If investing = sexy…

If investing = sexy, and if sexy = better = innovative = how we’re going to solve all the world’s problems…well then, Houston, we have a problem.

There’s huge momentum around using investing capital to solve social problems.  The question isn’t whether this is a good thing (it is!); the question is, how do we do this in a way that doesn’t devalue grant funding, that doesn’t inexorably end up at the conclusion that if you’re getting your money back (and then some), you win, and if you’re the grantmaker, you’re doing something that’s not as important/innovative/worthwhile.

What a shame that would be.

What happens when we build large-scale enterprises that serve tens of millions of people, but the service still remains out of reach for many?  Is the grant funder who provides capital to makes the service more affordable doing anything less noble, less valuable, less impactful than the equity investor?  What about the person who put up the first $500,000 with no expectation of ANY return so that the whole thing could get off the ground?

The thing that’s in scarce supply isn’t investing capital – heck, there are trillions of dollars fleeing the European fixed income market and looking for a place to alight.  What’s scarce is risk capital that will take a bet on a person or an idea and help it scale; and high-impact capital, which will take a powerful, existing infrastructure and make it accessible to those who can’t afford it…all in a way that doesn’t distort the market.

In the US, there’s no notion that the person who puts up $15M to fund cancer care for the poor is somehow doing something less important or less impactful than the bondholders who financed the initial construction of the hospital itself.  If anything, the donor is MORE celebrated.  Different tranches of capital are all playing their roles in an attempt (not completely successful nor a complete failure) to provide high-quality heathcare.

We’re obsessed with “building the market” for investing in enterprises that solve large-scale social problems.  That’s good.  But let’s not confuse that with making the world safe for investors to get their money back.

We’ll know the market is functioning not by measuring how much money is swirling around, how many funds there are, and their total capital under management.  We’ll know it’s functioning by measuring how many new blueprints for social change we’ve created; how many people’s incomes have increased; how many people no longer need a permanent handout.


Dear nonprofit

[Here’s the link to yesterday’s letter: Dear (potential) donor]

Dear nonprofit,

Speak up for yourself!  Don’t play the supplicant, tin cup in hand, hoping that some change will fall from that purse (or that pocket).  Your time is precious and the playing field is level.  You offer something of great value, both to the beneficiaries of your work and to your (potential) supporters.

Believe that and start treating yourself with the respect you deserve.  Believe that and start treating your potential supporters with the respect they deserve.   Be clear what you’re talking about and why, state out loud your hopes and expectations for where this conversation is going, risk saying early on what your goals are – knowing full well that the whole thing might crash and burn because you had the nerve to say something out loud that others were thinking.

It is true that the best partnerships take time to develop, that they can meander and take surprising twists and turns, that it’s not usually a straight line from here to there.  So be open, be generous, explore and share your dreams.

But by all means act like an equal partner in the endeavor, because you have so much to offer.

Sincerely yours,

Your (potential) donor

Dear (potential) donor

Dear (potential) donor,

Please, please, be careful and clear with your intentions, with your time, and with our time.  I know you don’t want any special treatment, and I know you don’t want different rules to apply to you…but they do.  (Nonprofit) folks will always take that extra, exploratory meeting with you, that broad-ranging conversation to better understand the sector, the work they’re doing, all the little intricacies that are their special sauce.  They’ll do it because they honestly want to share with you, and they’ll do it because it’s very difficult to tell the difference between a casual conversation and an active exploration of a partnership that leads to a funding decision.

(Worse than loose exploration, please, please, please, don’t make commitments that you cannot or will not keep.  There are few things more debilitating than that.)

It’s true, it really is their job – the nonprofit’s – to draw the line, to be clear, to ask you the tough questions.  But it’s a hard thing to do, and sometimes they won’t.  Sometimes they’ll talk and talk and talk, keeping that distant hope alive that sometime soon you’ll see that glimmer of what you’re looking for and decide to write a big check.  No, that’s not the only thing they see when they see you coming, but it is certainly part of what they see, and they’re going to give you more leeway than they would give to someone else.

So, please, explore, talk, brainstorm, ask questions, give advice, but also insist on clarity if they’re not being clear.  If you know you’re not planning to fund them, but the conversations are going great, you have a chance to speak up, to level set, to explain where things are and explain why you’re talking – because there are many ways to partner, and funding is just one of them.

You’ll be doing yourself and them a great service by speaking up.

Very truly yours,


[coming tomorrow: Dear Nonprofit]

Generosity Day

Generosity Day is here!!!

We announced it on Friday, and it’s spread like wildfire over the weekend (1,000+ tweets, expecting 30-40 blog posts today at a minimum…for example on FastCompany, ABC News, Katya’s Nonprofit Marketing BlogMalaria No More, Beth Kanter’s blog, New York Public Library).

Our hunch was spot on: people are hungering for something more in their lives – more connection and more meaning.

When I put up my post on Friday, I was hoping this idea would spread.  It has.

But that’s not good enough.  Now I have a much bigger aspiration.  We need people to ACT.  Thousands of actions.   Millions of actions.  Tweeting ain’t enough.

So please, today, continue to spread the word AND to celebrate Generosity Day through your actions. It’s a day of practicing saying YES, because doing so will change you and change those around you.

Give to people on the street.  Tip outrageously.  Help a stranger.  Write a note telling someone how much you appreciate them.  Smile.  Donate (more) to a cause that means a lot to you.  Take clothes to GoodWill.  Share your toys (grownups and kids).  Be patient with yourself and with others.  Replace the toilet paper in the bathroom.  All generous acts count!

As you act generously, and as you witness acts of generosity, please keep folks updated using the #generosityday hashtag or post on www.facebook.com/generosityday

For example:

I just celebrated #generosityday by tipping my waiter 50%! Reboot Valentine’s Day by being generous! http://bit.ly/fJASGV

I’m commemorating #generosityday by volunteering for @pencilsofpromis!  Share your stories on www.facebook.com/generosityday

Just watched someone smile and shrug after being splashed by a car driving by.  It must be #generosityday

Happy Generosity Day, and here’s to the start of a new tradition!!!

(A HUGE thank you to all the people who have made this happen, especially Scott Case at Malaria No More for (inadvertently?) pulling together me, Katya Andresen and Ellen McGirt on a panel for Social Media Week, and to Katya and Ellen for their encouragement to do this now.)

Thank you to all the folks who have jumped in to spread the word, including:

Katya Andresen’s Nonprofit Marketing Blog, Ellen McGirt at FastCompany, Malaria No More, ABC News, the New York Public Library, Jennifer McCrea’s Exponential Fundraising Blog, The Marketoonist, Lucy Bernholz (Philanthropy 2173), Sharon Schneider (The Philanthropic Family), TBD, the Christopher and Dana Reeves FoundationHyderabad HappinessJocelyn Wyatt, Idea Transplant, New Frontier, Getting Attention Nonprofit Marketing Blog, Keoghzer’s Blog, Frugaltopia

Will innovative philanthropy always be a niche?

In preparation for the Feast Debate that I’m moderating next week, I was having a conversation today about trends in the philanthropic space.  Someone made the offhanded remark, “Well, there’s clearly a trend of philanthropic dollars being harder to come by and philanthropists being more interested in new models and in financial sustainability.”

Are we talking “trend” or “Trend” with a capital “T”?

Here’s how I think about this question, in terms of total dollars and how they are deployed: without a doubt the “trendsetters” in philanthropy (especially individual philanthropy) are the Buffett/Gates Billionaires who have pledged to give away at least half of their wealth and who are, by and large, younger, more active, and more wealthy than the previous generation of mega-donors.  It’s also clear that the talk in professional philanthropy circles continues to be around results, new approaches, more transparency and accountability.

But how people talk in philanthropy circles and forums and conferences and how actual real live philanthropists behave is not the same thing.  And part of me wonders – and fears – that the amount of talk is getting ahead of the amount of change, and at a certain point we have to ask ourselves what we think the future will look like and what we WANT it to look like.

Graphically, if there’s a leading edge of innovative philanthropy today (which there is…and let’s put aside the question, for now, of whether more innovative is more effective), do we expect and hope that 10 years from now there will be a slightly larger, more established group of innovative philanthropists (v1 in the chart below), or do we think we’re engaged in shifting the whole curve?

What kind of future do we want to create – one with a bigger niche of progressive philanthropists or, instead, do we want to see a shift in the center of gravity?  Because the actions we’d take, the measures of success, the audiences we’d address would be very different depending on which future we hope to see.

My hat’s in the ring for the wholesale shift, but if we’re going to get there we have to spend a lot more time working directly with philanthropists themselves – and not only the most active and engaged ones, but all across the spectrum.

The future of impact investing

I’ve now spent four years in the impact investing space, and nearly three years as a blogger on philanthropy, generosity and social change.  The landscape looks radically different than it did just a few years ago.

On the upside, JP Morgan is now saying that impact investing might be a $1 trillion market; “impact investing” and “social entrepreneurs” are two of the top 10 philanthropy buzzwords of the decade; and we’ve seen a flourishing of philanthropy, especially by mega-donors, both in terms of total philanthropic dollars committed and in more visible and more public talk of results-oriented approaches.

At the same time we’ve seen the limits of markets: the global economy nearly collapsed in late 2008; microfinance, wunderkind of new philanthropy, was shaken to its core by a wave of suicides in southern India late last year.  No wonder that some are calling 2011 the year of reckoning for social enterprise.

Here’s my take on what this all means, from my talk at the 2010 NextGen:Charity conference.

(You also don’t want to miss these other great talks from the conference: Scott Case, Scott Harrison, Scott Belsky, and Nancy Lublin.)

Enjoy, and please share you reactions.

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Philanthropic milkshake mistakes

Thanks to a reminder from Katya on her Nonprofit Marketing Blog, I finally went ahead and bought Clay Shirky’s most recent book, Cognitive Surplus: Creativity and Generosity and a Connected Age, which is about the digital age, the demise of TV, generosity, and the rise of interactive and user-generated content (among other things).

Clay tells an instructive story at the start of the book, one that got me thinking that most conversations about philanthropy leave out the central question – what problem does giving the gift solve for the donor?

Once upon a time, Clay recounts, McDonald’s wanted to improve sales of milkshakes, so they hired a handful of researchers.  Most of the researchers went out and asked customers what they wanted more or less of in the milkshake (sweetness, flavor, temperature, containers, etc) – which sounds like a good, customer-centric and solution-centric approach, right?  Wrong.

One of the researchers, Gerald Berstell, did something different.   Gerald “chose to ignore the shakes themselves and study the customers instead…

He sat in a McDonalds for eighteen hours one day, observing who bought milkshakes and at what time.  One surprising discovery was that many milkshakes were purchased early in the day…the buyers were always alone, they rarely bought anything besides a shake, and they never consumed the shakes in the store.

Berstell’s insight (explained in this Harvard Business Review article, by Clay Christensen, Scott Anthony, Gerald Berstell, and Denise Nitterhouse) was to ignore the milkshake as a product and instead ask, “What job is a customer hiring that milkshake to do at eight A.M.?”  And so Berstell understood the milkshake for what it really was: a portable, slow-to consume, not-too-messy breakfast – a core insight that all of the other researchers missed entirely.

When we discuss sales strategies – philanthropic or otherwise – we inevitably focus on the milkshake: is our story compelling, clear, memorable, and sticky?  Does it resonate with the worldview of our customer?  What tactics are we using for outreach, referrals, etc?

All good questions, but if we stop here we’re making a milkshake mistake.  We have to ask: what job is the customer hiring this philanthropic gift to do (in their lives)?

Being an effective philanthropic fundraiser is challenging for a host of reasons, not least of which because there’s no obvious product that’s being sold, so it’s so easy to forget about (or underplay) the fact that giving is serving a very real, very tangible purpose for the donor.

A good test to see if you’re paying enough attention to this: if you think everyone is giving for the same reason and/or if you think the reason they’re giving is because they believe in your mission then you haven’t dug deep enough.

Clay tells an instructive story at the start of the book, one that got me thinking that most conversations about philanthropy leave out the central question – what problem does giving the gift solve for the donor?

Once upon a time, Clay recounts, McDonalds wanted to improve sales of milkshakes, so they hired a handful of researchers.  Most of the researchers went out and asked customers what they wanted more or less of in the milkshake (sweetness, flavor, temperature, containers, etc) – which sounds like a good, customer-centric and solution-centric approach, right?  Wrong.

NextGen:Charity talk tomorrow

For those in the NY area, I’m speaking tomorrow at the NextGen:Charity conference.  It’s an exciting line-up of speakers including so many people I admire and respect…too many to list them all, but folks like Seth Godin, Scott Case (Malaria No More), David Saltzman (Robin Hood), Jonathan Greenblatt (Worldchanging.com), and Joanne Heyman (Heyman Partners), to name a few.

Tickets just sold out but you can follow the conference on Twitter and as soon as I find out about video (either simulcast or after the event) I’ll post the link here.

Here’s the list of speakers (click for details)


For those in the NY area, I’m speaking tomorrow at the NextGen:Charity conference.  It’s an exciting line-up of speakers including so many people I admire and respect – too many to list them all, but folks like Seth Godin, Scott Case, David Saltzman, Jonathan Greenblatt, and Joanne Heyman, to name a few.

Last I heard a few tickets were still available with a discount.

For those in the NY area, I’m speaking tomorrow at the NextGen:Charity conference.  It’s an exciting line-up of speakers including so many people I admire and respect – too many to list them all, but folks like Seth Godin, Scott Case, David Saltzman, Jonathan Greenblatt, and Joanne Heyman, to name a few.

Last I heard a few tickets were still available with a discount.

For those in the NY area, I’m speaking tomorrow at the NextGen:Charity conference.  It’s an exciting line-up of speakers including so many people I admire and respect – too many to list them all, but folks like Seth Godin, Scott Case, David Saltzman, Jonathan Greenblatt, and Joanne Heyman, to name a few.

Last I heard a few tickets were still available with a discount.

Letting go of my gift

A few weeks ago I emailed a Pakistani colleague to ask for her advice about which organization – among those recommended by Acumen Fund – to give to for flood relief.

While looking at the recommended organizations, I found myself thinking about all the things one thinks about in these situations: how much of the money will go directly to help people? How credible and well-managed is the organization?  What kind of difference will this make in people’s lives?

All normal questions, though in some way they felt absurd upon further reflection.  I gave what I could give because of the tragedy that these floods represent, because of the tens of millions of people whose lives have been uprooted and whose homes and livelihoods have been destroyed.  I gave as an act of solidarity, as a too-small act of expression of my shared humanity with those who are suffering.

But the actual gift – its monetary value – in the context of everything, is tiny, is miniscule, is quite literally a drop in the bucket.  It’s like casting a vote in an election – something totally irrational in terms of my ability to affect an outcome, but something that is fundamental as an expression of my rights as a citizen, an act in support of democracy, and a statement of my values.

In this way, the act of giving is an act of self-expression, a statement of my values and obligations as a citizen of the world, and, perhaps most importantly, an act of generosity.  And generosity is act that expects nothing in return.

This made me wonder again what was going on when I was pondering the potential efficacy of my gift.  Was I, in some way, unable fully to let go of the notion that “this is my money that I worked hard to earn, and I’m only parting with it in exchange for something tangible that I’m getting” (in this case for someone else).

This may be where I – where we – get tripped up.  The thing that we’re used to doing, that we’ve been trained to do, is to buy stuff. We part with money and in exchange we get……  whatever it is that we get.

Maybe philanthropy is something completely different, maybe it’s a sheep in wolf’s clothing: an act of self-expression disguised as a transaction.  In which case we’ve got the order all wrong – we cannot first go through all the learned calculations of what-am-I-getting-for-my-money but instead have to start with ourselves, who we are, and who we want to be.

I worry that in our pursuit of better, smarter philanthropy, we run the risk of trading in soft-heartedness for hard-headedness, and in so doing everyone ends up coming up short – because this is a false choice, one we don’t have to make.  Of course we want money to go the furthest, we want to support the best organizations, we want to make change.  But the “we” in the equation matters a lot.  We, people who give (and people who ask others to give), are affected by our own actions.  We are also striving to be the best version of ourselves.  And we, in the act of giving (the way we approach it, the reasons for our actions, the way we let these actions change us) have a chance to take another step towards becoming the person we hope to be.

Dispatch from Padrauna, India (Part 2)

[if you missed Part 1, you can read it here]

As the sun rose over the deep green rice fields around us, hundreds of people were walking along the highway and amongst the rice paddies, starting their day – squatting, walking, sitting, and waking.  That’s one aspect of India that feels different from nearly everywhere:  no matter where you go, it feels like there are always a lot of people going about their business.

1 in 6 people in the world lives in India, so any social issue in India is, by definition, a big one.  The Indian state of Bihar, India’s poorest, has a population of 85 million, 80% of whom have no reliable access to electricity, 58% of whom are under the age of 25, and 85% of whom live in rural areas.  And this is just one state – with a population larger than the UK, France, Italy, Spain, or Germany – in a country of 1.1 billion people.

When people talk about what will ultimately break the back of poverty – philanthropy or market-based solutions, or some combination of the two – I’m inexorably drawn back to these sorts of numbers.  They makes me ask how anything could possibly grow to touch hundreds of millions of lives without some sort of economic engine that works.  It feels impossible.  The imperative, then, is to find a way to make markets work in service of social change in places like Bihar.

Lighting and cooking solutions are a great place to start, because villagers already spend  10-15% of their income on fuel (for dirty, unsafe kerosene lamps and for open stoves that spew noxious smoke in people’s homes), and because 1.5 million people a year die globally from respiratory conditions resulting from indoor air pollution – 50% more than from malaria.

The opportunity and the need here is huge.

Acumen Fund has two investees that are working to crack this problem: D.Light, which sells solar lights to replace kerosene lamps, and Husk power, which is bringing power directly into people’s homes.  So when six-foot-two Gyanesh Pandey, CEO of Husk Power Systems, casually rolled into the (VERY bare-bones) Skylark Hotel in Padrauna wearing shorts, a white t-shirt, and a big smile on his goateed face, I wanted to know how and why he is solving a problem that no one else has managed to tackle.

Karthik Chandrasekar (Acumen Fund) and Gyanesh Pandey (Husk Power Sysetms)

What comes across quickly in conversations with Gyanesh is that markets are working in a limited way even in Bihar:  villagers are buying kerosene, fertilizer, seed, alcohol and clothing, so even people making just a few dollars a day have some small amount of cash that they’re spending.  This means that the goal isn’t to wave a magic wand and introduce markets where they don’t exist; the goal is to understand the village-level economy – and the mindset of people living there – well enough to offer solutions that will work to improve lives.

It turns out Gyanesh, who has a BS in Electrical Engineering from IIT Varanasi and an MS in Electronics Engineering at Rensselaer Polytechnic Institute, grew up in a village in Bihar, and he’s quick say, with a twinkle in his eye, “Hey, if I don’t work on these problems, who will?”

Gyanesh started tinkering with renewable fuel solutions for the poor in 2002, and in 2007 he and his partner Ratnesh Yadav set up and funded an NGO, the Samta Samriddhi Foundation, to build one mini-system that would provide power to 2-3 surrounding villages at a price villagers could afford.  Gyanesh and Rathnesh figured that if the price were low enough and the reliability high enough, they could sell power and 1-2 lightbulbs to villagers who would be all too happy to give up their kerosene lamps.

Husk Power's systems use rice husks (that brown stuff) to generate power

In 2008, based on promising early results, Gyanesh and Ratnesh set up Husk Power as a for-profit company, and less than three years later Husk has installed and is operating more than 40 ultra-small systems that are providing power to more than 100,000 people, and Husk plans to grow to 5-10x their current size in the next few years.