ve committed to four approach areas, we are not in the business of rigidly applying these to every situation. Indeed, we appreciate the complexity of solving social problems and thus we bring an adaptive mindset to every client situation and knowledge development opportunity. If in three years we’re still talking about the four approaches above in the exact same way, we’ve done something wrong.
• Learn in Order to Change: In doing all of the above, we know that we have a ton to learn. More than a ton. Humility is actually the only way to “Do More Than …”. So we cultivate learning agendas around all of our approach areas, which help us to improve knowledge and practice on an on-going basis. Moreover, we take our learnings and create so-called actionable knowledge that we share with the field at large.

As we increasingly “Do More Than Consult” we hope that any actor out there – even if not a philanthropist – is also inspired to “Do More Than …” and embrace the principles above for their own work. The possibilities are endless: “Do More Than Teach”; “Do More Than Govern”’; “Do More Than Heal”; etc.

But if you’re not into tattoos, or you have other ideas about what body art you’d like to try, I will turn to how we think about strategic clarity for community foundations.

Indeed, given the recent advances in online collaboration technology, (i.e., Web 2.0) if collaboration were only about a good technology platform, then any organization with even a modest IT budget would be doing it and doing it well. But this is not the case.

It’s not about the technology – it’s about culture. But too often too many issues are stuffed into that "box" labeled culture (e.g. networking, communication style, establishing trust and knowledge exchange). There are many ways to collaborate. Even if you are fortunate enough to have a supportive culture in place, it behooves the KM and social change practitioner alike to determine what needs to be shared through collaboration, and what are the goals or objectives of the collaborative effort.

The point is that collaboration benefits from a deliberate model and strategy, that begins with assessing which of the basic models your effort requires. I am not alone in this belief. These ideas are discussed in a Harvard Business Review article entitled, "Which Kind of Collaboration is Right for You?" My favorite insights in the article are the strong case it makes that collaboration can occur in a closed environment, in spite of the "open transparency" mantra of collaboration zealots of late, and the sometimes need for incentives to attract collaborators.

In another Harvard Business School paper, best practices in orchestrating and managing collaboration in an outsourced, or extended enterprise setting are provided. The bottom line of this article, is that collaboration needs to be deliberately designed and managed in order to maximize effectiveness and the value of the outcome.

So while it may be nice to think that collaboration is all about viral and organic growth, research and experience indicate that there is ample room for some control and management of the processes, as well as the knowledge and content captured in the process.

I’ll wrap this post up with a link to another article, this one recently published by Central Desktop, purveyors of collaboration software. Despite that fact, the article does not focus on technology, but rather the art and science of collaboration, and offers several interesting and powerful real world examples of what is possible when collaboration is addressed deliberately and strategically, including: SETI@home, the largest distributed-computer effort on earth using volunteers from around the world, collaboratively looking for evidence of intelligent life on other planets; ReCaptcha, a global collaboration project to digitize books that YOU – yes YOU have likely participated in, though you may not know it –collaboration can be sneaky; and a fun one, Stand-By-Me, part of the Playing for Change movement. I found these examples entertaining, enlightening and inspirational, and hope you do too.

Collaboration: Get it right and your chances for success go way up. Get it wrong and failure is almost guaranteed.
 

The difference between scaling organizations and scaling impact lies in the belief that scaling impact does not necessarily rely on reaching a new population. In fact, scaling impact may mean going deeper with a population that an organization or initiative is already engaging.

What does it look like to go deeper? It may mean that an organization shifts its approach to addressing a social problem from a narrow focus that meets a specific need (e.g., delivering substance abuse treatment services to urban youth) to a broader, wrap-around approach that helps these same youth cope with issues related to poverty, mental health, and education that also affect substance use behaviors. Eric Rodriguez, Vice President of the Office of Research Advocacy, and Legislation at National Council of La Raza, talked about their organization’s desire to go deeper by expanding its “advocacy work into states and regions of the country where the need for civic empowerment and the potential for success is great.” The organization has primarily focused on policy advocacy at the federal level for many years. This growth plan suggests a deepening of their commitment, a scaling strategy that is vastly different from replication or even traditional organizational expansion into a larger catchment area.

Effective collaboration will be critical for these strategies for scaling impact to succeed. As Lance Fors, Chairman of Silicon Valley Social Venture Fund, highlighted during a panel on funder collaboratives, “This requires a shift from thinking about the foundation as being at the center of social change efforts, to placing the problem at the center.”

This mental shift is not easy. In our work at FSG, we have often seen our foundation clients struggle to identify and define the problem that they passionately care about and seek to address in an intentional, game-changing way. Nonetheless, this conference is evidence that the field of philanthropy has come a long way. Yet as Vanessa Kirsch, founder of New Profit Inc., reiterated last week, “There’s still a long way to go.”

Last week’s Call to Action sought to change all this, challenging the world to commit to a new set of goals for keeping kids alive. Currently, 78/1,000 children die before age 5. The goal is to reduce this to 15/1,000 by 2035. This represents a dramatic acceleration in the rate of improvement compared to what we have seen in the past.

The following are some of the key insights I took away:

• Role of Partnerships in Creating Shared Value. Partnerships with corporations are evolving from viewing the corporation as a sponsor or check-writer to viewing them as partners in effecting lasting social change. For example, Carolyn Miles, the CEO of Save the Children described their partnership with Proctor & Gamble and local government to reduce school drop-out rates due to menstruation in South Africa. Using a three-pronged strategy of education (of the girls, their care-givers and teachers to empower girls during the transition), tools (providing sanitary towels to address the shame girls felt), and supportive environment (working with school governing bodies to upgrade their toilets) the program reduced dropout rates by 50%. By being partners in social change, corporations can bring the full extent of their reach and scale to social programs – in this case the partnership was able to scale the program to all nine provinces in South Africa. The discussion acknowledged challenges in creating and sustaining such partnerships including the time such partnerships can take to have impact, striking the right balance between the social purpose and business opportunity, and the importance of champions within the company.
• Shared Value in Emerging Markets. There is an abundance of opportunities to create shared value in emerging markets such as India and Latin America. In particular, there are many opportunities to create shared value in these locations by strengthening the business cluster. Examples discussed included vocational skills development (Godrej in India, Arauco in Chile), addressing demand conditions such as responsible consumption of alcohol (beer companies in Latin America), and strengthening healthcare distribution systems (Abbott in India). Both local companies as well as multinationals can avail of these opportunities but need to develop the intuition spot and leverage these opportunities that surround us in emerging markets. Creating shared value in emerging markets is an absolute imperative for continued economic growth of these economies.
• Measuring Shared Value. The purpose for measuring shared value is to optimize the value creation and to unlock new opportunities to increase the value created. Measurement of the social value should be rooted in the intent i.e. companies should measure the intended social impact of their shared value efforts. The measurement of business value on the other hand, should be coupled to that arising directly from addressing the social problem. For example, David Jerome, Senior Vice President at the Intercontinental Hotels Group, described their measurement of cost savings (business value) that is derived directly from reducing energy use (social value). Nestle and Intel both acknowledged that measuring shared value was challenging but possible if broken down into “chewable” parts. Shared value measurement can leverage social and business impact measurement already being done by the company but needs to be differentiated in its purpose from other types of measurement such as compliance and sustainability.
• Investor perspective. Long-term value creation analysis must take into account the environmental, social and governance (ESG) aspects of a business. Unfortunately, the market today has become too short-term oriented - Erika Karp, Managing Director Head of Global Sector Research at UBS described how the average holding period of a single stock is mere seconds! David Blood of Generation Investment also emphasized the importance of factoring in changes to business context (due to factors such as climate change, social issues arising out of the increasing income gap especially in emerging markets, etc.) when analyzing long-term performance of a company’s stock price. This is the approach Generation Investment takes and the firm has a seven year track record and has consistently outperformed the market. The broader market is slowly beginning to recognize this fact and is beginning to demand this information. Curtis Ravenel, Global Head of Sustainability from Bloomberg described how the number of companies providing ESG information has increased to 6,000 from 500 just seven years ago. A culture of thoughtful analysis and investing is needed for shared value efforts to be fully rewarded.

Such a rich discussion!

In the end, the value of a community of practice hinges on its ability to create the right vehicles and tools to engage its members in a process of continuous learning. The Shared Value Initiative, guided by a leadership council (composed of 5-7 companies and 2-3 government/NGOs) and supported by FSG, will attempt to build just such a community of practice. It will attempt to increase the adoption of shared value as well as deepen the practice of it. To learn more about how to participate in this community practice, contact the initiative’s Executive Director, Justin Bakule.

So you may be wondering, as was my friend, what in the world am I talking about. What is all this about baskets?  To explain, I need to rewind....

Seven years ago, I was sitting in a hotel lobby preparing for my job interview with FSG. While going through the website, I came across a 1998 article entitled “Mixed Motives” by the organization’s co-founder, Mark Kramer. The article struck me because it clearly and effectively broke down the key motivations for why and how people give. In it, Kramer segments philanthropic motivations into 3 baskets:

1) Obligatory giving – Supporting key institutions with whom you are affiliated (e.g., churches, temples, alma maters);

2) Social giving – Supporting philanthropic efforts primarily due to relationships (e.g., friends/colleagues doing a 5K Fun Run for a charity) rather than passion for the cause itself; and

3) Strategic giving – Supporting institutions not only with money, but also with time and experience, to achieve a specific change within a social issue.

As I sat there in the hotel lobby, I realized that the vast majority of my own giving fell in the first two baskets, and that I had really never sat down to think through where and how I wanted to spend the philanthropic dollars in my third, "strategic giving" basket. 

I needed to rebalance my philanthropic portfolio. And to fill that third basket, I needed to find organizations that inspired me not only to give, but also to act.

I love an inspirational story as much as I love data, but to motivate me, I need a combination of both – compelling storytelling with the facts. What’s the problem? How are you trying to address it? How do you know your approach works? What are the outcomes? How does this intervention change lives? This is not easy to do, but when done well, it can be quite powerful. 

So what’s in my third basket? City Year. You’ll know City Year from their corps of young people wearing the signature Red Jacket. These volunteers devote a year of service in local schools, where they work alongside teachers to augment their capacity and provide 1:1 help to targeted at-risk students. City Year uses the data AND the story to explain how they achieve positive outcomes and, in the process, change lives.  As a result, I not only give from my wallet, but I also give of my time by volunteering on their evaluation committee. I want to do more than financially support them - I want to help them succeed.

So as a challenge, try allocating your own giving into the three baskets. Are you happy with the resulting portfolio? If not, make a change. You don’t have to be a multi-million dollar foundation to be intentional with your giving. We can all be catalysts in creating social change – just find your third basket and do more than give.

For more information on how to be strategic in your philanthropy, check out FSG's page on Catalytic Philanthropy.

As I see it, the whole system sets nonprofits up for struggle and starvation, not for solving challenges. We funders, board members, and civic leaders should be supporting nonprofit leaders to build strong, high-performance organizations. Instead, we cause them to think incrementally—month to month and hand to mouth. We often say we’re focused on results. But really what we’re doing is pushing our agendas and demanding more information on results without paying enough attention to what leaders actually need in order to do their jobs and produce those results.

In the next 25 years, Napa County will become predominantly Latino, the first county in California’s Bay Area to reflect this significant demographic change. Yet there has been little public discourse about it aside from angry letters to the editor every time the local paper prints a story that involves immigrants.

As our community foundation began looking for a way to use our reputation as an even-handed convener for good, we decided it was important to have a local discussion about what we can do to move forward together on immigration-related issues.

We decided to fund a study that will talk specifically about the economic and fiscal impact of immigration in Napa County in the hopes of sparking reasonable and civil public discourse in a political climate that is too often polarizing and not based on data. We’re also bringing together elected officials, law enforcement agencies, nonprofit service providers, and community groups to talk about concerns surrounding deportation and the county jail.

We’ve made a significant investment in terms of our very limited time, and we’re seeing positive results. There are a lot of people in the community who are hungry to have this conversation. Groups that disagree with each other are talking and working toward a common understanding. Within the ranks of the nonprofits that we support, we’ve gotten a lot of props for trying to tackle an issue that nobody else is working on. I think there’s a real appetite to try to find a better way.

Being a community leader is ultimately about trying to get people to focus on where they live, as simple as that may sound. You can’t fix Washington, D.C. No matter what your politics, you can acknowledge that the federal immigration system is broken. So the question then becomes, what can we do together to make a difference in our community and make it better for everyone?

What can you do in your community?

The road to community leadership is different for every community foundation, which is why I hope you’ll join me and Kris Jaeger, my board chair—along with the leaders of two other community foundations—for the Learning to Lead webinar on May 2. We’ll be talking about our experiences in community leadership and sharing the lessons we’ve learned about what community foundations have to offer, what communities and their foundations have to gain, and some common challenges we faced along the way.

The expanded Community Foundations Series, created by The James Irvine Foundation, now addresses three new topics: becoming a recognized community leader, staffing at a small scale for big results and engaging board members to boost progress.

Earlier topics are: enlisting board members as ambassadors for growth, marketing with limited resources and planning for financial sustainability. Access the full series here.

For a taste of the experience and why it is important, read the “First FOTH” blog post from first time attendee Carl Little, or reflections ahead of the event by FOTH veteran Robert S. Collier Writing "Pitching Partnerships to Your Members of Congress" who has been 18 times!

FSG supported the talented Council on Foundations staff in preparations for the meeting by collecting information on Donor Advised Funds (DAFs). We shared data from over 230 community foundations as well as, for the first time, data from the three largest national DAF providers. We also mined over 100 stories of the work done through these funds in local communities.

One of the things I value about FSG is our determination to help not just individual organizations, but the field of philanthropy, focus on solving social problems - and we use data to do it. In collecting this information we learned that:

• There are over 95,000 accounts held by individuals, families and organizations who give through Donor Advised Funds. Comparing this with the 76,000 grantmaking foundations in the United States shows that DAFs have significantly broadened participating in charitable giving.
• Giving to Human Services was the biggest slice of grantmaking dollars with Education grants a close second – together accounting for 46% of the pie.
• Most inspiring are the stories behind the numbers of work being done in communities – of individuals who help rebuild schools, support local nonprofits with not only dollars but expertise and of families determined to improve the immigrant experience for others.

If you were part of the Foundations on the Hill events – please share what you’ve observed and learned. And better yet, if you picked up our latest information on DAFs and shared with your lawmakers, we’d appreciate hearing from you!

For more on DAF's check out: Community Foundations and Impact Investing of DAFs and Dollars that Respond—for Today and Tomorrow.

The response to this article has been extraordinary. Around the world people are talking about Collective Impact, holding conferences, starting initiatives. Major funders and nonprofit organizations have told us that they are changing their entire approach in order to embrace this concept. And leaders of numerous organizations in both the developed and developing worlds have consistently expressed to us that the language of Collective Impact has given them the words and rationale to explain to their boards and partners what they had been trying to do for years.

I see the world differently. I look at myself and see someone who spends his days going after social impact, but then still consumes more than most at home. I see companies where a few champions are going after shared value creation: solving social problems in ways that grows the business, but where most employees and managers are still going after business as usual. And I see industries where some of its companies are redefining their purpose around social progress, while others are still pursuing a bigger share in high consumption markets.

But at FSG it’s different. Four years ago the whole company (all 30 of us) sat down to talk about what we valued and how we wanted to communicate it. I hear people reference the resulting statements in conversation about clients and intellectual capital development and the way we work together. Just last week, at our 2012 retreat in Boston, we sat down to focus on them again – how do we convey the depth of thinking behind each statement and the ways we apply them day-to-day to the newest people at FSG? As we grow (we’re 100 people strong now and hired as many people in 2011 as were at that retreat in 2007) it’s increasingly important, and difficult, to pass that knowledge along.

Commitment to Impact – We cover a lot of material in our offsite: professional development, business planning, social bonding, etc. The moments that got the most applause, the most discussion and even the occasional tear, were the stories of impact. FSGers sharing how they saw their work change lives for the better. 

Trust and Collaboration – We invested in a workstyles assessment for the entire company to help improve the way we work together. It takes deep trust for those conversations to be fruitful, and they were. 

Authentic Engagement – My personal favorite. This is FSG through and through. In a retreat setting it means everyone is participating fully and energetically engaged (see the picture below of our table competing with others to build a block tower. Samere is authentically engaged in placing her block!) We listen actively, question rigorously, and encourage enthusiastically when we are together.

I'd be curious to hear how others have seen the FSG values in action - either at our retreat or elsewhere.  

In 2009, GE launched Healthymagination, a bold commitment to invest US $6 billion by 2015 to develop 100 new, more affordable, and simpler products that address severe health issues. In India, one of the severe health issues the company targeted addressing was infant mortality. A key Millennium Development Goal (MDG) for India, infant mortality had come to symbolize the country’s struggle to balance rapid economic progress with human development challenges. One of the causes of infant mortality is premature births and low birth weight. Babies born pre-term or at the low end of the weight scale do not have as much fat in their little bodies and struggle to stay warm. As a result, one in five of these babies don’t make it through the first month of their lives. In developed countries, such babies would be placed in incubators like the ones GE has traditional made. At a cost of US$20,000 and requiring steady electricity supply, this was too expensive and impractical a solution for India. 60% of India’s population lives in rural areas with unpredictable electricity supply and where vast majority of births are delivered by midwives at home. GE’s R&D engineers spent months reinventing their incubator and managed to bring the price down to an impressive US$2,000 – 10% of the original. However, this was still too expensive. It was then that GE chanced upon Embrace, a social enterprise born out of a Stanford Design class that had radically rethought the solution to the problem.

Bearing no resemblance to a traditional incubator, Embrace’s solution was instead fashioned as a sleeping bag with a pouch for a heating pad. The pad which could be warmed by an electric or water warmer in 20 minutes could keep the baby warm for 4-6 hours. Most of all the solution was priced at just $200 – or 1% of GE’s original incubator. Portable, affordable and practical, it was the perfect solution for the problem. GE recognized the power of Embrace’s solution and decided to partner with the social enterprise to distribute the product.

A screenshot from Embrace's website.

GE and Embrace bring very different and unique strengths to the alliance. Like most social enterprises, Embrace, unencumbered by a legacy product line was able to develop a disruptive solution to the problem. Further, it had the ability to quickly adapt and improve its design based on market inputs. GE on the other hand, brought very different strengths to the partnership. Its experience with healthcare regulatory requirements enabled it to turn a neat solution into something that was market-ready. This coupled with its awesome depth and breadth of market access as well as marketing prowess ensured the solution would reach the greatest number of population in need – far more than Embrace alone would have ever been able to reach.

In short, together, GE and Embrace will be able to capitalize on the opportunity in ways neither would have been able to alone. It is the ultimate “win-win” alliance – a match made in heaven. Both parties are quick to point out however, that it takes hard work to make such alliances successful. The speed of progress can seem painfully slow to social enterprises used to moving quickly. On the other hand, social enterprises can seem lacking in structure and organization to the large corporation. However, with enough trust, it is possible to make such alliances work as GE and Embrace have shown.

What is your experience with such alliances? We invite you to share what you see as the benefits and challenges of such alliances.

Is this an important nuance? Consider the competitive for-profit sector. Look at any successful company and without digging too deeply, you will find at least one instance of discovery and innovation. The company likely began with a creative idea (i.e., discovery), that was commercialized through the innovation process. Now consider a company that has sustained success over a long period of time, and you will likely find many examples of innovation, a mix of what are known as “BIG I” and Small i” innovations.

But to do it with less resources and competition from other priorities- are we just dreaming? For a dose of reality, I read the latest World Economic Forum global risk report for 2012, which lists “Centers of Gravity” as the greatest perceived risks in five categories. 

The five 2012 risks identified by world experts start off with, not surprisingly, economic risk: 

1. Chronic fiscal imbalances (economic)
2. Greenhouse gas emissions (environmental)
3. Global governance failure (geopolitical)
4. Unsustainable population growth (societal)
5. Critical systems failure (technological)

For those who enjoy exploring the haunting data on global risk – there are visualizations of risk to explore interconnectedness and expected impact  across the globe.  The hurdles to addressing these risks are daunting. 

What exactly is impact investing?
Impact investing can reference a wide range of activities. In a 2012 report entitled “Impact Investments an Emerging Asset Class” JP Morgan defined impact investing:

Impact investments are investments intended to create positive impact beyond financial return. As such, they require the management of social and environmental performance (for which early industry standards are gaining traction among pioneering impact investors) in addition to financial risk and return. We distinguish impact investments from the more mature field of socially responsible investments (“SRI”), which generally seek to minimize negative impact rather than proactively create positive social or environmental benefit.

This definition is helpful in that it clearly separates impact investing from SRIs and sets a higher bar for impact investors. It also indicates a certain intentionality for the investment on behalf of the donor and the intermediary providing the investment opportunity.

We see impact investing as an exciting space for DAF donors to increase the impact their philanthropic dollars can have. In 2007, according to a Council on Foundations report there was $31B nationally in DAF assets, almost half of that, $16.5B, was invested in DAFs at community foundations. Community foundations represent a major portion of DAF funds and therefore represent an enormous opportunity for impact investing of DAFs. Through our work with community foundations, we have seen that some innovative community foundations are already starting to capitalize on the opportunity impact investing represents.

The Greater Cincinnati Foundation (GCF) is on the forefront and has been experimenting with impact investing since 2002. The foundation looks for opportunities within the community that offer compelling investment opportunities for specific donors on a deal-by-deal basis. In 2011, GCF was involved with five different community investment opportunities that involved seven individual donors. The foundation looks for organizations within the community that could benefit from loans or equity investments and conducts a thorough due diligence process. It then takes the investment opportunity to potential donors who it thinks might have an interest in the investment. GCF will make investments alongside the donor and when necessary will also provide grants to the organization to develop capacity to accept the investment opportunity. GCF provides donor outreach and education on impact investing to its donors to help them understand the opportunity. In general, donors have seen a 1-2% return on their capital through the community-based investment opportunities generated through GCF. GCF sees its impact investing efforts as a way to recycle its charitable capital.

In another example, Napa Valley Community Foundation has provided individual donors with specific opportunities to make impact investments in their communities. Christina Tucker and Diane Miller outline the story of Napa Valley Community Foundation in a 2011 article titled “The Community Foundation, A Charitable Giving Vehicle for High-Net-Worth Individuals.” Napa Valley had a donor who was interested in investing in a local hospital but also had an interest in the environment. The Community Foundation worked with the donor and a professional advisor to purchase a gas congeneration power plant that turns natural gas into electricity for the hospital. The power plant was purchased with a structured gift of $500,000 and a zero-percent interest program-related investment. The hospital can now meet more than 50% of its electrical needs and one quarter of its hot water needs while reducing harmful emissions and is paying back its loan with the money it is saving. Through impact investing, the donor made an impactful contribution to the hospital and the environment, and is also being repaid the program-related investment so that money can be recycled into another investment.

Considerations for Community Foundations wanting to pursue impact investing
The community foundations that have been experimenting with impact investing have seen a number of successful project completions and provide some early leanings that can help drive success. These projects indicate:

• It is best to have a controller, CFO, or other internal finance expert involved in the process. Deals can be complex and require financial expertise on the part of the community foundation in order to best structure the opportunity. 
• Developing a pipeline of opportunities within a community can be challenging and community foundation staff will need to be willing to devote time and resources towards developing this pipeline. 
• It takes time to educate donors on the opportunities impact investing offer. One-on-one conversations with donors about the advantages seem to generate the greatest understanding and excitement on behalf of donors.

For community foundations interested in impact investing, The Rockefeller Foundation is currently working to develop a toolkit that will incorporate lessons like these as well as others to help guide the process.

In general, the impact investing opportunities we have heard about through community foundations tend to be locally-based. In comparison to many of the large national providers, many of these opportunities through community foundations tend to be on a project-by project basis rather than investment into larger more diversified funds. Donors at community foundations therefore have the opportunity to impact specific organizations within their communities while generating a financial return and retaining their capital, but are unlikely to diversify their risk across multiple projects.

Julia Coffman and Tanya Beer have also been working hard to bring discussions about strategy and evaluation into the same room – by focusing on strategic learning. They write,

Based on the increasing number of writings and conversations on this topic, there seems to be an emerging trend toward being more deliberate and thoughtful about the intersection of strategy and evaluation. This means that an organization’s strategy informs what gets evaluated, when, why, and how, and evaluation is designed and implemented to inform the development and refinement of strategy. Attending to the intersection of strategy and evaluation ultimately contributes to an organization’s ability to achieve greater social impact by making explicit the needs, assumptions, activities, resources, and desired outcomes of its efforts.

It may be helpful to consider the following questions that lie at this intersection.

A strategic planning process typically involves engaging key stakeholders in determining:

• What should we do?
• How should we do it?
• When should we do it?

While strategy and evaluation both ask:

• What’s going on?
• What should we do next?

And, evaluation focuses on:

• How will we know if we made the right choices?
• How well are we making progress on implementing our strategy?
• How will we know if our work has made a difference?

“We believe helping others is core to improving yourself. That’s why we’ve created a walkathon in every Striiv device that counts your steps and gives based on your movement. At no cost to you, Striiv and corporate partners donate on your behalf. Just walk, earn, and plug into your PC to donate. It’s that simple. You have the choice of 3 charities - providing clean water to families in South America, polio vaccines, and help save the rainforest. The more you walk the more you give.”

(Image snapshot from Striiv.com)

In addition to immediate giving, the other obvious alternative to Donor Advised Funds is charitable giving through private foundations. For most donors, Donor Advised Funds are more efficient than private foundations. By virtue of their low administrative costs, a higher percentage of funds go to charity rather than to administrative, legal and financial expenses. In short, even if there’s always room for improvement, it’s very hard to argue that the charitable sector would be better off without the possibility to give through Donor Advised Funds.

The other example is a $25 million African Agricultural Capital Fund launched by the Gates, Rockefeller and Gatsby foundations, together with JP Morgan and USAID. Both of these funds demonstrate the progress that impact investing has made with the world-class caliber of investors involved, the pro-active focus on measurable social impact, and the increasingly sophisticated structure and scale of investment.

Money is important but his message merits a read for its emphasis on the new set of development actors who bring relevant experience and ideas to the global table. Specifically, he outlines a new vision for development based on the following factors -

• New partnerships for innovation: It’s no surprise that Gates talks up investment in new “tools,” such as seeds or vaccines as investment in life-improving technologies is a focus of his foundation. Taking a step further, Gates eyes new partnerships among traditional donors, poorer countries, and the rapidly rising economies of China, Brazil, India, etc. to spur the next wave of innovation in development. For example, China’s “Green Super Rice” initiative is helping to develop new varieties of rice for 15 countries in Africa and South Asia.
• Domestic funding: While we tend to think that development is solely about money flowing from rich nations to poor ones, the biggest potential sources of aid are the lesser developing countries themselves. There has not yet been a wholesale shift but it is heartening to see African governments pledge 10% of their budgets on agriculture (eight governments have followed through thus far). Less promising is spending on health – only two African countries have followed through on a 2001 promise to dedicate 15% of their budgets on health. However, Gates is hopeful as Sub-Saharan GDP will double in the next ten years. 
• Value for money: Conventional practice has evaluators from the developed world critiquing projects in developing countries. Gates spotlights Mexico’s new National Council for the Evaluation of Social Development Policy as a beacon for more localized measurement of development activities. He also suggests public private partnerships between G20 and developing countries to inspire more cost-benefit analyses of development initiatives. 
• New forms of impact investing: To spur more investment in infrastructure, Gates recommends that emerging market countries set aside a small percentage of rapidly rising sovereign wealth funds for projects such as roads in developing countries. He also recommends that diaspora communities invest in bonds for developing country infrastructure.

My first taste of development was as a Peace Corps Volunteer in Sierra Leone in the late 1980s. At that time, we had the G7. Over the course of my life, agricultural productivity in developing countries has jumped dramatically and new vaccines have saved millions of lives. It’s amazing to think what an expanded list of countries, many of them with fresh learnings about their own development, can accomplish in the next 20 years.

David Armano, EVP of Global Innovation at Edelman (the uber PR firm) recently posted a blog on HBR about “social digital,” and writes, “…the current revolution is not only digital, but codependent on social behaviors and interactions from human beings. If the digital revolution was about computers being connected (the internet) then the social-digital revolution is about people being connected (the social web).”

Fascinating yet so simple, this evolution to the social-digital revolution. And about time for thought and discussion as we pry our thumbs from our iPhones and BlackBerries to remember the live person(s) on the other end of the ether. (Disclaimer: in all transparency you’ll catch me texting and IMing my dear husband more than I call him these days. It’s faster and I can get my message out lickety-split. Stuck in traffic. Grace has strep. R U on dinner? We’ve even been known to email each other when one is working upstairs and the other downstairs.) Madness? Efficiency? Perhaps some strange place in between that's no longer than 140 characters long.

But that's the thing about social media, new media tools and tech and how we communicate with each other today. IM, text, tweets, FB posts, LinkedIn updates all have the benefit of being focused, short and quickly delivered. And very one-sided, at least to start. I can open a discussion or a post or a tweet without actually having a conversation with anyone. There's a lot of "I" in IM. What happened to the "social" in social media?

At FSG, we've launched a new website in the last year that features this blog and 6 others...plus a verdant repository on social change thinking that we call the "Knowledge Exchange." When we developed the new site, a cornerstone for our design and content strategy was the idea of building a platform that would allow for an exchange of ideas, discourse, dialogue. An opportunity for those around us to learn and share ideas, embrace them, pull them apart, mash them up, adapt them, improve them and spread them. And that ideally, these ideas would not be ours alone.

Flash forward one year later. We have 7 living, breathing blogs. We have a knowledge exchange. We have a 100% increase in web traffic year over year. We have increases in the numbers of downloads of our thought pieces, and blow the door off the hinges metrics based on web analytics. We have a vibrant Twitter feed. Loyal Facebook fans. But, the question of the moment for us is, why aren't folks commenting and responding more? Are people reading our stuff? (Google analytics suggests yes.) Are people engaging? (metrics suggest yes--good time spent on pages.) Are people noticing and talking about these ideas (pulse checks when we are out and about, and media coverage stats suggest yes.) And yes, we know about the yardstick that for every respondent, there are at least 100 lurkers who do not post. I know this personally—I read and lurk more than I comment. But still I get itchy when it seems like a post or a tweet or an eBlast we share feels like it should get meatier dialogue going.

So, being researchers, we asked our audience some of these questions about communications and engagement in a survey, focused on our eCommunications efforts and on the new site. Thanks to the hundreds of intrepid souls who responded in late August (bless you and thank you!), respondents to the survey largely noted that their reasons for not joining in the conversations included:

- lack of other comments (oh dear…really?)
- perceived lack of subject matter expertise
- lack of time

The one that intrigues me the most and the one that my team and I will be exploring and thinking about in the coming months is the middle one: the lack of perceived subject matter expertise. As we’ve aimed to eliminate the barriers to entry to more dialogue and engagement with our ideas, and to use technology tools to engage in more conversations, we are still bumping up against a perception that thought leadership is a one-way street. We can do our best to fix whatever technology or functional glitches may be occurring that affect someone’s ability to engage with us, but this particular issue is more an issue of human connection and understanding.

How are you integrating new media and social tools to connect technology with community and the human spirit? Please post your response here so we can share with each other.

The event sought to answer three key questions:

• What kind of innovation approaches does tomorrow's society need?
• Why are Shared Value and sustainability the answers?
• But why do many such innovations result in a "dilemma"?

Imagine that you’ve decided to build a CO2-neutral car – a car that doesn’t create any net new emissions. Imagine that you are authentic about it, meaning that you’re not satisfied by the car not emitting new CO2, you also want the production of the car to be CO2-neutral. You discover that in theory, there is enough alternative energy in the country that you produce in to power the production of the car. But in practice there is not yet a solution to capture and store the wind and solar energy excesses on any given windy or sunny day, so you can’t actually access this alternative energy. In the old, pre-shared value paradigm of doing business, you could easily say that as a car company, it is not your duty to solve this problem. But in the new paradigm, a paradigm where you develop new products and services in part by redefining productivity in your value chain and working with partners in your cluster, the logical answer is to roll up your sleeves, call your best innovators to action, and develop a technology to solve this problem. Does this sound utopic? Maybe. But Audi is doing this as we speak with its new e-gas project.

“Ownership” is so passé

If all goes well, our children will scratch their heads at the notion of “ownership”. The notion that we buy products for our own individual consumption and then dispose of them eventually – even if we try to recycle – will hopefully seem outlandish. The society of tomorrow must move to the concept of “usership” or even “stewardship”. These means that customers purchase temporary access to products that have been designed for dismantling and reuse from the beginning. After a certain period of time, the producer or a third party proactively takes the product off the customer’s hands, replaces it with a newer version, and feeds the components of the original product back into its production processes. It sounds so simple and obvious. But it doesn’t always happen. Moreover, the concept of individual ownership, which implies endless amounts of idle time, must also be tossed out. We need a “Zipcar” model for much more than cars!

Dare to cannibalise

Thanks to Clayton Christensen, and Kurt Matzler and Stephan Friedrich von den Eichen from IMP, the seminal book “The Innovator’s Dilemma” has finally been released in German, both in terms of language but also in terms of examples and the German context. As you may recall from reading it nearly 15 years ago, successful companies often fail to recognize and ride new innovation waves because they are doing everything right. Hence the dilemma. It was true in 1997, it is still true today. Shared Value innovations in particular can cause companies headaches because if they result in better and potentially cheaper products and services, established products and services can quickly become cannibalized. However, avoiding this dilemma in the short-term by putting breakthrough innovations that can erode margins into a drawer is never the right answer in the long-term. For someone else will just make the same discovery anyway. It is better to cannibalize yourself than to wait for someone else to do so. So as companies are reconceiving products and markets, redefining productivity in their value chain and even enabling local cluster development, they should embrace potential cannibalization, not shirk it.

But breaking things cannot be our recipe for social change. History tells us that breaking things almost always spreads to the destruction of people and institutions who could have been powerful agents of progress.

We must get ahead of the pain and the breaking points, and help our governments, businesses and non-profits find ways to deal more effectively with our social challenges. As I observe rallies in the streets from Athens, Madrid to New York – I admire the courage but I fear the breaking instinct. I ponder the energy dedicated to protest, but I hope to channel it towards action.

League and team reps hailed from the MLB, NBA, NFL, MLS, NHL, EPL…and, well, seemingly whatever three letter acronym describes your favorite sport of choice.

FSG’s co-founder, Michael Porter, gave the keynote address focused on the role that Shared Value can play in sports. Noting that most sports teams are engaging in primarily philanthropic community-based efforts, he encouraged teams and leagues to address the social issues surrounding their sports in a way that drives business value too. A fair enough call to action, but practically speaking, what could Shared Value look like in practice for professional sports?

Take the Pocono Raceway in Pennsylvania, for instance. Faced with a deregulating state energy authority, the Pocono Raceway performed a business-driven analysis that suggested that their energy costs could rise by as much as 40-60% - any business would be alarmed by the prospects of a key cost rising so precipitously. So, they set out to figure what they could do about it. The business asset they had most readily in abundance was space – so they evaluated how they could connect all of that space with the various power options at their disposal – wind, geothermal, solar, etc. And, a business case emerged that suggested that solar power was going to be their best bet to combat the energy price increases they faced….$16M in solar farm investments and later the track is not only generating power for itself but driving a new revenue source by returning energy to the grid.

Some stats from Pocono:

• 3MW Pocono Solar Project came online after just 3 months of construction with 40,000 photovoltaic modules covering nearly 25 acres
• Will produce more than 72 million kilowatt hours (kWh) of energy over the next 20 years
• Will generate enough power to provide the electricity needs for close to 1,000 homes beyond the power needs of the Raceway

As it turns out, according to track president Brandon Igdalsky, the story, however, didn’t end there. A funny thing happened on the way to returning power to the Pennsylvania grid – race goers started providing overwhelmingly positive feedback on Pocono’s solar investments. And, Brandon believes that the track’s green initiatives have not only attracted new fans to his track, but also have contributed to a new way for NASCAR to think about creating shared value…in a sport known, even as he acknowledged, more for resource usage than resource creativity.

Congratulations to the Beyond Sport team for a great event and let’s hope examples like Pocono provide the impetus needed for other sports to move beyond philanthropy and into CSV.

The conference theme was “steps” – what bold steps, fresh ideas and new solutions are out there for community foundations?  As I think about my work with CF Insights, I am inspired .  The work we do in partnership with the Council on Foundations and the Community Foundations Leadership Team extends the learning and support year round – making sure support is available when foundation leaders get back to their desks and board rooms.   Each day we focus on providing resources that help community foundations advance, one step at a time.

Community foundations are a source of stability, permanence, and strong community values (‘For good.  For ever.’ as many say).  But the world is ever-changing.   Donor priorities, community needs, philanthropic opportunities, competitive offerings, and economic circumstances are constantly shifting.   Making sure the community foundation can sustain its strength, stability, and leadership is essential – and the business model needs to continually evolve.  

Community Foundations recognize this as the challenge it is.  In a plenary session on competition, Silicon Valley Community Foundation CEO, Emmett Carson stressed the need to fix a “broken” community foundation business model.   He urged community foundation leadership to take steps to differentiate themselves.  His comments sparked conversation and resonated with many in attendance.      

An essential addendum to the conversation is that many community foundations are taking action.  CF Insights’ research and work with our members demonstrates that innovative community foundations are constantly tuning the business model, using data to make smart and often bold decisions.   

• Focused on bringing a legacy business model into the future, Arizona Community Foundation faced a few key challenges:  86% of revenue from asset-based fees; an operating budget $400k higher than expected revenues in 2010; and a fee schedule that did not differentiate between products and services that operated differently.  Guided by Fueling Impact, ACF was able to define new goals, develop new revenue sources, and adjust current operating practices.  By taking a hard look at the data, ACF made smart decisions to better serve the interest of their community.

• Building the case for action based on facts, Community Foundation of North Texas is working hard to meet National Standards, build endowment, grow operating revenues, and adjust their fee structure to match business model priorities. This savvy foundation worked with CF Insights to benchmark similar community foundations and explore a range of metrics:  the history of asset growth at peer foundation, the types of gifts, and staffing ratios.  The data has built the case to take action, adapting management practices to achieve significant new goals.  

• Understanding the foundation’s economics has led The Greater Cincinnati Foundation to increase its revenue base and tune-up its product line.  The foundation worked with CF Insights to conduct an in depth economic analysis. As they discovered, adapting your business model is a lot easier if you understand the costs of your products and services.   As a result of looking at the data, they made some immediate changes to make their services more sustainable, including adjusting fees.

It is essential that as the world keeps changing, community foundations keep learning from one another and their colleagues across different philanthropic communities.  Grounded in data, community foundations will be able to leap forward into the future, or fine tune their business models as they go, ultimately strengthening their ability to achieve greater social impact.

This was the question Stephanie Powers, the director of the Council on Foundation’s Public-Philanthropic Partnership Initiative, posed to a roomful of community foundation leaders at the Council’s annual Community Foundation Conference last week in San Francisco.  A particularly relevant question, given President Obama was in the process of unveiling his 3 trillion dollar debt reduction plan – a plan that undoubtedly will have far-reaching consequences to the philanthropic community and the regions that they serve.

John Kania, Managing Director at FSG, provided a perspective on the problem: work differently. Many factors prevent successfully cracking complex social problems - lack of human capital, lack of financial resources, lack of public will. The biggest issue, however, is that organizations are working in isolation. Instead of using a rushing torrent of water to carve a canyon, nonprofits, funders, and public entities are chipping away at it one drop at a time. Progress against social problems is held back by strategies that promote isolated impact versus collective action.

So how do you turn the tide? How do you do more with less? For starters, you change the way you collaborate. For years, groups have assumed they could gain leverage and solve social problems by collaborating with others. This is true – to an extent. But not entirely effective, as we still are facing many of the same, and in some cases growing, social problems today.

To do more with less, stakeholders will need to go beyond collaboration to collective impact. Align, share, complement, communicate and support. This is not your mother’s collaboration – this is collaboration on hyper-drive.

By working differently, the philanthropic field, and can better position itself to attract more public funding to a cause. Federal, state, and local governments are trying to do more with less, too. Put yourself in Uncle Sam’s shoes: If you have finite funds to invest in addressing social problems, how would you want to give? Take a “spray and pray” approach by funding a handful of well-meaning organizations? Or fund a well-coordinated, streamlined group of committed and aligned multi-sector stakeholders? Now that is how you get bang for your buck.

So who’s doing it? Who has seen success?

Take the Franklin County Communities That Care Coalition (CTC).

• Who are they? CTC has more than 140 members, including local government, businesses, schools, law enforcement, faith-based organizations, media, hospitals, mental health providers, parent advocates, and afterschool programs.

• What do they do? CTC promotes the health and well-being of young people, focusing on reducing risk factors and strengthening protective factors to target youth substance abuse and other behaviors.

• How did they do it? The Coalition engaged in a strategic planning effort to identify key goals, and created buy-in from members to contribute staff time and align funding, resources, and programming to those goals. Then individual member agencies applied for funding and directed it to coalition goals and strategies. 

• What results have they seen?  They have seen a 10% decline among  8th graders in alcohol abuse (16% decline among 12th graders); a major decline in binge drinking among both grades; and a 10% decline in marijuana abuse among 8th  graders (13% decline among 12th graders).

• How did they leverage their funding? As a result of this alignment, the coalition leveraged multiple streams of Federal and State substance abuse funding, and other sources, for a total of nearly $5M over 9 years, including multi-million dollar grant support from the US Dept. of Health and Human Services, the US Dept. of Justice, and Massachusetts Dept. of Public Health (among others).

During the conference break-out groups, community foundation leaders reflected on their success stories in securing public funding, as well as lessons learned. Some of the key takeaways include:

• Be at the table: Change mindsets and influence how public dollars are being spent by getting involved in the conversation

• Get your Board on board: Communicate with your Trustees to solicit their ideas and gain buy-in to your strategy. Influencing the public agenda is effective, but can make some uneasy if not well informed.

• Invest in relationships: Take the time to get to know and build relationships with public sector officials. Often, they don’t know who to connect to in the philanthropic sector. Let it be you!

• Deemphasize attribution: No man is an island – nor is a nonprofit or funder. Commit to your cause, work together with partners, and celebrate your collective successes rather than your isolated impact.

• You can’t know enough: Leverage your peers in the field. Invite community foundation leaders who have been successful in securing public funding to speak with you and your Board.

• In for a penny, in for a pound: Know what you are getting yourself into when accepting public funds. When you accept public funds, know you are also accepting accountability for public reporting requirements (and the administrative burden that goes along with this). Think creatively about to structure that investment (e.g., supporting organization).

• Create awareness: Help educate the public sector on the role of community foundations – you are more than a charitable checkbook – you are an innovator, a convener, and an incredible resource about the needs and stakeholders in your community.

• Key your eye on the prize: Be patient. Taking a collective impact approach to solving complex issues will take time, as will helping to influence the public agenda and how dollars are being spent. Remain flexible to adapt to changing conditions.

What are your success stories and lessons learned from engaging in public-philanthropic partnerships?

So what does this all mean for philanthropy in India? On the one hand, these past two years have been exciting times for Indian philanthropy. Large pledges have been made by business leaders such as Azim Premji, Shiv Nadar, G. M. Rao and most recently by Rakesh Jhunjhunwala (India’s most famous investor, often held up as India’s equivalent of Warren Buffet). On the other hand however, even compared to the relatively few resources India spends on its social issues, philanthropic resources here are a drop in the ocean given what is needed. Let’s again put this into context. India’s national education budget mentioned above represents a sum which is eight times the total charitable contributions by individuals in this country. Even if we assume that half of all individual contributions go to education that would total a mere 6% of the public education expenditure.
The bottom-line is that more than anywhere else in the world, Indian philanthropy needs to be laser-focused on those key interventions that can effect large-scale change at the systems level – in other words, they need to be highly Catalytic. To contribute to this dialogue and learning about Catalytic Philanthropy in India, FSG are currently in the final stages of publishing a report on Catalytic Philanthropy practices in this country with our partners the Center for Emerging Market Solutions at the Indian School of Business. To write this report, we looked for and researched catalytic practices that were already underfoot amongst Indian philanthropists. To our surprise, we found quite a number of highly innovative examples. Donors like Dr. Anji Reddy and Azim Premji working through their namesake foundations, Rohini Nilekani through the Arghyam Foundation and Hemendra Kothari through the Wildlife Conservation Trust, are adopting approaches that have the potential to catalyze large-scale social impact on a variety of critical issues such as skills development, public education, water and wildlife conservation. These philanthropists are laser-focused, use data to drive systemic change, engage heavily on cross-sector collaboration to do their work, use multiple tools in the philanthropic toolbox (including advocacy, building knowledge for the field, mass/social marketing & communications) and measure and learn continuously.

I’ll share just one example here to give readers a sense for just how innovative Indian philanthropists are in their approach. Here’s the story of how the Hemendra Kothari Foundation funded Wildlife Conservation Trust uses mass communications to catalyze change on its target issue: wildlife conservation.

In 2009, the Wildlife Conservation Trust, partnered with the Indian mass media network, NDTV and one of India’s largest mobile telephone operators, Aircel to launch a major mass media campaign to increase public awareness around wildlife conservation. To make the campaign as memorable as possible, it was focused on a simple message about the danger of extinction of India’s most majestic and proud mammal – the Royal Bengal Tiger. The campaign, coordinated across multiple media and making heavy use of Bollywood celebrity endorsements, ignited the public’s imagination across the country - there were marches, cycle rallies and signature campaigns demanding action before it was too late. The campaign included a 12-hour save our tigers telethon that raised a total of $1 million – $0.5 million from the public, matched by $ 0.5 million by Hemendra Kothari, Chairman of the Trust. The Wildlife Conservation Trust, designated the implementation partner for the campaign, is now engaged in using those funds to create change on the ground.

More than the money it raised, the campaign has been a crucial contributor to significantly increase in public awareness of the issue of wildlife conservation. Anish Andheria, the Director of the Trust captured the impact of the campaign as follows: “The increased awareness has led to activism at a local level. You read much more today about conservation in the papers. The common person is talking much more about it. Both the public and local media are putting pressure on the forest department to take action. The government is taking much greater notice of the issue as a result of all this awareness”

The full report will be published in the near future and will contain more stories of these remarkable philanthropists and their even more remarkable work. We invite you to read, learn and share your experiences!

Since publishing the SSIR article “Collective Impact,” we at FSG have heard from many, many exciting examples of multiple organizations working together to create positive social change around the world.  These examples span different geographies (from a single neighborhood to multiple countries) and a wide range of social issues (environment, health, education, public safety, workforce development, homelessness, etc), and many are employing the five conditions of collective impact outlined in the article: a common agenda, a shared measurement system, mutually reinforcing activities, continuous communication among stakeholders, and a backbone organization to support the effort.  Of these five conditions, practitioners report that one of the most challenging to achieve is shared measurement - the use of a common set of measures to monitor performance, track progress toward goals, and to learn what is working and not working. 



It’s not surprising that shared measurement is so hard. As outlined in FSG’s white paper “Breakthroughs in Shared Measurement and Social Impact,” the traditional paradigm of evaluation focuses on isolating the impact of a single organization, or of a single grant, rather than assessing the impact of multiple organizations working together to solve a common problem.  It can be very challenging to come to agreement on common measures, with competing priorities among stakeholders or even concerns about comparative measurement across providers working in the same space. There is often limited capacity for measurement and data analysis within individual organizations, not to mention the significant time and cost of developing and maintaining a shared measurement system among multiple organizations.



But for many collaborations, the benefits of shared measurement outweigh the challenges. These benefits include greater alignment among the goals of different organizations, more collaborative problem solving, and the formation of an ongoing learning community that gradually increases the effectiveness of all participants. In some cases, simply the process of defining shared measures has led to significant changes in the way that organizations do their work. 

When stakeholders in Calgary, Canada came together to define common programmatic measures around reducing homelessness, they found that providers had very different definitions of key homeless populations, such as “chronic” or “transitional” homeless, and that their services were not always aligned to the needs of the individuals served.  The process of developing common measures led some organizations to fundamentally shift their service offerings and to coordinate with other organizations in order to better serve the homeless population.

One key to success is that developing common measures is itself a collective effort, with broad engagement by many organizations in the field and with clear expectations about confidentiality and transparency. The Road Map for Education Results, an education-focused collective impact effort in Seattle and South King County, established four work groups across the cradle-to-career continuum to develop common measures using clear criteria, and then refined these measures through iterative meetings with hundreds of stakeholders – including mayors, superintendents, CBO leaders, and parents – before finalizing a common goal and set of shared measures.



Other key success factors for shared measurement include:

• Funding: Shared measurement systems are expensive to develop and maintain. Having strong leadership and substantial funding throughout the development period is critical.
• Infrastructure: It is important to have ongoing staffing support to provide training, facilitation, and to review the accuracy of data.  (This is sometimes the role of a “backbone” organization, but not always).  Web-based technology enables multiple users to access and use a shared measurement system.
• Learning and Improvement: Once shared measures are defined, it is critical that there is a facilitated process for participants to gather periodically to share results, learn from each other, and refine their individual and collective work based on the learning.  This learning and improvement process is often supported by the “backbone” organization.  The shared measurement system itself must also be tested and continually improved through user feedback.

For those interested in learning more about this topic, I will be leading a session about shared measurement in the context of collective impact at the Stanford Nonprofit Management Institute on September 27th.  Participants will learn about innovative examples of shared measurement and details on the steps to developing shared measures, as well as the benefits and challenges involved in implementing this in their own work.  Also, stay tuned to hear from collective impact practitioners about how to develop and learn from shared measurement in an upcoming FSG webinar.

No single company, organization or government can find these needed answers. Only through extraordinary partnership will we collectively find meaningful answers. Today, Lilly announced the Lilly NCD Partnership. The goals of the program—

• Explore and research comprehensive models of care for people who have diabetes through partnership with leading global health organizations.
• Report as soon as possible about what we are finding so others can evaluate and replicate should they like and then advocate that the best answers and approaches be expanded.

We are inspired by the complex NCD issue; we are honored to have a committed array of partners in Brazil, India, Mexico, and South Africa. I applaud and ask other organizations joining in the effort to find answers to the NCD issue to bring their full assets and expertise to bear so collectively we can help those we may never have the chance to meet but who await an answer.

About Tracy Sims: Tracy J. Sims is the Senior Advisor of Global Health Programs, and Vice-President of the Lilly Foundation at Eli Lilly and Company. Mr. Sims is responsible for leading strategy development and tactical implementation of Lilly’s global corporate responsibility programs. Mr. Sims oversees staff that is deployed globally in support of the global health strategy. Mr. Sims joined Lilly in 1995 and since has held several sales, marketing, corporate affairs, and strategy leadership roles. Prior to joining Lilly, Mr. Sims held positions with the American Diabetes Association. Mr. Sims is a member of the Board of Directors for the Ruth Lilly Health Education Center, which focuses on improving the health status of youth in Indiana.

In Mark and John’s study, they identified five criteria for successful collaborations:

1. A common agenda;
2. Shared measurement systems;
3. Mutually reinforcing activities;
4. Continuous communication;
5. Backbone support organizations.

Whether your work centers on hunger or climate change, disease eradication or legislative change, I encourage you to consider whether the conditions are ripe for you and like-minded stakeholders to discuss the potential for combined, collective impact. By working together, we can make a powerful difference improving lives and strengthening communities everywhere.

About Diana Aviv: Diana Aviv is president and CEO of Independent Sector, the national leadership forum for America’s nonprofits, foundations, and corporate giving programs. Diana is a leading speaker on trends in and key issues for the sector, such as the financial state of nonprofits, public policies affecting charities and foundations, the role of civil society in democracy, and civic engagement. She has testified several times before Congress and has been featured in media outlets such as The New York Times, The Washington Post, The Wall Street Journal, NPR, and MSNBC.com. President Obama appointed Diana to the White House Council for Community Solutions in December 2010.

But, to be honest, it has also been met by confusion, skepticism and debate. For example, a debate, which included commentary from FSG’s own Mark Kramer, ensued in July, based on a post to the Philanthropcapitalism blog by Matthew Bishop.  Just  last week, Aman Singh posted to a blog on CSRWire in which she contrasted shared value to corporate social responsibility (CSR), from the perspective of mainstream media. Her post highlights the ongoing debate over CSR’s feasibility. In it Singh points out “…Porter start[ed] a flurry of debates, white papers and panels…” referring to the publication of “Creating Shared Value” by Porter and Kramer in The Harvard Business Review.

Creating Shared Value is obviously complex, but as a “lay person” here at FSG, perhaps I over simplify the issue. I recently came across an article in the Boston Globe that put a different spin on how one might think about Shared Value.

Typically the idea or debate concerning Creating Shared Value starts in the board room  and makes its way to philanthropy. But in the case highlighted in this article the approach was turned inside out.

According to this pithy article, a group of nuns, the Benebikira sisters, led by one Sister Augusta found themselves in dire straits. Faced with a multitude of growing social problems in their native Rwanda, they expanded their ‘mission” to include for-profit business development. That’s is to say, they sought ways to be self-funded, while simultaneously bringing about positive social change. They are in the process of creating profitable businesses that also directly address and serve Rwanda’s social issues.

Sister Augusta came to understand that building an organization that can turn a profit not only helped to fund her charitable work, but was also integral to her charitable work. In her case, she just needed to think a bit more like a business person. Her focus is still first and foremost on her charity mission, but she has broadened her sight, and thinks creatively on how, as a business person, she can do more to advance her social mission. Her approach was a mirror image of creating shared value.

Creating shared value asks business people to think a bit more like a nun. Primary focus remains on business goals and objectives (i.e profit and shareholder value), but sight is broadened to think creatively about how the business can be simultaneously served by addressing social issues.

Perhaps Sister Augusts’ story is not a complete equivalent to creating shared value, but for me anyway, it offers an interesting reflective look at the basic concept. Charity and business do not and should not be seen as mutually exclusive, but potentially symbiotic and strategically tied. As Porter put it “[Shared value is] a more sophisticated form of capitalism,” in which “the ability to address societal issues is integral to profit maximization instead of treated as outside the profit model.”

Recall that the title to Porter’s and Kramer’s article that kicked off this debate included the phrase “Unleash a Wave of Innovation and Growth."  Therein lies the challenge. Whether CEO or “NUN”, the challenge lies in thinking creatively, and being innovative. While for me, CSV is a simple concept,( i.e. it "simply"  looks at the connections between societal and economic progress) it is nonetheless NOT “business as usual.”

When my optimism is muted, I think of my son, Diego. One day, about 6 years ago, I was driving Diego to kindergarten. Like many younger brothers, Diego is very impressed by his older brother, Bron. Diego announced from the back seat, “Daddy, when I grow up, I’m going to be taller than Bron!”

I replied, “Maybe, Diego, we’ll just have to see.”

Diego persisted. “Daddy, when I grow up, I’m going to be stronger than Bron!”

I replied, “Well, Diego, we’ll see.”

His voice getting more urgent, Diego insisted, “Daddy, when I grow up, I’m going to be older than Bron!”

I paused and then said, “Well, Diego, you might get to be taller or stronger than Bron. But one thing we know for sure – you can never be older than Bron.”

Diego caught my eye in the rear view mirror. Undeterred, he replied, “We’ll see!”

The U.S. banking industry would put even Diego’s optimism to the test. FSG co-founders Professor Michael Porter and Mark Kramer write in “Creating Shared Value” that private sector legitimacy has plummeted because companies are perceived to be prospering at the expense of the broader community. The banks are a striking example. Gallup reports that trust in banks has reached an all-time low: 36 percent of Americans have little or no confidence in US banks. With uncertain legitimacy and a challenging economic environment, US banks should be exploring opportunities to Create Shared Value.

Many banks have impressive CSR and Philanthropy: Goldman Sachs is providing 10,000 underserved women a business education; Citigroup gave away $70 million last year, focused on education and entrepreneurship. But while we can cite many examples of pharmaceutical, consumer products, technology, and other companies finding innovative ways to address social needs and strengthen their competitiveness, few examples of CSV exist among leading banks. Bank of America works with inner city businesses in conjunction with ICIC. Barclays’ Banking on Change partnership in conjunction with CARE and PLAN has set ambitious targets in the developing world. The vast majority of banks, however, are doing nothing of significance.

While banks undermine my optimism, organizations like the Center for Financial Services Innovation (CFSI) restore it. CFSI’s mission is to transform financial services to help underbanked consumers achieve prosperity. Per CFSI, 26% of US households are underbanked – a huge market opportunity. CFSI works to create transformation, not through government regulation, but by helping banks recognize the long-term financial opportunities.

Making the business case to US banks is complicated. They are deeply wed to traditional business models. They struggle to find ways to apply their strengths – the ability to understand risk, create new products, and identify consumer segments – to deliver solutions for the underbanked.

CFSI advocates principles for financial services companies: three of them represent CSV opportunities:

1. Distinguish between competitive and pre-competitive parts of the underbanked opportunity

Banks must collaborate in areas that are “pre-competitive,” confronting complex challenges such as: improving risk assessment and management, creating the market infrastructure, partnering with government and NGOs. Banks can chart independent courses in the competitive elements of the market, such as building a compelling customer experience.

2. Integrate the CSV opportunity with the rest of the bank operations

Banks will only succeed if they use their best talent. This requires integrating the underbanked opportunity with the rest of operations so that the most creative personnel in product development, market research, and credit focus on finding new solutions.

3. Do it at scale

To build a successful model, banks must experiment. They must test many potential solutions simultaneously. Most ideas will fail. In order to find the few that succeed, banks must pursue the opportunity at scale and not just a few pilot initiatives.

4. Identify gaps in the business model and find partners to help fill them

The challenges of the underbanked are manifold. Even if banks work pre-competitively, integrate CSV, and do it all at scale, there will still be gaps in the business model. Gaps may lie in market knowledge, customer education infrastructure, or even in getting credits and debits to line up. Banks must explore new partnerships to fill the gaps. Partners might be educational institutions, community organizations, government, or others trying to meet the needs of the underbanked.

Large US banks do not have an impressive track record in CSV. Considering their lack of creativity in working with the underbanked, there may be little reason for optimism. But I choose to adopt Diego’s attitude. Not confined by logical constraints, nor a long history of undistinguished bank strategy, I choose to be inspired by the work of CFSI. Banks can take a new approach. Executed in the right way, CSV initiatives in Inclusion, Financial Capability, and Mobility can create tremendous wealth for banks and start restoring their legitimacy with the American people.

When the doctor arrived home, he called a meeting of the hospital’s leadership, where together, they identified a number of reasons for poor hand hygiene (informal evaluation!). Their reasons included: (a) doctors are too busy to wash, (b) a sink is not always handy, (c) Purell dispensers are not convenient, (d) self-deception—doctors think they are washing more often than they are, and (e) arrogance—“not me” attitude. After this meeting, the hospital devised a number of “social interventions” to incent doctors to wash their hands more frequently. They sent e-mails and faxes, and developed posters that were placed around the hospital. They concluded, however, that none of these worked (another informal evaluation). They then started a campaign in the hospital parking lot where nurses handed out Purell (another social intervention). They also roamed the wards and handed out $10 Starbucks cards to doctors who were washing their hands. Although compliance did rise to 80% from about 65%, they were still not meeting the Joint Commission on Accreditation of Healthcare Organization’s requirement of 90% compliance (and a visit from this body was imminent). (Note that the informal evaluation results were being used, but behavior wasn’t changing to the degree necessary.)

When these results were presented at a luncheon attended by the chief of staff advisory committee, the doctors were quite discouraged. However, much to their surprise, after they finished their lunch, each person was handed a sterile Petri dish loaded with a spongy layer of agar and were told they were going to give a culture of their hand. Obediently, they pressed their palms into the plates, which were then sent to be cultured and photographed. According to the doctor who initiated this activity, the resulting images “were disgusting and striking, with gobs of colonies of bacteria”. As a result, the administration decided to photograph the Petri dish and make it into a screen saver, which is now on every doctor’s computer. As one person explained, “When you present them with good data, they change their behavior very rapidly. Some forms of data, of course are more compelling than others, and in this case, an image was worth 1,000 statistical tables”. Hand-hygiene compliance shot up to nearly 100% and has stayed there since this occurred.

But what happens when those brains are located all over the globe? We’ve got 6 offices in 3 countries but when you include travel for client projects, we’re in even more locations than that. Yet we aspire to do things that only a cohesive group working together can achieve. As a result, we spend a lot of time and energy trying to create and maintain a unified organizational culture, or what we call one firm feel.

One firm feel means that regardless of where an “FSGer” is located or what project we’re on, we have access to all the firm’s resources and a common vision of what success looks like. It means that we can join a project that’s already underway and know how to plug in: asking questions and suggesting methodologies with confidence from day one. Not only does one firm feel mean better service for our clients, but it creates an engaging and invigorating place to work (see our core value on finding vitality in our work.)



Some of the things we’ve found that keep us connected (while keeping costs in check) are:

• Liberal use of videoconferencing so we can see AND hear our colleagues in group or one-on-one settings. We continue to experiment with new technologies that help build communities and reinforce our collaborative culture
• Cross-staffing our teams (client facing and internal projects) so people from different offices get to work together
• Including culture onboarding in our new hire orientation training – among other things, this discussion typically includes a history of the firm with key milestones that shape who we are today, a discussion of our core values and how we identified them, and an overview of our goals for the year and how we developed them
• Holding virtual, all-firm meetings each month to talk about firm business and recent client projects
• Taking full advantage of visits to other offices by including extra time for team building, office hours or a good old-fashioned “happy hour”
• Getting the entire firm together, in-person once a year (see Kyle’s blog post about our retreat in January). It’s a financial investment but there’s no replacement for the learning and brainstorming that happens in person.

While living in Cartagena this spring, I had the pleasure of learning more about this effort and how it puts FSG’s Collective Impact thinking into practice. As many of you know, we believe Collective Impact depends on five components: a common agenda, a shared measurement system, mutually reinforcing activities, continuous communication among stakeholders, and a backbone organization to support the effort.

Mutually Reinforcing Activities and a Backbone organization: Participants in this effort bring unique skills and take on specific responsibilities. The National Hotel Association helped to launch the effort and act as a central voice regarding the needs of hotels with respect to requirements for quality and standardization in products. USAID and the Government of Colombia provided financial and strategic support for the program. The six largest hotels in Cartagena signed on to this effort and committed to sharing information about product requirements and to eventually buying 20% of their products from local producers. Local foundations and technical providers are the liaisons with the microenterprise owners, delivering the knowledge and practice to strengthen the quality and quantity of relevant products. The Clinton Foundation funds the technical assistance providers, gathers data and provides the backbone services to the effort, troubleshooting issues that arise, facilitating discussions and issue resolution with hotels, expanding the outreach to new “industries” and keeping the flow of data open and transparent across stakeholders.

From Grantee to Strategic Partner
We’re witnessing a profound shift in the relationship between NGO and business where mutual needs are being served in the spirit of Shared Value. This new relationship will not replace the role NGOs have played with companies for decades – as recipients of matching grant funds, service providers for disaster relief, and implementers of projects that benefit communities where employees live. Yet, as businesses see their touch points with society less out of obligation and more about competitive advantage, NGOs will serve a new purpose and new partnership criteria will appear. For the most part, this will expand, rather than reduce the pie of resources available for NGOs from corporations.

Strategic Partner Examples

• Redefining productivity in the value chain: NGOs have been working with the private sector in a partner or “supplier” mode for years. It’s in the value chain where businesses have been most apt to partner with NGOs, particularly around issues of compliance. We’re now seeing new nonprofits move beyond compliance to improve efficiencies in the value chain that have huge social and environmental benefits. Nonprofit FishWise partners with seafood retailers, producers, and distributors to find more sustainable sources of dwindling ocean fish. The World Wildlife Fund (WWF) acts on an even larger global scale, partnering with Walmart on similar sustainable seafood issues and Coca Cola to help the company improve its use of water.
• Enabling local cluster development: TechnoServe is a longtime partner to business. What’s noteworthy is the cast of new NGOs entering into partnerships. CARE has dozens of corporate sponsors and among these are a few that are examples of Shared Value. For example, CARE helps to train farmers in Ghana to improve their cocoa yields on behalf of Kraft. Nonprofits also enhance the communities where products are sourced on behalf of companies. Save the Children is partnering with Starbucks to provide education and health services in its coffee-growing areas.
• Reconceiving products and markets: Seattle-based PATH is a highly-regarded nonprofit that frequently partners with the private sector to develop health technologies for patients in developing countries. For example, the NGO dramatically expanded the use of a vaccine for Japanese encephalitis, a disease that affects the rural poor, by helping with tricky regulatory hurdles and negotiating a public sector price so that the Chinese commercial partner made a financial return. PATH worked in a similar way with US-based Temptime Corporation to develop a vaccine vial monitor to reduce vaccine spoilage.

Business partnerships are not always the answer for NGOs as there might not be obvious overlaps. But when the rationale exists, it’s clear that each actor has unique offerings. For example, PATH comes to business with a bundle of incentives, relationships and tools that fill gaps and make it more economically viable to develop a health technology. Each side is looking for particular, non-existent relationships, knowledge, and resources:

NGOs Should Seize the Initiative
Rather than wait for business to knock on their doors, NGOs should pursue these assets and skills to scale, sustain and accelerate their missions. Where to look?

On behalf of the beneficiaries and at-risk environments in which they serve, nonprofits can create more social impact by leveraging the private sector’s need for the following:

• Continuous supply of high-quality inputs and talent
• Reduced costs in the value chain
• Continued vitality in communities where workers live
• New markets and customers

Starting with the NGO’s targeted beneficiaries and locations, NGOs can look for leverage in places where there is an existing geographic or product overlap or where companies will need to de-risk their value chain, introduce new products, and address deficiencies in their competitive context.

Today, many nonprofits tend to view companies as funders. There’s nothing wrong with this philosophy and much good comes from traditional company-NGO relationships. But if nonprofits want their programs to move from pilot to solution more quickly and in a sustainable manner, they would be wise to reconsider business as Shared Value partners.

How do you find like-minded organizations that are committed to sharing?  How do you agree on common terms?  What level of transparency are you and your peers comfortable with?  How do you get the data in a timely way?  How do you interpret the data in a way that yields new insights?  And even if you’re able to achieve this once through a research process or benchmarking study, how do you sustain the effort? 

Breakthroughs in Shared Measurement featured innovative examples of nonprofits developing shared approaches to performance, outcome, or impact measurement.  These efforts are inspiring, creating new opportunities to gauge progress and help organizations learn from one another. 

Over the last four years, I have been inspired by the 130 US community foundations who have committed to share knowledge and improve performance through the creation of CF Insights, supported by the Council on Foundations and FSG.  The idea is simple:  What if each community foundation could know what all community foundations collectively know?  But as with many things, the details are complex. 

I’ve had a front row seat as CF Insights has grown from an idea to a reality.  There have been bumps along the way, but community foundations have navigated each of them:  Defining clear and relevant performance data.  Generating enough participation to create critical mass.  Finding the right balance of participants to represent the diversity of community foundations.  Delivering value to early contributors so that the model can be sustained.  These are all challenges, but community foundations have an admirable sense of responsibility to one another and to the field as a whole.  They’ve stuck with it and the effort is yielding tremendous results. 

Today, CF Insights participants have timely performance data available at their fingertips, and are able to compare themselves to organizations they define as peers.  The Community Foundation for the Fox Valley Region in Wisconsin uses the CF Insights database to quickly assemble comparative data for Board presentations.  Arizona Community Foundation used the data during a recent strategic planning process to help define what makes them unique.  Comparative data helped identify areas of strength or challenges where the organization should be learning from others.  Others, like The Dallas Foundation, use the data to make the case for changes to policy or practice.  Even during the economic downturn, the organization tapped data about similar community foundations to justify an important investment in internal capacity. 

All too often we lament the social sector’s lack of performance data.  Let’s celebrate the groups that have prioritized collaboration, taken on the challenges, and advanced their own knowledge –individually and collectively.   

What a golden opportunity for Creating Shared Value – companies could create a competitive advantage by designing and selling energy efficient DVRs that offer significant cost savings to the consumer and reduce carbon emissions. The leading manufacturers and service providers could transform the DVR market to competing on the “greenest DVR” – the Prius of TV watching, if you will. This original report by the National Resources Defense Council estimates $3 billion annually is spent on energy for DVRs and it lays out a number of suggestions for innovation across the industry.

“I don’t want to use the word ‘lazy,’ but they have had different priorities, and saving energy is not one of them,” said a scientist referenced in the article. Unfortunately, as we see in other industries, companies often fail to recognize that social and environmental challenges represent vast opportunities for increased competitiveness and profitability. Manufacturers such as Cisco, Samsung, and Motorola think about their environmental footprint through a traditional CSR/sustainability lens – how to reduce their own emissions from manufacturing and distribution – but designing products based on their societal benefits is often an afterthought. Similarly, service providers such as Time Warner, Comcast, Cox, Verizon, and AT&T are hesitant to have boxes go into sleep or hibernate mode, which would cut power consumption and costs significantly. We know power reduction has happened in “always on” mobile phones and tablets, so it’s just a matter of the industry making this an innovation priority.

As an advisor to leading companies on Creating Shared Value strategies, I see untapped opportunity for the DVR industry to fast-forward its innovation and leadership. As a consumer, I hope I can still enjoy my DVR, but cut my energy bills and environmental footprint at the same time.

“…it has always been our intention to be more than a corporation that makes mortgage loans; we wanted to be a force in making positive differences in people’s lives. Our goal was – and still is – to demonstrate that there is a unique role for the private sector in public service."
--Angelo Mozilo, CEO of Countrywide Financial Corporation
February 4, 2003 speech to The Joint Center for
Housing Studies of Harvard University

• CSV isn’t anything new, but rather fresh terminology for a concept which many in the sustainability field have espoused for a long time (see The Economist’s critique which cites Jed Emerson’s concept of blended value and Stuart Hart’s “Capitalism at the Crossroads”). For these authors and others, regardless of the term used (e.g. sustainability, CSR, CSV), the underlying meaning is the same: companies thrive over the long term when they actively consider the environmental, social and economic contexts in which they operate and adapt accordingly.
• Porter and Kramer attempt to distinguish CSV by highlighting its proactive emphasis on companies developing new products and markets that help solve social problems, such as GE developing ultrasound machines for use in rural African villages. Yet, we and others have long advocated the need to rethink products, markets and business models to address the world’s intractable social and environmental challenges (see an illustration of SustainAbility’s model of sustainable innovation on page 26 of The Social Intrapreneur).
• This said, we welcome the authors’ intellectual heft behind the sustainability (or CSV) agenda, and think good can come from it, particularly if they get additional attention from senior executives.
• We also welcome their call for focus – “the most fertile opportunities for creating shared value will be closely related to a company’s particular business...” Many companies today try to address a multitude of sustainability issues, which can distract them from investing in the areas in which they can most add business and societal value.

We welcome CSV as another arrow in the sustainability quiver – a framework that nicely describes one way in which addressing societal needs creates business value. Yet we will keep that arrow alongside the others in our quiver – the “traditional” tools of the sustainability or CSR trade: stakeholder engagement, horizon scanning, issues management, communications, etc. And of course the most important tool from our perspective: the persistent questioning of whether a company’s business model adds value to society, the planet and the economy over the long term.

About Michael Sadowski: Based in New York, Michael leads SustainAbility’s work in the finance and consumer goods sectors and is a member of SustainAbility’s Management Team. Over his career, Michael has advised a variety of global companies on sustainability issues, focusing on strategy development, business case articulation, communications and stakeholder engagement. Michael’s past and current clients include Brown-Forman, Gap, Inc., Goldman Sachs, Holcim, HP, Nike and Standard Chartered. Michael plays a key role in SustainAbility’s research and advocacy work, and has researched and written on topics including the business case for sustainability in emerging markets (Market Movers), globalization (Raising Our Game), stakeholder engagement through web 2.0, engaging mainstream investors and retail sustainability (European Retail Digest, Winter 07-08).  

Conventional wisdom suggests that academic preparedness, or lack thereof, largely explains the correlation between enrollment in top-tier universities and family income but a recent study referenced in the NY Times story by the New Century Foundation entitled “How Increasing College Access is Increasing Inequality” provides data from 2004 showing that the percentage of students in the top –scoring quartile (of the test distribution in the National Educational Longitudinal Survey) attending a four-year college varies dramatically by socio-economic background.  Within the top-scoring quartile, students in top socio-economic quartile were twice as likely to attend a four-year college as students in the bottom socio-economic quartile and five times less likely to not attend college at all.  And this was all before the “Great Recession.”

Where are we now?  If high potential students from low income backgrounds were enrolling in four-year colleges at half the rate of their high income counterparts almost ten years ago, the secular trends of the Great Recession have introduced powerful head winds that are making these challenges even more acute.  Student loan debt has nearly quadrupled in the last 10 years and now exceeds credit card debt according to Mark Kantrowitz at Fastweb.com.   The bifurcation of public university systems has become more pronounced as state flagship universities mimic their private counterparts with large fundraising programs, rising tuition rates to offset the loss of state funding and actively competing for top students nationwide while other state institutions endure more drastic cuts without the ability to leverage the mitigation strategies of the flagships.  The Education Trust recently published a report called, “Priced Out: How the Wrong Financial Aid-Policies Hurt Low-Income Students” that asserts that none of the nation’s public flagship universities were among a set of five institutions that met relatively conservative criteria for affordability, quality, and accessibility. 

These trends are sobering to say the least and as a country we have some serious soul searching to do regarding our priorities and the implications of these trends on socio-economic mobility going forward.  That being said, I also think there is room for hope because of the kind of work I am engaged in with my colleagues at FSG.  I’m excited to moderate the panel I mentioned early because we will be talking with leaders from YES Prep Public Schools, the SEED Foundation, and the Christo Ray Network on successful strategies they are already using to ensure both post-secondary access and success for low income students.  In addition, we also collaborated with the Greater Texas Foundation in 2010 on “Dollars for Degrees: Structuring Post-Secondary Scholarships to Increase Student Success” which examines how funders can structure their scholarship awards and provide access to key non-financial supports to improve post-secondary access, persistence and completion.  Although focused on Texas, the implications and the opportunities for improvement are applicable across the country.  The road is clearly steep and may be getting steeper in some ways but it’s exciting to be able to play a role in the solution – one project or one panel at a time.

Links

• 2011 National Charter School Conference
• Top Colleges, Largely for the Elite, New York Times
• How Increasing College Access is Increasing Inequality, The New Century Foundation
• Priced Out: How the Wrong Financial-Aid Polices Hurt Low-Income Students, Education Trust
• Fastweb.com
• Dollars for Degrees: Structuring Post-Secondary Scholarships to Increase Student Success
• Dollars for Degrees: Financial Aid and its Impact on Post-Secondary Degree Completion in Texas

I started my whirlwind tour in Barcelona in mid-May at the ESADE Spring Event on Emerging Markets and Developing Countries. I had the pleasure of sharing a panel with representatives from the Heineken Africa Foundation and P&G. The audience was filled with MBA students, wanting to know how to embed shared value thinking into their classrooms and cases. We lamented together about the existence of dedicated “CSR” classes and hoped that soon they would be a thing of the past. The successes and challenges of companies embracing CSV should be taught in “normal” business classes and not viewed in the context of CSR, but in the context of what it means to be a business in the 21st century.

Wow – takedown complete.

But, almost lost within the story, I saw an important point mixed in with the salacious accusations. And, in my point of view, it is probably more important that the basic charges of poor management and fabricating stories. Did Mortenson’s schools fail in their remit to actually teach girls? Kroft highlighted a school in the upper reaches of Afghanistan’s stratosphere that hadn’t been used and others that were now empty. In essence, was CAI having any impact? Did anything change from all of the good works and best-selling books and heart-warming stories?

As a Director at FSG, who has worked with large and small private foundations, community foundations and individual philanthropists, I hear the frustration of many who fear repeating the mistakes of the past – unknowingly - and of those who feel they may be re-inventing the wheel. As a field, we are rather poor at sharing and using knowledge.

Not to intimidate people from giving in the first place. There is a lot you can learn through giving with a 10-year-old for example, as Lucy Bernholz observed in a popular post. If you are simply trying to find an organization to work with, asking simple questions like “What does the organization do and how do they do it? and “How do they know if they are making a difference?” is a good start.

There are also people in the field to help. FSG and many other organizations like Grantmakers for Effective Organizations, Rockefeller Philanthropy Advisors and others offer resources for emerging philanthropists. In the next few months some of those resources will be accessible in one place through a new effort called LearnPhilanthropy. LearnPhilanthropy asks you to imagine:

• Learning resources from multiple providers all in one place.
• A wider audience for content providers.
• A searchable catalogue—for you, your staff, your members.
• Online peer learning and advice.
• Field learning data to guide new offerings.
• Learning as essential to effectiveness.

I am excited about this pilot to create a vibrant knowledge marketplace in philanthropy – where providers and seekers can meet and grow in their practice. I’ve led the effort to identify FSG’s “best of the best” (although it is all great, of course) and am looking forward to seeing if they will get used.

Speaking of usage, this will only work if Learn Philanthropy and knowledge providers are responsive to your questions and needs – what questions do you find yourself asking most often as you practice philanthropy? What kinds of resources would be most helpful to you?

Industries of purpose: as more and more companies embrace new visions for leadership around social needs, are we going to think about industry sectors in a different way? As I think about leading CSV companies, they state their mission clearly. Nestlé is the ‘Nutrition, Health and Wellness’ company, Syngenta is hanging a ‘Food Security’ mission over its activities, Houghton Mifflin Harcourt (HMH) – a major publishing company - is concentrating its purpose around ‘Educational Outcomes. ‘ And the list goes on and on. We’ve had the ‘Healthcare’ industry for a long time, the ‘Clean Tech’ sector for a few years, and if we are right about CSV as the new frontier of competition, then won’t we see new industries of purpose emerge? I can just hear the financial analysts on business talk shows: “In our Food Security portfolio…we think X is a “buy;” and in our Educational Outcome segment, we would favor Y for delivering superior financial and educational returns.”

Measuring purpose: Well in that case, we better start answering questions on how to compare companies on food security or educational outcomes. And the answer is not to be found in the CSR measurement legacy. Sure, we’ve made big strides there, particularly on measuring the use of natural resources, energy or even labor inputs – as championed by GRI. Those measurements are getting smarter too. I am impressed by Corporate Knights in Canada for example, in the how they look at energy productivity across companies within industry sectors. You can see how this approach could spread to water or labor productivity measures, and be useful to financial analysts, as corporate laggards may indeed be heading into oblivion for lack of rigor in a resource constrained world.

But we’ve got to look beyond compliance and sustainability metrics.

As once hammered in by my business school professor: revenue is king! You can’t win forever on labor or resource productivity; you’ve got to find ways to better serve (customer) needs and new avenues for growth. So now that we will have high growth purpose industries, how will we compare who’s winning on that challenge?

Perhaps we can start with the one we’ve had around for a long time: the healthcare industry. If you look at what is being measured today from a needs perspective, you quickly fall back into the old CSR world and stumble unto the ATM (Access to Medicines) Index. The instigators of the ATM have a noble cause: show which pharmaceutical company does more or less for access to medicines for the poor, and it will cause laggards to do more. And it works, because companies are terrified of the impact of ‘naming and shaming’ strategies on their overall business. But it is precisely the fact that the overall business is ignored by the ATM that has always bothered me. What about that ‘rich’ cancer patient in a ‘rich’ country and how medicines are helping her? The public health sector, albeit imperfect, has a measure for healthcare that cuts across disease areas: DALY (Disability-Adjusted Life Years). DALY measures loss of life and loss of life days due to any disease. With that indicator, you can compare the relative burden of any disease, or conversely, the relative benefits of any healthcare intervention. Pharmaceutical companies know how many patients they reach with their products and the relative improvements in health outcomes these products deliver: it was part of their business development strategy and regulators’ approval process. So why not measure such economic and DALY purpose consistently? I see my future analyst talking again and pointing at a two-by-two matrix: on the upper quadrants are the companies that deliver high financial and DALY returns, and their success is ensured by the inherent linkage between the two. DALY intensive sales and profits are worth more than DALY weak sales and profits (read more about “not all profits are equal” here).

A lot rests on how precisely you define the purpose and specific objectives of our new competitive niches. Companies that define their purpose as “Zero Emissions Mobility” (like Toyota) or Food Security need to find that common measure that will be attached to each new business plan to measure progress against purpose. Food security is largely about yield improvements in agricultural based on the same or lesser use of natural resources, and then of course access to that agricultural output for consumption. For companies like Syngenta, each new seed variety, or pesticide, should have an incremental yield/resource impact versus products already available in the markets. Should we ask each product manager to deliver results against yield purposes and guide investment decisions across the company with these opportunities and results in mind?

Aggregating purpose: the next challenge of course is the actual measurement and aggregation of results across the company. We know from the social sector and our learning and evaluation practice at FSG that rigorous analysis of social outcomes can be extremely complex and costly. Even DALY or yield measurements, which we know how to do, will require considerable foresight, research and validation to measure and aggregate across products and services. Then take a company like Nestlé, operating in almost every country of the world with hundreds of brands, and tell me how we will aggregate and compare its nutrition purpose against another nutrition company? Nutrition is particularly tricky, because there’s a lot more in a daily food basket than that one Nestlé product. And measuring that specific contribution to a diet is extremely difficult: it takes costly longitudinal studies tracking individual consumers over time. Part of the issue here may be that we don’t have a specific problem defined as “nutrition.” We don’t have a DALY measure here that cuts across nutrition needs. So does Nestlé need to set the tone on the basis for competition and issue nutrition metrics (e.g. calories or micro-nutrients delivered per consumer)? Or does it need to find more specific needs and outcomes under nutrition (e.g. micro-nutrients deficiencies) and therefore “compete” in several different purpose markets under nutrition?

The momentum and energy around this idea set of collective impact has morphed into discussions of how to take the next steps in implementing collective impact initiatives, how to identify and define ‘backbone’ organizations, how to develop technology-enabled roadmaps and solutions, and many more topics...related to finding ways to transcend from the concept and framework level of these long-term and complex systems changes into concrete, practical applications.

So how do we capture and sustain the incredible energy and dedication to learning and progress that I witnessed at this event? How do we continue to become more proficient, more skilled and more confident in our application of collective impact, beyond the aspirational concept and framework?

For each of us, I suspect dropping our training wheels in collective impact will be a little different, much like how each of us learned how to ride a ‘two-wheeler’. Like many kids I couldn’t WAIT to ride my bike (a blue stingray with a banana seat and monkey bar handles) without training wheels as quickly as I could. Same was true for my next door neighbor, Stan, from a family of four active boys. Stan dropped his trainers, took off one morning with his brothers down our street and proceeded to take a dive bomb over his handle bars, and with a bleeding head was rushed to the ER. He was fine, but his adventure certainly made a mark on me when I saw his bandaged head and bruised body come home. I decided to take it a little more carefully on our graveled street, not stopping in my pursuit of learning, but distilling the experience of another and modifying as I applied this learning to my own case.

We may come to learn, adapt and adopt an idea or a practice more or less quickly. Some of us may need to keep one trainer on the ground. Others may be ready to drop both trainers and race down the roadway. Others may drop the wheels, take them back again, and go through an iterative process while learning how to ‘do’ collective impact successfully.

None of us knows exactly where we will end up 3, 6, 18 months from now in our collective impact efforts. At FSG, we believe that this particular topic has struck a powerful chord in the psyche of the social sector, and we are dedicated to carrying the momentum further and farther still.

We want to learn more about your stories of “Collective Impact in Action” and figure out the best tools and ways to share them with each other and with the field. What the end product may look like, we’re not certain, but we know that the momentum of your interest in collective impact will help us keep our balance as we continue to pedal forward. Please share your stories of collective impact approaches and strategies with us: send them to me, danag.yonchak@fsg.org. Ride on!

One cannot help but recognize that the face of technology is also changing in this same direction. The advent of Web 2.0 and  Enterprise 2.0 circa 2005 heralded computing platforms that  facilitate collaboration, simplify and expedite the identification of and access  to “relevant” people and content, and the delivery of lean and nimble systems.

I do not believe that it is coincidental that at the same time, government and private industry are moving in a similar direction.  Whether guided, supported or instigated by technology, social computing technology is clearly having an impact on social impact.

A recent article in the Harvard Gazette provides timely example of this idea. The article is titled “Tapping the Information Fire Hose,”an interesting throw back to an earlier Enterprise Content Management (ECM) metaphor. Several years ago the business world realized that the issue was not one of not enough information – but “too much” information – culminating with the rapid growth of the internet. The challenge morphed from getting access to content, to one of how to effectively tap into the gluttony of resources so as to maximize the value received. Years later Web 2.0 and Enterprise 2.0 emerge as ways to make this information available in a personalized, in context manner, as part of a collaborative work environment.

The Harvard article highlights a case study in which a community of volunteers, using tools such as wikis, mashups, social network analysis, and mobile computing, deftly bring aid to the victims of the earthquake in Haiti.

Though perhaps cutting edge, this is not new. Their efforts and experience are not that unlike those of a group of volunteers that stepped up, and leveraged Web 2.0 technologies back in 1997, in an effort to help locate Steve Fossett, the millionaire who disappeared while piloting his own plane.  The technology and coordination behind the effort is worth reading about.

The article also mentions a newly published report, commissioned by the U.N. Office for the Coordination of Humanitarian Affairs, the United Nations Foundation, and Vodafone Foundation Technology Partnership, appropriately titled, Disaster Relief 2.0, that examines both the current and potential future impact of Web 2.0 technology on humanitarian disaster response.

The world around us is changing in many ways, the least of which is not technology. The internet ushered in an era of unprecedented abilities to create and share information. More recently, Web 2.0 provided new ways to access and repurpose all of this information – and additionally ushered in new ways for people and content itself to collaborate. These new capabilities pose opportunity and challenge to virtually every type organization and community. From government to private sector, business models are being redefined by the inclusion of social computing.

In the world of social impact, the opportunity and the challenge lie determining how best to leverage social computing for the greater social good. As one of the authors of the aforementioned  report, John Crowley, research coordinator for crisis dynamics for the Harvard Humanitarian Initiative stated, “We have the opportunity here to take advantage of the situation [new social computing tools]… If we do it, we can adapt faster, respond faster, and respond more efficiently.”  

Something is happening here, what it is, is becoming clear.

So why, I’m sure you’re thinking to yourself, am I talking about Thanksgiving in April? Because for me, a Thanksgiving meal is a very simple metaphor for Collective Impact. I’ve never been to a Thanksgiving meal that was prepared by a single person – it is a collective effort. The food is prepared by lots of different people, but there is rarely duplication – you’ve got the turkey, stuffing, cranberry sauce, mashed potatoes, beans, pies and of course the controversial brussels sprouts. Each dish is prepared by someone different, often in different kitchens, and with varying levels of expertise and data. There is even a shared measurement system – although unspoken – as it’s always clear which pie gets finished first. Recipes are shared and passed on or discarded from year to year. The host acts as an informal “backbone”, helping to set the menu and coordinating dishes but never dictating exact ingredients or how the food is made.

But of course at Thanksgiving, it’s not just what you eat but who’s at the table that is important. In my family, we know that the friend from out of town who has a fondness for Glenn Beck should not be seated next to Aunt Jean, the radical feminist. And that while a little wine is essential to the party, it’s not a good idea for Uncle Peter. As with collective impact, understanding the relationships and personalities at the table are critical to a successful party. To take the metaphor to the social sector, taking a Collective Impact approach means that individual organizations are going beyond coming up with their best recipe in their own kitchens to being participants in a multiple-course Thanksgiving dinner to which all the stakeholders for a social issue are invited. It is a far bigger and more complex, and also very exciting, party. As Mary Jean Ryan at the Community Center for Education Results recently said, “We are finally organizing in ways appropriate to impact a system.”

FSG and SSIR recently hosted a day-long conference on Collective Impact, and it was clear from the 300+ attendees - who included nonprofits, funders, corporations, and government entities - that this is an idea that has wide resonance that cuts across sectors and issues. The conference was full of great discussion and insights from practitioners (including Jeff Edmondson from Strive Partnership, Howard Shapiro from Mars Incorporated, Tobias Aguirre from Fishwise), funders (Paul Shoemaker from SVP, Sterling Speirn from Kellogg, Norman B Rice from The Seattle Foundation, Emmett Carson from the Silicon Valley Community Foundation), industry experts (Ed Skloot from Duke, Diana Aviv from Independent Sector, Jane Wei-Skillern from Stanford, and FSG’s own John Kania and Mark Kramer) and the audience. The conference highlighted the importance of shifting mindsets in order for existing players to work together more efficiently toward a common goal, and the need for data and a neutral backbone organization as well as trust between players. As with all good ideas, the discussion about Collective Impact has led to some very good questions, to name a few: What really needs to be in place to be successful with Collective Impact, and how do you assess readiness? Who do you include? How much community engagement should there be? What do you do with mediocre players? Who decides what is “effective”?

The recent conference was an opportunity to learn from one another, but with only a single day of discussion it just scratched the surface of how to do Collective Impact well. We heard from attendees that there is a strong desire to keep learning from successful efforts underway, and we look forward to continuing our work and research on this important approach. Do you have Collective Impact examples to share? What have been the successes and challenges you have faced in launching and sustaining a Collective Impact effort? Please share your stories with us, so that we can share them with you.

We wrote Do More Than Give because we believe that philanthropy, as commonly practiced, has become antiquated. It’s no antidote to the complex, interconnected problems that face our world. And while more than $300 billion is donated alone in the U.S. each year, experts agree that most philanthropy falls far short of its potential to create significant change. The exceptions are those donors who take a catalytic approach and strive to solve problems. They employ high-impact practices like funding and engaging in advocacy (rather than only supporting direct service providers). They embrace mission investing (rather than separating their financial and philanthropic interests). Perhaps most importantly, catalytic donors pursue collective impact strategies, collaborating with foundation and nonprofit peers to achieve field-wide wins (rather than only funding individual nonprofits or competing to establish their own legacies). They recognize that change requires influencing entire fields and systems – which are affected by multiple nonprofits, donors, policymakers and business leaders – to adopt better approaches (see John and Mark’s recent article in Stanford Social Innovation Review, Collective Impact). Catalytic donors see the forest for the trees.

Writing Do More Than Give has changed the way I think about and advise donors how to practice philanthropy. After studying the catalytic foundations, corporations, and individual donors featured in the book, I have come to believe that every funder has the potential to contribute to systemic change. This wasn’t always the case.

Back in 2007, when my previous book, Forces for Good, was first released, I held a different view. My coauthor Heather McLeod Grant and I had written about the “six practices of high-impact nonprofits,” and explored how great nonprofits create wide-scale systemic change by leveraging forces that extend far beyond the four walls of their own organizations (see www.forcesforgood.net). So when donors would ask me how they could apply the concepts in Forces for Good to their giving, at first I advised them to use the six practices as a screen to select the best nonprofits for funding. If donors spent more time finding and funding high-impact nonprofits like those in Forces for Good, I reasoned, more philanthropy would flow to top-performing organizations, and we would move closer to solving problems like underperforming public schools or climate change.

But then I realized that donors can do more than fund nonprofits to do things like combine policy advocacy with direct service. Donors themselves can actively advocate and push for policy change — and they are often in a better position to do so, given their connections and clout with policy elites. These are important assets that nonprofits often lack. But I didn’t know of many examples of donors who actually did much more than make grants. So John, Mark and I set out to find out examples of philanthropists who go beyond basic checkwriting to proactively catalyze change.

The results of our research are encapsulated in Do More Than Give. The book officially publishes on March 28, 2011, and we are excited to hear what you think. My coauthors and I will be starting a book tour this spring, and we look forward to sharing these ideas at various conferences and events in the U.S. and overseas. I’ll return to this blog to explore questions raised and ideas sparked from these encounters. So please join me back here to share your feedback and exchange your own stories about what it takes to catalyze change in this 21st century of giving.

A few years ago, I was taking Dane Marie to her daycare. As we walked into her classroom, one of the other parents recognized my daughter.

“Dane Marie,” the friendly woman called out, “is this your father? Why, you look just like him.”

My daughter looked at the woman, looked at me and burst into tears. After spending several minutes reassuring her that she was much prettier than I and that she did not have to be afraid of losing her hair, I was able to calm Dane Marie down.

Dane Marie’s teacher overheard the whole exchange and gently chided my daughter. “Dane Marie, you shouldn’t cry. Your father will get the impression that you don’t think he looks handsome.”

The next morning, Dane Marie came into our room as I was getting ready for work. I had just put on my aftershave and was arranging my tie. She gave me a kiss and said, “Don’t worry, Daddy. You smell handsome.”

When I look through the names of the companies on the CR list, I get the impression that some of them only smell handsome. They have slapped on a bit of “aftershave” in the form of corporate philanthropy designed to capture the public’s attention and improve their image. They prepare themselves for what is, in essence, a beauty contest based on CR’s seven different categories. These lists miss the point.  Focusing attention on corporate citizenship does shareholders and society at large a disservice. “Citizenship,” and “Responsibility” are only table stakes at this point. They do not create economic value for shareholders and they rarely create significant social value, either.

Don’t get me wrong, there are quite a few companies on the list that have demonstrated impressive social engagement. IBM, with its Smarter Planet initiative and GE, with Ecomagination and Healthymagination are great examples. Medtronic is developing a new business unit to extend the access of underserved populations in emerging markets to their medical products. Mattel is looking for ways to expand their markets by helping disadvantaged children find opportunities to learn and play. Coca-Cola's Live Positively program is creating economic and social value in many places across their Value Chain.

Companies need to go further than simply working their way through a checklist. They have a responsibility to shareholders and the world to develop a Shared Value strategy – that is, to discover ways they can simultaneously accelerate profit and have a profound social impact. They will never discover Shared Value in a checklist, not even if it is 342 items long. Companies need to go through a careful strategic exercise to determine where their business models intersect with the serious social challenges around them.

When companies find ways to profit from addressing a serious social problem, they are more likely to invest sufficient resources in sustainable and innovative ways that actually create social impact. Think about banks developing products or services to meet the needs of the underbanked in inner cities in a profitable way; or supermarkets working with the chronically unemployed to develop a workforce that will stay in their jobs for a longer period of time and have a higher level of engagement in their work.

CR puts a great deal of rigor into its ranking and certainly the companies on the list are to be applauded for making contributions to Human Rights, the environment, and maintaining good employee relations and corporate governance. But shareholders should insist that companies do more than check off the myriad boxes on the long CR checklist. Corporations must find ways to reconcile their profit maximization imperative with a social problem where they can have a profound impact. If they limit themselves to going through a list, they run the risk of “smelling handsome,” but leaving economic and social value on the table.

Based on the examples they gave and my own experience, “collective impact” requires “place,” or at least is more likely to succeed with place. Part of the failure of Gates, Ford, Annenberg and Pew (mentioned in their article) may be the tacit assumption that place is not important, that education is a technical problem. As Kania and Kramer’s examination suggests, place may be unimportant on technical problems (how to get vaccines that do not require refrigeration), but for adaptive ones (how a community closes equity gaps), a place component may be critical.

By place, I’m talking about geographically based initiatives, where the growth of local or regional capacity and bridging and bonding social capital, are part of the solution. Too often funders see a problem or opportunity from a “tool” perspective. I’ve certainly made the mistake of believing what we needed to do was find a tool that worked somewhere and just modify it to this situation. That is trying to make a technical solution behave like an adaptive one, when it is still really a technical approach. I’m not suggesting ignoring the tool-based experience of others, but stopping at understanding what worked somewhere else can be a trap. A classic example of this is for funders to say, “We are not funding operating costs; we are just funding the program implementation.” Funding the tool without healthy partners to wield it, is almost guaranteed to have problems.

I’ve fallen in this trap (a tool metaphor) numerous times during my career, but their article helped me to understand the failures more clearly. At Northwest Area Foundation (with which I am no longer associated, so these comments are only mine), I unfortunately often saw poverty as a technical problem, not as an adaptive one. This was reinforced by beliefs in many communities that all they had to do was find and transfer the right technical model, especially in areas like economic development. Thus the pursuit of best practice without understanding what “best” required. As Michael Q. Patton asked several years ago, “What makes a best practice, best?” For many opportunities, “best” requires a place-specific adaptive answer, rather than a technical one.

Part of our difficulties at Northwest Area had to do with underestimating what is required for a community or region to be “ready.” The communities where our support produced the greatest outcomes were those most ready. We did some things to help communities become readier, but we were often in too much of a hurry. The five conditions Kania and Kramer outline are excellent dimensions along which we can observe readiness. One does not have to wait until all five conditions are met, but funders can use the five to help make both developmental and implementation support more useful.

I encourage Kania and Kramer to take their challenge to funders a step further. Most of my career in philanthropy I have worked as an external funder, representing an organization that is not in the community or region where the money is being spent. For the last four years I have served as an embedded funder for the first time in my career (at Danville Regional Foundation we are actively engaged in all five dimensions the authors suggest—we will see if we get them right). The two approaches—embedded and external--are significantly different. Kania and Kramer suggest that funders shift “…to leading a long-term process of social change.” External funders cannot lead from a distance, or if they do they often fall into the trap of a technical approach. Most external funders end up being rule or covenant driven, not able to fully comprehend and act with adequate speed on what needs to happen in the community or region. I’ve certainly made that mistake. 

External funders can invest in readiness but they cannot create it, just like they can earn trust but they cannot buy it. People and organizations near the ground must create readiness. Both external and embedded funders can make investments in ways that actually damage the ability of communities to meet the five conditions. Much of the technical work of philanthropy is based on the assumption that diffusion occurs automatically, or by some natural means—create a good tool and it will be transferred. What this article helps me to understand is that social capacity represented by excellent backbone organizations and several of the other conditions, is critical to the diffusion of adaptive solutions. External and embedded funders that are unwilling or unable to invest in such social capacity end up reinforcing the mal-distribution of opportunity in America. This opportunity segregation is particular critical in places of low capacity and low philanthropic connections like many rural and urban low-income areas.

What if national or regional funders used their resources to encourage the development of the five capacities proposed in this paper, as a few have? What if embedded funders focused on the new leadership role Kania and Kramer propose, as a few have? I think we would be significantly further along addressing regionally defined opportunities and solutions, rather than waiting for someone telling us what best practice to pursue. But in their next paper, I hope Kania and Kramer will explore the question, When embedded leadership best comes from funders and when it best comes from less financially privileged organizations? Does it matter? My instinct is that it does.

As a former federal official, I also think there are great lessons in this piece for governments, but I’ll save that for another day.

Karl Stauber is President & CEO of the Danville Regional Foundation (DRF), a five year old health conversation foundation based in Danville, VA. Prior to joining DRF in 2007, Stauber served as the head of the Northwest Area Foundation in Minnesota for 11 years. He also was Under Secretary for Research, Economics and Education at USDA and served in leadership roles with a venture capital firm in Colorado, the Needmor Fund in Ohio, and the Babcock Foundation in North Carolina. He has written and spoken extensively on rural development and philanthropy.

Prior to joining FSG in 2009, I was an academic and among other courses, taught a graduate level seminar on “The Theory and Practice of Organizational Learning.” Throughout the 15 years I taught this course, I struggled to find examples of organizations that were true learning organizations. While the literature offered many definitions and case examples, I still had not seen one up close. During this time, I also had the opportunity to consult with a wide range of philanthropic, human service, corporate, education, and government organizations, many of whom talked the talk of learning organizations, but did little to walk the walk. I began to wonder, what does it take to be a learning organization? Is it even possible? Is a learning organization akin to a mythical creature?

But then I met the Education Initiatives (EI) team at the Ball Foundation, a small family foundation in Glen Ellyn, IL, and my faith was renewed. For the last decade, the team had been struggling with the following questions:

• What would it take for every child to achieve high levels of literacy?
• What would it take to develop schools where each child actualizes his or her unique  potential?
• And why do so many schools, filled with hard-working, well-intentioned people, fail to meet the learning needs of their students, especially students of color and English language learners?

Working with mid-sized urban school districts, and using literacy instruction as an entry point into a conversation about how a district behaves as a system, they asked, how could a small group of people help a school district become a learning organization in service to literacy achievement for every student?

For two years, I had the privilege of being a “thought partner” to the EI team. As I listened, observed, and reviewed their plans and materials, it became increasingly clear to me that this team represented a genuine learning organization. They believed that for them to ask school district staff to learn and change, that they would first, have to model authentic learning with each other, challenge their own and each other’s assumptions, and ask lots of questions. The more I worked with the team, the more I realized that they were actually living the definition, principles, and values of what it means to be a learning organization, and were developing and implementing true organizational learning practices and processes. Because we felt it was a story worth sharing with others, we collaborated on writing their “learning journey,” which is described in the recently published book, Becoming the Change: What One Organization Working To Transform Educational Systems Learned About Team Learning and Change. The story, often told in their own words, reveals what people really experience as they go through the sometimes difficult and ambiguous process of becoming a learning team and organization.

Perhaps more than any other, the philanthropic sector has embraced the importance of being intentional about learning as a core organizational practice. The sector’s interest and commitment to learning is evident through several publications that have been published in the last few years. These include: A Compass in the Woods: Learning through Grantmaking to Improve Impact (2010), Evaluation in Philanthropy (2009). Learning for Results (2007), and Learning for Community Change: Core Components of Foundations that Learn (2005). As stated in the introduction of the Learning for Results publication, “Effectiveness in philanthropy is not just about the money. It is also about how grantmakers use what they are learning to lead change and achieve better results.”

While I truly believe that we must think and act in big and bold ways to solve complex social problems and create systems change, I hope that amidst the excitement about grand experiments and scaling what works, we not lose sight of the fact that change is personal; that change is negotiated and nurtured through relationships, and that organizations are the vehicles through which systems change is designed and implemented. My hypothesis is that the more organizations embed a learning culture that values risk taking and building trust, supports asking questions and engaging in dialogue and reflection, uses information and data for decision making, and views failures as opportunities to learn and grow, the more likely they are to achieve social impact – individually, and collectively.

I’m curious to hear your thoughts and experiences…

1. What do you think it will take for organizations to embrace organizational learning practices?
2. Why do you think so many organizations talk about learning, yet do so little to support it?
3. Do you think learning organizations are more likely to be effective in helping solve social problems than those that are not learning organizations?

One of the ways to be more transformational is to invest for impact – through your votes and cash. Traditionally, funders have maintained a fairly straightforward and inflexible relationship between their assets and their giving. Investment decisions often are made in the context of maximizing returns, resulting in more dollars and larger checks. However, as the authors of Do More Than Give point out, there are a number of other ways for donors to “invest” to achieve the social change they desire.

Using Your Vote
Take the case of The Nathan Cummings Foundation, a family foundation established by the founder of the Sara Lee Corporation, which transformed shareholder advocacy efforts among foundations in the United States. The Cummings family, who had a long-standing commitment to protecting the environment, was quite surprised one day to learn that their investment portfolio contained 32,000 shares of stock in one of the largest pork processing plants (and largest polluters) in the United States. Instead of following their initial reaction to divest the stock, they took a different and more powerful approach: they leveraged their role as a major shareholder to create a resolution for the company to disclose more information on the environmental effects of its practices. After several years, and several more resolutions, the Foundation was able to convince other shareholders to join in, ultimately leading the company to increase its transparency on pollution.

Using Your Cash
Foundations can also use their cash in more imaginative ways to create social impact. The F.B. Heron Foundation and Meyer Memorial Trust are two examples of foundations leveraging their capital to make social change. Meyer Memorial Trust, based in Portland, Oregon, has used program-related investments (PRIs) to offer accessible, nimble capital, such as low-interest bridge loans, to partners in their affordable housing initiative. The Heron Foundation, another leader in the field, has leveraged more than a third of its corpus through equity investments and loans (many of which deliver market-rate returns) to pursue its mission to help people overcome poverty.

Recent Investing for Impact Ideas in Action
We are also starting to see foundations leveraging their capital to support “proof of concept” social program pilots through social impact bonds. These investments would be repaid by the government, assuming agreed-upon indicators show the program is effective. A New York Times article last week highlighted the critical role foundations are playing in supporting these efforts, along with how the concept is being tested by David Cameron’s government in the UK. The idea is this: many government programs fail but are never properly evaluated. As a result, most policymakers remain in the dark about which programs are failing and why. They continue to invest in the same programs year after year because there is limited appetite and capital to invest in the development of new, more innovative programming. But foundations can break this cycle by playing the role of venture capitalists.

The Rockefeller Foundation is one player doing just that. By investing in new ideas, the Foundations hopes to see programming that will: more effectively address social problems, result in getting the loan paid back so that it can be redeployed, attract for-profit investors to increase the total amount of capital put towards a social issue, and reduce the taxpayer’s burden for paying for ineffective or unproven programs.

How have you seen donors invest for impact with their votes or their cash? What new ideas and approaches are most promising?

Upcoming discussions: We’d love to see you at one of our gatherings after the March 28th release of Do More Than Give to hear both your reactions to the book as well as examples of donors you know who are playing a catalytic role in addressing challenging social problems – check back soon to the FSG website for details and dates. Do More Than Give is the result of a collaboration between FSG Managing Directors John Kania and Mark Kramer (author of Catalytic Philanthropy and The Power of Strategic Mission Investing), and Leslie Crutchfield, the co-author of the book Forces for Good: The Six Practices of High-Impact Nonprofits.

I’ve been away on a two-month sabbatical and came back just in time for our all-staff retreat celebrating our 10 year anniversary. The retreat, the time away, and the addition of 23 new FSG colleagues in 2010 provide a fresh perspective on FSG in its second decade of work. So, what will it be like working at FSG in the years ahead?

• Creative: It’s Day Two at our retreat and already we’ve seen a video presentation about Catalytic Philanthropy starring two of our consultants as animated avatars. An hour later, 75 of us are worked up about a new board game that our Geneva office has invented on Creating Shared Value. The board game format fires up our competitive juices and, in a fun way, reveals the distinctions between this idea and traditional Corporate Social Responsibility activities.
  
  Similar creativity is penetrating our daily work. We’re adding videos into our client presentations. Some offices will receive a make-over to increase team-based collaboration. And we’re rethinking the way we disseminate our ideas - beyond white papers – to inspire action. 
• Well-Rounded: Ten years ago, it was difficult to recruit people who had both strong consulting skills and frontline experience with the social issues we encounter. We are a much stronger firm today with the addition of colleagues who bring skills and experiences on a broad range of issues relevant to our work. Meet Sebastien Mazzuri, a former medical doctor and McKinsey consultant, who exemplifies the multiple life experiences of an FSG consultant.
  
  Like in 2010, we expect to grow substantially this year. The fresh faces will re-make our firm with multiple perspectives, languages, and approaches to problem-solving.
• Courageous: These new recruits are not constrained by old ways of looking at problems. They are optimistic and quickly see the logic in moving away from “isolated impact” to more Collective Impact approaches, for example. Yet, the field may not always agree with these new approaches as they conflict with long-held paradigms about social change. We believe that the stakes are too high to let discomfort preserve the status quo. While Authentic Engagement has always been a treasured firm value, we are more comfortable speaking truth to power for the sake of social change. 
• Global: Increasingly, our work, clients, ideas, and staff are more international. Last year, we were hired by the Banque de Luxembourg to help foster more formal philanthropy in Luxembourg. Our growing global development work, particularly in the area of agricultural productivity in developing countries, builds upon our engagements with Nestlé, Syngenta, and Firmenich. In the next month, we will have teams conducting research in Brazil, Tanzania, India, and Mexico for two pharmaceutical clients.
  
  Perhaps most intriguing on the global front is our increased activity in India. We just completed a Shared Value project with the Godrej Group, a well-established company with 25,000 employees. We are partnering with the Indian School of Business on a ranking of top philanthropic givers in India. We still have much to explore but the learnings in India are already influencing how we think about scaling social innovations, the role of new philanthropists, and environmental sustainability in emerging markets.

As much as we hope to make change, our firm has been profoundly changed by our clients, partners, new staff members, and the new approaches to problem-solving we learn about every day. We look forward to sharing and revitalizing the FSG experience with you during this next decade.

That may seem like a strange statement to one that has not straddled the worlds of Knowledge Management and social problem solving, but to one who has, the overlap is significant – especially in the way FSG operates.

First consider the definition of Knowledge Management: “leveraging collective know how and experience to increase responsiveness and innovation.”  Furthermore, as I have written about before Knowledge Management is a multi-faceted practice, that often manifests in subtle yet pervasive ways. It is tightly intertwined with practices such as community development, collaboration, innovation and creative problem solving. These are all issues fundamental to the core of FSG’s work.

In the recently published article by John Kania and Mark Kramer, “Collective Impact,” Kania and Kramer define a new approach to large scale social change, an approach founded in basic tenets of Knowledge Management including collaboration, team management and developing trust, social networks, shared measurement, information sharing, shared vision (referred to in the article as common agenda), and crowdsourcing (referred to in the article as collective impact).

In a recent blog post, Andrew Wolk cites the "Collective Impact" article as illustration of the advancements being made in social innovation. I have to smile when I read that phrase. By its very definition Knowledge Management is about innovation, and as Wolk points out, this new direction in philanthropy is all about INNOVATION. It is not just about solving the problem but in thinking creatively to solve it better.

In its essence, FSG is really an innovation firm; part think tank – developing new ideas and approaches – and part consulting firm, integrating new solutions into the thinking and programs of its clients.

In our work with foundations, corporations, nonprofits, and governmental organizations, we deploy approaches, such as collective impact, in collaboration with forward-thinking clients trying to not only “make a difference” but understand how they make that difference, and increase the impact of their efforts.

Most importantly, as we do this work, we evolve. As managing Director Greg Hills recently opined, “We glean immense learning from that (consulting) process. Our ideas on how to identify and pursue collective impact opportunities are still evolving.” Indeed, as is the case with any knowledge-driven organization, we are always learning.

Background

Even though a confluence of recent unfortunate incidents has caused the current situation, a crisis has been brewing for a while in the microfinance industry. This crisis bears an uncanny resemblance to the sub-prime debacle that rocked the US just recently.

The future

The future of microfinance in India is uncertain. It could be that it continues but becomes more highly regulated. It could also be that alternative models like the government-introduced Business Correspondent model , becomes the preferred model. Whatever the end scenario, there is no doubt that it will look fundamentally different from how it does today. If MFIs continue to exist, it is likely that they will need to go back to including a strong income generation model. While some microfinance borrowers might be inherently more entrepreneurial and able to use the money to generate higher incomes, experts feel that for the microfinance model to be generally applied to the vast majority of the country’s poor (many of whom live in areas where potential for income generation activities are more limited or face systemic challenges like lack of access to market information or lack of access to know-how and expertise to increase yields) as a poverty alleviation tool, it will need to be based on livelihood capacity building with microfinance weaved in as part of it. Measurement of social impact around income generation and poverty alleviation needs to be an integral part of microfinance going forward.

I think so. I recently had the opportunity to speak at a convening of foundations working on issues of migration and integration. Sponsored by the Bundesverband Deutscher Stiftungen, Germany’s association of foundations (Europe’s oldest and largest of such bodies) and two leading German foundations, the Robert Bosch Stiftung and Stiftung Mercator, the day-long event brought together 20 or so foundations to discuss what they could learn from mistakes and failures in their efforts. The title of the event is already telling about the spirit of this group: they are open to admitting that past efforts may not be achieving change at scale. A new way of operating is needed.

Throughout the day, the foundations discussed how to move from funding small, innovative projects, to fundamentally addressing the issue at national and local levels. They spoke about new tools that would be needed, the need to come together around collective impact strategies, how to break down institutional barriers that would prevent their foundations from embracing a new modus operandi, and the importance of a learning-oriented evaluation culture in all of this. They left the event with a series of concrete action steps to work on together, for example:

• creating a tool-kit for the field of lessons learned by foundations tackling this issue
• developing a check-list to help foundations address issues of integration across all of their program areas
• combining resources to fund an innovative national advocacy campaign.

I left the convening feeling highly energized. I look forward to seeing what this group of dedicated foundations comes up with over the course of the next year.

This perspective on how true social change happens aligns closely with FSG’s idea of Collective Impact. Collective Impact happens when a group of cross-sector actors commit to a common agenda for solving a specific social problem and agree to each be accountable to a single overarching goal.

One good example of collective impact in action is the Strive collaborative in Cincinnati, Ohio – a cross sector “cradle to career” education initiative, involving over 300 organizations who are in constant communication with each other. Strive focused Cincinnati’s educational community around a shared set of goals with a shared measurement system. Unlike other types of collaborations – such as social networks alone - collective impact initiatives involve a centralized infrastructure, a dedicated staff, and a structured process that leads to a common agenda, shared measurement, continuous communi-cation, and mutually reinforcing activities among all participants.

Organizations like Strive, Mars, and Shape Up Somerville who are making collective impact happen know that no single organization or individual can create the kind of impact needed to tackle the complex problems that our society faces.

Do you work with or know an organization that exemplifies collective impact? Please share your thoughts and stories with us.

We firmly believe that the social problems our world faces today can and must be solved. Doing so requires that we approach them differently than before. We need a new set of tools that combine the best practices of philanthropy with those of business, strategy with evaluation, investing with donating, and good intentions with accountability for results. We need to create a new generation of leaders who shatter traditional boundaries to achieve social impact in ways we have never yet seen.

Like it or not, we are being forced to think differently about how we give to charity, operate our businesses, invest our capital, relate to developing countries, and measure results. The paradigms we have accepted for so long no longer fit the opportunities we face. New frameworks like catalytic philanthropy, shared value, impact investing, and collective impact challenge us to abandon long-held assumptions and grapple with unfamiliar demands.

It is thrilling to see and feel this change already happening around us. It is driven by innovations in technology that bring cellphones to the world’s poor and enable a global exchange of knowledge; by an outpouring of new knowledge from consulting firms, research organizations, and universities; by constantly emerging new social enterprises; and above all by the growing number of talented and hard-working people who are finding their life’s purpose in healing the world.

FSG is proud to play a part in this global movement, helping clients succeed in this new reality, introducing new frameworks to the field, and building a growing international team of skilled social impact consultants. Our new website is designed to share the learning and experience we have gained over the past ten years, but it is also intended to help us keep learning by stimulating dialogue with the many other people and organizations around the world who also contribute to the growth of this movement. Together we are reshaping the world.

Much has changed in the social sector since Michael Porter and I founded FSG as Foundation Strategy Group in 2000. In these ten years, our firm has grown to 75 FSG team members located in 5 offices; and the power of new online and technology tools and resources is enabling greater collaboration between global corporations, foundations, nonprofits, governments and individuals to achieve social impact. These tools and resources are helping organizations reinvent philanthropy by fostering easier exchange of ideas and information.

We have also used some of these technology tools to develop a brand new website for FSG, at www.fsg.org. We invite you to visit, engage with the ideas, and join in the conversations. See our welcome video.

FSG's New Knowledge Exchange
We've designed our new website to be more dynamic and interactive, featuring a rich Knowledge Exchange where you'll find video, blogs, research reports, published articles, and other publications. Additionally, we're excited to begin to bring other experts in the field and collaborators to our site...by linking to blogs that we follow, featuring resources from other organizations, and sharing relevant information from the field.

Other Features
Browse our new site and you'll also find videos, webinars and other tools and resources. You'll also find our new network of blogs, including our Social Impact blog, Corporations & Society blog, Education blog, and Global Health blog. Additionally, we've added commenting functionality to our knowledge items, and we hope that you'll share your points of view.

Sharing and exchanging ideas and knowledge is central to FSG's mission, and we hope you'll find the new design of our site helpful, informative and a powerful tool in your efforts to help achieve social change.

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