If we ever needed proof that raising capital is one of the biggest, most important challenges facing promising young innovators in the social sector, here it is: Kjerstin Erickson, Jon Gosier, and Saul Garlick, all promising 20-something leaders of new social ventures, are each offering up 3% of their lifetime income in exchange for a $300,000 investment in them and the nonprofits they’re building. They’ve created the ThrustFund to raise a total of $1.2M in unrestricted philanthropic capital ($600k, $300k and $300k respectively) in $3,000 increments, and have created a contract to manage the payout of their future lifetime income to their “investors.”
This is definitely smart marketing: it’s innovative, it’s headline-grabbing, and I bet it will get them the visibility they’re looking for. And without a doubt they’re all courageous and they’re putting themselves out there.
But it doesn’t sit right with me. I’m worried that this plays into and amplifies the exact power imbalance that we need to re-imagine – the story of the successful, wealthy, powerful philanthropist and the struggling nonprofit CEO, hat in hand, who literally is offering up a part of himself and his earning potential in exchange for an investment in his dream.
And this is a very small view of the value that nonprofits offer (and I’m not talking here about social versus economic value).
Thoughtful philanthropists are looking to make real, important, lasting change in the world, and through their philanthropy have the potential to realize personal growth, development, connection and legacy. Yet unless the philanthropist is going to become a front-lines operator of a nonprofit/social venture, she has no choice but to realize these aspirations through her philanthropic investments. Put another way, great nonprofits are uniquely positioned to enable the philanthropists to realize their own dreams and aspirations. As much as nonprofits need great philanthropic investors, philanthropic investors need great nonprofits. And this is a good thing for everyone.
Which is why, no matter what the contract says about a termination clause and the exact terms of the payout, the story of selling 3% of your lifetime income to a philanthropic investor seems to reinforce all the old ideas.
It says, to me, that the value that promising leaders like Kjerstin, Jon and Saul bring to the world is easily bought in a simple transaction. It says that the answer to finding partners to back your dream can best be realized by tapping into a little bit more greed (“maybe I’ll get my $3,000 back…or even make a profit!”). It says that someone who has $3,000 to give isn’t already getting enough in return – for themselves and for the world – when they back someone willing to work 20-hour days, 7 days a week, in pursuit of a dream whose main payback is improving the lives of others.
I wish Kjerstin, Jon and Saul great success. And I know that we can and we must do better than this.