Janice Fry - Jul 14, 2003 8:54 am (#1 Total: 58)
Former Vice President of HR at Sun Mircosystems


I am pleased to be one of your hosts for this event; thank you for joining us.

Most of my professional experience has been in the business world, but I have also had the good fortune of being involved with several very different nonprofit organizations.

While in some ways the nonprofit sector feels worlds apart from my experience in business, some of the underlying principles for success are very similar. Successful organizations, in my view, are ones that are clear about their vision and mission, know what success looks like, are passionate about their work and have dedicated staff and stakeholders to provide the ideas, time and talent to accomplish their goals.

I have observed that the greatest successes in bridging the gap come when people of different backgrounds come together with a shared goal to find common ground, through dialogue and collaboration. Widening of the gap occurs when one party wants to impose their views or lessons learned from their experience on the other party.

I look forward to hearing your views, and to engaging in some spirited discussion on this rich and important topic.

host: Mario Morino - Jul 14, 2003 9:47 am (#2 Total: 58)
Event Host/ Chairman of Venture Philanthropy Partners

Hello and I’m very pleased to be able to participate in the dialogue on Bridging The Cultural Gap: Business & Nonprofit.

I compiled some thirty years in the software and services industry before “retiring” in 1992 and have since focused my time on work in the nonprofit sector – starting five new nonprofit initiatives/organizations and directly working with several scores more.

Bridging the cultural gap between business and nonprofit worlds is a subject of immense importance. Unfortunately, it is a challenge as both cultures – business and nonprofit – are not inherently receptive to one another, not if one scrapes past the pleasant and too often superficial veneers to get to the core of people’s beliefs and feelings about one another. I’ve witnessed too many in the business world that think too highly of themselves and their accomplishment and, intentionally or not, may look down on those in the nonprofit sector. Conversely, I’ve seen too many in the nonprofit world be far too cynical and too quick to brand their business counterparts as disciples of avarice and greed and insensitive to the causes nonprofits advance, while being all too ready with hands extended to accept their checks.

Too harsh? Perhaps in some circles, but not in the nonprofit world of community-based organizations serving children of working-poor and poverty families where “class war” is real and where reality hits you squarely in the face.

But to the positive side of this topic, even in the toughest of settings, when the right people from business and nonprofit come together and who take the time to learn about one another, recognize the need and act on earning each other’s respect, and come to realize they each have something to offer and something to learn from one another, great things can happen.

Thanks and I’m looking forward to the discussions that follow.

newventr - Jul 14, 2003 1:04 pm (#3 Total: 58)
Silicon Valley art Museum


Having spent much of my professional life in both worlds as both a business executive and as a college professor. From those experiences I can certainly agree with Mr. Morino's comments. My own observations led to the creation of my present project. It is in the not for profit world and was conceived in part as an effort to bring the world's art and technology communities to a better understanding of the contributions over the ages of each to the other. Thus our mission is to show the inter-relationship of art and technology through our exhibition and educational programs.

As the worlds first full featured all Internet art museum (www.svam.org), we have been able to attract a global audience. Typically they come from 25-30 different countries and we currently have some 45,000 visitors a year who spend ten minutes or more on our site with each visit. We recognize that changing attitudes is a long term effort but the growing response to our museum leads us to believe that we are finding an interested audience for our message.

David Keller - Jul 14, 2003 1:08 pm (#4 Total: 58)


I would like to echo mario's comment on both the importance (and opportunity) of bridging the gap as well as the inherent challenges. Janice's comment regarding the value of shared goals is spot-on. However, based on my experiences over the last year (I recently retired from business to focus on the non-profit activities) I would say there is a superficial receptivity to bridging the gap but a lack of depth or urgency in effectively leveraging the resources of the business world for the benefit of non-profit world. I would offer the point of view that the non-profit world should be more demanding of both the government sector and the business sector, i.e. use a little more reverse psychology vs. dependent/subservient psychology...

BDUNN - Jul 14, 2003 1:46 pm (#5 Total: 58)


Leadership companies are increasingly mapping the landscape of NGO's assessing the opportunities to engage in dialog and identify potential partners for serious and long-term collaboration.

At the same time, traditional and activist NGO's are also recognizing the influence and impact of the private sector, focusing more attention on rewards and sanctions for company policies and practices and sharing their own extensive knowledge of people, markets and culture.

In my view the early pioneers in these efforts need greater support and recognition.

Cross-sector collaboration is still defining its own lexicon of terms, its norms of behavior and its mechanisms of sustainablility.

Because benefits are often long-term, we need to help both elements of these partnerships to prepare for dialog, stay the course, learn from the experience of others and disseminate the lessons of their own experience.

Focusing on the "how to" of these collaborations strikes me as the most productive discourse we need to engage in.

mlflorence - Jul 14, 2003 1:54 pm (#6 Total: 58)
CompuMentor


I've been working in the nonprofit sector for 14 years. I've only worked in the nonprofit sector (excepting, of course, brief stints making some extra change working at a bookstore which could truly have qualified for nonprofit status anyway ).

I am the Director of TechSoup, an online learning community for nonprofit practioners on appropriate and successful implementation of technology. A year ago, TechSoup launched an e-commerce portion of our site. It has become a wonderful example of a partnership between nonprofit and for-profit entities. Through this channel we distribute products donated by technology companies to nonprofits. This service has grown considerably since its inception and while still integrated with TechSoup operates under its own management.

I have several thoughts on this topic. However, I'll detail those in a separate message. But, the main question I have is: "Is the divide between nonprofits and for-profits really as big as we often make it out to be?"

mmorino - Jul 14, 2003 2:20 pm (#7 Total: 58)
Chairman of Venture Philanthropy Partners


Hi -- as a big fan of TechSoup and CompuMentor please give my best to Daniel!

I think the divide depends on at least two things: first the inherent personality and styles of the individuals and organizations involved; and second on the nature of the part of the nonprofit world in which one functions. The former may be obvious to most, but style, culture and nuance are all important and read in very different ways. I've seen a busy executive checking his Blackberry in a first-time meeting with community leaders who interpreted his actions as a sign of disrespet. For instance, I'm sure your leader Daniel thought me somewhat of an enigma and pushy business person when he and I first met back in the mid-90s -- and our respective cultures were quite different. Only as we came to know each other over the years as people and to better understand our respective values and beliefs did our relationship take on the trust and grounding it has today. My only riveting worry about Daniel is that he's still an avid Giants fan!

Yet, other factors make this divide we're discussing very large and in some cases even formidable. For instance, an individual, Russ Ackoff, who some consider the "father of systemic thinking" once told me a story to illustrate this gap and how he over came it when he first joined the Wharton School of Business. With the tough neighborhoods surrounding Wharton in the Philadelphia area, he knew that he had to earn the trust of those in the community, if they were going to work together. It took almost six months to learn who to approach, a year before he was allowed to come into the neighborhood -- escorted, and two years before he could come in on his own with "safe passage."

I think that its best to avoid generalizations for the nonprofit world is so diverse in its makeup and its best to understand the inherent backgrounds, cultures, and shared interests of the parties involved.

sarpcv - Jul 14, 2003 2:37 pm (#8 Total: 58)

I am a graduate student from the School for International Training(SIT) and will be conducting my Practicum research topic related to finding solutions to bridging the "digital divide". My training with understanding the nonprofit sector along with NGOs during the past year have opened my eyes to the opportunities and disparity that some nonprofits, foundations, associations, philanthophist, corporations and others have with using technology to benefit society.

I am a former Race and Human Relations: Diversity Teacher and Trainer of seven years and a returned Peace Corps volunteer who served in the Republic of South Africa for three years. I've developed web sites for SIT and gained valuable knowledge and skills about Internet accessibility.

My Practicum research work for the Stargazer Foundation will entail issues related to Bridging The Cultural Gap: Business & Nonprofit. I am pleased to participate and learn from this discussion forum.

David Martin - Jul 14, 2003 2:55 pm (#9 Total: 58)
Researching & designing financial services for low-to-moderate income Americans


Hello everyone, I've already added my two cents to another forum thread, so I'll just stick to the introduction and make some brief comments. I have worked mostly in the for-profit world as a strategy consultant, a tech entrepreneur and, currently as a strategic planner for a mortgage bank. But my primary passion lies elsewhere...I am writing a book on these and similar topics and dream of one day being a really cool social entrepreneur (instead of a corporate planning dork )

To Mario's points made above: you're spot on about the divide. However, the fact that there is one also points to the lack of visionary leadership in the corporate world (creating zero or negative social value in many cases) and the lack of fiscal accountability/ sustainability in the non-profit world (I couldn't think of a better way to say it than you did: "hands extended to accept checks"). Polarities usually signal the lack of a synthesis.

mmorino - Jul 14, 2003 3:02 pm (#10 Total: 58)
Chairman of Venture Philanthropy Partners


Great observation. We've found that one of the keys to bridging the divide is to find and build on the areas of agreement. One great example I can recall is an evening dinner we had hosted after an all day planning session in which two individuals sat down to talk -- one quite right of center politcally and working in faith-based initiatives and the other equally left of center politically working "on the street" in youth development. Fortunately, these two had enduring personal qualities and were very gracious in how they approached others. But at the end of the meeting I remember them saying a "friendly good bye" and noting to their surprise how much they actually agreed on when it came to what mattered for children. Their comment which I will always remember was "maybe we'd be better off focusing on where people agree to build trust and shared interest, instead of always starting with what we disagree on."

Ed Batista - Jul 14, 2003 4:56 pm (#11 Total: 58)
N-TEN


Hi all. Small world--I'm running into a lot of friends around here. I'm the Executive Director of N-TEN, the Nonprofit Technology Enterprise Network, http://www.nten.org. We're a nonprofit whose mission is helping the nonprofit sector make more effective use of technology.

The topic of the for-profit/nonprofit divide particularly resonates with me because although I've spent the bulk of my career as a nonprofit manager, I got an MBA from Stanford a few years ago and was considering other options before deciding to return to nonprofits. And N-TEN includes many for-profit technology companies among our members.

Something that always strikes me when considering this topic is the bottom line, i.e. profitability, and how much that can simplify things in the for-profit world. If something--a product or service, a division, a specific employee, a company tradition--isn't directly contributing to that company's profitability, then it better be contributing indirectly. This isn't to say that profitability is the ONLY decision-making criteria used in the business world. But it's clearly the most important, not least because it gives a very clear sense of whether or not something's "working." This is an immense help, whether you're setting long-term strategy or making immediate tactical decisions.

In contrast, the nonprofit world has a much harder time being certain when something's "working." As nonprofits launch more revenue-generating programs, profitability is increasingly relevant as a metric. But even then, we have to ask whether it's the right metric. And usually it's not an option simply because most nonprofit operations are, from a business perspective, nonprofit

I think this fundamental distinction underlies many of the cultural differences Mario and others have talked about here. Businesspeople are used to operating in an environment where success is generally clear-cut and objective and where quantitative analyis is typically essential. Nonprofit people, in contrast, are used to an environment where success is often largely subjective and where quantitative analysis is sometimes inapplicable (and sometimes just poorly executed.)

Looking forward to hearing more!

Ed

amgoldfarb - Jul 14, 2003 8:38 pm (#12 Total: 58)
Environmental Defense


Andrew Goldfarb here - currently managing Web projects for Environmental Defense in New York City. I've worked within the nonprofit and corporate sectors - and plan to continue pursuing professional experiences in each. I'm excited to participate in this forum - partly for the topic - and partly to understand how effective online dialog can be as a tool for exploring this particular issue.

I am interested in exploring vehicles for enhancing dialog that enable the two sectors to speak to each other more effectively increase the good ideas and thinking in both directions. I think that the more easily professionals can move between the nonprofit and corporate worlds and cross-pollinate - the more gaps can be bridged.

Many of the middle managers with whom I've worked who have "crossed over" have had extremely frustrating experiences. The differences can be jarring and many of the subtle nuances are only apparent when individuals attempt to deliver on the job for which they were hired.

I'd like to learn more about the less obvious barriers to movement - aside from pay differentials for example - and come up with ways that professionals can be more effectivley supported through the transition - all the way from translating resumes and making the initial leap - to helping them to be more effective in their jobs on an ongoing basis once they've made the change.

Jan Masaoka - Jul 14, 2003 11:22 pm (#13 Total: 58)
Executive Director CompassPoint Nonprofit Services


It's often difficult for like-minded people with similar backgrounds to work well together--so we shouldn't be surprised when people with common ideals but dissimilar backgrounds have trouble doing so!

At CompassPoint (where I work) we get lots of people from the business sector coming to ask about how they can do consulting to nonprofits (we're a consulting and training firm working with nonprofits in strategic planning, financial systems, CEO transition, etc.). Of course it's annoying when they think that they can solve the problems of the nonprofit sector right away--just as it would be if I went to an airline company and tried to offer them advice on how to run their business!

Well, we in nonprofits can bemoan this attitude, but we should focus on how to work with it. One of the strengths of the nonprofit sector is its ability to take people with different attitudes and put them to work for important social change. It's like this: we may wish the VCR were easier to program, and it's entertaining to complain about it, but we've gotta figure out how to do it! (some ideas next post)

jimfruchterman - Jul 15, 2003 6:30 am (#14 Total: 58)
Benetech


I like the topic of bridging the gap, since I have had a foot in both worlds for 14 years, as a tech entrepreneur turning social entrepreneur (the change is 90% complete).

Jan's point is a good one. One of the analogies I use with business people is the customer one. If you want to help nonprofits and the communities they serve, approach this like any other market. Do the research, understand the issues, figure out who the effective players are and why. Sometimes businesspeople think that they can blindly apply some of the rigors of business to the nonprofit sector without the do-your-homework piece (after all, how hard is it to lose money?). To extend the analogy, I usually point out that there is no such thing as a defective customer.

One of the most useful books I found in making the transition from business to nonprofit was Banker to the Poor by Muhammud Yunus, founder of the Grameen Bank in Bangladesh. His point was that poor people in a place like Bangladesh had to work very hard just to stay alive. What the poor need is the opportunity and the tools to help themselves advance (in Yunus' case, the tool they need is microcredit). I think that a significant slice of the nonprofit sector maps well to the mindset of business, if the businessperson takes the time to understand the "market."

Jed Emerson - Jul 15, 2003 7:42 am (#15 Total: 58)
Senior Fellow, Generation Foundation (London)


Hi, Ed! Great to hear from you!

I think part of the "tension" we see at this point is simply evolutionary...these two sectors have lived in worlds apart for decades (thus the divide...), but as more folks like yourself come to be bred as "mutant managers" capable of playing in both arenas, the tensions will fade and the issue/focus will simply be upon how to best create/maximize the value of our work---regardless of whether that takes place in a nonprofit or for-profit context---since it is all, ultimately, One...

best to all, j.

K.L.SRIVASTAVA - Jul 15, 2003 8:49 am (#16 Total: 58)
Researcher and Consultant,Hyderabad,INDIA


I feel happy to interact with so many distinguished hosts and participants in this forum. I have a background in natural resource management and sustainable rural development in developing countries. I have had opportunity to work with universities, international agencies and NGOs.

I think that bridging the gap between the organizational cultures of for-profit and non-profit agencies may be a challenging task in many cases. Although I agree with Janice Fry that there is need for ideas, talent, time and passion for pursuing the chosen field of activities in both fields of endeavors, the life missions and yardsticks for measuring their self-worth is likely to be different. In my associations with many successful people in NGO sector and business sector, I have observed clear differences in their values and behaviour patterns. Probably they have different role models for their lives.

In nature, we find that biological diversity is needed for sustainable development. In community life, we find that cultural diversity should be respected and celebrated. We are told that each individual is unique and we should learn to use our uniqueness as our strength.

Using same analogy, I think that we should not strive for uniformity and 'monoculture' in the field of entrepreneurship.

Having said this, I can recognize the need for collaboration between two sectors based on their unique strengths.

However, I agree with the concluding comments of Janice. The main constraint in collaboration is imposition of views by one group of people on other.

Thanks,

K.L.Srivastava

Anne Perlman - Jul 15, 2003 9:19 am (#17 Total: 58)


K.L., it's good to see you at this on-line event. I hope you'll share comments with us that reflect your experience in India and with international agencies. Are there considerations in bridging the gap that you've experienced that may be specific to India, other geographies or to particular cultures?

Ed Batista - Jul 15, 2003 2:00 pm (#18 Total: 58)
N-TEN


Likewise, Jed--hope all's well!

You make a great point about how simply having individuals who are comfortable in both worlds will go a long way toward bridging the gap. My experience as a nonprofit manager in business school made me realize how many preconceived notions I had about "businesspeople" and left me feeling excited about how much I could learn from business while continuing to work in the nonprofit sector.

But I also feel like I had a somewhat unusual experience. We need to look for other ways to get people from both worlds interacting, like the Taproot Foundation, http://www.taprootfoundation.org, or Stanford's Alumni Consulting Team, http://www.gsb.stanford.edu/alumni/act/, are great ways to bring people together.

Ed

Janice Fry - Jul 16, 2003 11:55 am (#19 Total: 58)
Former Vice President of HR at Sun Mircosystems


K.L.,

It sounds like we have some common views about the value of collaboration...and an understanding that differences in life missions and yardsticks make it challenging. I would be interested to hear more about the how you see these differences - how would you characterize them? which might be most challenging to overcome? which might facilitate collaboration? And building on Anne's message and your international experience, I would love to hear about your views on how a global perspective may change the way we view this subject.

Janice

Janice Fry - Jul 16, 2003 12:03 pm (#20 Total: 58)
Former Vice President of HR at Sun Mircosystems


You raise a very important question - "is the divide...as big..." I am sure that each of our experiences vary, but in my experience the gap is not insurmountable in most cases. And one of the things I think we need to do more of is learn from success experiences.

So, I would be interested in hearing more about WHY you think the launch of TechSoup has become a "wonderful example of partnership between nonprofit and for-profit entities". What made it work? What were the challenges and how did you overcome them? Are there some "lessons learned" that you can pass along to the rest of us?

Janice

Charles Cameron aka hipbone - Jul 16, 2003 9:20 pm (#21 Total: 58)
HipBone Games / Rheingold Associates


Thanks, Eleanor, and all at Skoll:

Once again, it is a pleasure and a privilege to be here, and our topics are surely ripe for rich and varied discussion.

Marino, you write:

I’ve witnessed too many in the business world that think too highly of themselves and their accomplishment and, intentionally or not, may look down on those in the nonprofit sector. Conversely, I’ve seen too many in the nonprofit world be far too cynical and too quick to brand their business counterparts as disciples of avarice and greed and insensitive to the causes nonprofits advance

A couple of times I've found that this sort of mutual disregard arises from what are essentially misreadings of the languages habitually used by the different groups. George Lakoff has written some enlightning comments on this aspect of problems between "liberals" and "conservatives" in his book Moral Politics, and if I might paraphrase his main point, he suggests that the characteristic difference between "conservatives" and "liberals" arises from their different ways of construing the nature of need.

In Lakoff's view, which he supports by an analysis of the metaphors used by both sides, liberals regard the conservative unwillingness to "take care of" or "look after" the poor, the Iraqis, folks in our own inner cities, etc., as a failure of generosity, and thus inherently mean-spirited and immoral, while conservatives view the liberal wish to "take care of" or "look after" those same people as an "enabling" wish playing into and reinforcing a vicious circle of victimhood -- hence no less inherently naive and immoral.

Note that the accusation of immorality goes both ways, and that to the extent that either side acts on the principles articulated here, they are in fact behaving in a manner that is far from immoral, indeed very much the reverse.

What Lakoff allows either side, then, is a chance to see how the "other side's version" is in fact principled, and thus may perhaps be disputed but should not be disdained and derided. And that in itself is quite a breakthrough.

We all, I believe, know by now that there is such a thing as "enabling", and that it is not immoral to wish to avoid it, and that there is such a thing as "empowering", and that it is not immoral to wish to achieve it. And yet all work in the social sector can be read as either "enabling" or "empowering" – and which reading business chooses may well be the single most influential factor in the division we're discussing here. Likewise, business can be viewed as either "refusing to enable", or "unwilling to empower" the needy -- and which reading the social sector adopts may well play a significant role in their own tone when approaching the business side.

*

Lakoff's discrimination between "conservatives" and "liberals" is based on an analysis of their preferred metaphors, as I said, and a similar comparison of metaphors surrounding the concept of "need" would, I suggest, have a lot to teach us. And I must confess that I'm confirmed in this thinking by a somewhat different use of quite similar language, which I found in David Keller's post, when he suggests:

the non-profit world should be more demanding of both the government sector and the business sector, i.e. use a little more reverse psychology vs. dependent/subservient psychology...

Hope this stimulates…

Jan Masaoka - Jul 16, 2003 10:44 pm (#22 Total: 58)
Executive Director CompassPoint Nonprofit Services


One reason this discussion is so intriguing is that it has explored many aspects of cultural differences that would not have been immediately suggested by the title. Along these lines I'd like to break the ice on two intertwined matters that also intertwine with for-profit/nonprofit cultural differences.

Although all generalizations have plenty of exceptions, overall, the nonprofit sector is more left-leaning than the business sector. Simply stated, there are more Republicans in the board rooms of Fortune 500 companies and more Democrats in the board rooms of environmental health organizations.

And because nonprofit organizations are vehicles for social change and democracy, they are often focused on, staffed by, and led by, people of color.

These differences which are often unspoken, nonetheless create and reflect important cultural differences. As a Japanese American woman Democrat working in the nonprofit sector, I often find myself less than comfortable in the company of business leaders who are more frequently male, white, and Republican. At a business event I attended recently, jokes were made about illegal aliens working as domestic help to the conversation participants--I felt quite uncomfortable. One of those business participants would probably have felt uncomfortable in a conversation with me and some of my minority colleagues decrying George Bush and the tax cut.

Regardless of our differences, nonprofits are often places where people with disparate cultures can come together around a common goal. Because nonprofits are a place for all-too-rare conversations about values with people who have different values from ourselves, we should take advantage of the opportunity and surface cultural differences around politics and race, rather than pussyfoot around them or neglect to mention them in discussions about for-profit/nonprofit cultures.

Okay, I realize I'm probably asking for a blast of "but" comments, but bring 'em on!

mmorino - Jul 17, 2003 4:59 am (#23 Total: 58)
Chairman of Venture Philanthropy Partners


Charles, your referenced to the "mutual disregard that arises from what are essentially misreadings of the languages habitually used by the different groups." You are so right, and it is not only the misreading of the languages but the choice of language elects to use.

In my business life, we learned (eventually and after great pain) to understand the differences in languages with respect to industries, fields, markets and economies, in both what he heard and said. And as important as this was, what we've learned in bridging the business-nonprofit divide, is that the issue is much more difficult and, often times, not nearly as obvious -- as it goes beyond the nonprofit-business world, into issues of ethnicity, race, economics, cultures and even neighborhoods.

The Edna McConnell Clark Foundation, led by Michael Bailin, in this regard has done some interesting work. As they explore the "re-engineering of philanthropy" to make their grant-making more effective, they've placed great focus and importance on language. Too often, we've erred in our work with Venture Philanthropy Partners by using business terms, e.g., landscaping a field or area to find promising organizations, where Mike and his organization has selected terms, e.g., surveillance of a field or area to find promising organizations, that are more clear, to the point, and potentially less offensive. And, there are some great articles in the Edna McConnell Clark website that discuss the importance of language and terminology.

Yet, this also works two ways. It is important that those of us in business respect the language of the nonprofit world(s), yet in the same way, as nonprofit leaders reach out to business people for their support, it is similarly important to respect the language of business. One of the greatest examples I've seen in this regard was that of Ashoka, the remarkable global social entrepreneurship organization, led by Bill Drayton. When they sought to raise $20 million to bring their international model for social entrepreneurship into the U.S., they did one of the most creative and innovative things I've seen done. Instead of developing a "fund raising campaign" to raise the $20 million, they described their need for $20 million in capital financing by developing what in the financial world is called a Private Placement Memorandum (PPM). A PPM is used by firms and investment bankers to raise capital for businesses that are either not ready to or unable to raise money through debt financing or an initial public offering (IPO). The result of what Ashoka achieved, was that they described their $20 million capital need in a format, with a rationale, and in the terminology the business executives and investment types could readily equate to and understand. I can't assure that the PPM resulted in the final result they achieved, but it’s my understanding that one family ended up providing a substantial portion of the $20 million. It so impressed us in our work that we plan to explore developing a Private Placement Memorandum with one of our investment partners.

In summary, language is important, but its not a one-way street and I suggest it is the responsibility of the one doing the communicating to understand and respond with the language, messenger and medium most suited to those they are trying to reach.

K.L.SRIVASTAVA - Jul 17, 2003 6:38 am (#24 Total: 58)
Researcher and Consultant,Hyderabad,INDIA


Anne and Janice,

Thanks for your comments and for inviting me to discuss this issue of 'bridging the gap' with Indian examples.

I shall post these examples and my views after a few days.

Many thanks.

K.L.Srivastava

Eleanor Clement Glass - Jul 17, 2003 9:05 am (#25 Total: 58)
The Foundation Incubator


Charles, Jan and Mario have raised interesting points about language and culture between sectors. An analogy that comes to mind is traveling to another country. Americans are often faulted for our unwillingness to learn other languages and customs when traveling overseas, or even meeting people of different cultures within our borders.

I would suggest that the inital foray for a businessperson into a nonprofit might feel that way. For example, often there is more demonstrative social contact and attention to personal relationship-building prior to "getting down to business" at a meeting. This might be because of the social nature of the mission of the nonprofit organizations or the nature of the jobs where the personal passions of the individuals are what spur each other on and bond them to the work. Another example is board rooms. A business person might be appalled by the amount of discussion and concensus decision-making that takes place, resulting in a lengthier meeting than if it had been run more "efficiently" with up-down voting or more formal facilitation. They might not realize that shared ownership and buy-in is key to the operations of the nonprofit and key to keeping multiple stakeholders at the table.

I talked to one MBA student once who mentioned that the nonprofits he was working with seemed to have no understanding of important concepts like "value proposition" or "value chain" and that as he worked more and more "in this space" he was becoming disenchanted with the "lack of professionalism." I tried to bring the perspective that you mentioned, Mario, about using DIFFERENT words that might be better understood as he entered these relationships. He stared, unbelieving, patted my arm, and said, "But Eleanor, isn't it OUR JOB to help them to learn to be more professional?"

I would hope that both nonprofits and for-profits would recognize that they are entering a foreign land and need to attempt to learn the language and customs and the reasons behind them in order to forge respectful partnerships.

JOBI - Jul 18, 2003 6:43 am (#26 Total: 58)
HUMAN ANGLE


JOBI - 06:39am Jul 18, 2003 PST HUMAN ANGLE

The topic of this dscussion goes to the very heart of the survival of the social sector, particularly in a country like Nigeria, where I live and work. I am an Ashoka fellow and my organisation (HUMAN ANGLE)works towards the assertion of the socio-economic rights of women and children, using various means. Now, everybody that has come in contact with my work and results over the years has agreed with me that what I am doing is vital to the wellbeing of Nigerian women and children (who by the way, make up around two thirds of the population) but you cannot believe just how difficult it has been to convince the business sector to invest in my programs. They seem to have difficulty understanding why they should invest in programs that do not directly affect their bottom line. They appear to prefer erecting parks and gardens in the major cities where they will then proudly display their corporate logos saying 'built and maintained by so and so company' They then feel that they have been socially responsible, end of story. However, how many people are touched by that? How many lives are improved? There is a need to bridge the gap between the Profits and the Non-profits because any meaningful development has to come as a result of effective collaboration between the two sectors. Anything less would result in the Non-profits struggling endlessly to fix urgent social issues, while the organised private sector wastes resources on less important pursuits. The victims of this deadlock unfortunately, are the very communities that the two parties are trying to serve.

Josephine C. Nzerem Lagos-Nigeria.

sally osberg - Jul 18, 2003 10:58 am (#27 Total: 58)
CEO of Skoll Foundation


Charles, Mario, Eleanor,Jan, David and friends,

The words both sectors choose, the metaphors we adopt and construct, the paradigms we hold to and yield, as well as the tone and spirit with which we utter all this--clearly contribute to how well we do and don't understand one another.

The Private Placement Memorandum is indeed a brilliant expression--perhaps more important to Ashoka and its sense of self-worth/legitimacy than to the outside, but I'm not sure...What's most interesting to me is that Bill and Ashoka chose to appropriate this construct and claim it for the social sector (but then, I know what Bill thinks about Foundations and traditional philanthropic mechanics!)

Regarding the more fundamental issue of how well-meaning human beings miss the chance to connect over what they hold in common, I offer this from John Gardner, food for thought:

"The most gifted leaders understand that the needs of people cannot be fully plumbed by asking them what they want or why they want it. One of the deepest truths about the cry of the human heart is that it is so often a cry that is never uttered. There are needs and feelings we express quite openly; lying deeper are the emotions we share only with loved ones, and deeper still the things we tell no one. We die with much unsaid. It is strange that members of a species renowned for communicative gifts should leave unexpresssed some of their deepest yearnings, their smoldering resentments, their worries and secret hopes, their longing to serve a higher purpose.

The greatest poets, novelists and playwrights have always tapped those underground sources. They have always given expression to the unexpressed, have always had transactions with the hidden element in the souls of their audiences. The ablest leaders share that gift of understanding..."

Sally

Charles Cameron aka hipbone - Jul 18, 2003 2:51 pm (#28 Total: 58)
HipBone Games / Rheingold Associates


Sally -- do you have a source for that magnificent John Gardner quote?

Two points that arise from it, if I may.

One is that much of the submerged part of who we are, the unspoken part, consists of our hidden assumptions, and it is those which cause the ructions when they clash with the hidden assumptions of others, far more so than overt disagreements. Much of what we're discussing here about the interaction between business and non-profit has to do with this unseen level of missed understandings, rather than the surface level of mis-understranding, I'd wager.

The other aspect has to do with creativity, and Gardner is (not surprisingly) right on the mark when he says the poets and novelists have privileged access to our inner yearnings. The yearnings he's speaking of reside like ore in deeper layers of our being which open up during the aha! phase of creativity – and the great creators then mine them.

They are therefore most susceptible to our day-to-day understanding when we operate at the contemplative tempo, in quiet moments, in meditation, in reverie, and obscured from our view when we are harried and hurried. And it follows that best practices may perhaps turn out to be neither business practices (which know how to get things does under budget and ahead of deadline) nor what Dragonfly called "feel good" practices (which almost certainly work at a slower pace), but a blend of both in a rhythm which includes rest and restlessness, stillness and warp speed, depth of feeling and empowered achievement of goals.

*

Okay, I'm returning to my roots and waxing poetic -- but my point is that our most powerful drivers are our hopes and fears where they touch the level of dream and nightmare, myth and heroism, and that an oscillation between contemplation and action is therefore the best practice of all.

Does that sound "too" idealistic? I don't think so. I am only rephrasing what I learned from my mentor, the single person who achieved the most of anyone I have ever met. He was a monk, a contemplative who took action. His name was Trevor Huddleston, and his achievement was to see the end of apartheid in his beloved S Africa. He was the one who tipped his hat to Desmond Tutu's mother (post #67, 27 Jun 2003) Here's what Nelson Mandela said when Trevor died:

It is with special humility that South Africa joins in this commemoration to convey the sense of loss we feel, as a nation, at Father Huddleston's death, and our abiding gratitude that the vagaries of history brought him to our land. We do so in the knowledge that we are speaking of one who touched the hearts of millions of South Africans. Although he disparaged empty words, this man of action, who also lived a deeply contemplative life, inspired the world to action through his eloquent denunciation of our condition…

Words, words, words indeed!

Bruce Sievers - Jul 18, 2003 3:03 pm (#29 Total: 58)


Hello all,

Sorry to be late to this party, but I have been away most of the week. Really enjoyed reading all the threads so far.

Just to spice things up, I want to make sure this is not too much of a love fest. Sally's recent entry, plus some of what has gone before spurred me to point out a distinction between the active involvement of people from the business community in philanthropy (which, in my view is a good thing) from application of the BUSINESS MODEL to philanthropy (which is much more problematic). The problem with the latter is its tendency to translate techniques and, more importantly, a mind-set to the arena of social action that results in excluding crucially important characteristics and purpooses from the understanding of social life. One quick example: A recent open letter by Alex Counts, CEO of Grameen USA to the field warns of the tendency in the imposition of rigid "industry standards" and efficiency goals to move the field away from its original goals of reaching the neediest populations through micro-enterprise finance. Based on my conversations with nonprofits through the years, this concern could be multiplied hundreds of times in every field of nonprofit activity. While it is true that organizational discipline and rigor can be good things, it is also true that nuance, interpretation, and just muddling through can also be beneficial approaches to enaging important social issues and advancing human development.

Bruce

Charles Cameron aka hipbone - Jul 18, 2003 3:55 pm (#30 Total: 58)
HipBone Games / Rheingold Associates

Bruce, you tell us:

nuance, interpretation, and just muddling through can also be beneficial approaches

Bravo, well said. Would it be fair to see a resemblance between this point and that made in this post by K.L.Srivastava?

In nature, we find that biological diversity is needed for sustainable development. In community life, we find that cultural diversity should be respected and celebrated. We are told that each individual is unique and we should learn to use our uniqueness as our strength. Using same analogy, I think that we should not strive for uniformity and 'monoculture' in the field of entrepreneurship.

*

I see from my web-browsing that you are currently writing (among other things) about the commons. D'you think that some of the tension between (stereotypical) "business" and "non-profit" thinking is explainable in terms of the difference between those with individual grazing interests and those with an insight into the protection of the commons? I have the sense that the dynamic of the commons lies at the heart of many of our most significant problems, How can the individual grazer best come to appreciate the need to protect the commons -- before it's depleted? And how can the protector of the commons best respect and honor the rights and interests of individual grazers, while pursuing the larger goal?

sally osberg - Jul 18, 2003 4:53 pm (#31 Total: 58)
CEO of Skoll Foundation


Hi Charles,

Yes, I do have a source: from Gardner's "On Leadership," 1990, p. 186; and more recently quoted in the just released "Living, Leading and the American Dream," a selection of Gardner classics with some unpublished gems, edited by his daughter Francesca Gardner and published by Jossey Bass.

I'm thinking (with apologies to Bruce, who's clearly worried about this "love fest"!) that "waxing poetic" may need to get factored into the Social Edge measurement rubric!

I am grateful to have learned about your mentor Trevor Huddleston--

Sally

Bruce Sievers - Jul 18, 2003 7:55 pm (#32 Total: 58)


Charles, thanks for that nice excerpt from Srivastava's comments. Yes, I do think it is in part about being sensitive to the unbelievably complex differention of social aspirations and behavior. But, even more, I think you put your finger on the key issue at stake--the fate of the commons in a world programmed for individual incentive. Assuming we are agreed that the "invisible hand" never did work (even Adam Smith knew that it had to be buttressed with the "moral sentiments"), then the challenge becomes how to marry the pursuit of economic or quasi-economic goals driven by interest-maximizers (the business model) with pursuit of of "common good" goals pursued by social entrepreneurs (the civil society model). Mutual learning is part of it, so is not attempting to reduce one to the other.

Bruce

jimfruchterman - Jul 19, 2003 7:58 am (#33 Total: 58)
Benetech


Sometimes I make the opposite point to business people looking at the social sector. They should use their business brain more rather than less. The specific arena I think of is doing one's homework. You would never dream of entering a new market or business without doing the market research: understanding the market, the customer, the key players and what makes them strong.

Too often, business people approach the social sector and check their analytic brain at the door. They believe that the social sector must be simple and they can get away without understanding the details. And that's what is often the problem. Because they blindly apply the model of what they know to a new field without analyzing whether it will work.

I think that business models can be very helpful to the social sector: a source of innovative thinking. However, it is like trying to doing business in a foreign country while pretending you are in the U.S. It usually doesn't work. If you take the time to understand the way things get done in that country, and truly have some value to bring, you're much more likely to succeed.

Charles Cameron aka hipbone - Jul 19, 2003 10:11 am (#34 Total: 58)
HipBone Games / Rheingold Associates


Bruce:

I believe your question:

how to marry the pursuit of economic or quasi-economic goals driven by interest-maximizers (the business model) with pursuit of of "common good" goals pursued by social entrepreneurs (the civil society model).

is one which begs for a vivid graphical representation.

I guess my issue here is educational: the dynamic doesn't sink in very easily when it's expressed in the abstract, and only a bit better when expressed in verbal imagery eg of grazing. It really requires at minimum a system diagram of the sort Peter Senge uses in The Fifth Discipline, but even that's not really enough.

I'd love to see a short flash clip that explained it with a dynamic model of the way a commons can be maintained or lost, maybe agent-based or maybe designed by an animator, and made freely available under open license for educators and explainers. More than that, I'd like to see an experience of the loss of a commons, followed by an experience of what it takes to avoid that loss, as a basic part of the curriculum at a fairly early age. I think it's that vital for us to understand it.

Sorry to keep hammering away at this, but if a grasp of the dynamics of the commons were instinctual, I believe we'd be living in a very different world.

*

I have some ideas about how we could model this, using a perspective that's close to Robert Axelrod's (in works like The Complexity of Cooperation. It's not everyone's cup of tea, I know, but I've found the approach helpful. If I had the modeling skills, I'd probably take a crack at it myself – but I don't. But I'd be happy to discuss the idea further with anyone who is interested, either here (in another part of the conference, perhaps) or by email, whichever seems appropriate.

Bruce Sievers - Jul 19, 2003 9:39 pm (#35 Total: 58)


Hi Jim,

I would agree on the need to apply good analytic skills in the social sector and that businesspeople often have important perspectives to add. My problem is with the transposition of the entire worldview of the business sector onto the nonprofit arena, meaning that terms like "market," "customer," "scale," and "social return on investment" come to be seen as the essential definers of the nonprofit world in place of such terms as "area of social need," "citizen," "program reach," and "accomplishments." The former are thought to be more precise and rigorous, whereas, I would argue that in many cases they are just more narrowing. I think we are in agreement about the cross-cultural translation problems; I would just add that it is not only a matter of approaching the foreign culture with humility, it is also realizing that there are just some concepts that are untranslatable (like the German word, Geist) and that it is necessary not only to learn the language, but to be grounded in the culture as well.

Bruce

Bruce Sievers - Jul 19, 2003 9:46 pm (#36 Total: 58)


Charles,

That is a good thought about the need for visual illustration of the common good dilemma. Actually I think the best image is still that of Garret Hardin's "tragedy of the commons" (I use it in class all the time) of the cows grazing on the commons and what happens when each farmer adds one. Also some of the "prisoner's dilemmas" type games make the point in a very lucid way. I totally agree with your sense of the centrality of this notion to the work of the social sector and that (I would add) it is not addressed well by the business model.

Bruce

Alex Counts - Jul 20, 2003 3:34 am (#37 Total: 58)


Bruce,

Thanks for mentioning my open letter to the the micro-finance community of several years ago, in the context of this interesting discussion. The only thing I would add is that I am not so much against imposing rigid industry standards on micro-finance or any other activity -- though rigidity is best avoided, and the question of who defines standards and why should be asked -- as I am strongly FOR including standards and measurement tools that track the social outcomes of micro-finance, to supplement and augment those that track the financial performance of micro-finance institutions. By rigorously measuring one set of outcomes, and not doing the same on another set of outcomes that may be harder to measure but are at least as important as another set, we can set a sector or movement in unintended directions. In economic terms, it creates a situation of close to perfect information in one area and imperfect or no information in another, which yields "market failure" and may result in less than desired application of philanthropic resources. -- Alex Counts, acounts@gfusa.org

K.L.SRIVASTAVA - Jul 20, 2003 11:58 am (#38 Total: 58)
Researcher and Consultant,Hyderabad,INDIA


India is world's largest democracy. After gaining independence in 1947, India faced many challenging problems like mass poverty, illiteracy, rigid caste-based social structure,untouchabilty etc. During the last five decades, the country has progressed substantially in several fields, but most of the problems are still with us.

Upto the eighties, India's planners felt that profit-motives of individual entrepreneurs can further increase socio-economic and regional disparities, and can channel scarce capital investments to low priority sectors of economy. Consequently, the entreprenurial ventures by individuals were tightly regluated. Business sector was mostly in the hands of Govt. agencies and Cooperative organizations. People relied primarily on Govt. agencies for all forms of development (including social sector development). Consequently, the economic and social progress was slow. Gradually, the importance of private business sector and NGOs has now been widely accepted, specially after the liberalisation of the economy in the early nineties. During the last10-15 years, there has been significant growth in NGO sector. Most of these NGOs receive funding from Govt. sector, international donors, UN agencies etc. Several of these organizations are led by noted social workers and religious leaders. Most of the NGOs work at grass root level and they are small-scale.It has been noted that people's participation in development programmes has improved significantly because of the involvement of the NGOs. Butthere is also a significant number of unprofessional and corrupt NGOs who deserve to be blacklisted. Thus there is a mixed picture.

Formation of self-help groups, arrangement of microcredit, and promotion of microenterprises constitute important activities of a large number of NGOs. In this field, some agencies are working for double bottom line (social as well as financial).

Example#1. BASIX (www.basixindia.com)

The mission of this organization is to provide sustainable livelihoods for poor people. For achieving this, BASIX is formed as a holding company including two ventures: an NGO and a financial company. BASIX is managed by Mr Vijay Mahajan, a management graduate who has earlier led a famous NGO. The management is sensitive to complex responsibilties of staff members who have to balance the livelihood promotion aspects and loan recovery aspects. The Non-profit venture is eligible to get philanthrophic funds and development grants; the for-profit venture can get investments from the market. This is a successful experiment that requires high managerial inputs.

Example#2: Hindustan Levers Ltd. ( a giant business group) is collaborating with women self-help groups (comprising of poor rural women) for direct marketing of some of its products in remote rural areas. What is important here is sense of mutual respect between staff of a large business house and members of women-groups, and income generation opportunities for citizen-sector groups in these transactions. Thus it is a "win-win" situation for both the parties.

Thus there is scope for devising creative solutions for achieving social returns on investments on a sustainable basis in several situations. The for-profit and non-profit ventures can collaborate for mutual benefit. However, each collaborating party must have respect for the mission and values of the other party.

Thanks.

K.L.SRIVASTAVA - Jul 20, 2003 8:44 pm (#39 Total: 58)
Researcher and Consultant,Hyderabad,INDIA


Janice,

The NGO movement in India (as in many other developing countries) can be broadly classified in two categories: (a) Those NGOs whose main mission is to change existing political, business, and social structure, and to create new systems. Many of these NGOs (not all) have leftist ideological orientations. It may be very difficult for business groups to collaborate with these NGOs. (b) The second category consists of NGOs with development orientation (working within the existing system).

The second category, obviously, is more suited for 'bridging the gap' through collaboration. The organizational structure on both sides (business and NGO) should be able to communicate and understand each other's special circumstances and strengths for mutual benefits (without losing their credibility).

Hope I have answered most of your questions. I feel happy to discuss it with you.

Thanks.

K.L.

Jan Masaoka - Jul 20, 2003 9:03 pm (#40 Total: 58)
Executive Director CompassPoint Nonprofit Services


"The needs of people cannot be fully plumbed by asking them what they want or why they want it." Sally, thank you for giving us this great quote from John Gardner. This is why marketing, needs assessment, outcome evaluations, and many other fields of effort in both the for-profit and nonprofit worlds are not hard science. P.S. Can you give us the reference, too? Jan

Steve Rudolph - Jul 21, 2003 2:59 am (#41 Total: 58)
Director, Jiva


I'm sorry for not having been able to join the discussions earlier. I am currently logging in from a cybercafe in Bhutan, where I'm working on a project with Healing the Divide and Bhutan's Ministry of Education for introducing information and communication technologies into schools.

I thought I might mention a very different perspective on bridging the gap--from the Bhutanese perspective. Bhutan was a monarchy until 1998, when it became a constitutional monarchy. It has been extremely cautious in its liberalization, wanting to ensure its culture and traditions are not lost as it opens its doors to the world.

This country of 700,000 still largely supports itself on subsistence farming, and receives its other income through sale of hydro-electricity to India, tourism, and development funds. Surprisingly there are only 5 NGOs in the whole kingdom. While the country has been making great efforts to increase literacy (education is entirely in English), it has been producing more graduates that industry can absorb.

A country, landlocked, with a large number of educated English speakers, a decent Internet pipeline, a well-managed government (though not rich), Bhutan is a ripe opportunity for foreign collaboration in the IT sector. It could be one of the next countries to take on IT enabled services.

The more I hear about people from developed countries losing jobs or opting out of mainstream business, and looking for opportunities in social enterprise, the more I think about the future of the merging of these disparate fields happening in geographically diverse areas in very creative ways...

Combining tourism, volunteerism, IT donations from individuals or companies, business for IT services, educational exchanges.

There are MANY possibilities if the right people find each other.

More ideas soon.

Best,

Steve

SparkPeopleChris - Jul 21, 2003 7:45 am (#42 Total: 58)


Hello Everyone!

My name is Chris - aka "SparkGuy".

I'm in the middle of trying to bridge this gap on a really small scale myself. I originally co-founded a company named Up4Sale that was acquired by eBay. After working at eBay, I started a company named SparkPeople that helps people reach practically any personal or professional goal. We have both for-profit units and a 501(c)3 non-profit as well. We're still in the early stages, but we build systems and resources on the for-profit side and then let our non-profit use them for free.

The systems we use at SparkPeople helped me so much personally and professionally that now my life mission is to "spark" others to reach their goals. I love both capitalism and the non-profit world and think there are many ways they can work together.

I'm happy to be involved with such a great group of people - together we can make a huge difference in the world!

I believe that everyday life is our greatest adventure because we can make such an impact on other people.

Adventure on!

Chris

Magda Escobar - Jul 21, 2003 8:01 am (#43 Total: 58)
Plugged In


Hi Mario, Hi Everybody, Thanks to Social Edge for the invitation to participate. It´s awesome to get to read the thoughts and ideas of friends I admire.

Mario - Regarding your point on the importance of language and the responsibility of the communicator, I could not agree more.

I think that the advantage the business sector has in this regard is a set of common concepts, frameworks, and reference points that have been highly developed, distributed, and internalized by corporations and business professionals. Because we don´t have that on the non-profit side, we have to spend more time working to create common and basic understanding even among ourselves about how we work. Add to that - philosophical differences about the type of social change work that needs to be done, the state of society today, and vehement disagreements about who should be represented, who has power and who does not, and how decisions should be made.

Sometimes I think that the non-profit sector is the worst of business and the worse of politics. It is hard enough to be just a good business person or just a good "politician" - let alone what the non-profit sector needs - EXCELLENT "business politicos." [Can´t think of a better term right now! ;)] People who can communicate in the way that you describe, listen deeply, delight in discovery, mine opportunities, generate momentum, inspire people to act and keep on keeping on over a long time.

Bill Kramer - Jul 21, 2003 8:14 am (#44 Total: 58)
World Resources Institute


Hello all. I'm joining you from the Digital Dividend Project at World Resources Institute in Washington DC. A bit of background. Like Mario, I spent a long career in business (in my case over 30 years) in and around the Washington area -- the various Kramer bookstores, for those of you who have visited the area. About 6 years ago, I shed most of my businesses to concentrate on non-profit work, starting my own NGO working knowledge and development issues. A few years ago I helped to set up a couple of companies assisting colleges and universities adopt web-based applications more strategically (portalsl, web classroom tools, e-procurement, digital printing and publishing). I've been with WRI for nearly a year, working on innovative uses of ICTs at the "base of the pyramid." You can find our work at www.digitaldividend.org. I look forward to reading and participating.

Eleanor Clement Glass - Jul 21, 2003 10:50 am (#45 Total: 58)
The Foundation Incubator


Hi K.L.,

Thanks for your astute comments in the Welcome thread.

I think we have a similar phenomenon here in the U.S. Often, but certainly not always, the public benefit organizations here represent more "progressive" and "liberal" political leanings, sometimes making it difficult to attract or maintain the support of business leaders. They may even feel that they, their beliefs, or their lifestyles are being attacked.

Sometimes the corporate leaders on the boards of foundations, even community foundations, may rankle at grants recommended by staff that either support or provide public education or advocacy for or against controversial issues. I have seen this occur with issues such as union-organizing, gay marriage, racial profiling, and the most recent, the privacy initiative put forward by Ward Connelly.

Sometimes lack of support comes from an inability to relate or even believe in the need for the "on-the-ground" or "grassroots" activities that seem to be welling up "from the community." Jan Masaoka identified that race and politics are at play in "the divide" we are discussing. I think class differences might also be an aspect of the divide. We need to be open about communicating our realities and recognizing the realities of diverse communities who are differentially impacted by issues that may not be in our realm of experience.

Mal Warwick - Jul 21, 2003 2:21 pm (#46 Total: 58)
Author, consultant, public speaker


I've been having trouble getting a handle on this discussion, because it all seems so abstract. This question, though, points to the heart of my concern, because I certainly do not see a clearly defined line between the for-profit and nonprofit sectors. Reality, it seems to me, is much more complicated than that.

I'm one of those odd people who has lived on the intersection of both sectors for decades -- with many a diversion into the public sector as well. For the past 24 years I've run a for-profit company that provides consulting services to the nonprofit sector, but my experience with nonprofits goes back a lot longer than that. I've served on a slew of boards, both nonprofit and for-. And I'm currently serving as Chair of the Advisory Board of the Social Venture Network, a San Francisco-based nationwide network of some 400 business founders and CEOs, social entrepreneurs, investors, and philanthropists committed to promoting social and environmental responsibility in the business sector. The upshot, then, is that I've had about as much exposure to the interface between the sectors as anyone I know.

Here's why I believe the divide (if in fact that's the right word) is hard to measure:

(1) A substantial and growing number of established for-profit companies are waking up to the reality that the single-minded pursuit of profit (the "bottom line") may not be sustainable -- in fact, IS not sustainable in certain industries. The success of Business for Social Responsibility under Bob Dunn's leadership points to the remarkable spread of that perspective. A business' commitment to social responsibility almost invariably opens up new opportunities for collaboration between the company and nonprofit organizations, including everything from cause-related marketing programs to philanthropic support to employee volunteer programs.

(2) I know of very few nonprofit boards that don't include at least one businessperson. Similarly, I know of very few experienced business leaders who aren't serving on at least one nonprofit board. I believe there's a whole lot more overlap than is generally recognized. And not only business leaders are involved: millions of business employees provide hundreds of millions of hours of volunteer work every year.

(3) To an extent, the lines between for-profit and non- are blurring. More and more entrepreneurial people, mostly young, are establishing businesses with philanthropic motives. In the Bay Area, we have one particularly brilliant example of this: the office-supply company Give Something Back, which exists to generate profits that are immediately channeled to what is loosely called "charity." Give Something Back is remarkably successful, but it's by no means unique. At the same time, more and more nonprofits are venturing into the for-profit realm by establishing affiliated businesses. My hunch is these trends will continue.

There's more to say, but that's more than enough for one message!

Ernie Ting - Jul 21, 2003 4:08 pm (#47 Total: 58)
est/a


Hi Bruce and Charles and others contributing to this thread,

I've enjoyed reading your thoughts -- thank you. I would certainly agree that the common good is "not addressed well by the business model"... In fact, I would say it is not AT ALL addressed by the prototypical business model. Classically, the structure of business organizations is to facilitate individual profit-seeking -- and for services/products that have smoothly-working markets and consumers with plenty of $$$ -- it does work remarkably well. (But I must say that the profiting individuals are as often executives rather than their shareholders!) Individual execs sometimes try to meld in social goals, but the pressure of competitive markets usually makes that very difficult to sustain in a big way.

To me, that pretty much means that we have to look to alternatives to address the common good -- either organizations with a nonprofit mission, or public policies which alter the terms of the business environment to incorporate the public interest. (While I like efforts to promote "corporate social responsibility", I'm not very optimistic about the size of the impact that can be generated that way.)

Having said that, I think we have to be careful of the inferences we draw. While it is inappropriate to transfer the whole mentality of business -- with its primary focus on profit-seeking and strictly financial results -- to the social realm, I don't think it follows that most specific concepts and techniques used in business cannot be transferred to nonprofits and be valuable in the management of them. In my experience, many can. While the goal of nonprofits (and government agencies as well, for that matter) is not financial success, they and their programs still operate within the broader environment of markets (working in an equitable manner or not) for services, suppliers and labor. While they are nonprofit organizations -- they are not "non-financial organizations".

Further, while many business management techniques conventionally focus on profit-making or strictly financial considerations, they do not HAVE to be designed to focus solely on those goals. Nonprofit leaders should feel free to broadly describe what matters to them -- what success means in their world -- and ask "business types" what tools they can design/translate from the business world that can be helpful to a much broader social purpose.

On the bottom line, if you'll excuse the expression, it seems to me that we need to be as determined to explore any better ways of running our social institutions as we are adamant that they will not become narrow, simple-minded and impersonal production lines.

best, E

Bruce Sievers - Jul 21, 2003 8:06 pm (#48 Total: 58)


Hi Ernie,

The "commons" seems to be really important theme here (maybe this should be a distinct thread, Eleanor?), because it is at the heart of the issue of how well the business approach to the world can address social problems. I think we are in almost full agreement about the potentially beneficial application of business techniques to nonprofit work but the need, at the same time, to understand their limits in the pursuit of public goods. One way of putting it, in economic terms, is that businesses attempt to eliminate economic externalities (reinforcing your point about the limits of corporate social responsibility) while nonprofits seek to address them (e.g. clean air and water). Thanks for your good thoughts on this.

Bruce

K.L.SRIVASTAVA - Jul 22, 2003 12:35 am (#49 Total: 58)
Researcher and Consultant,Hyderabad,INDIA


Charles, Ernie, Bruce,

The individual and community dimension of impact of a venture is obviously the core issue in discussing conventional entrepreneurship in relation to social entrepreneurship. Thank you for highlighting this point. Another important and related issue is: " How big is "commons" and our boundary for defining community?" As we enter the area of society and environment, scale of analysis becomes important. A business entrepreneur, defining his success in terms of profit, generally has a flexibility to increase the scale of his operation.

In contrast, a social entrepreneur may have to operate at a smaller scale where he or she can understand the needs of the community and work for the 'common good'.

In many cases, differences in "scale of operation" also induce cultural divides between the two types of organizations. I would like to hear your views on this.

Thanks,

K.L.

Tim Walter - Jul 22, 2003 3:09 pm (#50 Total: 58)
Association of Small Foundations


Greetings, all. About to jump in on one of the threads and thought I'd introduce myself... Am the new head of the Association of Small Foundations. We're a 10-person nonprofit formed by foundations about 8 years ago. We have about 2,900 private foundation members, and we're serving another 900 brand new foundations, (http://smallfoundations.org and http://foundationinabox.org.) By small we mean "small staffed" or totally volunteer-led, so I deal a lot with boards. Collectively they make grants to over 130,000 nonprofits each year. They're also a fairly dynamic portion of the philanthropy world, with over 40% still adding to their endowments. Our ambition is to help donors be effective and thereby deepen their interest in giving.

Career-wise, I've crossed sectors a few times, including having founded a couple nonprofits and stints with GE, the Aspen Institute, and a Japanese trading company. Today, I run ASF more like a socially-responsible business than a traditional charity, thus, am very interested in this discussion.

So with that, into the fray...

Village - Jul 22, 2003 5:17 pm (#51 Total: 58)
Village Enterprise Fund


I've had the good fortune of working in the business world (part of the time as an entrepreneur), at two universities and now in the non-profit world. I'm currently Development Director at Village Enterprise Fund. We fund microbusinesses in Africa.

Personally, I don't think the divide is that great. My latest example is from the interactions of our Board and management. Our board members are all business people, from the venture, investment and commercial real estate communities, primarily. Their input is to help us be as successful as possible, using some of the metrics from the non-profit world, adapted to our work as a non-profit. When we moved from solely a business grant format, programmatically, two years ago to start several large projects in the field as loans, there was lots of discussion and ferment before we went ahead. We looked at downstream effects of starting $10,000 ventures when heretofore we funded (and still do) $100 businesses, looked at return on investment, leverage, saturation, etc.

I think the divide is "old school", maybe a familiar way to look at a largely archaic disconnect. There's lots of room for cross-fertilization.

Looking forward to reading more of the discussion.

Barbara Lamb Hall Development Director Village Enterprise Fund

Bruce Sievers - Jul 22, 2003 6:08 pm (#52 Total: 58)


K.L., You make an interesting and important point about scale in relationship to the commons. One very good book on this was Dan Kemmis's "Community and the Sense of Place" where he argued that natural geographic boundaries are one fundamental way in which a sense of the commons becomes realized. My own view would be that the larger the scale (geography, population, etc.), the more difficult it is to generate political commitment to the commons (think global warming), but, nevertheless it is critical to keep such issues in the forefront of social change agendas. Enlightened self-interest isn't enough.

Bruce

Janice Fry - Jul 23, 2003 12:20 pm (#53 Total: 58)
Former Vice President of HR at Sun Mircosystems


K.L,

I read with interest your background message and Indian examples. Thanks for taking the time to outline these. I also found it interesting that, as Eleanor mentioned in her message, there are some parallels with our situation here in the U.S. It reinforces for me that we can learn something valuable from each other even when the situations look, at least on the surface, like they are very different.

Janice

Janice Fry - Jul 23, 2003 12:32 pm (#54 Total: 58)
Former Vice President of HR at Sun Mircosystems


K.L.,

Thanks for responding to my questions - very helpful. And I understand why you say that the second category of NGOs is more conducive to collaboration. As I think we have both said in earlier messages, collaboration starts with some shared objective or at least the willingness to listen and learn.

Regards,

Janice

Joni Podolsky - Jul 23, 2003 4:52 pm (#55 Total: 58)
Social Edge Moderator


Hi Everyone. This is a very interesting and thoughtful discussion. I'm excited to be a part of it.

Since I'm late in joining the conversation, let me introduce myself. I am a consultant, author, trainer, and project manager specializing in helping nonprofits strategically implement technology, build community relationships, and develop partnerships between the private and public sectors. Most recently, I authored the Center for Excellence in Nonprofit's book, "Wired for Good: Strategic Technology Planning for Nonprofits," (Jossey-Bass 2003).

There have been many excellent points made in this discussion. I've read a lot about people from the private sector transitioning into the nonprofit sector, and bringing corporate knowledge to bare on the business operations of nonprofits, but what's the flip side?

Besides better pay compensation, why do people choose to work in the private sector? Are there similar barriers to people making the leap from the nonprofit sector to the private sector? If so, what are they and why?

Adding onto that, what can the private sector learn from nonprofits on how to improve their way of doing business?

Is part of the gap a perceived disparity in what the two sectors can offer each other?

With warm regards, Joni

Eleanor Clement Glass - Jul 24, 2003 5:51 pm (#56 Total: 58)
The Foundation Incubator


I think the topic of what business can learn from nonprofits is a piece of this pie that has been least explored. Thanks, Jeff, Andrew, Jan, and others for bringing it to light.

One aspect I think about is that strong, community-based nonprofits have a deep understanding of their markets and the multiple stakeholders who need to be involved in a process to serve those markets most effectively.

When nonprofit folks join the business community, they often bring a deep understanding of the culture, norms, expectations, hopes, and dreams of the diverse communities they may have worked with. How to assess community needs, how to conduct outreach and access these communities, how to adapt products and messages to speak to various communities, and how to identify the connectors or possible partners can be a boon to business interested in marketing to diverse markets.

ganzm - Jul 26, 2003 2:26 pm (#57 Total: 58)


I teach at the Kennedy School of Government after many years doing organizing in the civil rights movement, farm worker movement, union organizations, and elctoral politics.

Isn't there a world of difference between non-profit "firms, governed by boards, defined by their assests, and delivering services to clients of one kind or another and membership associations, governed by elected board, defined by their number of members, and serving their members as a way to have voice -- with respect to economic, political, social, cultural concerns they may have. These non-profit "firms do seem much more like board governed business organizations that also deliver services of one kind or another. In both cases, governance derives from control of property -- whether the assets of a non-profit or a business. Both are also the beneficiaries of tax policies that systematically redestribute income upward, contributing to a transformation of our nation of citizens into one of philanthropists and clients...and in which our public institutions have been so weakened as to offer little counterbalance or accountability. Membership associations, on the other hand, can - not must, but can -- begin to equal the playing field by providing a way individual members can pool their resources to exercise collective voice -- as unions such as the national education association do, advocacy organization like the Sierra Club, and, yes, even the national rifle association. I don't want to be the skunk at the picnic but why gloss over critical political, economic, and moral differences that define choices we have to make as a society, rather than arguing there are no choices, only getting along together.

Charles Cameron aka hipbone - Jul 27, 2003 2:59 pm (#58 Total: 58)
HipBone Games / Rheingold Associates


Hello, Marshall:

I believe you're making an important point here -- but just beginning to outline it. May I invite you to say more about those "critical political, economic, and moral differences that define choices we have to make as a society" -- and about the choices themselves, perhaps? This particular event is just drawing to a close, but the discussion fora on SocialEdge remain after specific events have come and gone, and I would very much appreciate the chance to read your thoughts in more detail, and to discuss them with you...

Thanks so much.

Jeff Skoll - Jul 14, 2003 12:27 pm (#1 Total: 39)
Founder of Skoll Foundation


I'll start!

I believe that the main difference between a social sector organization and a more traditional business is that the mission of the social enterprise is primarily to benefit society. From the start, the social organization focuses on social value creation (such as a safer community or cleaner rivers) rather than financial returns. That said, a socially-oriented organization can have a traditional business approach (ex: Goodwill) just as a traditional business can have a social dimension (ex: Ben & Jerry’s). However, one would hardly think of Goodwill as a “for-profit business” or Ben & Jerry’s as a “non-profit organization.” Why is that? Well, compare these mission statements:

Goodwill Industries Mission Statement: Goodwill Industries will enhance the quality and dignity of life for individuals, families, and communities on a global basis, through the power of work, by eliminating barriers to opportunity for people with special needs, and by facilitating empowerment, self-help, and service through dedicated, autonomous local organizations.

Ben & Jerry’s Mission Statement: To make, distribute and sell the finest quality all natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community - local, national, and international

Both are fine organizations to be sure…but one has a primarily social mission and the other does not.

BDUNN - Jul 14, 2003 1:53 pm (#2 Total: 39)


Jeff's points are well-taken.

At the same time I think part of what makes this such an interesting time is that businesses are being asked to add economic value in a way that also contributes to social and environmental well-being. NGO's, on the other hand, are increasingly asked to add social value by conducting themselves in a business-like way.

If current trends responsibility, accountability and transparency continue, the distinctions in operating frameworks and cultures between business and the NGO community may start to be less and less important.

I for one, think this will have benefits that far outweigh the costs to both types of institutions in the short-term.

David Martin - Jul 14, 2003 2:18 pm (#3 Total: 39)
Researching & designing financial services for low-to-moderate income Americans


The generic corporate objective, as we all know, has been to maximize profits (Friedman school), and more recently has come to be known as "shareholder value maximization" or simply "value maximization" which includes all debt and equity. Stakeholder theory attempts to broaden this definition by including more than just debt and equity holders in a particular firm. A newer theory, which has been noted on previous posts, "blended ROI" (Jed Emerson, et. all) has taken route as perhaps the the balanced approach between stakeholder theory (sometimes measured by the balanced scorecard) and the non-profit pure social objective (as noted by Skoll in the above post).

The problem that I see with all of these different approaches is the over-reliance on quantification and metrics. For instance, in the for profit world, managers who work in companies that closely tie metrics to incentive pay often see their systems gamed, or they see unforseen outcomes because the metrics themselves don't actually encompass the entire "desired outcome." In the non-profit world, I have seen (and helped to write) funding proposals designed around a foundation's particular program area metrics. In this situation, we found ourselves saying "how can we change our program to meet their guidelines and fit their vision of positive social impact?"

There are other problems with the use metrics as well: most notably, "false precision." False precision arises when we try to quantify that which is inherently impossible to quantify or when we create metrics that extrapolate beyond the source data's ability to be precise. Emerson, in his seminal work on the Blended ROI, addresses this issue by suggesting that we focus on some metrics (that are indeed able to be precise) and on a qualitative "fundamental" analysis, similar to an equity analyst company report.

Of course I am not suggesting to rid ourselves of metrics, but rather to keep in mind that they should not be the central point of the enterprise corporate objective or the non-profit social mission. It doesn't seem to be going this way, however, as I see that many in the business community are convinced that everything can be measured, even when the externalities argument is brought forward. In the end, accountability and social change is about much more than numbers.

Lee Davis - Jul 14, 2003 2:45 pm (#4 Total: 39)
NESsT

To the question "What are the underlying motivations of a business vs. a nonprofit or philanthropic organization?" -- although there is indeed an increasing 'hybridization' of the sectors going on, the distinction comes down to three primary issues: 1) priorities/motivation; 2) destination of income/profits; and 3) accountability.

On the first, priorities/motivation: the for-profit's priorities, even if a socially- or environmentally-responsible business are, at the end of the day: profit first and mission/values second. For the nonprofit, they are reversed: mission/values first; and profit second. One of the two priorities is subordinated to the second.

On the second, destination of income/profits: the for-profit distributes profits to shareholders/owners (perhaps a percentage is donated to charity depending on financial performance); the nonprofit reinvests any 'profits' in the mission-related activities or administration/core activities of the nonprofit (as required by either law or organizational policy).

On the third, accountability: the for-profit is accountable to shareholders; the nonprofit is accountable to stakeholders.

I would agree with Jeff that in this "gray area" these are what ultimately distinguish between a Goodwill and a Ben & Jerry's. I see a reason for both but also see a need for clearly distinguishing between the motives and intent of the two.

SparkPeopleChris - Jul 14, 2003 2:53 pm (#5 Total: 39)


I agree with you that there's more involved than numbers. When we hired someone to lead our non-profit (our company has both for-profit and non-profit divisions), she talked about how many of the non-profits she had worked with rewarded people based on the NUMBER of people touched. As a result, the people working at those non-profits often did a sub-par job and got poor overall results - even though their numbers may have looked outstanding.

On the other hand, we're trying to start small and build a strong foundation by touching people in a deep and meaningful way. Then, we'll build systems that could lead to exponential growth. So, our numbers might not look great relatively, but check back in a couple of years

Chris

Larry Stupski - Jul 14, 2003 3:49 pm (#6 Total: 39)


Nonprofits that are funders operate in some ways similarly to a venture fund or investment fund, whereas operating nonprofits probably have more similarity to operating companies than they do to funders. Our foundation, which operates exclusively in the field of public school district reform is a bit of a hybrid, but operates hopefully more like an operating company. I would say like a consultancy.

Of course, motivation and incentives are important. Since we are funding eveything we operate from the principle that our district partners are using a valuable resource and need to get with the program for us to stay involved. If we were a for profit, and did not have a work backlog, in theory as long as the bills got paid it would be okay for the partner district to move slowly.

Although I think there are big differences in recruiting and the motivations of employees, I don't necessarily think they are as different as sometimes articulated. Good companies have a bit of transcendency to the mission as well as the good old numbers, and good nonprofits pay attention to numeric outcomes as well as the social or transcendent goal.

I think one of the biggest differences I notice is in the customer set and the kinds of motivations and factors in the "buying" or "using" decisions of the customers. This differs a great deal depending upon the social intervention. Many services just have to be delivered on the street in a highly distributive fashion than for profits would find very enervating and difficult to control quality. This is often a delimiter of size and scale for the nonprofit service entity.

Other differences are in many nonprofit areas what I would call the immaturity of the "intermediaries" There just aren't the investment bankers, lawyers, consultants, architects, etc. to smooth getting projects done the way there are in the for profit world.

And of course, the total differences in the funding mechanisms. The absence of an equivalent of core equity in nonprofits drives many of them to distraction. They often find themselves operating like a small underfunded proprietorship.

Ed Batista - Jul 14, 2003 5:30 pm (#7 Total: 39)
N-TEN


David makes many excellent points about the inapplicability of metrics and quantitative analysis in the nonprofit sector, and I don't dispute his basic premise that "accountability and social change is about much more than numbers." But I think that in practice people in nonprofits sometimes use that attitude to justify their failure to even make a reasonable effort to quantitatively assess their work--and I'm guilty myself as well!

I think a greater emphasis on quantitative analysis in the nonprofit sector could be handled with some sensitivity and wouldn't necessarily lead to the wholesale abandonment of non-quantifiable values or to completely cynical system-gaming.

Ed

Barbara Kibbe - Jul 14, 2003 7:41 pm (#8 Total: 39)
Vice President for Program and Effectiveness at the Skoll Foundation


I think David has said something quite profound. I would add that a rigid focus on metrics and accountability will lead nonprofits and philanthropy to tend toward initiatives and programs where the outcomes are easily measured. This trend will be as destructive for social programs as it has been in education where the result is teaching to the test.

The simplicity of the business bottom line is a comfort that the nonprofit sector cannot wholly adopt because so very many factors affect the lives of people and influence their attitudes, behaviors and beliefs.

On the other hand, philanthropy and the nonprofit sector - in my view - exist to take on society's more intractable challenges, many of which are by nature long term and require sustained efforts.

The sector is now at a critical point in terms of metrics and evaluation as a field and a discipline is not well enough advanced to solve the measurement problem but that we can't abandon the effort to take meaning from nonprofit efforts. But I wonder if there are any lessons in this regard that we can take from business. It may very well be that this will be an area where the nonprofit sector will develop innovations that the business sector may look at a decade from now...

robgitin - Jul 14, 2003 9:34 pm (#9 Total: 39)
At The Crossroads


The current economic climate seems to be bringing out a significant difference between non-profits and for-profits when it comes to which entities will survive difficult financial times. Let me qualify my upcoming statements by acknowledging that I am going to be making many generalizations, and that my statements about for-profits are based largely on second-hand knowledge from what I read and from my friends in the for-profit world. For-profits seem to be trying harder than ever to be responsive to customer needs. In order to maintain profitability, they must make sure that they are providing a product that consumers will purchase even with limited disposable income. Customer satisfaction breeds loyalty, which breeds continuing sales. In this way, it seems that the for-profits that survive this period will be the ones that are best meeting the needs of customers, which is not a bad thing. It is very different for non-profits. The non-profits that make it through this difficult funding climate are those that meet the needs of their funders. More than ever, funders are wanting to know that they are getting the maximum bang for their buck. Unfortunately, their perception of whether or not this is happening is often a function of how well the fundees present themselves, rather than the actual impact of their work. That is not to say that organizations who present themselves well necessarily do bad work; it is just that it does not nenecessarilyean that they do good work. I am also not trying to imply that all funders get duped, but rather want to acknowledge that non-profits can have a lot of control over how people view their work. Non-profits who market themselves well, accaccommodatee desires of funders, have the capacity to write good reports, and prioritize funding within their organization will emerge from this shakedown. Non-profit representatives that can speak the language of funders will continue to receive support, while those who do not will likely be the first to lose funding. Often, this will be organizations who have members of the communities they serve as their public face. Frequently, it is these organizations best understand how to serve the community. Also, when non-profits are losing funding, they may face the choice between allocating resources to fundraising or to program activities. Those who deprioritize their program work will preserve their capacity to raise money. The organizations that want to focus their energy on the needs of clients will be less likely to survive. Unfortunately, these various forces can conspire to create an environment where the programs that are most devoted to their mission will be the least likely to continue to exist. Whether or not non-profits successfully meet the needs of their clients/members/constituents may have little to do, or may actually have an inverse relationship with whether they will financially survive these times. This is a bad thing.

jimfruchterman - Jul 15, 2003 6:46 am (#10 Total: 39)
Benetech


I often draw a continuum on this topic: with Microsoft at one end and the Red Cross at the other. Pure profit at one end and pure nonprofit at the other. Both are organizations that operate the way they do for good reason, and both are very successful at what they do.

In the middle is the nonprofit/for-profit line. Clustered around this line are the enterprises that have a strong double bottom line orientation: both social and financial objectives. The choice on what side of the line you operate depends on which bottom line will ultimately be primary. If mission is primary: be a nonprofit with a strong social enterprise flavor. If financial return is primary, be a for-profit.

I think that there are good reasons to choose one or the other for a given project. If you can make serious money while delivering social good, the business form is a pretty effective way to change the world. If the financial opportunity is less strong, be a nonprofit social enterprise that delivers a lot of bang for the buck. Most the time, enterprises can juggle both bottom lines effectively. However, Ben & Jerry's ended up selling to Unilever because they were structured as a business. At a critical juncture, shareholder value was the dominant factor in their future.

Enterprises move in both directions across that line. We sold our reading machine for the blind social enterprise to a for-profit three years ago because it was clear that it would be more effective as a for-profit (better access to capital and to people with disabilities). A good number of dot-com ideas that had a strong social orientation probably would have been successful as nonprofits...

amgoldfarb - Jul 15, 2003 7:59 am (#11 Total: 39)
Environmental Defense


After moving to a for profit high tech company (that is actually still around!) I found that the softer skills I had cultivated while working for nonprofits were much appreciated. Solutions to issues that were obvious to me - were often less obvious to staff who's entire work experience was within the for profit sector. While some of this may have had to do with organizational maturity - I felt that a lot of it had to do with the a basic difference in core organizational values.

Nonprofits with obviously some acceptions are created in response to social need - and presumably by people who are motivated by other than money. Bottom line driven work environments can be very dehumanizing. Nonprofits - sometimes OVER humanizing (if that makes any sense). Try explaining that dynamic and its impact on a company's work to a CFO of a financial services company...

leo chavez - Jul 15, 2003 9:29 am (#12 Total: 39)


I think David has hit the target with his case that the assertion the profit sector can accurately measure their performance while not for profits cannot is not entirely accurate. His case that the actual differences between the two are not as profound as most assume is compelling. I think the difference rests with the belief in the profit sector that they have a clear "target" and can therefore make decisions based on achieving the target. Non-profits, on the other hand, lack that "precision" and thus lack the ability to focus more clearly on measureable outcomes. If one accepts David's comments then the difference between the two systems is not nearly as profound as some make them out to be.

mmcnulty - Jul 15, 2003 1:34 pm (#13 Total: 39)
Coro Northern California


An issue for NGOs, Business, Philanthropists is that peer relationships are not commonplace. We have myriad experiences where Bus. and philanthropists offer their resources to NGOs, but we don't often talk about how NGOs benefit their "benefactors". Power is an issue, whether recognized or not. We are working on shared language. In the last decade, incredible work has been done to recognize and bridge gaps-but we're still nonprofits, rather than public benefit organizations.

Ed Batista - Jul 15, 2003 2:22 pm (#14 Total: 39)
N-TEN


As usual, Jim comes up with a great insight. Although at some critical junctures an enterprise's nonprofit or for-profit status is going to be a determining factor, as Jim says, "Most of the time, enterprises can juggle both bottom lines effectively."

Are we paying too much attention to the differences between nonprofits and for-profits and not enough attention to the similarities? If most of the time we're all juggling both bottom lines, maybe we have more in common than we usually realize.

I'm not trying to elide the real differences that I know exist, just thinking about potentially reframing the basic question we're asking here. If the premise is, "How do we differ?" do we miss opportunities to recognize common concerns and learn from each other?

Ed

Bjorn - Jul 15, 2003 4:51 pm (#15 Total: 39)
SV2 (Silicon Valley Social Venture Fund)


I think one reason that public benefit corps (CAN WE PLEASE COME UP WITH SOMETHING EASIER TO SAY?!) and for profit corps act differently is because they tend to attract different people... few teachers go into the profession because of the quick money... not a whole lot of people working in soup kitchens or the local Boys and Girls Club are in it for the fame or glory.

Luckily, the world seems to require both kinds of people... those that generate revenue, and those that can help use that revenue to patch and fix the problems created in the process.

Bjorn

sista_sista - Jul 17, 2003 7:54 pm (#16 Total: 39)


What a great conversation. I found that there are two good resources folks here might want to take a look at as they think about these issues:

1) Here on Social Edge, there is an Alliance Magazine article by Heather McLeod Grant with Elizabeth Bremner of the Foundation Incubator titled "Bridging the Cultural Gap"

Click Here: http://www.socialedge.org/Discussions/Knowledge%20Vault/Articles/Bridging%20The%20Gap?293@@

2) Bill Drayton's article on Ashoka's website: "The Citizen Sector: Becoming as Entrepreneurial and Competitive as Business"

Click Here: http://www.ashoka.org/involved/drayton.cfm

David Bornstein - Jul 17, 2003 9:41 pm (#17 Total: 39)


A few years ago, I did an interview with a McKinsey consultant in Brazil who had led teams of pro-bono consultants working with numerous social purpose organizations. He found that these organizations actually had a lot in common with family-owned and operated businesses -- in the sense that they tended to take a lot of soft or emotional factors into consideration when they made management decisions. (Both are less numbers driven than big companies.) He also found that as much as he had management expertise to offer, he also had valuable insights to gain, especially in the areas of motivating people and getting a lot done with a little money. The social entrepreneurs didn't have "IT" departments to solve their problems. And they often faced major resource constraints. Yet many of them found ways to achieve significant impact nonetheless; often they did it through creative low-cost strategies (eg. getting clients to self-organize and self-manage to solve problems) that wouldn't have occurred to him.

Michael Chertok - Jul 20, 2003 2:46 am (#18 Total: 39)


Jim and David Bornstein have touched on it above, but I think another important distinction between business and social sector organizations is their financing and ownership.

Businesses are owned by individuals, partners, or shareholders who expect some kind of return, generally a financial one...although depending on where they are in Jim's continuum, they may have non-financial objectives as well. Financing is provided to these organizations with the expectation of some kind of financial returns.

Social sector organizations are not so much owned as they are accountable to their constituencies, be they clients, staff, board, and/or the public. Funding is provided to these organization with the expectation that they will in turn provide social returns to their constituencies.

This all has some rather interesting implications for financing, especially for social enterprises that may have a "choice" about which side of the non-profit/for-profit line they will live on. Hmmm, which is easier to raise, investment dollars or philanthropic dollars?

Recently I sat in on a panel discussion about micro-credit organizations. While all of these groups needed philanthropic capital to get started, becoming legally recognized as a for-profit financial institution seems to be the holy grail for many of these organizations, as it allows them to tap into public capital markets.

Does this mean that we have been successful in the social sector if we are able to go private? Should this be a goal? What does it mean if an organization or idea started in the private sector and then becomes a non-profit? And what about these new hybrids, non-profit and for-profit organizations that work in synergy? Who owns them...and how do they get away with straddling that line?

K.L.SRIVASTAVA - Jul 20, 2003 6:42 pm (#19 Total: 39)
Researcher and Consultant,Hyderabad,INDIA


Michael,

Regarding operational details of non-profit and for-profit hybrid organizations, please visit the following site:

www.basixindia.com

Such companies are able to devise complex institutional structure for achieving their social mission and financial sustainability.

Thanks, K.L.Srivastava

Jed Emerson - Jul 21, 2003 9:47 am (#20 Total: 39)
Senior Fellow, Generation Foundation (London)


While I understand the need to assess the appropriate legal structures underwhich these ventures function, of greater importance (IMHO!) is that we BEGIN by understanding what the fundamental value proposition is of organizations first and then secondarily assess which legal structure makes the most sense.

As KL intimates, the legal structure does not matter (putting words in your mouth there, KL! Sorry!), since one can have for-profits with nonprofit support organizations and nonprofits with interest in for-profit subs.

Form follows function and at the end of the day the function of ventures is to create value through executing strategies that are then funded with a variety of types of capital. It is not a question of whether one is for-profit or nonprofit, but rather how we define the blended value being created by all institutions (ie. value that is simultaneously economic, social and environmental) and that after affirming that reality we step back to see what forms of capital are most suited to this venture and which type of legal forms will best facilitate the pursuit of the full value we seek through the application of that capital.

I have an article on this in the Summer Issue of the California Management Review, but unfortunately it is not in PDF at this point...

In any event, let's bat this around some more since it is a central and key question in all this...

thoughts?!

best, j.

Jed Emerson - Jul 21, 2003 9:51 am (#21 Total: 39)
Senior Fellow, Generation Foundation (London)


PS: I'm a huge fan of your organization... very solid stuff....congrats and best for continued success!!! jed

Eleanor Clement Glass - Jul 21, 2003 10:28 am (#22 Total: 39)
The Foundation Incubator


To add to you comments Bjorn -- Rob Giton has pointed out that the leadership qualities important in a nonprofit leader might be somewhat different from those learned in business school. For example, the staff and clientele of a nonprofit organization place enormous value on the content knowledge of the issue area they represent and the deep understanding of clients served. Knowledge of program approaches that have been tried in the past and lessons learned, time in "the trenches", ability to advocate for the people and issue with policy-makers, and credibility with other programmatic leaders is part and parcel of the leadership qualities needed in an Executive Director of a public benefit corporation. The complementary management skills are often learned later or are represented in other staff hired. Unfortunately, with the shoestring budgets afforded the nonprofit sector, these great leaders are often under-compensated, and, I might add, under-appreciated, and their organizations are under-capitalized. This makes it difficult to bring in some of the business talent that could be used to build the organization. Nonprofit leaders often learn to manage the organization through experience.

I wonder how we can begin to assist nonprofit leadership by allowing them to do what they do best and bringing them either the opportunities to gain skills they feel they need (e.g. fundraising, technology, board development) or affording them the complementary staff or consultants they need to help run their organizations.

David Keller - Jul 21, 2003 11:20 am (#23 Total: 39)


The Blended Value Proposition is very helpful in moving beyond a general metaphor (a bridge) to a framework to comprehend the notion of social return.

Caroline Hartnell - Jul 21, 2003 12:20 pm (#24 Total: 39)
Alliance Magazine


Those of you who have read the original Alliance article on 'Bridging the Cultural Gap' by Heather McLeod Grant and Liz Bremner, posted as recommended reading for this discussion, may like to see a very interesting letter we have received from Simon Zadek of AccountAbility, now posted with the article.

Simon's letter basically questions what he sees as the implicit assumption behind the article, ie 'that business is there to provide the resource and non-profits to do the work'. In future, he suggests, business will itself be a major development player.

Click Here for Letter to Editor: http://www.socialedge.org/?293@@.1ad92f31

Click Here for Original Article: http://www.socialedge.org/Discussions/Knowledge%20Vault/Articles/Bridging%20The%20Gap?293@@

K.L.SRIVASTAVA - Jul 21, 2003 9:31 pm (#25 Total: 39)
Researcher and Consultant,Hyderabad,INDIA


Although it is good to know that main-stream business ventures are also trying to generate social and environmental value, they may be able to touch only a few aspects of vast amount of work to be done. Many of such ventures will find it hard to acquire core competency for attacking deep-rooted social and environmental problems.

As we know, many Govt. agencies have been trying to address social and environmental problems, but there is a lot to be done by other sectors. The Govt. staff often lack appropriate skills, motivation, incentives, and organizational set-up to deliver the goods. Similarly the business sector also has several limitations in tackling issues of people's empowerment and ownership of the programs, and tension in organizational culture. Thus there is an obvious need for social and environmental sector agencies and entrepreneurs.

There is another important consideration. The credibility of main-stream business sector in society is quite low. People do not trust their intentions.

Thus there is need for a wide range of organizations (a continuum from business to humanitarian pursuits). Some compatible organizations may benefit from collaboration with others.

As Jed Emerson has stressed: Let these organizations strive and compete for generating more value to the society in many different ways.

Let thousand flowers bloom!

K.L.Srivastava

K.L.SRIVASTAVA - Jul 21, 2003 9:42 pm (#26 Total: 39)
Researcher and Consultant,Hyderabad,INDIA


Jed,

Thanks for your valuable and enlightening post.

I am interested to go through the article in California Management Review, that you have mentioned. Is it possible to post it on Social Edge site?

Thanks.

K.L.

Tim Walter - Jul 22, 2003 4:24 pm (#27 Total: 39)
Association of Small Foundations


Regarding financing and ownership, let's focus on ownership for a minute. My IT consultant, when I told him I'd just been appointed CEO of our nonprofit, asked "So, do you now get shares in the company?" He heads his own three-person shop, and one day he expects to sell his book of business and take a long vacation.

It bugs me, sometimes, that my staff works 50-hour weeks routinely, and if we thrive, "the public" gets to keep the upside of this.

I know, I know, there are some really complex issues here, including psychological rewards, my poor management, and potential burnout. But, wouldn't it be neat to consider some sort of incentive pay or "take-out" compensation for nonprofit entrepreneurs who do great work? (I think it'd be illegal for employees to gain anything in the process of converting our nonprofit to a for-profit company.)

From a financing perspective, a nonprofit public charity is allowed to tap into tax-exempt donations and grants. Some days this seems like a bad tradeoff given that private financing and contracts are another way to go. Looking forward, to the next organization I start, I'd definitely consider some sort of hybrid for-profit/nonprofit corporate structure.

Finally, in my work with foundations, we're going to look deeper into the concept of contracting rather than always just granting to public charities, and second, we're going to look more at "expenditure responsibility grants" in which funds legally can be granted to for-profit firms as long as the work is for public benefit.

Dragonfly - Jul 22, 2003 5:40 pm (#28 Total: 39)


re: "wouldn't it be neat to consider some sort of incentive pay or "take-out" compensation for nonprofit entrepreneurs who do great work?"

I think this would be neat for anyone in the sector, not just the entrepreneurs. Whether it's incentive pay or just plain old fashioned compensation that's commensurate to the reasonable salaries offered in the business sector! Compensation in the nonprofit world is something that has always made me curious. I personally took a 2/3 salary cut to move into this sector and I work equally hard, if not harder now. Of course I am infinitely more rewarded by the work I do, but the burden of financial management has certainly increased.

Is the disparity between business and nonprofit compensation a barrier for attracting talent into the sector? Does lower compensation drive people out of the sector over time?

Jeff Skoll - Jul 23, 2003 8:51 am (#29 Total: 39)
Founder of Skoll Foundation


"After moving to a for profit high tech company (that is actually still around!) I found that the softer skills I had cultivated while working for nonprofits were much appreciated."

I'm curious, what were those softer skills and how were they appreciated? You often hear of how business skills can be applied in the non-profit world, but you don't usually hear about the reverse path!

Jan Masaoka - Jul 23, 2003 10:13 am (#30 Total: 39)
Executive Director CompassPoint Nonprofit Services


Peter Drucker has often commented on how nonprofit managers have important skills that business can use, including the ability to bring a group to consensus while still providing leadership, holding effective meetings, balancing demands and expectations from multiple constituencies, working respectfully and effectively with people of different racial and economic backgrounds from one's own.

Everyone I know who has left nonprofit work for the business world has echoed Andrew Goldfarb's comments repeatedly--that their abilities to manage people and processes, think strategically, and develop teams have made them remarkable succeses at their new companies.

These skills are, of course, valuable in any context--whether a nonprofit, a business, a government agency, a club, etc.--but are often best nurtured in a nonprofit. Knowing this is one key reason why so many business leaders value their nonprofit board experience as important leadership development work.

Thank you, Andrew and Jeff, for bringing out this important facet!

Andrew Wolk - Jul 23, 2003 12:30 pm (#31 Total: 39)
Root Cause / MIT Sloan School of Management


This is a fascinating discussion. What I am wondering is, why are we not also discussing government as well in the mix. They actually provide the largest amount of capital to nonprofits, and yet are often overlooked as an 'investor'. There structure is to take our taxes and do what they see as best with it for the greater good. However, they seemed to be structured in a way that does very little in the way of working with nonprofits, philanthropists, and business in order to do so more wisely?

amgoldfarb - Jul 24, 2003 7:09 am (#32 Total: 39)
Environmental Defense


Jeff - I'm primarily referring to people management skills. Although there are many examples of nonprofits who don't necessarily do a good job of this - I found that there was more awareness within the nonprofit sector of when issues related to people vs. other things. Nonprofits have a high percentage of women in leadership positions - corporate sector - more men. Nonprofits oriented around human need - corporate sector around money. Nonprofits are more naturally inclined to value these skills more highly. While I understood this theoretically before moving to the corporate sector, I didn't get the difference until I'd worked there for a while. When I moved to Organic - a for profit digital services firm, I saw things others didn't. Whether they listened to me or not was another story...

Jeff Butler - Jul 24, 2003 12:17 pm (#33 Total: 39)
Mayfair Improvement Initiative


Hi Andrew,

You know, you raise a good point. Government, at all levels, is certainly both a large capital provider to the non-profit world. It's also a major source of policies, regulations and such that can help or restrict what non-profits do. So, it behooves the non-profit world to think about "bridging the gap" with government as well.

That being said, it's probably a formidable task. Processes for getting government funding can often be drawn out, complex and unyielding. Funding priorities are naturally influenced by political agendas, which are part of a bigger picture than a particular non-profit's projects.

Still, it's worth a shot. Beyond getting through the procedural side of things, many non-profits do important advocacy work at all government levels (federal, state, local) to influence funding allocations, policy directions, and so on. I think it's important for non-profits to not only know how to work within the system, but to also have an active voice in how that system looks.

afurnari - Jul 24, 2003 12:57 pm (#34 Total: 39)
Community Foundation of Southern New Mexico


Speaking from a local Government perspective, I think there are definitely opportunities for connection between nonprofit social enterprises and local Government. No doubt many agencies at the state and federal level will take much longer to become involved. But in Florida I have seen many examples where Government has been supportive. And some trends, such as Government contracting out many services, and paying on a unit cost basis instead of cost reimbursement, lend themselves to enterprising nonprofits.

For example Community Development funds can assist a nonprofit with renovations of a building where a job training program will be, or a child care center, or other social purpose business. I know of several local examples where this has happened.

Government can be a customer for goods as well as a potential source of contracting for services. While government may be best known for it's regulatory and rule setting I would suspect that for the most part nonprofits are not subject to much more regulation than other businesses. The exception to this is probably the current extra scrutiny given to nonprofit applications because of security considerations.

I guess my reaction is that enterprising nonprofits may find more interest and support from government officials than you might think. As with any lobbying, knowing what you want from government, what their limitations are, and coming in with a plan for how the unit of government can help and what the impact will be on the community is essential.

Eleanor Clement Glass - Jul 24, 2003 5:41 pm (#35 Total: 39)
The Foundation Incubator


An excellent example of government, philanthropy, and nonprofits working together are the Beacon Schools in San Francisco. A collaborative of foundations pooled funds to provide technical assistance for community planning efforts, start-up support for lead nonprofits specializing in youth devlopment, and an evaluation effort for a comprehensive after-school program network modelled after the Beacons Schools in New York.The Mayor's Department of Children, Youth and Families, the San Francisco School District, and the Private Funders' Collaborative worked together to guide the development of almost 10 wonderful after-school youth development and family support programs. Government funding continues to pay for the ongoing subsidies required and foundations and individual donors contribute to collective learning and individual nonprofits working within the Beacons networks who provide an array of services to diverse communities. The school district provides janitorial services and access. It has been a remarkable partnership where each sector does what they do best. It helped to have a fantastic intermediary organization, Community Network for Youth Development, to help the steering committee of the leaders of these various entities to forge a coherent plan and coordinate the parts. CNYD also provided key technical assistance to start-up sites on youth development, as a quality control measure, and coordinated the evaluation. In New York, the intermediary was the New York Community Trust. I thought it was an inspiring example of what partnership can accomplish.

Eleanor

Jeff Butler - Jul 24, 2003 5:43 pm (#36 Total: 39)
Mayfair Improvement Initiative


To balance the slightly griping tone of my previous note, I have to say that our agency enjoys a good relationship with our local government (City and County) and they support us in many ways.

Also, I just came back from a meeting where a partner agency of ours announced their participation in the New Markets Tax Credit Program from the U.S. Treasury department. The program will allow them to generate $25 million in new capital to invest in low-income communities locally. Nationwide, Congress has authorized $15 billion for the program. Not bad!

Non-profits can definitely work with both government and the for-profit world. In both cases, we just need to understand each other well enough to do that.

K.L.SRIVASTAVA - Jul 24, 2003 9:19 pm (#37 Total: 39)
Researcher and Consultant,Hyderabad,INDIA


I think there is no substitute to gaining direct experience of social and environmental problems at ground level and coming face-to-face with impact of various strategic options in action. Working in nonprofit sector, especially at grass root level, we acquire a different perspective for looking at things, and a different peer group for interactions and comments on our work. As people from nonprofit sector move to other sectors, they are likely to utilize their experience for enriching their performance in the new job.

In India, movement of key personnel from one sector to another is not very common. The existing personnel policies and laws are not very conducive for such movement. However, I know of some key Government officers who have taken leave from their service to work in NGO sector for a few years. After going back to Government service, these officers have contributed to innovative thinking and practices in the Government sector.

Thanks,

K.L.

Parmely - Jul 25, 2003 7:47 am (#38 Total: 39)


I think that is where the conversation needs to go. Who provides and how can assistance to nonprofit leadership begin to happen in a thoughtful and unintrusive manner. You mention nonprofit leaders learn to manage through experience. Not only because of the nature in which they become leaders, but when one looks at institutions and universities that are doing some the skill building training and educating for nonprfits, the cost of going to them is usually out of reach or one needs to find a grant to offset costs. I believe there are opportunities here for businesses to assist the non-profits. I know of some examples, but they seem far and few and usually come with some expectation of a quick return in their investment.

mmorino - Jul 25, 2003 11:30 am (#39 Total: 39)
Chairman of Venture Philanthropy Partners


The issue of talent recruitment and development is a huge issue for
nonprofit organizations and next to funding , is one of the bigger
impediments to growth of community-based organizations. We believe
several things must be undertaken to address this issue and see real
impact in the field:

o We have to recognize that leaders of nonprofits need a compensation
that at least allows them to enjoy a "reasonable living" -- and the fact is that compensation for many executive directors is woefully inadequate which, of course, serves to lessen compensation for the entire organization. The suggestion here is not to be extravagant, but rather pragmatic, and to give talented people not only the encouragement to enter the nonprofit field, but even more importantly, to stay in it.

o The sector needs to raise the awareness and image for those doing work in the trenches in the nonprofit field for too often promising
candidates "look down" on the opportunities, versus see the potential
these opportunities could present. A similar situation exists for
people in government and the nonprofit sector might find it worthwhile to consider the efforts of the Partnership for Public Service (see
http://www.ourpublicservice.org/ <http://www.ourpublicservice.org/> )
for a similar initiative to raise the importance and public view of nonprofit service.

o The sector needs to do more to recruit talent into the sector,
especially for the second tier of management to support strong community leaders, like COO, CFO, etc. We believe there is a rich pool of talented people in the business, education and government sectors who are 45-55 years of age and are ready for a career change, which Bob Buford has eloquently phrased as moving from "financial success to life significance." Tom Tierney, previous CEO of Bain & Company, and the founder of Bridgespan, is working with Jeff Bradach, who leads Bridgespan, to implement a new capability, BridgeStar, to better track and match the availability of management talent to the opportunities in the field.

o And, more needs to be done to help develop promising talent in the
field. Groups like the Maryland Association of Nonprofit Organizations ( http://www.mdnonprofit.org/) and <http://www.mdnonprofit.org/)and> the Mandel Center for Nonprofit
Organizations ( http://www.cwru.edu/mandelcenter/)are
<http://www.cwru.edu/mandelcenter/)are> examples of centers
providing development programs.

We continue to believe that for there to be a significant change in the effectiveness of the sector, philanthropy has to help shape public opinion and influence public policy to see a substantial increase in the effectiveness and volume of capital and talent flowing into the nonprofit sector.

Elizabeth Kennedy - Jul 15, 2003 9:27 am (#1 Total: 5)
Consultant


Is there an enhanced opportunity to bridge the gap during this period of time where, at least in the US, there is so much more focus on accountability in both the non- and for-profit sectors? The specific regulatory or guideline responses may look different (spend rate questions vs. Sarbanes-Oxley reporting requirements), but it seems that they're similar in trying to make organizations' actions and results more transparent.

Ed Batista - Jul 14, 2003 4:56 pm (#2 Total: 5)
N-TEN


Hi all. Small world--I'm running into a lot of friends around here. I'm the Executive Director of N-TEN, the Nonprofit Technology Enterprise Network, http://www.nten.org. We're a nonprofit whose mission is helping the nonprofit sector make more effective use of technology.

The topic of the for-profit/nonprofit divide particularly resonates with me because although I've spent the bulk of my career as a nonprofit manager, I got an MBA from Stanford a few years ago and was considering other options before deciding to return to nonprofits. And N-TEN includes many for-profit technology companies among our members.

Something that always strikes me when considering this topic is the bottom line, i.e. profitability, and how much that can simplify things in the for-profit world. If something--a product or service, a division, a specific employee, a company tradition--isn't directly contributing to that company's profitability, then it better be contributing indirectly. This isn't to say that profitability is the ONLY decision-making criteria used in the business world. But it's clearly the most important, not least because it gives a very clear sense of whether or not something's "working." This is an immense help, whether you're setting long-term strategy or making immediate tactical decisions.

In contrast, the nonprofit world has a much harder time being certain when something's "working." As nonprofits launch more revenue-generating programs, profitability is increasingly relevant as a metric. But even then, we have to ask whether it's the right metric. And usually it's not an option simply because most nonprofit operations are, from a business perspective, nonprofit

I think this fundamental distinction underlies many of the cultural differences Mario and others have talked about here. Businesspeople are used to operating in an environment where success is generally clear-cut and objective and where quantitative analyis is typically essential. Nonprofit people, in contrast, are used to an environment where success is often largely subjective and where quantitative analysis is sometimes inapplicable (and sometimes just poorly executed.)

Looking forward to hearing more!

Ed

Jeff Butler - Jul 21, 2003 11:59 am (#3 Total: 5)
Mayfair Improvement Initiative


Hi Ed,

I agree that the business world benefits from having clear-cut measures of whether something is "working". The most universal of those would be a $$ bottom line, although other things which indicate the inherent "health" of that bottom line (relative market share, debt load, true shareholder value, etc.) are important too.

The dollar bottom line is a useful indicator for businesses not only because it's clear-cut, but also because it's like a common denominator that allows one business to compare itself to others. I don't think dollars will ever be the main metric for non-profits. However, I think the concept of something "in common" or standard would help non-profits know how much of an impact they're having.

For example, my area of non-profit work is micro-enterprise (small business). There's no industry-wide set of standards yet for microenterprise programs, but there is an effort underway called Microtest which aims to create those standards. A number of microenterprise programs around the country are working together through the Aspen Institute to develop these shared measures. It doesn't mean everyone is obligated to use them. But to the extent we all speak the same language, it's easier to assess what we've accomplished.

Eleanor Clement Glass - Jul 22, 2003 9:39 am (#4 Total: 5)
The Foundation Incubator


I think the time horizon for seeking results of an enterprise should also be considered. For example, I know of one funder who asked for quarterly reports from his grantees. He said this was a business practice he was applying to his philanthropy...that it was just good business practice to look at the bottom line on a quarterly basis. In a discussion with other funders, he was asked to consider what the bottom line was for his investments in teen pregnancy programs.What was the actual impact he was seeking? Why would quarterly reports be of value to him or his board? Did they care whether the girls were 3 months more pregnant, or that girls who "graduated" from the program did not get pregnant in the next 3 months? The expended energy of the nonprofit and the funder in managing quarterly reports did not yield the kind of accountability information that he really wanted. Time horizon became an important consideration for him in deciding the frequency of progress reports and the types of evaluation information he and the nonprofit organization really needed.

Janice Fry - Jul 23, 2003 12:48 pm (#5 Total: 5)
Former Vice President of HR at Sun Mircosystems


Eleanor,

I very much agree that the time horizon needs to be considered in looking at results and measures of success. Having spent almost 25 years in publicly traded companies, I think that too often the relentless drive to show results on a quarterly basis, consistently, works as a deterrent to longer term, strategic thinking and initiatives. I certainly understand the need or desire on the part of shareholders to see a return. Yet the longer term success of the enterprise absolutely requires some investments and strategies with longer time horizons. Your example demonstrates that we need to match the success measures including time horizon to the specific organization and situation, not "blindly" follow what appears to be a best practice from another sector,

Janice

SparkPeopleChris - Jul 14, 2003 3:20 pm (#1 Total: 35)


I think there are often opportunities for-profit and non-profit organizations to come together - especially when this coming together benefits both organizations.

For example, I live in Cincinnati, headquarters to Procter & Gamble (P&G), the giant consumer products company (Tide, Folgers, Charmin, Pantene, etc.). P&G is known for doing good things for the community of Cincinnati by supporting the arts and many non-profits. For example, P&G's CEO just volunteered to lead a fairly time-consuming government development program.

For P&G to remain a leading global company, it needs to recruit globally. To get more than 10,000 top people to live in Cincinnati, it has a vested interest in making sure the city is attractive to current and potential employees. In this case, a business need comes together with many non-profit needs and both sides win.

One of our jobs in helping bridge the gap could be to figure out more ways the two sides can naturally come together!

Nelson Layag - Jul 14, 2003 4:06 pm (#2 Total: 35)
CompassPoint Nonprofit Services


Hi Eleanor, Thanks for hosting this event.

I think one obstacle that for-profit professionals can try to avoid is assuming that all nonprofits are "basically the same". The fact is that nonprofits range widely in both structure, scope and function. Additionally, one should make sure that when your comparing a business to a nonprofit you're not comparing apples to oranges (or what I see more is comparing apples to airlines ) In other words, sometimes a practice in a certain business may not be an appropriate practice in a nonprofit organization.

I would also add that nonprofits should also be open to explore business practices that may be effective in their work.

JackOnter - Jul 14, 2003 4:18 pm (#3 Total: 35)


In Fresno, times are hard! We are an ag town, and the ag companies are hurting. It is too expensive now, relative to other places, to even pick the fruit. Nobody likes a dried out tomato.

Many of the workers are hispanic and they are the first to be let go, often from companies where they have worked for many years. Then these poor workers have nowhere to turn. Drugs and crime are on the rise...can you guess why?

Who is going to make these companies accountable?

Nobody* likes a dried out tomato.

Christy Chin - Jul 14, 2003 4:21 pm (#4 Total: 35)
Skoll Foundation


I agree that too often the social sector/nonprofit sector is characterized too broadly. No two organizations, regardless of their tax structure, are identical -- but all too often the press coverage of nonprofits is too generalized.

Do you think that the lack of press coverage about the social sector contributes to these generalizations? For instance, if there were a "Wall Street Journal" - i.e. a daily, well-respected, well-distributed global source of news on the social sector, that these broad generalizations would be less prevalent? :chagrin:

Jed Emerson - Jul 15, 2003 8:12 am (#5 Total: 35)
Senior Fellow, Generation Foundation (London)


I would say the first thing that needs to happen to help move the conversation forward between players in these two spheres is for folks to simply "get over themselves.".....

By this, I mean that both sets of folks need to approach the conversation from a greater position of humility.

The biggest fiasco in the late 90s was the entry of folks from business into the NP sector who (having created a genuine revolution in technology) thought they could revolutionize "poverty and the NP sector" overnight...to put it bluntly, the arrogance was palpable...

Many of these folks wouldn't think of entering a new commercial market without doing their homework and REALLY understanding what the dynamics were---but that is exactly what many of them did NOT do when they began working with nonprofits, so it is understandable that resentment arose...

(By way of reference: Read the HBR/Mckenzie commentary on how nonprofits "waste" millions annually for a great example of folks demonstrating how a little bit of knowledge is a dangerous thing--altho in that case, perhaps a little bit of knowledge might have helped!! In any event, it is a great example of people how tell us they want to "help" and yet clearly don't have any respect for those of us who have spent decades changing the world while others were simply making money off it...--can you say "management consulting fees"?)

This is but one example of how calls for us to "become more business-like" are not going to give rise to a more effective social/nonprofit sector...---OR contribute to bridging the divide!

HOWEVER, on the other side of the table, too many nonprofit folks are so heavily bound by a "business is bad" ideology that it prevents them from taking those things that are good, effective tools from the for-profit space and turning them on their heads in order to be most effective in leveraging resources and pursuing social impact/value creation.

There seems to be a strong moral posture that business does not create social value and that unless someone has done "time on the streets" one cannot provide insights or have a meaningful contribution to make to social change (ie. BEYOND simply raising money to do more of what we already know we want to do...).

So, I would simply say that hopefully:

the corporate scandals, dot-com bubble experience, and increasing actual experience working with NPs will help corporates enter the conversation on a high pony (as opposed to a high horse...) and

that the reality that the NP sector, while filled with many great, creative folks, should be challenged to get out of its mental box and more aggressively pursue any and all options for most effectively achieving its mission,

will combine to allow ALL of us to enter this discussion with a bit less hubris and more compassion (which in its roots means "to suffer with" someone...).

Perhaps in this way we can at least have a chance to hear one another...

all the best to you all!!! jethro

mmorino - Jul 15, 2003 8:24 am (#6 Total: 35)
Chairman of Venture Philanthropy Partners


As usual, Jed has shared some excellent points (Hi Jed!).

Let me add another nuance to the discussion. In our work, we've now discouraged the reference to "business like." or "run like a business." Granted there is much nonprofit executives (and forprofit ones as well) could learn from many of the more advanced management practices the best private firms use, e.g., financial controls, recruitment, board development, marketing, etc., but we should not simply decree that being "business like" itself is good. Instead, we've now migrated to focus on "good management" on the assumption that one does not have to be in the private sector to be a good manager or to apply good management practices. It may come across as semantics to some, but it avoids the "sensitivities" and potential negative reactions Jed notes in his posting and pays respects to individuals in the nonprofit sector that are doing remarkable jobs, if one takes into account the scare resources and support they're afforded. Another hard learned lesson for us in the field.

Liz Bremner - Jul 15, 2003 9:00 am (#7 Total: 35)
The Foundation Incubator


Christy, I totally agree that when people talk/write about the social sector their comments are far too generalized. The spectrum of organizations/institutions is vast. Probably the most misunderstood is the tiny grass roots nonprofit whose ultimate objective may be to organize one neighborhood not "go to scale." It seems that those critical community organizations aren't even on the radar screen for "newbies" to the social benefit sector. It's in the countless grass roots groups where we see so much creativity, innovation, passion and guts.

I don't think we should go overboard and glorify nonprofits, either. There's tons of room for improvement and for more capital!! There has been incredible growth and increasing sophistication in the sector over the years. There couldn't be a better investment. Ultimately, the social sector is the glue that holds this complicated society in some kinda balance.

Ed Batista - Jul 15, 2003 2:45 pm (#8 Total: 35)
N-TEN


Rock on, Jed--calling 'em like you see 'em. No need to expand upon your comments about business-side arrogance, but I would add something to your comments about nonprofits' resistance to (or just plain prejudice against) techniques or approaches perceived as being too "business-like."

I'd love to see nonprofits stop using the term "clients" to describe the recipients of their services and simply adopt the term "customer," a word that seems to make a lot of nonprofit people uncomfortable. But in our culture, "clients" are often dependent and disempowered," while "customers" are "always right" and ultimately the source of an enterprise's success.

Businesses must keep their customers happy, or they die. (Less true in certain industries than in others, but grant me the general principle.) Nonprofits must keep their FUNDERS happy, and clients come second. (Of course, the best nonprofits juggle the needs of both stakeholders effectively, keeping the dollars flowing while staying true to their missions.)

This basic issue isn't going to go away anytime soon, although I think a wonderful side benefit of nonprofits launching revenue-generating programs is that this turns "clients" into "customers" and makes the organization that much more responsive to the needs and preferences of the people being served.

Ed

amgoldfarb - Jul 15, 2003 5:56 pm (#9 Total: 35)
Environmental Defense


Jed - great comments - good food for thought. I agree with you about the business folk who decided to help nonprofits solve all the worlds problems if only they would approach things in a more business like way. I've also seen the opposite of what you describe - a wholesale embrace of whatever the business folk said without question. This was only magnified during the internet boom with the added excitement related to technology as a panacea for everything and anything. A lot of money down the drain.

It's kind of like The Music Man - you know - Robert Preston was a scheister (sp?) but everyone wanted to believe he was the answer to all their prayers and they did without question - even though there were no instruments - no uniforms etc. (Of course, for my analogy to work you have to ignore the happy ending part...). For those of you too young to remember the movie - I suggest you Google it...

David Martin - Jul 15, 2003 10:02 pm (#10 Total: 35)
Researching & designing financial services for low-to-moderate income Americans


I'm agreeing with most of what I read. I'd like to add one bit of cynacism (and maybe some optimism, too). Here in corporate America where I work, non-profits are seen as a way to: (a) build culture and teamwork once a year a la Habitat For Humanity projects, (b) fulfill the CSR portion of the vision by cutting a check and forgetting about it, or (c) balancing a corporate year-end budget surplus by cutting a check and forgetting about it. Sound bad? Perhaps overly cynical, but nontheless accurate for many companies that are focused primarily on maximizing profits.

Don't get me wrong. I'm not saying that Marx was right and Adam Smith was wrong and "down with capitalism!" The mindset just isn't there to be thinking about maximizing social value first, or even second. And that is exactly why I get excited by Social Entrepreneurism--because we need new models that work. We need people to lead the way by showing how instead of just talking about it. It is really up to us to create these new, sustainable models, because most of America and the world don't really know how else to conduct business other than the way they have been...just go to Borders books and look in the management section. It's exploding with new books that all say essentially the same thing: be paranoid, be efficient, be smarter than your competition. Pure hogwash.

These issues that we discuss are core. Living them means closing the gap, day by day.

Ed Batista - Jul 16, 2003 9:13 am (#11 Total: 35)
N-TEN


David, I don't think you're cynical at all, just realistic. Nor do I think there's anything wrong with the reasons you noted for corporate interest in supporting nonprofits (essentially, building culture and teamwork, making a gesture toward social responsibility, and balancing a budget.)

As an Executive Director doing a lot of fundraising, I talk to corporate funders regularly. I understand that there has to be a strategic rationale for them to make an investment in my organization. Essentially, there has to be something in it for them--not a tangible quid pro quo, of course, but a good fit with their reasons for giving.

And I don't think that's different from any charitable work or philanthropy. Whether it's you or I writing a check for our favorite cause, or whether it's a billionaire giving away millions, we all have both generous motives AND selfish motives. We want to make the world a better place AND we want to polish our image.

That's fine with me, because charitable impulses bolstered by self-interest are more sustainable than charitable impulses alone. And I hope that sounds realistic, not cynical

Ed

Lisa Spinali - Jul 16, 2003 3:22 pm (#12 Total: 35)
The Omidyar Foundation


I think that this same notion of differences that exist with the types of nonprofit organizations is also true for the corporate world. It may seem like an obvious point but there are significant differences when you compare consulting, banking, start ups or venture capital with the likes of consumer product companies, production companies or car manufacturers. In fact, I would suggest that "operating businesses" actually have more in common with the nonprofit sector because it all comes down to effective management of people who deliver the work or service. I am often challenged when private sector folks want to make the switch to the nonprofit sector and they have never truly managed anything. It's a lot more fun to start something up than to stay with it for the long haul. For that reason, I have tremendous respect for those that have the vision and staying power in either sector--these are truly valuable assets for both sectors.

Eleanor Clement Glass - Jul 17, 2003 9:18 am (#13 Total: 35)
The Foundation Incubator


Hi Jed, I agree with you that there seems to be a big initial distrust factor going on, sparked by many myths and prejudices. Perhaps it can be bridged by simply agreeing to give each other the benefit of the doubt and working to understand the true differences and what can be learned from each other and blended for best results.

With that said, there are true differences that should be put on the table and explored. I invite you to see some of the postings in the Welcome and Introductions thread that are beginning to surface some of these. Jan, Mario, and Charles have some interesting thoughts.

Thanks for jumping in, Jed! Eleanor

Larry Stupski - Jul 17, 2003 3:27 pm (#14 Total: 35)


In the for profit world I was fond of the aphorism that Leading was primarily about making decisions and to make good decisions one had to have knowledge, information, context on four things, the people dynamics of the company, the financial dynamics, the relevant technology or practice of the industry or field, and the customers. I think the biggest issue for us businesstypes getting into the Np world is having a lot of ability to diagnose the first and second in a nonprofit reasonably quickly, but as others have said, not taking the time and engaging in the inquiry to have a good handle on the third and fourth pieces. In our foundation, which works with public school districts, many of the 'outsiders' can get a pretty good handle on people and organizational issues, and a good handle on financial issues, probably more quickly than a lot of executives brought up in public education, but miss a lot of the knowledge about product and customer, and to some extent how much relative leverage a lot of different players have in the system. (Maybe governance or industry structure is a fifth piece? Well, this is an evolving conversation......

Liz - Jul 17, 2003 4:53 pm (#15 Total: 35)


Hi, I'm Liz Erickson, Co-Founder of YouthNOISE (www.youthnoise.com -- our mission is to inspire, connect, & empower teens to affect social change locally & globally). I'm excited to have this opportunity to talk to such a remarkable & thoughtful group of folks about these issues. Thank you Skoll Foundation!

I want to address the question of how we can bridge the gap, for I couldn't agree more that there's tremendous untapped (yet tappable) potential for win/win partnerships between the sectors. So do we bridge that gap? I think one way is to build knowledge in both sectors.

- Nonprofit Sector: I see an opportunity to increase the nonprofit sector's knowledge, confidence, & skills relating to corporate partnerships. For example, although I worked in the corporate sector, and have a fair amount of experience as a nonprofit partnering with corporations, I struggle with how best to pitch, price, & negotiate win/win deals with corporations. I'd love to have the opportunity to participate in a virtual workshop (perhaps through Social Edge:), with experts who could help me refine my skills in a very practical way (e.g., provide the latest Cone Roper or other research that demonstrates that value that nonprofits can bring to corporations, review my draft pitch, advise on pricing & negotiating strategy, even role play). We can tell corporations all we want that nonprofits offer value in a general sense, but I think they have to see us talk their talk, think their think, & deliver results to overcome the gulf of negative sterotypes.

- Corporate Sector: I think a concerted campaign could build awareness (dare I even say buzz:) among corporations about the bottom line benefits of aligning with nonprofits, & help cause-marketing become a top-of-mind part of corporations' marketing mix. It would be important for such a campaign to reach beyond corporate foundations to the marketing depts. I envision a PR campaign of editorial placements in marketing industry publications (e.g., BrandWeek) plus well crafted presentations at industry conferences (e.g., within the teen sector there's an annual, teen marketing conference that gets you significant share of the teen corporate market in one-stop).



Take care all, Liz

Jed Emerson - Jul 18, 2003 9:38 am (#16 Total: 35)
Senior Fellow, Generation Foundation (London)


Hi, Larry! Great to hear your foundation is doing its thing!

First off, the notion of four components to a good analysis of the sector/segments thereof I think is a great way to think about it and it "makes sense." I wonder if you or anyone has written anything up on that notion, since I think it would be interesting to explore further in a short article or something...

With regard to governance and industry structure, I would agree those are also important considerations---and create in many a barrier to analysis since for many of us analysis of industry structure would include governmental policy/regulatory frameworks that make our head spin...but they are both really critical pieces.

I think with these components in place, one is then ready to address the final challenge: actual market experience! I think this is perhaps one of the toughest issues for those new to a space (regardless of whether they are coming from the business world or not) since knowing the facts and analysis is one thing, but having a true feel for the market is something that really comes only through time...

What do you think about that angle? Is information/analysis enough or does true knowledge come from deeper experience in the space?

best to all! j.

Jed Emerson - Jul 18, 2003 9:44 am (#17 Total: 35)
Senior Fellow, Generation Foundation (London)


I like this distinction a lot, Mario (Hi!)...I don't see how anyone could be against learning how to more effectively do whatever it is they are trying to do...

But I still feel that even with that "nuanced" twist, many nonprofit folks still resist even the notion of being better managers, etc., since they continue to connect that with not being "good nonprofit folks" or something....

Do others think I'm being too harsh on nonprofit folks or is this true? I'd be curious to hear what folks think...

best, j.

Jed Emerson - Jul 18, 2003 9:51 am (#18 Total: 35)
Senior Fellow, Generation Foundation (London)


Good point!

I'd be interested in folks' take on why this is...

On the one hand, it's pretty obvious that if the business folks come to the table with new resources that may drive some of the supplicant function, but I also wonder if part of it isn't a societal sense that business people somehow "know more" than social sector folks...

My grandmother used to get in huge debates (fights?) with me (uh...maybe I got in fights with her...ANYWAY...), and she would always fall back on the old line:

"If you're so smart, how come you're not rich?"

I think in our case there's this assumption that folks of wealth and mainstream success are somehow "smarter", and we respond/react to that notion, even tho we all in an objective way would acknowledge that social sector folks can be smart in their stuff and vica versa...

Know what I'm getting at here? Is there some type of of social dynamic in play here?

just wondering...

best, j.

Dragonfly - Jul 18, 2003 11:00 am (#19 Total: 35)


Jed,

I don't think you are being harsh at all. I think you are being honest and realistic. Having worked on both sides, I completely agree that there's a tendency on the nonprofit side to resist the adoption of "business" practices as if it will change the "feel good" nature of their work. It's really just narrow minded. Regardless of your organization's mission -- be it for profit or nonprofit -- sound management and business practices are prudent. These practices can also make the experience as an employee more enjoyable -- humans, in general, like structure and direction.

Thanks for bringing such a provocative spirit to this discussion.

Jan Masaoka - Jul 20, 2003 10:09 pm (#20 Total: 35)
Executive Director CompassPoint Nonprofit Services


People new to the nonprofit sector (or even "old"!) often think they know several "well known facts" about nonprofits that turn out, like the alligators in New York sewers, to be urban myths. Examples: "A nonprofit can't make a profit," or "Nonprofits can't lobby." A very quick read ("short enough to be read over a cup of coffee") is this article I wrote for the Board Cafe, a newsletter for nonprofit board members with 30,000 subscribers:
http://www.boardcafe.org/bc2002_02.htm

Let me know what you think! Jan

michaellewkowitz - Jul 21, 2003 8:54 am (#21 Total: 35)


Hello everyone,

An interesting thing I find when people discuss for-profits and non-profits, is that the conversation virtually always leads to the differences. I also find that when people from 'the 2 worlds' discuss what is the same, things can progress really quickly.

When we boil it down, both are ventures that have to have a vision, a plan, and be able to execute. The context maybe be different between one non-profit and another for-profit, but so it is also been 2 non-profits, or 2 for-profits.

Early stage companies all wrestle with the same things. Figuring out the 'right' path, attracting resources to execute on the plan, and most importantly actually getting things done. Both can find lots of people who 'want to help' and both have equal difficulty in getting people to actually help. Both are always short on resources. Both live in ambiguity... etc. etc. etc.

Having been in early-stage ventures, both for and non-profit, i've yet to come across something that was so radically different that solutions to tactical problems wouldn't transfer. Are the 'differences' maybe more of a philosophical than a tactical? And if so, why do we spend so much time on them?

Be interested to hear what people think!

Michael

mmorino - Jul 21, 2003 9:34 am (#22 Total: 35)
Chairman of Venture Philanthropy Partners


Michael, like yourself, I have pretty good experience in business. I've started several firms, grown one to some prominence, led a score of acquisitions and mergers, helped numerous entrepreneus and have participated on major, strategic investments as a member of the private-equity firm General Atlantic Partners.

I've also been working in the nonprofit sector since 1993 and not casually, literally devoting the lion's share of long work weeks to nonprofit pursuits. More recently, we're attempting to adapt certain investment concepts to helping leaders of high-quality community-based organizations strengthen and grow their organizations.

You are right to suggest that there is a commonality on matters like a vision, a plan, execution, good management and so forth -- and it is in this way there is much to share. But my experience also insists that we recognize there are compelling differences and they are anything but a red herring.

These differences are as fundamental as a lack of a continuum of capital funding as there is no such parallel to the commercial sector that enjoys debt and early stage funding, venture, mezzanine and public market financing. And, we find a much greater role and sensitivity around matters of politics, race, ethnicity and social class play (at least in the nonprofit world serving children in which we function).

And, the reward and support system between the forprofit and nonprofit world, defies comparison. Simply put there are few nonprofits executives that will find the type of systems, options, compensation, and peer recognition for them to encourage and support them to excel as "executives" than exist in the forprofit world. What is deceiving is when realizes that the environment in which for-profit and nonprofits function are so radically different -- in their funding systems, their cultures, and their mores and norms, And, even worse, this "environmental difference" is not at all obvious unless one goes out of one's way to ferret out the variances and differences. I know that we're learning each and every day and we've been at it for a while.

michaellewkowitz - Jul 21, 2003 12:19 pm (#23 Total: 35)


Hi Mario,

Thanks for jumping in on this one. First off, I couldn't agree more that there are some fundamental challenges that non-profits are facing and I think you have hit on a couple of major ones... and obviously you are actively trying to address it in you day to day life. Great stuff.

I guess what I'm trying to get at is identifying where these types of conversations have the greatest value. Understanding the differences is paramount in understanding how to improve the infrastructure and remove the barriers for non-profit ventures. It's a longer term endeavour that is essential to a vibrant and successful sector. Good.

However, in the context of operating a venture I often see these discussions as 'widening the gap' which reinforces the existing barriers to learning and action. It's not that these differences don't exist or aren't important, it's that every venture has their own 'unique differences' that they have to face. Time and time again, it's not brilliance in understanding differences that leads to success, it's diligence in execution and getting the basics right. That's the hardest part of venture building for or non-profit.

Connecting back to the topic... I believe where we focus attention is where there is growth. If we focus on the differences (gaps), the differences (gaps) grow.

Michael

mmorino - Jul 21, 2003 12:37 pm (#24 Total: 35)
Chairman of Venture Philanthropy Partners


Michael, I absolutely agree that you don't focus on the differences. But what I suspect one will find is that its knowing and dealing with the differences is what often allows the work on things like vision, plans, management, boards, etc., move forward in a way that they will be effective and endure. One of the great tragedies is that things are done and for whatever reason they don't sustain -- and often times this is because those involved did not have a full enough understanding of the environment the organization had to function. For example, I can point to K-12 reform efforts we've watched. The plans have been thought through, the steps thought out, but the business people involved have not recognized the nuances and "power" of neighborhood politics and "grass roots" community leaders, that will in the end, be highly influential in whether the reform programs get a chance to work or not. You may assume this is just a natural part of the analysis process, but what we see is that these issues -- these differences -- are not fully factored in and often times not appreciated well enough.

Jeff Butler - Jul 21, 2003 3:45 pm (#25 Total: 35)
Mayfair Improvement Initiative


Hi everybody,

I think part of why businesses and non-profits miss opportunities to work well together is lack of understanding.

On the one hand, many people in the for-profit sector don't realize the complexity and long-term nature of many non-profit goals. For example, my particular non-profit area is microenterprise. We help people in a low-income, immigrant neighborhood start or improve their own small business. It's an economic alternative to the decent-paying job they can't get because of language, socio-economic, cultural, or other barriers.

When we met with one of our corporate funders after the first few months, one of the first questions was "so, how many businesses have you started?" While some people had indeed started businesses, the majority still needed a lot of things like education about how business works in this country, understanding of how to access available small business resources, learning to trust certain institutions (financial, licensing, etc.) enough to make use of them, and so on.

On the other hand, non-profits sometimes fail to make a real case (dare we say, a "business" case) for why the for-profit world should contribute any of its time, money, contacts, expertise and so on to a non-profit's goals. Even the good-hearted in business are constantly considering "what's in it for me?" That's just the way business works. Non-profits can't assume the for-profit world will want to support a cause or project simply because it's "good" or "important", even if it actually is.

ataylor - Jul 21, 2003 9:22 pm (#26 Total: 35)


Thanks for the clarity, Mario, on how we use our words. I'd suggest that the problem isn't that we use terms such as 'business like' or 'like a business', but that we never really defined what we mean by those words. To me, to behave like a business is to align your available resources in the best possible way to achieve your objective. In the for-profit world, this clearly simplifies to cash, capital, and other monetary resources, but also includes people, networks, connections, and other intangibles.

Among nonprofits, I'd suggest that being 'business-like' is exactly the same, if we stick to my definition. For some reason, the word 'business' has come to carry a bunch of baggage about being sterile, process-focused, disconnected, and compartmentalized. I don't know of any really good business that has those qualities -- nonprofit or for-profit.

For anyone interested in this 'business-like' conversation among arts and culture nonprofits, hop on over to my new weblog on the subject: http://www.artsjournal.com/artfulmanager/

Keep the great comments coming.

K.L.SRIVASTAVA - Jul 21, 2003 11:32 pm (#27 Total: 35)
Researcher and Consultant,Hyderabad,INDIA


Thank you Jeff for clearly presenting the need for better understanding of nature and complexity of work different types of organizations do.

Here in India, we find similar problems. The NGOs are often being advised to scale-up their area of operation, become as efficient as a business venture, and achieve the targets quickly. Often, the people,s empowerment and institutional development components are not fully understood by people in other sectors.

Thanks, K.L.

Ken Goldstein - Jul 22, 2003 8:25 am (#28 Total: 35)
Goldstein Consulting


There have been some excellent points made in this discussion, and there is much each sector - for profit and nonprofit - can learn from each other. But, as long as we continue to use terms like "business-like," we perpetuate the myth of nonprofit incompetence. The implication is that the learning can only go in one direction and that there is nothing "business" can learn from the social sector, which is simply not true. I'd much prefer that we say that there is much new managers can learn from successful ones, independent of sector.

Bob Dunn - Jul 22, 2003 9:41 am (#29 Total: 35)
CEO, Business for Social Responsibility


I worry that this dialog is operating in a bit of a time warp.

Leadership NGO's,companies and public agencies are already developing and implementing sound and successful collaborations - whether it's at the local level around sustainable agriculture in the San Francisco area, providing water to low income communities in the driest parts of Brazil or through global initiaitves to address technology shortfalls.

I don't say this because I think it is yet established practice or because their still isn't a lot to learn about how to do this better. I just think it's important to point out that there are a lot of people engaged in doing this work.

We need to do a better job of supporting innovative models and disseminating information about those that work well, but no one should be frightened about the "sector divide." It's emminently crossable.

Eleanor Clement Glass - Jul 22, 2003 9:55 am (#30 Total: 35)
The Foundation Incubator


Ken, I agree that there is much to be learned from the public benefit sector.Do you have some specific example? Also, if a business person has lessons learned from his/her experience in the nonprofit sector, we'd love to hear about it! Thanks, Eleanor

michaellewkowitz - Jul 22, 2003 10:58 am (#31 Total: 35)


Mario,

Great example. I'd actually argue that it's not the differences that will enable or hinder success, it's the organization's ability to identify the relevant differences and respond appropriately. That's a basic of effective venturing which is independent of the 'difference' itself. The business people who miss those things are, IMHO, not getting the basics right. And not that this basic is easy to accomplish, in fact it's extremely difficult (I've certainly missed the boat my share of times), but it is a basic of effective venturing. And finally, in that, non and for profits are certainly the same.

Anyway... that's all just my perspective for what it's worth... thanks for the dialogue... anyone else have something to add?

Michael

Jeff Butler - Jul 22, 2003 4:27 pm (#32 Total: 35)
Mayfair Improvement Initiative


Hi Michael,

I agree that in some fundamental ways, like you describe, both for-profits and non-profits aren't as different as people might think.

I'd also add that, where there are differences, figuring out how to capitalize (literally and figuratively) on them effectively could be more effective than trying to "iron them out". For example, if someone from the for-profit world knows how to mount a successful advertising campaign, let’s see how those skills can transfer to fundraising and outreach for the non-profit. Alternatively, maybe non-profits could teach the for-profit world some things about successful collaborations, creative use of limited resources, and successfully communicating and working with diverse populations.

cisler - Jul 27, 2003 1:56 pm (#33 Total: 35)


I recently wrote an article about the history of companies placing technology in learning environments (schools, telecenter, community technology sites) and ended it with a problematic new initiative of Microsoft community affairs. I used to be involved in this activity at Apple Computer, Inc.

What was problematic was the way MS engaged some non-proft organizations (World Links and Catalyst Alliance) to act as their consultants and gather information for the corporate project. They had to do this without saying they were working for MS. Many people in the non-profits refused to talk with them, and a big gap remains, though it may be closed, if not resolved, by the outpouring of cash and support for community technology learning centers (MS's word for these tech centers) in the soon-to-be announced project.

At a World Links board meeting the board recently decided the staff should no longer sign non-disclosure agreements but be open about potential alliances and clients in the future.

The article is here:
http://eduaction.net/
"Product Placement in Learning Environments"
in both English and Spanish.

Charles Cameron aka hipbone - Jul 27, 2003 3:05 pm (#34 Total: 35)
HipBone Games / Rheingold Associates


Cisler? Steve Cisler?

Excellent to see you here! I haven't had time to read your article yet, but hope to do so soon -- and I hope too that you will stay around the SocialEdge discusssion boards once this particular event is over -- if for no other reason, then so that we can talk a bit from time to time...

EduAction -- terrific domain name you have there, incidentally!

amgoldfarb - Jul 28, 2003 12:05 pm (#35 Total: 35)
Environmental Defense


Liz - I like what you said. The marketing angle is the way to go - that's always been the a great platform for dialog between NP's and FP's. I'm not sure who would conduct such a campaign - or who would listen - but it is a great place to focus.

Anne Perlman - Jul 17, 2003 12:15 pm (#1 Total: 12)


Michael,

Thank you for such a clear context and set of questions. I thought I'd share my experience of being a businessperson on a non-profit board in case it helps.

What I brought to the board was a passion for the non-profit's mission, a sincere desire to be helpful, and some business/management/leadership skills. Other than that, I was simply a member of the community, interested in the non-profit's cause.

What worked for me in board meetings was to be educated about the topic in the context of non-profit governance. This was always done in a respectful manner, routinely included in addition to describing the topic, issue and relevant questions for the board's consideration. By contrast, in my experience on for-profit boards, context is frequently set simply by recalling for board members the history of the issue, its current status, and decisions to be wrestled, because board members all share business experience and vocabulary.

I was always aware that the presentation prior to the non-profit board requires even more work than a discussion of a similar issue for a for-profit board. Seeing this extra education effort taken seriously and being effective garnered even more respect for the presenter, and never failed to inspire humility in me.

Larry Stupski - Jul 17, 2003 3:19 pm (#2 Total: 12)


My experience is that the effectiveness of the board and the meetings is dependent upon the strength of the committee structure and the ability of the chair to chair the meeting. In a board that is part businesspeople and part community nonbusinesspeople context has to be set for the roles of committees and the whole board. The people all bring in different ideas of how much of the committeework has to be redone at the meeting. No discussion is of course too little and redoing the whole thing undercuts anyone's willingness to do committee work. Most of the boards I have served on had no what I would call "program committee" one that got very much involved with the staff in the mission, and I think therefore missed an opportunity to both advise and to get the mission and program in front of the board. Otherwise it can move to entirely issues of finance and the crisis du jour.

Eleanor Clement Glass - Jul 17, 2003 4:10 pm (#3 Total: 12)
The Foundation Incubator


Michael,

Jan Masaoka has done some groundbreaking work around nonprofit boards through CompassPoint Nonprofit Services. For example, the nonprofit board that I serve on found great utility in reading the article: "The CompassPoint Board Model for Goverenance and Support" that describes two fundamental types of nonprofit board responsibility...that of governance, and that of support to the organization, as a member of the governing group, and as an individual with skills and resources to support the Executive Director and staff and to represent the organization in the community.It allowed us to come to some agreements about how we would work together and what types of tasks the organization needed support and advise on and how what each might take on individually to support the organization.

Another helpful resource is an e-subscription to www.boardcafe.org, another fine resource by CompassPoint Nonprofit Services with short articles such as "The Strategic Board Agenda."

Clarifying the board members expectations about being a member of the board, and how they would like to contribute, would also be of help, so that the Executive Director knows how to best use the Board members and satisfy their education, networking, skill contribution needs.

Lisa Spinali - Jul 17, 2003 7:52 pm (#4 Total: 12)
The Omidyar Foundation


The other very good resource is the board assessment created by BoardSource (formerly NCNB). One of the things that I have found really helpful about using an assessment is that individuals learn what they do an don't know about their roles and governance in a very safe way--when they complete the survey individually they don't have to admit what they don't know publicly. It's also a good way to create a collective assessment of where your board stands and then build your "improvement" plan around the assessment. Hope this helps.

Janice Fry - Jul 18, 2003 4:13 pm (#5 Total: 12)
Former Vice President of HR at Sun Mircosystems


One other resource that you may find helpful is a book on Nonprofit Board best practices. It is called "For the Good of the Cause" (subtitle - "Board Building Lessons from Highly Effective Nonprofits"). It talks about the role of the Board, some key success traits, and goes through numerous case studies of actual nonprofit orgs nationally, chosen by their peers as the most effective. Also, in the back of the book, there are sample Board Member Agreements and Job Descriptions, a Self-Evaluation Tool, and a sample Board Report Card. If this sounds interesting, the book is published by the Center For Excellence in Nonprofits and is available on their website http://www.cen.org. Check it out!

Jan Masaoka - Jul 20, 2003 10:00 pm (#6 Total: 12)
Executive Director CompassPoint Nonprofit Services


Eleanor, thanks for the plug for the Board Cafe! If we recognize that one of the key characteristics of business people serving on nonprofit boards is that they are VERY BUSY, then we have to respond by having resources on boards short and easy for them to access. The Board Cafe's articles (archived at www.boardcafe.org) are each one page--such as "How to Fire Your Executive Director," "Board Assessment Survey," "A Board-Staff Contract for Financial Accountability."

With 30,000 subscribers now, I know we're reaching thousands of board members directly--not just through their CEOs/Executive Directors.

Link to Board Cafe Archives: http://www4.compasspoint.org/p.asp?WebPage_ID=661

Dragonfly - Jul 22, 2003 9:39 am (#7 Total: 12)


Do you feel it's necessary to compensate board members for their time? Will the quality of board members you can attract decrease if there is no compensation offered?

The San Jose Mercury News published this article today, I'm interested in this group's opinions on the matter.

Attachments:

Foundations reward directors.htm (14 KB)

Jeff Butler - Jul 22, 2003 3:59 pm (#8 Total: 12)
Mayfair Improvement Initiative


I personally don't think it's appropriate to compensate board members for their time. My service on the board of a local housing non-profit is without pay. No one has ever offered, but I wouldn't take it if they did.

I think boards should want people who are interested and dedicated enough in the first place to dedicate time to a particular agency or cause without being paid to do so. To those people, the feeling of being involved and making a difference are usually compensation enough. I much prefer the spirit behind the following sentence from the Mercury News article Dragonfly mentions:

"The president of the William and Flora Hewlett Foundation, Paul Brest, said the foundation offered board members $10,000 a few years ago but they weren't interested, preferring that the foundation provide matching grants to their own contributions to organizations."

As to the quality of board member you attract, I think there are talented and well-connected people out there who are also motivated enough to serve on a board. What it often takes is some extra effort to find them and convince them to serve on a particular board, but I think that's doable. Also, sometimes the most active and talented board members are people from the community or others we don't automatically think of as movers and shakers.

Finally, let's not forget that one of the perks of being on a board is also the chance to network and build contacts that could prove helpful and valuable in lots of ways.

Tim Walter - Jul 22, 2003 8:00 pm (#9 Total: 12)
Association of Small Foundations


The Mercury article is part of their continuing evaluation of foundation expenses.

As Rick Cohen observed in the article, public charities tend not to pay board members. I'd guess that is in part because the board members are usually donors or are expected to raise funds. Endowed foundations aren't faced with this particular conundrum.

The article does not make the point as to how prevalent the practice of paying boards is, but from the experience of the Association of Small Foundations (where I work) about 75% of foundations pay their boards nothing.

If they are paid, some board members receive small honoraria for attending meetings and reviewing grants, while others receive pay more akin to what a corporate director receives.

-Tim-

Michael Chertok - Jul 23, 2003 4:10 am (#10 Total: 12)


Thanks everyone for your suggestions...one of my colleagues on the board is bringing some of the Boardsource resources to me here in Cambodia...and of course I can access Boardcafe online! If this discussion is continuing after our meeting, I'll let you know how it goes.

Regarding compensation, we are considering whether we need to compensate local board members from the business community here to get their full commitment and participation on our board. In contrast to U.S. culture, it is not so typical for talented and well-connected people here to volunteer their time this way...and we feel it is important for us to have this kind of strong local guidance for our social enterprise.

I'd love to hear from anyone who has experience with board compensation in social sector organizations outside the U.S.

Janice Fry - Jul 23, 2003 1:09 pm (#11 Total: 12)
Former Vice President of HR at Sun Mircosystems


I agree with Jeff and personally do not believe that Board members of nonprofit organizations should be paid positions. Admittedly, I am less familiar with foundations, but I don't see why that should be different. In my experience, you can indeed find very competent, passionate volunteer Board members who have no interest in the pay. And as Jeff pointed out, they do get other benefits from their Board experience that can be great in both their business and personal lives.

And to Michael's question about compensation for nonprofit Boards outside the U.S., I do not have direct experience in the nonprofit sector. However from a business perspective I can tell you that it is essential to understand differences in local cultures and customs as well as the economics of pay. Globally, pay practices vary widely in different parts of the world. In some Asian countries for example, there is a huge emphasis on things like providing housing or housing allowances, or paying school expenses for the kids, and less emphasis on cash compensation. Some of this is due to local tax structures. So, in pursuing the question I would strongly urge you to do two things: understand what type of compensation (or benefit?) would be valued most, and second make sure you understand the impact on the Board members from a tax or economic perspective. I hope something is here is helpful.

Janice

Tim Walter - Jul 24, 2003 7:23 am (#12 Total: 12)
Association of Small Foundations


Just want to clarify something I wrote about foundations, and that is that there are obviously some foundations that pay board members what pretty much anyone would consider to be beyond the bounds of charitable service.

As for whether to pay boards, for public charities, I don't think one size fits all. I can imagine a board structure where a small operating board does receive pay or a stipend for their efforts, and then a larger advisory board that does not receive pay plays some of the community representation roles and has key fundraising and networking responsibilities.

Bruce Sievers - Jul 18, 2003 3:03 pm (#1 Total: 6)


Hello all,

Sorry to be late to this party, but I have been away most of the week. Really enjoyed reading all the threads so far.

Just to spice things up, I want to make sure this is not too much of a love fest. Sally's recent entry, plus some of what has gone before spurred me to point out a distinction between the active involvement of people from the business community in philanthropy (which, in my view is a good thing) from application of the BUSINESS MODEL to philanthropy (which is much more problematic). The problem with the latter is its tendency to translate techniques and, more importantly, a mind-set to the arena of social action that results in excluding crucially important characteristics and purpooses from the understanding of social life. One quick example: A recent open letter by Alex Counts, CEO of Grameen USA to the field warns of the tendency in the imposition of rigid "industry standards" and efficiency goals to move the field away from its original goals of reaching the neediest populations through micro-enterprise finance. Based on my conversations with nonprofits through the years, this concern could be multiplied hundreds of times in every field of nonprofit activity. While it is true that organizational discipline and rigor can be good things, it is also true that nuance, interpretation, and just muddling through can also be beneficial approaches to enaging important social issues and advancing human development.

Bruce

Eleanor Clement Glass - Jul 21, 2003 10:08 am (#2 Total: 6)
The Foundation Incubator


With the advent of venture philanthropy about 5 years ago, "high engagement" has become the code word for a set of activities used when working with nonprofits. These include frequent communication, provision of technical assistance, involvement of the funder in management and/or governance of the organization, and funding contingent on meeting specific objectives or benchmarks--often quantifiable benchmarks.

What many funders involved in "high engagement" philanthropy have discovered is 1) high engagement philanthropy is NOT brand new, as many philanthropists have been highly engaged for different types of projects, and 2) that you can't and shouldn't be highly engaged with each and every grantee. It is not practical, or even useful to some nonprofits. High engagement involves a set of tools that can be applied to specific situations, and should not be viewed as a style or an approach to be applied to each and every nonprofit. There is a danger that one philanthropist pointed out to me: When you just have a hammer (and are fond of it), you sometimes view every situation as a nail.

Anne Perlman - Jul 24, 2003 11:09 am (#3 Total: 6)


This article entitled "How Deep is the Ethics Crisis?" makes reform in the business sector sound almost hopeless. What can the business sector learn from the social sector about ethics, and what changes in practices would those learnings cause? Two things that this article advocates are an emphasis on longer horizons and less focus on the celebrity CEO. It seems to me that the social sector is a model for both: there is realism that systemic change takes time, and most people in the social sector are there to focus on others, not at all on themselves.

http://www.forbes.com/2003/07/24/cz_sp_0723ethics.html

robgitin - Jul 25, 2003 8:12 pm (#4 Total: 6)
At The Crossroads


Bruce- I appreciated your comments. To piggyback, I worry that the heightened focus among non-profits and their funders on outcomes that has, in part, been fostered by using "Business models" is going to leave the neediest and hardest-to-reach people out in the cold. With more pressure to show high-level results, organizations are already starting to be more self-selective with their clients. They are wanting to find clients who are more likely to "succeed" so that the program can have impressive outcomes. People who are challenged (by drugs, mental illness, physical disability, age, or non-mainstream values) when it comes to achieving goals that organizations and funders deem desirable are already finding a harder time being able to access services. These are ppeoplewho resources should be focused on, but increasingly they do not fit the criteria to access programs.

There are many programs that do need to focus more attention to evaluation, but that does not always mean that they need to focus more attention to outcomes. And when outcomes do start to take on a prominent role in an organization, they need to be carefully thought out, making sure that prioritizing outcomes coexists with reaching those who are most in need. I do not think that the two are mutually exclusive. However, because outcomes are often hastily introduced and are sometimes designed or imposed by people who have not invested enough time to understand the mission of the program, they often have the self-selecting effect. And this is not just funders; program managers often implement outcome measures that are not sufficiently aligned with the mission. While I think that there is a lot of good that can come out of an increased awareness of outcomes, it is not without its pitfalls, and the trend toward excluding those who are less likely to succeed is the one that scares me the most.

Charles Cameron aka hipbone - Jul 25, 2003 9:52 pm (#5 Total: 6)
HipBone Games / Rheingold Associates


Thanks, Anne, for an insightful and eloquent post.

amgoldfarb - Jul 28, 2003 8:11 am (#6 Total: 6)
Environmental Defense


Eleanor - having been on either side of the 'high engagement' relationship I can say that it only works when the funder and grantee share a mutual respect for one another. This is not often the case within a relationship that has power dynamics that can make it fraught with roadblocks to real communication and collaboration. Being able to fund does not always translate into being an effective partner in helping manage a nonprofit. Age old problem I know - but one that seems worth pointing out here.

Charles Cameron aka hipbone - Jul 16, 2003 9:20 pm (#1 Total: 8)
HipBone Games / Rheingold Associates


Thanks, Eleanor, and all at Skoll:

Once again, it is a pleasure and a privilege to be here, and our topics are surely ripe for rich and varied discussion.

Marino, you write:

I’ve witnessed too many in the business world that think too highly of themselves and their accomplishment and, intentionally or not, may look down on those in the nonprofit sector. Conversely, I’ve seen too many in the nonprofit world be far too cynical and too quick to brand their business counterparts as disciples of avarice and greed and insensitive to the causes nonprofits advance

A couple of times I've found that this sort of mutual disregard arises from what are essentially misreadings of the languages habitually used by the different groups. George Lakoff has written some enlightning comments on this aspect of problems between "liberals" and "conservatives" in his book Moral Politics, and if I might paraphrase his main point, he suggests that the characteristic difference between "conservatives" and "liberals" arises from their different ways of construing the nature of need.

In Lakoff's view, which he supports by an analysis of the metaphors used by both sides, liberals regard the conservative unwillingness to "take care of" or "look after" the poor, the Iraqis, folks in our own inner cities, etc., as a failure of generosity, and thus inherently mean-spirited and immoral, while conservatives view the liberal wish to "take care of" or "look after" those same people as an "enabling" wish playing into and reinforcing a vicious circle of victimhood -- hence no less inherently naive and immoral.

Note that the accusation of immorality goes both ways, and that to the extent that either side acts on the principles articulated here, they are in fact behaving in a manner that is far from immoral, indeed very much the reverse.

What Lakoff allows either side, then, is a chance to see how the "other side's version" is in fact principled, and thus may perhaps be disputed but should not be disdained and derided. And that in itself is quite a breakthrough.

We all, I believe, know by now that there is such a thing as "enabling", and that it is not immoral to wish to avoid it, and that there is such a thing as "empowering", and that it is not immoral to wish to achieve it. And yet all work in the social sector can be read as either "enabling" or "empowering" – and which reading business chooses may well be the single most influential factor in the division we're discussing here. Likewise, business can be viewed as either "refusing to enable", or "unwilling to empower" the needy -- and which reading the social sector adopts may well play a significant role in their own tone when approaching the business side.

*

Lakoff's discrimination between "conservatives" and "liberals" is based on an analysis of their preferred metaphors, as I said, and a similar comparison of metaphors surrounding the concept of "need" would, I suggest, have a lot to teach us. And I must confess that I'm confirmed in this thinking by a somewhat different use of quite similar language, which I found in David Keller's post, when he suggests:

the non-profit world should be more demanding of both the government sector and the business sector, i.e. use a little more reverse psychology vs. dependent/subservient psychology...

Hope this stimulates…

mmorino - Jul 17, 2003 4:59 am (#2 Total: 8)
Chairman of Venture Philanthropy Partners


Charles, your referenced to the "mutual disregard that arises from what are essentially misreadings of the languages habitually used by the different groups." You are so right, and it is not only the misreading of the languages but the choice of language elects to use.

In my business life, we learned (eventually and after great pain) to understand the differences in languages with respect to industries, fields, markets and economies, in both what he heard and said. And as important as this was, what we've learned in bridging the business-nonprofit divide, is that the issue is much more difficult and, often times, not nearly as obvious -- as it goes beyond the nonprofit-business world, into issues of ethnicity, race, economics, cultures and even neighborhoods.

The Edna McConnell Clark Foundation, led by Michael Bailin, in this regard has done some interesting work. As they explore the "re-engineering of philanthropy" to make their grant-making more effective, they've placed great focus and importance on language. Too often, we've erred in our work with Venture Philanthropy Partners by using business terms, e.g., landscaping a field or area to find promising organizations, where Mike and his organization has selected terms, e.g., surveillance of a field or area to find promising organizations, that are more clear, to the point, and potentially less offensive. And, there are some great articles in the Edna McConnell Clark website that discuss the importance of language and terminology.

Yet, this also works two ways. It is important that those of us in business respect the language of the nonprofit world(s), yet in the same way, as nonprofit leaders reach out to business people for their support, it is similarly important to respect the language of business. One of the greatest examples I've seen in this regard was that of Ashoka, the remarkable global social entrepreneurship organization, led by Bill Drayton. When they sought to raise $20 million to bring their international model for social entrepreneurship into the U.S., they did one of the most creative and innovative things I've seen done. Instead of developing a "fund raising campaign" to raise the $20 million, they described their need for $20 million in capital financing by developing what in the financial world is called a Private Placement Memorandum (PPM). A PPM is used by firms and investment bankers to raise capital for businesses that are either not ready to or unable to raise money through debt financing or an initial public offering (IPO). The result of what Ashoka achieved, was that they described their $20 million capital need in a format, with a rationale, and in the terminology the business executives and investment types could readily equate to and understand. I can't assure that the PPM resulted in the final result they achieved, but it’s my understanding that one family ended up providing a substantial portion of the $20 million. It so impressed us in our work that we plan to explore developing a Private Placement Memorandum with one of our investment partners.

In summary, language is important, but its not a one-way street and I suggest it is the responsibility of the one doing the communicating to understand and respond with the language, messenger and medium most suited to those they are trying to reach.

Eleanor Clement Glass - Jul 17, 2003 9:05 am (#3 Total: 8)
The Foundation Incubator


Charles, Jan and Mario have raised interesting points about language and culture between sectors. An analogy that comes to mind is traveling to another country. Americans are often faulted for our unwillingness to learn other languages and customs when traveling overseas, or even meeting people of different cultures within our borders.

I would suggest that the inital foray for a businessperson into a nonprofit might feel that way. For example, often there is more demonstrative social contact and attention to personal relationship-building prior to "getting down to business" at a meeting. This might be because of the social nature of the mission of the nonprofit organizations or the nature of the jobs where the personal passions of the individuals are what spur each other on and bond them to the work. Another example is board rooms. A business person might be appalled by the amount of discussion and concensus decision-making that takes place, resulting in a lengthier meeting than if it had been run more "efficiently" with up-down voting or more formal facilitation. They might not realize that shared ownership and buy-in is key to the operations of the nonprofit and key to keeping multiple stakeholders at the table.

I talked to one MBA student once who mentioned that the nonprofits he was working with seemed to have no understanding of important concepts like "value proposition" or "value chain" and that as he worked more and more "in this space" he was becoming disenchanted with the "lack of professionalism." I tried to bring the perspective that you mentioned, Mario, about using DIFFERENT words that might be better understood as he entered these relationships. He stared, unbelieving, patted my arm, and said, "But Eleanor, isn't it OUR JOB to help them to learn to be more professional?"

I would hope that both nonprofits and for-profits would recognize that they are entering a foreign land and need to attempt to learn the language and customs and the reasons behind them in order to forge respectful partnerships.

sally osberg - Jul 18, 2003 10:58 am (#4 Total: 8)
CEO of Skoll Foundation


Charles, Mario, Eleanor,Jan, David and friends,

The words both sectors choose, the metaphors we adopt and construct, the paradigms we hold to and yield, as well as the tone and spirit with which we utter all this--clearly contribute to how well we do and don't understand one another.

The Private Placement Memorandum is indeed a brilliant expression--perhaps more important to Ashoka and its sense of self-worth/legitimacy than to the outside, but I'm not sure...What's most interesting to me is that Bill and Ashoka chose to appropriate this construct and claim it for the social sector (but then, I know what Bill thinks about Foundations and traditional philanthropic mechanics!)

Regarding the more fundamental issue of how well-meaning human beings miss the chance to connect over what they hold in common, I offer this from John Gardner, food for thought:

"The most gifted leaders understand that the needs of people cannot be fully plumbed by asking them what they want or why they want it. One of the deepest truths about the cry of the human heart is that it is so often a cry that is never uttered. There are needs and feelings we express quite openly; lying deeper are the emotions we share only with loved ones, and deeper still the things we tell no one. We die with much unsaid. It is strange that members of a species renowned for communicative gifts should leave unexpresssed some of their deepest yearnings, their smoldering resentments, their worries and secret hopes, their longing to serve a higher purpose.

The greatest poets, novelists and playwrights have always tapped those underground sources. They have always given expression to the unexpressed, have always had transactions with the hidden element in the souls of their audiences. The ablest leaders share that gift of understanding..."

Sally

Charles Cameron aka hipbone - Jul 18, 2003 2:51 pm (#5 Total: 8)
HipBone Games / Rheingold Associates


Sally -- do you have a source for that magnificent John Gardner quote?

Two points that arise from it, if I may.

One is that much of the submerged part of who we are, the unspoken part, consists of our hidden assumptions, and it is those which cause the ructions when they clash with the hidden assumptions of others, far more so than overt disagreements. Much of what we're discussing here about the interaction between business and non-profit has to do with this unseen level of missed understandings, rather than the surface level of mis-understranding, I'd wager.

The other aspect has to do with creativity, and Gardner is (not surprisingly) right on the mark when he says the poets and novelists have privileged access to our inner yearnings. The yearnings he's speaking of reside like ore in deeper layers of our being which open up during the aha! phase of creativity – and the great creators then mine them.

They are therefore most susceptible to our day-to-day understanding when we operate at the contemplative tempo, in quiet moments, in meditation, in reverie, and obscured from our view when we are harried and hurried. And it follows that best practices may perhaps turn out to be neither business practices (which know how to get things does under budget and ahead of deadline) nor what Dragonfly called "feel good" practices (which almost certainly work at a slower pace), but a blend of both in a rhythm which includes rest and restlessness, stillness and warp speed, depth of feeling and empowered achievement of goals.

*

Okay, I'm returning to my roots and waxing poetic -- but my point is that our most powerful drivers are our hopes and fears where they touch the level of dream and nightmare, myth and heroism, and that an oscillation between contemplation and action is therefore the best practice of all.

Does that sound "too" idealistic? I don't think so. I am only rephrasing what I learned from my mentor, the single person who achieved the most of anyone I have ever met. He was a monk, a contemplative who took action. His name was Trevor Huddleston, and his achievement was to see the end of apartheid in his beloved S Africa. He was the one who tipped his hat to Desmond Tutu's mother (post #67, 27 Jun 2003) Here's what Nelson Mandela said when Trevor died:

It is with special humility that South Africa joins in this commemoration to convey the sense of loss we feel, as a nation, at Father Huddleston's death, and our abiding gratitude that the vagaries of history brought him to our land. We do so in the knowledge that we are speaking of one who touched the hearts of millions of South Africans. Although he disparaged empty words, this man of action, who also lived a deeply contemplative life, inspired the world to action through his eloquent denunciation of our condition…

Words, words, words indeed!

robgitin - Jul 25, 2003 2:40 pm (#6 Total: 8)
At The Crossroads


I think that the language barriers that often exist between the for-profit and non-profit worlds can have a dramatic impact on which non-profit agencies have the opportunity to partner with for-profit agencies to accomplish their mission. It seems like differences in lalanguagewhich are sometimes the manifestation of differences in culture, or other times falsely give the impression of a cultural gap) can be very scary for both non-profits and for-profits. Many of the grgrass rootson-profits (NPs) that I know walk away from dialogue with for-profits (FPs) feeling intimated, disrespected, confused, and very distant. NPs say "people" and FPs say "numbers." NPs talk about "how issues impact clients" and FPs talk about "cost/benefit analysis." NPs will spend a lot of time talking about process, FPs seem to spend more time talking about product. NPs talk about meeting their clients needs, FPs talk about supply or demand-side theory. It seems like FPs often walk away from dialogues with community-based organizations with similar feelings. NPs use language that makes out FPs to be "the problem." NPs describe their goals with complex, fuzzy language that does not have concrete bottom-line that FPs use to determine quality. NPs that are client-centered often use the jargon of their clients, which may be totally foriegn to FPS. What always concerns me most about this is that the disconnect seems largest bewteen large, well-established for-profits and small, community based organizations. This is problematic because the afformentioned FPs have the resources to really create social change, and the CBOs understand the needs of the community in a way that allows them to determine where the opportunities exist to make the most significant impact in their communities. Often, the CBOs that provide the best services are run by people who are from that community, and will therefore speak the language of that community. This is often a jargon that is totally foriegn to business leaders whose language may have been cultivated by academia and business culture. It is uncomfortable to try to communicate with people who you don't understand and who don't understand you, so there is often little dialogue between these two groups about how they can partner together to address social concerns. I don't hold out much hope for developing an "Esperanto" language that will bridge this specific gap. It seems that it will require a concerted effort, that is prioritized and backed by resources, for large FPs to learn enough Spanish and CBOs to learn enough English to successfully converse. Otherwise, an enormous opportunity for partnership that can result in significant social change will continue to be lost. It seems like this on-line discussion is a positive step in this direction. However, the language used in this forum seems to be leaning heavily toward that of the FPs and has little of the jargon used by CBOs, so I think that there are still challenges that need to be addressed.

sally osberg - Jul 25, 2003 6:19 pm (#7 Total: 8)
CEO of Skoll Foundation


Rob,

Having spent a memorable time sharing a forum with you for the "live" Bridging the Gap event at Stanford last year, I'd like you to know that the qualities you evince--integrity, commitment, credibility--shine through. There may indeed be language barriers between cultures, but I find good people on both sides find ways to break through.

Keep the faith!

Sally

amgoldfarb - Jul 28, 2003 8:20 am (#8 Total: 8)
Environmental Defense


Rob - never read the venus mars book - but I think you're right about the language issue. While I think that dialogs like these can help raise awareneness among nonprofit and philanthropic leadership - I am unclear about how the change filters down to people who are trying to have these conversations at in the 'trenches.' I'm talking about cocktail parties where the CEO of a corporation finds herself speaking to a nonprofit Executive Director of a rape crisis center - or in a job interview where someone who has spent years in the nonprofit sector wants to do what they see as equivalent work at a for profit (FP) company and can't find the common language to describe how what he has done in the past makes him a viable candidate. How does the conversation and dialog get moved forward? Maybe a Mars/Venus book about this issue? If you write it - I'll buy it!

Janice Fry - Jul 25, 2003 3:38 pm (#1 Total: 7)
Former Vice President of HR at Sun Mircosystems


I have certainly enjoyed the engaging dialogue during this Social Edge event. I have been impressed by the wide range of topics, the passion and conviction of participants, and the willingness to frankly and openly explore issues. I have also learned a lot. I understand a great deal more about some of the real differences between sectors. I understand more about where building bridges and collaborating is most likely to succeed, and where the hurdles are likely to be bigger or harder to navigate. I loved hearing success stories of situations where collaboration and partnership across sectors was possible. And I am personally committed to playing a part in continuing to create new success stories. Thanks to all for your stimulating thoughts and passionate participation!

Janice

K.L.SRIVASTAVA - Jul 26, 2003 2:22 am (#2 Total: 7)
Researcher and Consultant,Hyderabad,INDIA


It has been a frank and honest dialogue. Through this event, I could interact with so many people, and get a feel of their visions for the future and their concerns. I wish to express my gratitude to hosts and participants of this event, and thank Social Edge team. K.L.

Charles Cameron aka hipbone - Jul 27, 2003 2:51 pm (#3 Total: 7)
HipBone Games / Rheingold Associates


Many thanks to Eleanor Clement Glass, our event hosts and featured guests, our hosts at SocialEdge / Skoll and all those who participated. I'm beginning to get a sense of community around here -- and I suppose that's my own key interest, so I'll be continuing to drop in at the SocialEdge site and hope to meet some of you there again...

If I have any concern about a conference like this, it's that it's over almost before we've begun. What happens is excellent. What can happen, if we keep the SocialEdge discussions in our sights and high on our bookmark lists, and drop by to pick up inspiration or offer insights on a regular basis, will be transformative!

David Keller - Jul 28, 2003 8:13 am (#4 Total: 7)

amgoldfarb - Jul 28, 2003 8:24 am (#5 Total: 7)
Environmental Defense


Reporting in from NYC - thanks for a great discussion. - Andrew

robgitin - Jul 28, 2003 2:07 pm (#6 Total: 7)
At The Crossroads


Thank you so much to Eleanor and Sally and all of the other people who created, nurtured, and facilitated this event! It is exciting to see dialogue taking place; I am curious to see where the next steps take us. I think making a real dent in "bridging the gap" will be a long, complicated road, and I am thrilled that there are people who are invested in this process for the long haul. I hope that the many wonderful people who offered their thoughts during this event (or quietly read the dialogue) will remain committed to this topic and will become part of the change that we all want to see.

Keely Stevenson - Jul 28, 2003 2:10 pm (#7 Total: 7)
Royal Bafokeng Economic Board


Special thanks to Eleanor for sharing her priceless gifts as a moderator and to our expert Hosts & Special Guests for their truly meaningful contributions in painting this colorful and important conversation that shall inform so many of our actions moving forward.

I extend much appreciation and honor to the Social Edge learning community around the world. As change agents, we continue to learn such great things from each other.

"Tell me and I forget. Teach me and I may remember. Involve me and I will learn." ---Benjamin Franklin