Q: Matt Flannery, founder of online micro-venture Kiva, asks: "Venture Capitalists are quick to respond to market trends. Foundations aren't. Why?"

Patrick O'Heffernan responds:

Several reasons -from my experience, having to do with psychology and practicality. Foundation staff are public sector, non market-oriented people, by and large and as a rule have little training or interest in market trends. In some cases, I have met foundation staff who are antagonistic to market research, market trends and the whole concept of "markets".

However, I think a more immediate reason is that non profits, especially those that provide services to the poor, are simply not part of market trends, or even of markets. What they do has little impact on and is little impacted by market forces or trends. People are hungry, abused, jailed, kidnapped, raped or killed regardless of what is hot on Wall Street or Silicon Valley. It is simply not important to NPOs and NGOs and therefore, to the foundations.

This is not always or entirely the case, however. As a new generation of wealth emerges and a new generation of foundation staff and executive takes over, charity is shifting the social entrepreneurship, which does follow market trends. The rise of microcredit funding micro-industry for long-term development, as opposed to short-term relief, makes market trends more important in some areas.

However, since much of the NPO/NGO sector and their supporting foundations work in developing countries, market trends in the affluent world - which is where a lot of the available data is - are not always important. This is not to say that foundations should be funding projects that allow developing country farmers to use the internet to better engage in marketing to customers in the developed world, and similar projects which do track market trends.

Q: Is it possible that we will reach a point (perhaps someday soon) where nearly all corporations and social benefit organizations place equal emphasis on economic, social, and environmental returns?

Jed Emerson responds:

Q: I am seeking some insight and advice. I am with a start up organization that will be a women's association/membership. Our organization consists of seven core programs that have the opportunity to involve earned income strategies. We would also like to have a foundation which reaches a certain target market in addition to expanding our mission as well as a mix of social enterprises. Because we are a start up, does anyone have any advice on things I should look out for, do or don't do?

Patrick O'Heffernan responds:

Secondly, it sounds like for a start up, you are biting off an awful lot of stuff. Developing earned income is a major project in itself. Unless you have a significant staff with experience in each of the projects you have listed, and especially in the earned income strategies, you should pick one and develop it into a profitable income stream before branching out.

Since you did not indicate what your capitalization is and what your
strategies are, I have to stay somewhat general, but here are five points to take into consideration:

1.  Is your goal clear to the world as well as to you? 
Seven programs, even if each one is tightly connected to your goal, can each get off course as time goes by, leaving you with seven mini-organizations, each of which is under-funded and under-staffed.

2.  Are you capitalized to see through your revenue strategy?
Developing a market and a profitable revenue stream that changes with market changes and continues to grow is a long term commitment that require intense work. It will take about three times longer than your least optimistic timeline unless you have adequate capital to sustain the organization while you grow the business.

3.  Do you have the skills you need, especially marketing? 
NPOs often view marketing as an afterthought and when they get around to it, they under-fund it and try to do it without research or professional skills. If your revenue strategies involve selling stuff or services, at the beginning you must have the talent on board to understand the market you are entering and devise a competition strategy that fits that market and your strengths. Budget as much for this, or more, than for the program during the start up phase.

4.  Do you have the management depth to do all of this? 
Managing one program can be challenging;  managing seven plus income generation will take someone with a lot of management training and experience -- at least five years running start-ups and large organizations.

5.  Watch the politics!
Every body pulls together at start up, but when things go wrong - and they will - the knives come out. And when things go right and there are more resources, the knives can come out as the stakes go up. Keep your finger on the organization's pulse, listen, listen, listen, and be fair and truthful all the time so you are not seen as a advocate as the sides develop.