Tag: storytelling

Why overhead ratios are meaningless for Kiva and Acumen Fund

~ Sasha ~ 8 Comments

Matt Flannery, the CEO of Kiva, wrote an excellent post on nonprofit overhead over on the Social Edge blog.  Kiva has been a game-changer in the poverty alleviation space: they use Kiva.org to connect donors to microfinance loan recipients in the developing world.  What’s important is the loan part — rather than getting a grant the borrower has to pay back the microfinance organization, which in turn pays back the funder.  Conceptually, this is similar to Acumen Fund, where I work – we raise philanthropic donations and then make debt and equity investments in enterprises that serve the poor in the developing world.  When we’re paid back, we recycle that capital into new investments.

One of the challenges that Acumen Fund and Kiva both face is that our models – focused on innovation, accountability, investment, and better leverage for each philanthropic dollar – are in direct opposition to the traditional metrics that rate nonprofit efficiency.  This is because invested capital (loans and equity), unlike grants, don’t factor into ratio of “overhead costs as a percentage of total cost.”  It just stays on the balance sheet but is not part of the annual budget.

The conventional nonprofit wisdom is that “best in class” nonprofits will spend no more than 20% on “overhead,” breaking down roughly to 10% on fundraising and 10% on administrative costs.

As Bridgespan, one of the leading consulting organizations to the non-profit sector, reports, “Many organizations and their funders are locked in a vicious cycle in which nonprofits are pressured to under-invest in overhead and to under-report their true overhead costs, even when those costs are still below what their senior managers feel is needed.”  Worse still, Bridgespan reports that “The majority of nonprofits [75-85% they studied] under-report overhead on tax forms and in fundraising materials.”

If we’re going to break the cycle, we have to uncover how flawed the underlying logic is.  Here’s where the logic falls apart:

An example: Both the Grameen Bank and BRAC in Bangladesh are world-class organizations that have changed the lives of tens of millions of poor people (mostly Bangladeshi women) through the provision of microfinance services.  Both organizations were founded by visionary leaders upon whose shoulders my generation stands in our work to bring an end to global poverty.

Yet, if forced to choose, I would argue that Grameen had the greater impact on the world because Mohammed Yunus, Grameen’s founder, won the Nobel Prize.  This was a major marker that “mainstreamed” microfinance and allowed the world, and not just the development community, to understand that lending money to poor people could change their lives in new and exciting ways. The result was a huge influx of commercial capital, and significantly more growth in the sector – ultimately leading to millions more served.

My question is: in the 30 years prior to Yunus receiving the Nobel Prize, does it sound right to you that every meeting Yunus had with a world leader, a powerful donor, or a leading journalist would have been counted in Grameen’s “overhead” cost, as separate from the “program” cost of delivering microfinance services to Bangladeshi women?  Should Grameen have “stuck to its knitting” in delivering microfinance services and not wasted money on all the “overhead” of external communications and building a community of friends, advocates, advisors, and supporters, which ultimately led to a global movement in support of microfinance?  (and yes, I know it wasn’t all Yunus, but without him, I don’t think we’d be where we are today).

My point is: it’s not just a little wrong to try to separate out “program” from “overhead,” it’s an outdated (or maybe it was never right) mode of thinking that is based on the premise that nonprofits are primarily delivery mechanisms for pre-determined services.  In reality, nonprofits play an active role in shaping our collective understanding of how to solve important social problems.

And getting back to Kiva and Acumen…: There’s a whole new segment of hybrid organization – encompassing the likes of  Kiva, Acumen Fund, Root Capital, E+Co, Agora Partnerships, sitawi, and others – that deploy mostly non-philanthropic capital for social ends.  Much as we’d like not to worry about the conversation, people do often ask about “overhead ratios” when making philanthropic decisions.

In closing, here are four (more or less related) thoughts:

  • Until “social investors” like Acumen et al. can develop a common vocabulary to  assess how efficient and effective we are (or are not), we will be at a disadvantage in the philanthropic marketplace
  • The nonprofit sector as a whole would be significantly stronger, and better positioned to weather economic downturns, if nonprofits didn’t rely on annual funding cycles.  But raising money over 18 months to pay for costs over 5 years requires an upfront investment – one that will look “inefficient” based on traditional ratios
  • If you care about fundraising efficiency, ask how much it costs an organization to raise a dollar, not how much they spend in total on raising money.
  • Even when asking this question, take the answer with a HUGE grain of salt – raising money, teaching, inspiring people, changing attitudes, motivating people to act….there’s huge overlap in these activities. If you don’t agree, please read my NonProfit CEO Manifesto and let me know how we can all do this better.

Start with the punchline, please

~ Sasha ~ 2 Comments

I had two half hour conversations today that were completely upside-down.

In both cases I was talking to people I didn’t know very well, and I had agreed to (not set up) the calls.  Both people were smart, capable, and successful, which is what made the conversations that much more perplexing.

In retrospect, if I were to draw up an agenda for the call it would look something like this:

Minutes 1-2        Introductions and pleasantries

Minutes 3-15     Background information by the caller

Minutes 15-20  Discussion of potential synergies / overlap

Minute 21           By the way, I also called to tell you….. (the punchline)

Please, please, please, reorder this agenda and put the punchline upfront (in minute 3)!  Tell me why we’re talking at the start of the conversation.

For example, let’s say you’re having an informational interview.  Respect the time and intelligence of the person you’re calling and start out by saying, “I’m really interested in the sector you work in, and I’m trying to learn more about how I might transition from my current role.”  That’s so much more helpful than pretending you’re not looking for a job.

Similarly, if you’re trying to create a business partnership, why not lead off with, “So-and-so suggested we talk because, even though we’re in different lines of business, there’s a real overlap between the types of people who are interested in what we both do.  I’d like to explore that overlap, but first why don’t I tell you more about our organization so you have a little background?”

This sounds obvious, but so often people “bury the lead” of their story and lose their audience in the process.  This happens in presentations, emails, conversations, you name it.

No one wins if you drone on about all your thinking, your deductive process, your analysis, and then say, “So what this all means is…”  You’ve lost me by then.

Here’s why I think this is harder to do than it looks:

  1. People are sometimes nervous to ask for things. The padding up front is a great way to stall.
  2. Being direct, but doing it with grace, is tricky. If you want to ask for something, be direct, but don’t be so direct/blunt that you put someone off.  (and if your ultimate ask is for someone’s investment or their business, you don’t necessarily lead with that ask.  You start with asking for their time, attention and consideration).
  3. It ain’t the same every time. Doing this in the right way also depends on who you’re talking to, your relationship with them, their personality type, culture, etc.
  4. People confuse building rapport with sharing information. Building a rapport is very important;  but this is not the same thing as sharing a bunch of random information, which is potentially distracting without the right context.

When someone puts the punchline at the end, you find yourself having a whole conversation that communicates something like: “Ignore the man behind the curtain and pay attention to this semi-interesting, semi-distracting stuff I have to say first.  This will show that I’m smart and credentialed and doing important stuff, and it will make you more likely to accept what I’m asking of you once I get around to it.”

Sure, I’m interested in what you have to say and all the great work you do.  But the man behind the curtain is often the whole point, so let’s both acknowledge he’s there and get on with it.

If I know nothing about why we’re talking, think about how hard I have to work to make sense of what you’re saying.  While you’re going on about who you are, what your organization does, what’s been going on in the last three months, I’m sitting there trying to figure out “What part of this story matters?”

Pretty soon, you’ll lose me.

*          *          *          *          *          *          *          *          *          *          *          *

On the flip side, if you find yourself the victim of a buried punchline conversation, the time to perk up is when you hear ANY sentence that starts with:

“By the way…”

“Oh, and one other thing…”

“I’m not saying that…”

…or any other big disclaimer.

That’s the verbal billboard that screams: WHAT I’M ABOUT TO SAY IS THE WHOLE POINT OF OUR CONVERSATION!!

What stories do you tell yourself?

~ Sasha ~ 1 Comment

“I’m bad with computers.”

“I’m too busy to exercise.”

“I’m no good at math”

“I don’t really get…what a 401(k) is, how mortgages work, why people Twitter, what’s going on in Afghanistan, why people blog.”

….

Stories do more than describe the world.  They define it too. 

You get to chose the stories you tell about yourself. 

Want to change your life?  Change your stories.

You too can be Hans Rosling

~ Sasha ~ 1 Comment

If you’re interested in the visual presentation of information, you should already have seen Hans Rosling’s TED talk titled “Debunking third-world myths with the best stats you’ve ever seen” from 2006. If you haven’t, go check it out.

What’s incredibly cool is that Google docs will now let you create Rosling-inspired motion charts here.

So, for example, you could create a motion chart like this one that shows the relationship over time between the housing price index and the unemployment rate; or this one that tells something (I honestly can’t explain exactly what) about trends in the top journals.

To me, the lessons here are:

1. Hans Rosling is a genius AND an incredible story-teller

2. The fact that Google is making these kinds of tools available is just one more reason (along with free, simultaneous collaboration) that Google docs may just obviate Microsoft Office in 2-3 years’ time

3. Just because you have the tools doesn’t mean you should use them.  In truth, neither of the two examples I’ve linked to in this post passes my litmus test of making a clear story out of complex data.

Nevertheless, the tools are fun and worth exploring.  Enjoy.

Example of a motion graph on Google docs

What does the financial meltdown have to do with raising money?

~ Sasha ~ 1 Comment

What have I found most surprising about raising money for a nonprofit?  It’s that, when seen on the spectrum of “objective decisions” v. “relationships and trust,” most philanthropic decisions are made based on relationships and trust.

This shouldn’t be too surprising, but it belies the (appropriate) emphasis on measurement and impact assessment that is so preoccupies the nonprofit sector.  Put another way, many nonprofits care a lot about proving that what they do works, but they should remember that this kind of information does not drive many decisions about where to allocate philanthropic capital (for more on this, see the SSIR piece called “Why Measure” by Katie Cunningham and Mark Ricks, which essentially says that most individual donors do not look at nonprofit data, even when it is available.).

And here’s the tie-in to the financial meltdown.  Today I read an incredibly sobering article in the New York Times titled “From Midwest to M.T.A., Pain From Global Gamble” about school districts across the country that lost millions investing in complex financial structures.  In one example, the Whitefish Bay School district in Wisconsin, on the counsel of a financial advisor named David Noack, took $35M of its own money and borrowed an additional $165M from a bank called Depfa to invest in a synthetic collateralized debt obligation.  The district’s $200M was used as a type of insurance guaranteeing $20 billion of corporate bonds.  That’s right – $35M in equity to insure $20 billion in corporate bonds.  They leveraged up and were acting like a hedge fund, playing with the district’s financial future.  If 6% of the insured bonds went bad, the district could lose all its money.

What was the payout for taking on this much risk? $1.8M a year, versus $1.5M the district would have received investing in risk-free treasury bills.

Why did they do it?  Mark Hujak, a local financial advisor and member of the school board, said, “I never read the prospectus…We had all our questions answered satisfactorily by Dave Noack, so I wasn’t worried.”  The catch is, Mr. Noack was no expert.  He had, according to the article, “attended only a two-hour training session on C.D.O.’s”

The Whitefish Bay School district is one of scores of organization that are getting caught in this financial meltdown, which is why it will take a long time to unravel.  And the the truth is that the world has gotten so complex and interconnected that in many cases our only option is to follow the guidance of experts whom we trust.  Building anything big – whether a great nonprofit or, unfortunately, selling large swaths of risky CDOs – happens because one person trusts another, listens to their story, and puts their money behind that story. Without trust, you have nothing.

So whether you’re raising money or selling books or cars or (gulp) financing, recognize that the real currency you’re trading in is trust, and that earning, nurturing, and maintaining trust is really the only thing that matters.

And, by the way, if this is right, who do you want on the front lines talking to potential supporters – a “fundraiser” whose only job is to raise money, separate and insulated from “the work,” or someone who embodies the spirit, capability, execution, drive, motivation, and passion of your organization?

Obama and McCain repeating themselves

~ Sasha ~ 1 Comment

I’ve made every effort to steer clear of the Presidential race on this blog, but I couldn’t resist this one.

There’s no doubt that to tell your story to millions of people, you’re going to have to repeat yourself a lot.  But I’ve never seen this point illustrated quite so vividly.  Check out this mash-up of both Obama and McCain repeating themselves (over and over and over again) in the three Presidential debates.  Enjoy.

http://www.236.com/video/2008/watch_synchronized_presidentia_9857.php

(Oh, and please go out and vote next Tuesday.)

Johnny Chung Lee’s Wii remote hacks and the power of sharing

~ Sasha ~ 1 Comment

Johnny Chung Lee figured out a way to turn a normal computer display into a close approximation of a virtual reality screen.  He also knows how to create an interactive whiteboard – which typically cost more than $1,000 – for $60 in parts and a little software code.

So what does he do with this information?  He shares it.  His video about a computer display has been viewed more than 6 million times on YouTube.  More than 700,000 people have downloaded the software for making an interactive whiteboard, and a “Lego robotics club” of 5th graders (isn’t it great that such a thing exists?) built one in 4 hours.

Before you finish reading this post, do yourself a favor and DON’T file this away into the “computer geek” section of your brain (along with Linux, etc.).  Why can’t (and shouldn’t) this be the approach for all great innovation — especially in the nonprofit sector where resources are scarce?

Mr. Lee is quoted in yesterday’s NY Times asking, ‘”Would providing 80 percent of the capability at 1 percent of the cost be valuable to someone?” If the answer is yes, he says, pay attention.’

Imagine if every great innovation in fighting poverty, in hospital administration, in public schooling or early childhood education were open-sourced.  Wouldn’t we all be a lot smarter and more likely to focus our attention on models that work?

I posted a manifesto the other day making the same point as Mr. Lee: that the innovation, the insight, and the direct impact matter; and that sharing that innovation with others matters just as much.

I think I’m posting one of Johnny Chung Lee’s lines at my desk: “If you create something but nobody knows, it’s as if it never happened.”  Get out there and spread the word.

(And if you have 5 minutes to be amazed, watch Johnny Chung Lee’s demonstrations on the TED website).

The Body Shop: when stories fall short

~ Sasha ~ 6 Comments

[EDITOR’S NOTE: I’ve been given a serious factual correction by Michael, the Brazilian fixer who worked for the photgrapher on this shoot.  Please see his comment below.  Bottom line is he’s right and I was wrong in jumping to conclusions.

It turns out this girl is not a model, she is a person who works on picking nuts that supply the Body Shop in Maranhão, Brazil.  So I was wrong here – I figured she was a model and wove a whole story around that.

Personally, I still have some questions about this choice of image and the decisions around this campaign, but that doesn’t make up for the fact that I missed the mark on this one.  Thanks to Michale for the correction, and lesson learned for me that there tearing others down is not the right way to make a point.

I’ve edited my post somewhat.  I still stand behind some of the points, but more importantly I think it’s only fair to leave up what I originally said — lesson learned on this one, though.]

I’m beginning to think that outdoor advertising is the lowest rung on the external communications ladder.

Yesterday I came across this terrible ad.  Here’s a storytelling 101 suggestion: when you think your story is done, step back, look at it, and repeat it in 10 words or less to someone who’s never heard it before and who represents the people you are trying to reach.  See what they say; ask them if the story makes sense to them.

So what is the (very low quality…sorry) “hand selected naturally!” image trying to say?  Presumably that this woman had something to do with the hand selecting of the natural ingredients to your Body Shop products, and that this makes them more real, natural and authentic. [In fact she did, according to Michael’s comment, below.] Problem is, look at the woman — down to her designer short jean shorts and her $75 woven basket.

The image is so far off that it is borderline offensive.  There are hundreds of millions of people out there who make their livelihoods in agriculture, and I’m sure many of them sell to the Body Shop.  But somehow the Body Shop was unwilling to go all the way to authenticity in this campaign and with this image — finding actual Body Shop producers and telling their stories — and the whole house of cards comes crashing down.

The irony here is that people who buy at the Body Shop and who are passionate about the Body Shop  are going to notice exactly this kind of thing.  The brand was once about authenticity, natural ingredients, and our interconnected world, and it attracted educated consumers who likely care about things like the environment, the well-being of producers, and poverty in the developing world.

I guess it’s not surprising that this once-authentic brand has gotten so watered-down within L’Oreal that it’s lost all of its distinguishing charateristics — and the passionate followers who once made this brand great are gone as well.

“Presentations” are Stories Too

~ Sasha ~ Leave a comment

A lot of people have trouble with PowerPoint presentations.

The first problem isn’t with the slides.  The first problem is that people think that “making a presentation” is something other than storytelling, and that their goal is something other than connecting with the audience.  Do yourself a favor: the next time you have to “present” something, DON’T start with a blank page in PowerPoint.  And don’t start with a few slides that you have pulled together for some other purpose.

Instead, take out a sheet of paper (or open a Word document), figure out what you want to say, and write it down.  Keep it simple and stick to the main points.  Make sure someone who hasn’t been elbow deep your work would understand and care about what you’re saying. Avoid acronyms and abbreviations.  Give specific examples.  Use anecdotes.  Tell stories.  Share of yourself.

Once you’ve figured out what you want to say, start writing slides.  Use pictures.  Don’t write out full sentences.  Take most of what you want to say and put it in the notes section as a script.  Then learn the script.

If your slides would make sense without you presenting them, then they’re not slides, they are handouts.  These are two very different things.

If the presentation matters, practice giving it a few times before the big day.  The point is for people to listen to you.  The slides are supporting you and the story, they are not the main attraction.

There’s a lot out there about making good PowerPoint slides, and a lot of it is instructive.  But no amount of slide-making wizardry will help you if you don’t know what point you’re trying to get across, what story you’re hoping to tell.

What have you noticed lately?

~ Sasha ~ Leave a comment

A friend just shared this fascinating conversation on the AIGA website about noticing.  It touches on a few interrelated themes, but starts with the basic premise that it is important to be an “active noticer” (my made-up term) in the world if you’re going to be an effective designer (and, I would argue, communicator and storyteller).

I’m seeing the importance of noticing coming up more and more.  You need to be an active listener if you’re going to be successful at connecting with people.  You need to pick up on peoples’ cues, the flow of their conversation, even their language (I’ve noticed this last point especially when speaking in a foreign language, and how one’s accent naturally adjusts depending on the person with whom you’re talking.  I’m pretty sure it happens in English all the time as well, it’s just harder to notice).  But more broadly, the more you notice in the world, the more informed, connected, and aware you are of your surroundings, both local and global.

Noticing is also at the core of the design thinking mentality of great design firms, and IDEO has worked closely with Acumen Fund (where I work) to help us think about and incorporate user-centered design in creating products and services for the poor.

What a radical notion: start with poor people, their habits and their preference, when figuring out how to design a product.  Take their opinions seriously.  It’s about listening and valuing what you’re hearing and seeing, and knowing that you as an outsider don’t have all the answers.  It’s also the opposite of how lots of poverty alleviation has been practiced by international organizations, like the World Bank (“Bring in the experts!”), for decades.

From the conversation at AIGA, Dan Soltzberg comments:

It reminds me a lot of the approach we take to being with people when we do fieldwork. In the field, you have to simultaneously drink all kinds of information in, and at the same time be active in guiding the interaction. There’s this tightrope walk between action and non-action, ego and non-ego. To move back and forth gracefully between these different ways of being requires noticing not just what’s going on around you but what’s going on inside you as well. It’s one of these things that sounds so simple, but really takes practice to be good at.

If you’re going to be an effective communicator and storyteller, you have to be good at noticing – it’s the source of your raw material and the fabric of your conversations.

I’m discovering that it’s also part of the value of blogging: it forces you to notice and really pay attention to the world around you.

What have you noticed lately?