For the little guy, NPO funding is a drag. We often don’t fit the security blanket needed for mainstream foundations. Nor do we have the big celebrity board of directors to bank roll our visions. Any yet, like Tomas Edison, most innovations come from the fringes, not the conservative center.

I have run a small NPO for fifteen years. Recently I created a for profit social venture corporation to develop a revolutionary line of educational products for parents and early childcare providers. (over 65 million parents supported by 45,000 licensed providers in CA alone.) This subscription based produce line is distributed via NPOs, <st1:Street w:st="on"><st1:address w:st="on">United Way</st1:address></st1:Street>, the YMCA and other existing networks who are already serving parents and providers. NPO distributors receive a wholesale discount which represents approximately 40% of net. The remaining 60% is returned to social venture investors, who have the option of hanging on to the stock or designating their equity to other charities as did Paul Newman. We are in the pilot phase, doing very well, and expect a 1.5m investment to generate 6m to 7m (split 60/40 as described above) in five years. Any suggestions on innovative strategies for the initial 1.5M?

Michael Mendizza

In a book titled "Good to Great and the Social Secto", Jim Collins talks about a flywheel effect of constant growth that leads organizations to become good, then great.

In a variety of articles under the heading of "challenges facing non profits" writers show how the inconsistent way that philanthropy and government funds social benefit organizations reduces the ability many of these organizations have to grow to be good, let alone great. These links are at:

http://www.tutormentorconnection.org/TMLearningNetwork/LinksLibrary/tabid/560/rrcid/8/rrscid/96/rrpid/1/rrepp/20/Default.aspx

Since 2000 many charities have gone out of business because of the sudden loss of revenue due to lower giving by business and foundations, and many, like my own, have taken on debt ( credit cards, personal loans, etc.)  in order to stay in business or maintain continuity in key services.

Thus, if some billionare decides to set up a bank that would provide bridge funds/loans to help non profits cover cash flow fluctuations, or to bridge the times when funding drops due to unexpected events such as 9/11, or due to sudden crashes in the economy, such a fund could do much to help many more organizations stablize revenue, and thus stablize staffing, program growth, and social benefit.

The few groups I've investigated for loans, do not fund debt, but will fund capital improvements.  As a leader of a small non profit ($350k-$450k annually), I'm not in need of capital investments, but of this more fluid form of support.

Do any of you know of such financing?

Patrick

Socially responsible financing is a relatively new model. We might call it Social Capitalism. It reflects Gandhi’s concept of trusteeship. At the core is the profound realization that we are not individuals. As J. Krishnamurti said, We Are The World.

Socially responsible capitalism means using our resources in a way that serves the well being of the largest social web of which we are a part. We are trustees of our energy and capital. Not owners. The scale of this perception matters little. An individual bike ship is just as socially responsible and a large international cooperative.

And there is certainly room for both, large funding organizations and those who fund smaller personal ventures. I agree with you. It is up to the funding organization to set their priorities. A drop contains an ocean’s wetness.

Michael

Patrick,

The reason I use maps is that they show all of the geographic in a defined region where a social service is needed.  In your question, you asked do we fund the most underserved, or those who offer the greatest chance of success.

In my mind, our goal is to make best practice organizations/services be in all of the places on the map where such services are needed.

I maintain a database of non-school tutor/mentor programs in Chicago. Many times people ask me to tell them who I think is the best tutor/mentor program in Chicago. I say, tell me your zip code and I'll tell you if any programs are in that area. It does not matter who the best are if they are not in the neighborhood you want to serve, or where you live.  If there are no programs, or only poorly organized programs, donors, volunteers, community members, etc. need to find ways to learn from the best, and apply those ideas in making the programs in their own neighborhoods even better.

Thus, until the donor decides if he/she wants to end aids, stop malaria, improve education, etc. in ALL places where this is a problem, we'll have donors who are only solving the problem in a few places, while all other places continue to suffer.

On the other hand, networks of donors and service providers could begin to work together to make sure there were plenty of good programs in all of the areas where such programs were needed, and that they were sharing ideas and learning from each other so that all were constantly improving.

To me, this type of thinking opens the door to lots of other types of innovation.

I wrote about the use of maps in http://tutormentor.blogspot.com/2007/01/changing-demographics-of-chicago.html