Kiva
2007-04-14
Susan Milner: Can non-profits be cloned in other cities?
Patrick O'Heffernan responds:
Yes, and some have been. There are many offshoots of the Grameen Foundation around the world. Cloned is not quite the right word - replicated in a way that meets local conditions. For a great condensed lesson doing this, see Michael Gerber's book, "The E-Myth". It goes through the "how" of replication and tells why some don't work and how to fix them.
Franchising is also possible, although it has to be thought through carefully. In a franchise, the franchising company is selling something of value - name, formula, business model, etc. It has equity and it requires an investment. NPO's can also sell something of value and transfer equity, but it has to be carefully valued. The trick is to realize that what is being franchised is the business model, the brand, knowledge. Those must be protected in the franchise agreement or they lose their value. That being said, I would question if franchising is the best model for replicating an NGO/NPO. Training and education programs to transfer the working knowledge, rather than selling it and setting up an agreement, may work better. Again, also look to Gerber's books for strong how to's.
2007-01-24
Matt Flannery, with Kiva, asks:
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.
