Ailian Gan | >140

Staying Involved in Social Impact beyond Wharton

As we second years approach graduation, I’ve been thinking a lot about this question and wanted to pose it to all of you: how will you stay involved in social impact beyond Wharton? 

Almost none of us will be entering the social sector in our first jobs out of Wharton. A good number of us took up social impact related internships last summer - in education, with social enterprises, with non-profits, in social investing, etc. The reasons I’ve heard for not going into the sector full time range from financial constraints to limited opportunities available to lack of clarity on career path. My own excuse? I came really close to taking an opportunity in social VC, but fell in love with startups (as any good VC should) and really wanted to help build a company. That, and I decided that pushing the frontiers on technology is a wonderful way to change the world. 

 So how can we stay involved in social impact? Many of us came to Wharton and joined WSI genuinely interested in learning how we can use our business skills to have some kind of positive impact. Hopefully in your time here, you’ve learned a little more about the social sector, how it operates, where the opportunities for intervention might be, and what the obstacles are. But if your experience has been anything like mine, there is a wide gulf between knowledge and action. You can know a ton about the sector and still have no idea where to start doing or giving. 

The thing is, it is not hard to help. Or at least look like you are helping. There are plenty of opportunities to write checks and plenty of ways you can volunteer your time. Many of us will work for companies that facilitate exactly that - volunteer one day a year of your time to clean up a park or re-paint a school or serve at a soup kitchen. The issue is that 1) that’s not terribly satisfying, 2) that’s not a particularly good use of your skills, and 3) your impact is questionable. (In the corporate case, I have long held that companies should take one day’s worth of employee salaries and donate that, instead of donating employees’ time.) You can do more and you should. 

So how do you stay involved effectively? Especially for those of us who want our professional lives to touch social impact more directly later in our careers, as social entrepreneurs or board members or philanthropists, what can you really do in the mean time? 

From discussions with friends, I have been collecting ideas. Here are some: 

1. Stay current on conversations in the sector. Not too hard when the sector is very active on blogs, social media, etc.
2. Strive to be an effective, deliberate donor, not a guilty one. Consider setting a giving budget every year, instead of giving only when people ask you for money. 
3. Invest the time to get to know one organization well. Help them in whatever way you can help - as a volunteer, fundraiser, board member, etc. 
4. If you’re in an 80+ hour week job, consider taking a few weeks off next year to do something like MBA Without Borders.
5. If you are in a corporate position, think creatively about how you could marshal your company’s resources to do good. 

Some starting points:

• http://www.taprootfoundation.org/
• http://catchafire.org/
• http://www.sv2.org/
• http://www.bridgestar.org/LearningCenters/BoardService/FindandJoin.aspx
• http://mbaswithoutborders.org/

I’d love to hear from you if you have thoughts / ideas / plans for staying involved in social impact post-graduation. Please share. 

Beyond carving out a couple hours a week to care, I think the real challenge is to think hard about what the world needs and what we can give to it. Nick Kristof is one of thousands of journalists. But where most journalists are satisfied to just report, Kristof has used his talents, his passion, and his platform as a journalist to shed light on issues, countries, people who don’t have a voice. Most of us will never be journalists, but by virtue of the platforms that we hold and will hold as we climb in our careers, there is more that can be done than we realize. No one needs to give you a job to change the world. From wherever you stand, you just need to do it. 

Thanks so much as always for reading. 

[I wrote this originally for our Wharton Social Impact mailing list. Cross posting here. Many thanks to the handful of friends who have indulged me in these conversations. Special thanks to @kathliu for the original chat over good food that sparked all this.]

Should non-profits put themselves out of business

I’ve thinking about non-profits that should go out of business. It started with Nancy Lublin’s post about why charities should have an expiration date. Then I came across Scott Case’s talk on how non-profits should design their missions to put themselves out of business. He says their missions should be:

1) Measurable - You need to know whether you’re getting closer to your goal or further away or if you’ve reached it.

2) Achievable - It must be something doable, however ambitious it is.

3) Time limited in some way - Goals need deadlines.

I see the merit of this approach. If your goal was to end polio, do it, then get out of the way. We should encourage accountability in the social sector by pushing people to think about the shut down condition. Imagine what the world would look like if your work is done and you’re no longer needed. Now work backwards and figure out what it would take to make that happen.

But as I tried to define what the shut down condition would be for various organizations (non-profits and social businesses), I couldn’t quite make it work. Moreover, for-profit companies would never think that way. For instance, no pharmaceutical company thinks, we’re going to sell drugs to all the people with a certain disease, and when we’ve eradicated it, we’ll stop. No, if you’ve got a good process going, you figure out how you can tackle other diseases. Stay relevant, get bigger, take on more. 

Then I tried to think about whether the non-profit or social enterprise’s goal should actually be the opposite of shutting down - become ubiquitous. If you’re an organization that aims to deliver an additive good (think books, knowledge) to as many people in need as possible, shouldn’t you aim to be as big as possible? 

Then I put on my social investor hat. Should we only invest in organizations that are additive? Or is it worth investing in organizations that eliminate as well? Should every organization that is additive aim to become financially sustainable (and operate as a for-profit) so it can scale and be as large as possible? Can you ever make a double- or triple-bottom-line investment in an organization that eliminates? Or is that type of organization necessarily not financially self-sustaining because it means throwing resources at a problem until it goes away? 

I’ve been going back and forth on all this, and so far I’ve come to a few conclusions:

- Many missions can be defined in both the positive and negative sense. Your goal can be to end disease, or your goal can be to provide good healthcare to as many people as possible. End illiteracy, or provide education. Two sides to the same coin. 

- The “non-profits should go out of business!” tagline is useful for getting attention (it got mine), but what organizations really need to do is become better at setting goals. You can set a great long term mission that is lofty and all but impossible to achieve. But on a more realistic time frame, such as every quarter or year, you should have targets that are measurable and achievable. Hold yourself to that deadline. Report them to your donors/investors. 

- Non-profits should not be forced to shut down when they reach their goal. They should be shut down when they’re ineffective. 

This is a thought-in-process topic, wanted to share this for a start. 

In lieu of thank you gifts, donate

Over winter break, in exchange for housing we made donations. We stayed at two apartments. At the first apartment, when the topic of rent came up, our host and friend suggested that instead of paying rent, we make a donation to a non-profit he wanted to support. He told us about a friend who works with a non-profit operating a network of schools in Honduras. We thought it was a great idea and were happy to make the donation. 

Donation as thank you gift
We liked this in-lieu-of-gifts approach so much that we decided to give the same “gift” to our friends at the second apartment. We knew they weren’t into “things” so we didn’t want to buy something they didn’t need. But we knew that they supported various causes. So we said, we’d like to make a donation on your behalf to a charity of your choosing. This turned out to be a gift they couldn’t refuse. It was a way they could feel great about accepting a gift.

Why people give to certain causes
I think a lot about how to make effective donations, so I used this gifting exercise to better inform my own giving. What motivates people to give to what they give? Should I borrow from some of these approaches? 

One friend picked a cause because he personally knew the person running the non-profit. So it was about supporting a friend as much as it was about supporting a cause.

The other friend chose a cause she was made aware of through her travels. She chose an organization that used satellite radio to deliver news in a country ruled by a military regime. With the internet blocked and other forms of media censored, satellite radio is one of the only ways people could get unfiltered information.

Technology as a cause
What do you call this satellite radio cause? It was such an interesting mix of human rights and freedom of speech and media and technology. I really liked that it had a technological component. It made me think, oh, this is like giving people Twitter! Ok, that’s a terrible analogy, but I got really excited about it. 

In (social) venture capital, we invest in the development of technologies that improve the lives of the poor. For some reason, it has never crossed my mind that on individual level, I can also direct my giving towards life-improving technologies. Individual, small scale philanthropy doesn’t just have to be about subsidizing the delivery of goods and services. (When you donate to clean water, education, healthcare, food, that is basically what you’re doing.) It is possible to make personal investments in technology that has impact. For a start, Omidyar’s portfolio includes an investment area called Media, Markets and Transparency, which includes Ushahidi and FrontlineSMS, both of which take individual donations. I am going to look out for more of these opportunities. 

So next time you have a friend who doesn’t need anything, consider giving the gift of a donation on their behalf. 

(See also: Charity Water on donating your birthday; Nick Kristof on gift rats for Father’s Day.)

Why we should be willing to fund non-profit overhead

I’d like to propose that we should be willing to donate to a category that usually gets sidelined: non-profit overhead. Overhead includes employee salaries, infrastructure, fundraising. The pioneers of the metrics movement have convinced us that we should ask, “What % of the amount donated actually makes it to the victims?” and that the higher the % of overhead, the more poorly run the nonprofit. This approach of wanting every last cent to go to the end recipient is misguided. Totally misguided. 

Sophisticated donors should be willing to pay for quality overhead. If we’re willing to pay top dollar for great management in our private sector companies, why are we so reluctant to pay our non-profit managers well too? Donating to programs, to end recipients, means that your end recipient gets a meal, books, clothes, clean water. Paying for talent can be a great way to stretch the impact of your donor dollars. Paying to get an amazing non-profit manager can mean the non-profit now has someone who can make program money go that much further and deliver that much more impact to that many more people. It’s encouraging to hear that Charity Navigator is finally trying to measure effectiveness instead of overhead.

To push the point even further, I think we should be willing to fund fundraising. Or rather, invest in fundraising. Dan Pallotta, one of the boldest thinkers in the non-profit space, compares fundraising spending in a non-profit to SG&A spending in a for-profit company. For-profit companies approach SG&A spending as an expense that helps them to scale their business and bring in more revenue. Why can’t non-profits think of fundraising spending the same way - as an expense that will help them get more donations to solve social problems at scale? 

Obviously there must be some balance between overhead and program dollars, and obviously we should only pay for efficient, effective overhead. But too often, donors are repulsed that their money goes to paying for any overhead. We need to change that mindset. 

[I posted this to a Wharton Social Impact mailing list. It’s a follow-up to Nick Kristof and Impulsive, Ineffective Giving.]

Nick Kristof and Impulsive, Ineffective Giving

Nick Kristof wrote a gutsy post in today’s NYT, challenging people to think more critically about their donations, instead of assuming that all causes are good causes. 

http://www.nytimes.com/2010/11/21/opinion/21kristof.html

I was recently asked what is the difference between being a foundation grants manager vs. a social investor. Aren’t you presumably picking projects for social impact in both cases? I said something about how the difference is -100% financial return vs. potentially 0-50% return. But seriously, I do think the financial dimension matters because it changes the way you think about impact, how thoroughly you conduct due diligence, how much you demand in financial and social performance from your investment or cause.

The question also made me think about the comparison when it comes to individual giving - what is the difference between being a donor vs. a social investor? For those of you who got $10 GlobalGiving gift cards recently through the Wharton Social Impact Conference*, I wonder if any of you had the same experience I did: I had no idea what to give to. I felt that as a social investor, as someone who claims to care about impact, I should have had a more well reasoned approach to this. 

Instead, my process was that I screened for causes that appeal to me emotionally or philosophically (education, healthcare, the arts, technology), and then I tried to pick projects I had at least heard of. I finally went with a brand name cause I had heard enough about (The Girl Effect Fund), but honestly I have no idea where my $10 is really going. Put a little more bluntly, I gave to a cause because they have a really slick video campaign. That was my proxy for non-profit effectiveness. Great. It might actually be a decent proxy for good, thoughtful leadership behind the cause, but I felt I could have done better. 

It was just $10, but if we don’t know how to give $10 effectively (whatever that means), how are we supposed to be better donors / social investors / philanthropists in the thousands and millions of dollars? 

Do use your GlobalGiving gift cards, if you haven’t already. As Mr Kristof says, the point is to encourage more thoughtful giving, not to discourage giving! And if you’re up for sharing what you gave to and why, I’d love to hear about it. 

(*I posted this originally to our Wharton Social Impact mailing list. Attendees of our recent conference got $10 GlobalGiving gift cards that they could donate to any cause on the site.) 

Volunteer work that doesn’t help people?

Me: I’m doing some volunteer work.
Saleswoman: Oh. Do you help old people or children or animals?
Me: (thinks: it’s a social enterprise that is launching a social stock exchange.) We… don’t help people directly. We sorta help non-profits that help people… 

I’ve had to explain all kinds of terminology over the summer - venture capital, social venture capital, social investing, underbanked, double bottom line. People I’ve spoken to generally have some basic understanding of finance or the social impact world. People remarkably have generally heard about social enterprises. This was the first time I was completely stumped. I just could not find a reasonable frame of reference that would have made sense to the saleswoman. 

I say all the time that I want business people (my b school peers) to get more creative about how their careers can have social impact. This conversation was a good reminder that I should pay more attention to all the non-business, non-social impact people out there who still think about volunteering in terms of soup kitchens and animal shelters. Most of the world has no idea what a social enterprise is. But all of them can be part of solutions too, so it’s important to communicate the ideas well to any audience. 

A better answer would have been something like…

Me: You know all the organizations that help old people and children and animals? They need money to do things to help these people. They get donations but sometimes that’s not enough. So we’re building something to help them have more ways to get more money so they can help more people.

Something like that. 

The double bottom line approach

“So why do we need a double bottom line approach to solve these problems?”

It was just another day at work where we envision the future and play devil’s advocate and other fun stuff like that. Nobody has actually asked me that before. I’ve been asked lots of questions around what my job at Core is all about, but nobody has asked why take a double bottom line approach to these social problems. Why not solve them with non-profits? Or why not solve them with single bottom line solutions?

My short answer is scalability and sustainability.

I think you need the for-profit structure to build financial sustainability into your business model. If you care about helping people and you’ve got a great solution, then you should want to have a business model that can reach as many people as possible. Too many social enterprises and non-profits that try to take a business-based approach are very limited in their reach. You need to be for-profit to get these products / services to really scale. We talk about “social impact.” “Impact” should imply scale.

My longer answer is about integrated decision-making.

I’m still trying to articulate what it really means to be double bottom line, so bear with me. The social impact discussion currently out there, at least the parts of it that I read, is still focused on tradeoffs. To get more social returns, don’t you need to give up profits? For some businesses and some social impact ideas, yes, this is probably true. There are a whole bunch of social enterprises that are attempting these hybrid type business models, where the for-profit arm subsidizes the non-profit arm. There is probably a place for them (I admit that TOMS Shoes is very cool), but that is less interesting to me.

I am most interested in business, traditional for-profit business, figuring out how to use their enterprise to do good. I am talking about a very high level of integration between the social aspect and the business aspect, so that you’re not even thinking about the two aspects separately.

What on earth am I talking about? My favorite example is Walmart. There are few enterprises more strictly business than Walmart. But in the last few years, Walmart has built social goals into the fabric of its business. It has made business decisions that achieve social goals – environmental goals in this case. Stores have been forced to cut energy use by some 20-30% over the course of 7 years. Did that have a huge positive impact on their bottom lines? Absolutely. Did it have significant environmental impact? Well, just look at how many stores Walmart operates.

Did they make that decision for profit reasons or for environmental reasons? I would say both. But I don’t think they necessarily think of it as checking two boxes. Somewhere in there, this is just one great business decision.

This is the kind of integrated-ness that I believe is the future of “social business,” to hijack Muhammad Yunus’s term. It’s all well and good that we have social enterprises and hybrid business models and non-profits introducing business efficiency. But I think the enterprises that will move the needle on the environment, on social problems will be the social businesses that are able to take all these very important goals and integrate them into their decision-making.

So… how do we get more operators and managers, more entrepreneurs and CEOs, more ambitious b school students to run enterprises as social businesses?