Month: November 2016

Rip Rapson, the President and CEO of the Kresge Foundation, Joins Denver Frederick

The following is a conversation between Rip Rapson, the President and CEO of the Kresge Foundation, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

rip-rapson-20-2_webDenver: Transformation of any institution is difficult, particularly one as venerable and respected as The Kresge Foundation. Therefore, it’s hard to imagine a more dramatic shift in strategy and direction than has occurred since my first guest assumed the helm there some 10 years ago. He is Rip Rapson, the President and CEO of the Kresge Foundation. Good evening, Rip, and welcome to The Business of Giving!

Rip: Thank you, Denver, it’s a pleasure.

Denver: I’m sure some of our older listeners remember quite well the S.S. Kresge Department Stores — I know that I do. So before we get into the work of the foundation, tell us about Kresge stores and how this whole thing got started.

Rip: S.S. Kresge had a simple idea way back at the turn of the century, and that was to provide what we would now call a “drug store format” to move goods and to get people to a luncheon counter. Over the next 20 or 25 years, he slowly chipped away at this. It started in the Midwest, where it began to spread throughout the country. By 1924, the Kresge “five-and-dime” had become synonymous with small town retail, small town social activity. And it was where everyone went to get their Cherry Coke.

Over the next 50 years, it grew and it grew and ultimately transformed itself into Kmart. It’s hard to remember, but in the early ‘60s, Kmart was really giving Walmart a run for its money. Sam Walton often said that they felt that they were just within a couple of business cycles of being essentially put out of business by Kmart. Little hard to imagine today, but true. It got big enough… and it got successful enough… that the family and Sebastian’s son basically made the decision that they would get out of the business. They would sell their interest in Kmart, grab the money, put it in a trust, and create a foundation. So that’s how the Kresge Foundation was born in the late ‘60s, early ‘70s.

Denver: Great background! Well, moving to the Foundation, if I look at some of my professional scar tissue, much of it was earned early in my nonprofit professional career doing Kresge challenge grants. And if I may dare say, it was truly a painful process. And this is pretty much the organization that you walked into when you took the reins of Kresge back in 2006. Tell us about that process, challenge grants,  and how they worked.

Rip: Well, 20 or 25 years ago, the Kresge leadership team came up with the idea that not only should they support “building campaigns” — which they had been doing for the better part of a half-century… it’s really some of the first giving that Sebastian had done in the ‘20s, ‘30s and the ‘40s, but it was really sort of checkbook philanthropy.  But in the early ‘60s and ‘70s, it struck them that if they could actually use their money through greater leverage… if they could say to a building campaign, “We will give you a chunk of money, so that by the time you get your lead gifts in, by the time you get all your corporate gifts in–  and you really have to turn to your individual donors, we’re going to give you an incentive package essentially to get those donors online in the hopes that over the long term, that will really increase your stability and your sustainability.”

So the Kresge Challenge Grant was born probably 25 or 30 years ago. At that time, it was seen as this audacious, almost intrusive way of getting institutions to raise money. And again, it’s hard to remember that, because now, 20 or 30 years later, this is absolutely standard practice in the fundraising business of nonprofits. But for the better part of 30 years, Kresge would come in the middle of a campaign, put money on the table and say, “If you match this, we’ll free the money, and you can get across the finish line faster and with a broader donor base.”

Denver: It will be the “capstone” to this capital campaign effort. So, you arrived at Kresge in 2006 and you bring with you, Rip, a really interesting background and a breadth of experience. You worked in the public sector as a legislative aide to Congressman Fraser; were the deputy mayor in Minneapolis. You have private sector experience working as a lawyer and doing a lot of pro bono work and, of course, nonprofit experience having led the McKnight Foundation. So given this background, give us a sense of how you imagined some different possibilities for Kresge… and then how you went about introducing them.

Rip: It’s such an interesting question. If I can peel it away just a little bit, Denver. Because when I was first approached to talk to the Kresge Foundation–when they were looking for a new executive in 2005-2006– I said to the search firm that I wasn’t particularly interested. Kresge was such a familiar brand, and as you suggested: challenge grants were all they did — they were the bricks-and-mortar folks — and in many ways, they had refined how to do this within an inch of its life. It was really almost an algorithm. You would construct a gift chart with a certain number at the top, and a certain number in the middle, and a certain number at the base, and you would sort of push the numbers through that frame.  And if it came out the other side in a way that seemed to meet the standard, then we became an ATM machine, and the money flowed.

Denver: And it was the same for every institution, no matter what the sector.

Rip: Every institution. So if you were the Harvard Medical School… or a hospice in San Diego… or an arts organization in San Diego, it didn’t make any difference.

And there was something valuable in that it really helped refine and streamline a lot of fundraising operations in a lot of places.

Denver:Same algorithm.

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Aria Finger, Chief Old Person of DoSomething.org, Joins Denver Frederick

The following is a conversation between Aria Finger, Chief Old Person of DoSomething.org, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

aria_fingerDenver: Numerous studies show that Millennials entering the workforce place a higher premium on going to work for a purpose-driven company than do older workers. And in much the same vein, their choice of brands is influenced to a greater degree on the social good a company is doing. One reason they may be that way is because millions of them were once members of DoSomething.org.  And here with us this evening to explain is their CEO,or more appropriately, their Chief Old Person– Aria Finger. Good evening, Aria, and welcome back to The Business of Giving!

Aria: Thanks so much! It’s great to be here.

Denver: So, tell us about DoSomething.org– the mission and purpose of the organization.

Aria: DoSomething.org is the largest organization in the world. We’re a global organization for young people and social change. It is our entire purpose to get young people, aged 13-25, to find a cause they’re passionate about, and then take action with one of our campaigns.

Denver: Well, let’s talk about a couple of those campaigns, get right into it. One that I’ve always loved is “Give a Spit About Cancer,” probably also one of your more carefully …pronounced campaigns. Tell us about it. How does that work?

Aria: Well, Denver, “Give a Spit”  is also my favorite campaign, so you have good taste. It was a campaign that’s based on the fact that so many people need to get bone marrow transplants if they have blood cancer, leukemia, et cetera, and they can’t find a match. They might not have a match within their own family, and so they need to go to the kindness of strangers. “Give a Spit About Cancer” asks everyone– but especially college students because they’re the ones with the best bone marrow– to simply swab their cheek and get registered on the bone marrow registry.

Through this campaign, you can literally save people’s lives. Our Head of Product, Mike Fantini,  signed up for the bone marrow registry for our “Give a Spit About Cancer” campaign, and he saved the life of a 7-year-old boy from Texas.

Denver: Well, you’ve had over a hundred matches, haven’t you?

Aria: Absolutely. We’re actually one of the leading referrers to the bone marrow registry, and we are so proud of that fact.

The most important thing when you’re giving back is to make sure that you’re doing something that’s actually needed…

Denver: You have a great history also with homeless shelters. “Teens for Jeans” was one of the campaigns that you cut your teeth on, and that’s evolved even further into something called “Power to the Period.” Tell us about that campaign.

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David Levin, President and CEO of McGraw-Hill Education, Joins Denver Frederick

The following is a conversation between David Levin, President and CEO of McGraw-Hill Education, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

1448002996481Denver: When there is a discussion of how entire industries have been disrupted and radically altered, one that often doesn’t get included in that conversation is education. In fact, some fret that our classrooms and the way teaching and learning are conducted are quite similar to the way it was done 50, even 100 years ago. But in actuality, things are changing, and quite dramatically, and there is no one more on the cutting edge of that change and transformation than McGraw-Hill Education. And it is a great pleasure for me to welcome to the show their President and CEO, David Levin. Good evening, David, and thanks for coming in!

David: Denver, thank you very much.

Denver: You know there have been some significant changes in the ownership and management of McGraw-Hill over the last several years that everyone may not be familiar with. So let’s begin by having you tell us what they have been, and precisely who is McGraw-Hill Education.

David: So I think the story really begins just over three years ago. In 2012, the investors in what was McGraw-Hill, a very old, established company– a 128-year-old company– said that the education business was passé, and the board decided to sell it. It was considered, frankly, a bit of a basket case, and the company was put up to bid. A third-party bought it; an investor group bought it.  And that really provoked an opportunity to rebirth the whole company. So, we’re now a completely stand-alone, focused-only-on-education business, completely independent and separately-owned. Nothing to do with the other company, which is actually now called Standard & Poor’s. We’re just McGraw-Hill Education.

Denver: Very interesting. Well, tell us a little bit about that company, what you do, how it works, and the educational experience you’re trying to create for today’s student.

David: Well, as you’ve correctly said, the world of education has been… not quite in aspic… but very, very slow in evolving. And that’s not for lack of trying; it’s because it’s complex to change education. Parents themselves are not that keen necessarily for their children to have something radically different. So, there’s an innate sort of conservatism (with a small “c”) around how we do this. And, of course, you only get one shot at fifth grade, so having somebody gleefully tell you they’re about to experiment with your child is not going to promote a great teacher-parent dialogue.

Denver: Great point.

David: People want confidence as they go into this. We’ve embarked on this very much saying, “Look, we can see that there is a whole range of things which can come.” And in the last few years, we’ve put a lot of energy and effort into: How do we create a software that supports learners and educators?  And the educator’s bit is very important, and I know we’ll come back to that.

If we think about the way that people learn:  people learn by trying things, by experimenting with things, and by actually trying and failing. Much of the education system is unfortunately aligned so that people are too scared to fail.

But to an educator, the understanding of where somebody is struggling in a very specific way… not they’re struggling with this concept as a whole, but here’s the individual step in the maze where they keep stumbling… allows the teacher who’s great to intervene and make a difference.

Denver: What does this software do? One thing that I understand, David, is that it creates feedback. So how does that feedback work for the student?  And how does that feedback work for the teacher?

David: That’s the key point. If we think about the way that people learn: people learn by trying things, by experimenting with things, and by actually trying and failing. Much of the education system is unfortunately aligned so that people are too scared to fail. You only need to think about the big summative assessments, the end of period tests that people do. It’s victory or death.

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Abby Falik, Founder and President of Global Citizen Year, Joins Denver Frederick

The following is a conversation between Abby Falik, Founder and President of Global Citizen Year, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

event_126387322Denver: Many of us who went to college look back at those years as some of the best days of our lives. But today, that isn’t necessarily so for many young adults who enter freshmen year: exhausted, stressed out, uncertain about who they are, and what the future will bring. So, we can continue down that road without a second thought, or take a moment and wonder if there might be a better way. That is what my next guest did. And lo and behold!  She may just have found that better way. She is Abby Falik, Founder and President of Global Citizen Year. Good evening, Abby, and welcome to The Business of Giving!

Abby: Thank you! Delighted to be here.

Denver: So tell us about your organization, Global Citizen Year, and what it does.

Abby: Global Citizen Year is on a mission to reinvent the “gap year” between high school and college as a launch pad for global citizens.

I found it ironic that we send a million 18-year-olds into military service every year to defend and protect our values overseas.  But where was the civilian opportunity for somebody at my age and life stage to have a deep, immersive experience in another part of the world, with the intent of bringing those perspectives and values back home?

Denver: Now you got this bee in your bonnet to start this organization– or at least something like it– during your senior year of high school.  You wanted to take a year to do something constructive with your life before starting college.  So you started looking. What did you find?

Abby: I finished high school like so many kids today: exhausted, burnt out, and hungry to have experiences outside of the classroom. I remember vividly picking up the phone book and calling the Peace Corps and being told, “Go to college! We’ll see you in four years.”  You needed a college degree to join the Peace Corps, and you still do. And even at that time, I found it ironic that we send a million 18-year-olds into military service every year to defend and protect our values overseas. But where was the civilian opportunity for somebody at my age and life stage to have a deep, immersive experience in another part of the world, with the intent of bringing those perspectives and values back home? I couldn’t find an opportunity like Global Citizen Year, and literally ever since, I have been fixated on what it will take to make this “the new normal” in American education.

High school has become a high-stakes game to get into college, and experimentation and failure and exploration are not on that checklist.

Denver: Fantastic. Well, let’s take a look at some of these high school seniors as they’re heading off to college. What is it like for them? How many of them are going to graduate? How long is it going to take them? (more…)

Kathy Spahn, President & CEO of Helen Keller International, Joins Denver Frederick

The following is a conversation between Kathy Spahn, the President and CEO of Helen Keller International, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

kathyatopblackfacemountaincoloradoaDenver: It is hard to imagine a more inspirational figure over the course of the last 125 years than Helen Keller, who said, “Optimism is a faith that leads to achievement. Nothing can be done without hope and confidence.” And the organization that bears her name absolutely proceeds with hope and confidence as it strives each and every day to live up to the very high bar that Helen Keller set. It is my pleasure to welcome to The Business of Giving the President and CEO of Helen Keller International, Kathy Spahn. Good evening, Kathy, and thanks for being with us tonight!

Kathy: Thanks very much for the opportunity to talk about our work.

Denver: Before we get to your work, tell us about Helen Keller. I didn’t really fully appreciate the extent of all the things that she was involved in and what a champion she was for so many different causes.

Kathy: She was a remarkable woman. And it’s true that people think of her as someone who was blind and deaf and define her by that.  But let me back up. She was born in 1880, and when she was born, she could hear and she could see. At about 18 months of age, she got very ill, and no one really knows what it was. It could’ve been scarlet fever; it could’ve been meningitis.  But as a result of the illness, she lost her sight, and she lost her hearing.

I think the world probably knows the story of her working with Annie Sullivan, a remarkable teacher and friend to her, who taught her how to speak, how to say “water” the first time she put her hand under a water pump. But I think what most people don’t know is that Annie Sullivan herself went blind. She went blind from a disease called “trachoma” that we’ll probably talk about later. It was a disease that existed in this country back in the 1950s and that we’ve conquered, but it still exists in other parts of the world. So Annie Sullivan herself lost her sight.

Helen Keller was a champion for anyone who is disadvantaged. She felt that nobody should be denied opportunity: because of a disability, because of religion, because of where they were born, who their parents were. So she was a big fighter for social justice, and there are many more dimensions to her than most people realize.

Denver: Helen Keller was also a real champion for social justice, beyond those who were blind and who were deaf.

Kathy: Helen Keller was a champion for anyone who is disadvantaged. She felt that nobody should be denied opportunity: because of a disability, because of religion, because of where they were born, who their parents were. So, she was a big fighter for social justice, and there are many more dimensions to her than most people realize.

Denver: Absolutely ahead of her time. Well, you celebrated your centennial anniversary last year– 2015.  The predecessor organization, that is Helen Keller International today, began in a most interesting way. Tell us how this whole thing got started.

Kathy: We got started because of the sinking of the Lusitania. There was an American wine merchant and philanthropist named George Kessler, who was also known as the “champagne king.” He was known for throwing very extravagant parties where he would take over hotels and redo them to look like what a Las Vegas hotel looks like now.. He was on the Lusitania when it sank. As he was in the freezing cold water, holding onto a plank of wood, he made a pact with his God that if he survived, he was going to help his fellow man. He did survive. He woke up in a hospital in Paris and he said, “Okay. I want to help soldiers from World War I.” He knew a lot of soldiers had been blinded from mustard gas, so he said that’s where he wanted to start. So he reached out to Helen Keller to join him in setting up this organization. We were actually founded in Paris, and we were called the “Permanent Blind War Relief Fund for Soldiers of the Allies.”

Denver: Now that’s a mouthful.

Kathy: Not a name that rolls off the tongue.

Denver: And then a couple of years later, he passed away, and William Cromwell, who was a founder of Sullivan & Cromwell, stepped in.

Kathy: Yes, he did. And because of that, we always have at least one, if not two, partners from Sullivan & Cromwell who serve on our board of trustees. So they continue to be very good partners and friends to Helen Keller International.

Denver: And Kathy, when did the organization adopt that name, Helen Keller International? (more…)

Vu Le of Rainier Valley Corps Joins Denver Frederick

The following is a conversation between Vu Le, the Executive Director of the Seattle-based Rainier Valley Corps, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

 

cslymusumaadmqyDenver: The work that we do in the nonprofit sector is very serious work. I mean very, very serious. And as a result, we take ourselves a little too seriously at times…in fact, almost all of the time. One person who recognized that  we need to laugh a little at ourselves and some of the predicaments of the sector… while also making some serious points along the way through his humor… is my next guest. He is Vu Le, the Executive Director of the Seattle-based Rainier Valley Corps, and the author of the wildly popular blog Nonprofit With Balls. Good evening, Vu, and welcome to The Business of Giving!

Vu: Good evening, Denver. Thank you for having me.

Denver: I am sure that the first question you were frequently asked by many people about your blog is:  Where did the name Nonprofit With Balls come from?  But since we want people to stick around and listen a little bit, I’m going to make that the last question this evening. But reading your blog, which posts each and every Monday morning, has really become almost obligatory reading for so many people who work at nonprofit organizations.

Vu: It is for my staff.

Denver: There you go. Tell us about it, and what you’re trying to achieve with it.

Vu: I think, like you said, we have a lot of serious issues, and we don’t really focus on all the cool things that people are doing. We actually have a lot of hilarious people in the sector, but oftentimes what we see in the media are the really heavy things — poverty and homelessness –and I think it shortchanges the people in our sector who are diverse, who are funny and talented.  And there are amazing artists and comedians, and I just wanted to feature some of the lighter things in the work that we do.

Denver: Well, you go on some absolutely great riffs on so many different subjects that we have to deal with — whether we lead or work for a nonprofit organization. One of them has to do with restricted giving by donors. First, tell us how restricted giving works, and then some of the difficulties that it presents to a nonprofit organization.

Vu: Restricted giving is when you give someone some money, either grants or donations, and you say, “Well, with this money that I’m giving you, you can only spend it a certain way. I don’t want my money to be used on rent, or electricity, or something like that.” It causes us to spend a lot of time trying to Frankenstein bits of money first of all, and then trying to determine who is paying for which part… of which program… under which phase of the moon. And I think a lot of us in this sector are spending way too much time doing that, and it can get frustrating and distracting from the work that we do.

The metaphor I would use is:  Imagine we had a bakery, and a customer goes in and says, “How much does it cost for this cake? I want to buy a cake for 20 gluten-free veterans.” And we say, “Well, it’s going to cost $100 to serve 20 gluten-free veterans.” And they say, “Well, that’s great! OK, here’s $20 because I don’t believe in buying 100% of any cake. You have to go and find five other customers.” And we say, “OK. We’ll find four or five other customers who care about gluten-free veterans, and then I will make this cake.” “OK. Well, here’s my $20, but with this $20, I don’t want you to buy more than one egg and one stick of butter, and I don’t want you to spend any of this money on vanilla because that does not align with my priorities. I don’t want you to spend any of this money on electricity for the oven because that does not directly benefit gluten-free veterans.”

So we spend all of our time just trying to figure out who is paying for the eggs… and who is paying for the butter.  And then the oven thermometer may be broken, and no one wants to pay for that because it doesn’t directly benefit gluten-free veterans. At the end of it, it’s the veterans who get screwed because they’re going to get this cake– that may not be as good– because we’re spending all of our time not baking,  but trying to figure out who’s paying for what. And then they get fruit again for dessert, and no one should be eating fruit for dessert.

Denver: You know, that is a ridiculous story. But I can’t even begin to tell you how true it rings. When you bake that cake without the vanilla and the butter, they don’t like the cake, and they won’t buy another cake from you, right?

Vu: And then they say, “You don’t have baking capacities. So we’re not going to buy another cake from you.”

“Overhead” are critical things that we need.

Denver: Yes. It’s less strange than it really seems, but that’s exactly what goes on so often. You’re not a big fan of being beat up or seeing others take it on the chin because nonprofits are spending money on overhead… instead of helping those people in need. How would you frame that issue?

Vu: I think this whole argument on overhead is a distraction. It’s a red herring. It’s actually really destructive to the work that we’re trying to do. “Overhead”  are critical things that we need. We can’t do our work without rent… and chairs that work… and computer programs. I get really frustrated because some of the stuff that’s considered overhead are things that we are required by law to do. For example, financial management. That’s overhead. Some funders want an audit. That costs like $10,000 for many nonprofits. That’s also overhead. Or, we have to do an evaluation to figure out what outcomes we are achieving. We have to hire people to do consulting around evaluation work, or we have to spend some time collecting data– survey data– or do focus groups on how this program has helped people. That’s also overhead. We also have to get money to pay our staff. So, we have to spend money on fundraising so we can keep our programs going. That’s also overhead. We have to supervise our staff so they know what they’re doing and they feel supported. That’s also overhead. You have to report to funders. That’s also overhead. All of this stuff that’s required that we need to do, that’s all overhead. And so all of us are now trying to figure out how to do all of this work without spending as much on overhead.

There is a disdain in this sector about spending money on people…Ninety-nine percent of the stuff that’s being done by the nonprofit sector is done by people, so we should be spending a lot more money on people in the sector.

Denver: Especially people. We don’t want to spend money on people.  

Vu: There is a disdain in this sector about spending money on people. I actually talked to funders who say, “I want to support your program, but I don’t want to pay people’s wages.” And I’m thinking, “Who do you think is going to run this program? Do you think elves or unicorns are going to just appear and run the program?” Ninety-nine percent of the stuff that’s being done by the nonprofit sector is done by people, so we should be spending a lot more money on people in the sector.

Denver: That may explain a bit. But when people go to your site, they’re going to find it is absolutely littered with unicorns.

Vu: There’s a funny story. I got my Masters in Social Work, and no one would hire me. This is after I disappointed my parents and brought shame to my ancestors by going into social work. And I could not find a job because I had no experience. But I found this freelance writing gig– writing for a company that produces card games that was aimed towards girls from the ages of 5 to 12.  They have these magical unicorns. You would go and buy a card, and then you would take these cards, and you go to the website that they created.  You enter in the code into this website that you find on the card, and you unlock a magical pony. And you take that unicorn around, and you talk to other unicorns. You go on these little quests, and you grow things, and you learn about friendship and compassion and stuff. And I wrote some of the dialogue for these horses.

It made me realize that we’re the ones who are going around teaching people about friendship and community. We’re the ones growing things in the community. We’re the unicorns that we’ve been seeking. That’s us. And sometimes, like I said, funders and donors expect us to do things– using magic and wishes, and not funding.  I think that’s kind of where the unicorn thing is. We’re always expected to be magical, to make the world better with limited funding.

We need to be investing in our staff who are qualified, and make sure that they’re happy because that is directly related to what they can accomplish… and the quality of the programs we can deliver… by having more and better overhead to a certain degree.

Denver: That’s right. I think this whole thing about overhead has led to this truly dishonest conversation between organizations and funders. Because what we do to cobble our numbers…which we’re kind of making up along the way anyway… to keep our administrative costs down, and to keep our fundraising costs down… is absolutely bizarre.   I think the more enlightened people in the donor community realize that what we’re saying is not true– that the administrative costs have to be higher– but we’re forced to play this stupid, silly game.

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Randall Kempner of ANDE Joins Denver Frederick

The following is a conversation between Randall Kempner, Executive Director of Aspen Network of Development Entrepreneurs or ANDE, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

randalDenver: In the United States, when politicians and economic thought leaders discuss getting the economy going again and creating jobs, what do they talk about? That’s right; small business. That is where all the job creation is coming from, they tell us. So, it only stands to reason that the best way to create jobs and build economies across the globe –especially in less developed countries– is through small and growing businesses. And one organization that is dedicated to making that happen is the Aspen Network of Development Entrepreneurs or ANDE for short. And joining me now is their Executive Director, Randall Kempner. Good evening, Randall, and welcome to The Business of Giving.

Randall: Denver, it’s great to be here.

Denver: Tell us about ANDE, how and why you were founded, and what you do.

Randall: Thanks. So ANDE basically was created because its founders wanted to find a way to help millions of people in developing countries lift themselves out of poverty. Essentially, what we want to do is to create a movement like “microfinance,”  but aimed at the next level up. So we’re trying to help small businesses–those that are led by growth-oriented managers– to get access to the money, to the technical assistance, to the training, to the talented people that they need in order to thrive in the developing countries around the world…  ultimately creating jobs… and addressing social environmental issues that the poor face in hundreds of countries around the world.

Denver: How would you define a “small and growing business?”

Randall: So first of all, let me apologize to those of you who don’t want to hear another DC- created acronym, but the “SGB” we thought was important to create as a term and to adopt. Because it is the segment of small and medium enterprise…which is the term of art… that represents businesses that are seeking growth capital between $20,000 and $2 million, and are explicitly led by growth-oriented managers. These are the small sub-segment of “SMEs” that actually have the potential to grow and create those jobs and those social impacts that we’re looking for.

Denver: And ANDE would be what they call an “intermediary organization.” What is that,  and how do you operate?

Randall: Yeah.  We’re basically an industry association, to put it in simple terms. We have 262 members as of today.  And like any industry association, we do two big things: we try to help our members be more effective at what they do;  we try to grow the industry.

Denver: What kind of members, and who are some of your members?

Randall: The idea is that our members would reflect the full ecosystem of players that are relevant to helping entrepreneurs in developing countries. So what does that mean? It means we’ve got development agencies like USAID and the World Bank. It means we’ve got big corporations like Citi and Shell. It means we’ve got dozens of impact investing funds. We’ve got multiple multiple dozens– over a hundred– of capacity development organizations. These are like business accelerators and other technical assistance groups that are helping these businesses directly in emerging markets. We also have foundations; we have universities; we have research institutions. So collectively, we’ve got information; we’ve got training; we’ve got financing; we’ve got technical assistance. If you’d offer one of those things to entrepreneurs in emerging markets, you might be an ANDE member.

Denver: That’s quite a breadth!  The Aspen Network of Development Entrepreneurs is part of the Aspen Institute. Just give us a word about the Aspen Institute and how your work connects with them.

Randall: The Aspen Institute is a 60+ year-old institution based in Washington whose basic mission is to promote a better society. It’s really that broad, and in that context, the Aspen Institute does a whole series of things– from leadership development programs to our big highlight festival: The Aspen Ideas Festival, which is out in Aspen, Colorado. And then 30+ policy programs that literally run the gamut– from promoting investment in the Middle East, to trying to address poverty in rural areas in the United States, to promoting youth engagement.  One of those 30 policy programs is ANDE, the Aspen Network and Development Entrepreneurs. So, we are part of the Aspen Institute in that way.  But like all of the policy programs at the Institute, we are quite independent and autonomous and responsible for raising our own money. It’s actually a great place to be based– a lot of independence, but access to an array of brilliant people and ideas.

I personally think that there’s still a role for government support, and we need strong government entities in emerging markets…

Denver: That’s great. I think that the interest in supporting these social businesses and finding market-based solutions to solve problems has been driven, in part, by those who are frustrated with this international development enterprise. What have those frustrations been?

Randall: Yeah. As ANDE was being formed, there were a couple of popular books: one was called The Aid Trap;  the other was called Dead Aid.  So, you get the sense of what was going on.  I think there was legitimate… and is… legitimate frustration that the traditional development community had not embraced private sector development– had not embraced market-based approaches to development sufficiently.  Part of that was because you looked at the history, and you saw lots of cases where money was being given directly to, loaned to, or sometimes invested in government entities without thinking enough about how that actually gets translated into impact on the ground– to the individuals in the families that we’re trying to help. And so ANDE was created in that  era and ethos saying: “You know what?  There are some other approaches that we need to try.” And I personally think that there’s still a role for government support, and we need strong government entities in emerging markets…

Denver: Right.

Randall: …That’s key!  But I also feel… critically… that entrepreneurship, in particular, is a development strategy which has definitely not been fully leveraged.  And ANDE exists to try to push more organizations to get involved in that.

You, as the investor, need to intentionally be saying: “Ah! I am making an investment in company X because I hope that I will get a 5% return, and I will see the reduction of carbon by X millions of tons.

Denver: This entrepreneurship and these social businesses– what they’re going to need at the end of the day, is investment, and that specifically would be impact investing.   I was over at the Clinton Global Initiative recently, and I was speaking to someone about impact investing, and that it hasn’t perhaps lived up to its hype.  They felt that one of the reasons for that is that it kind of got muddled somehow. So, let me ask you to give us a clean and clear definition of what impact investing is. (more…)

Dean Karlan, Innovations for Poverty Action and Impact Matters

The following is a conversation between Dean Karlan, Professor of Economics at Yale University, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

dean-karlanDenver: In the world of philanthropy, people are constantly debating which social innovations work and which ones don’t based on theories of change and stories and other such things. These conversations can go on and on and on, sometimes endlessly. But one person who quietly excused himself from that conversation, and instead went out into the field to test different approaches– to actually find out what worked and what didn’t– is Dean Karlan, a Professor of Economics at Yale University.  He is the founder of not one, but two organizations: Innovations for Poverty Action, and more recently: Impact Matters. Good evening, Dean, and welcome to The Business of Giving!

Dean: Hi! It’s good to be here.

Denver: There are 2.7 billion people in the world who live on $2 a day or less.  Getting them the right programs with the greatest impact is at the heart of Innovations for Poverty Action, or IPA. Tell us about IPA and exactly how you go about doing this work.

Dean: Sure. Let me tell you two things.  You opened up with a perfect explanation of how we got to be doing what we’re doing– just long debates that are very far from the field…distant from people… about “Does aid work?” Those debates were very frustrating to listen to and also were very void of the hard data from just good, clean, simple tests on the ground to find out: “Does this particular policy in this country work?”

So what we did is, starting about 15 years ago, started going into the field and setting up randomized trials to just test very specific programs.  That gets you very good answers, very clean answers, to very specific programs. And then when you see a collection of evidence from lots of places, then you can start making some grander statements about policy. But at no point are we ever going to get to an answer to the question: “Does aid work?” because the answer is really very simple.  Sometimes it does, and sometimes it doesn’t. So the challenge is not answering that question, but just rather figuring out what are good policies to do.

I started Innovations for Poverty Action in 2002, and the basic goal of IPA was twofold. One was to help create those projects…to make those projects happen, and make them happen well. So we were the in-between – between:  organizations that wanted to find out whether what they were doing was working; researchers who wanted to help answer that question; and donors who wanted to be able to fund the projects and find out whether they’re working. And so we were the organization that was on the ground helping make that collaboration take place.

The second part of what we do is communicate those results to the outside world.  So the lessons aren’t just useful for the organization that’s doing the project, but actually helpful for other people elsewhere to learn from these ideas, and find out for themselves what might or might not be good ideas for them to try as well.

Denver: Yeah, if you don’t get this research into the hands of the policy makers who actually can act upon it, it really doesn’t do a heck of a lot of good.

Dean: Absolutely not.

Denver: So let’s talk about a few of the things that you’ve researched, and I’ll give you three or four examples, and let’s see how it goes. Suppose I am very passionate about education in Kenya, and I want children to spend more time in school.  What’s going to be most effective?  Build a new school?  Offer scholarships?  Buy school uniforms? Or perhaps purchase new textbooks? Which one works best?

Dean: This is a perfect example of why we set up these kinds of tests, because these all sound like good ideas to me. They all have some plausible, theoretical underpinning to it as to why that might unleash an obstacle that was preventing people from sending their kids to school. But how do we know which one is really actually the best one or not? We can go to the ground and set up some tests and find out.

Some of those exact studies you just named were started by Michael Kramer. He did this actually when I was in graduate school. He was really the pioneer that started taking these tests to very specific questions like this. What he found in that exact context was that a lot of children were not attending school because they were sick.  And they were sick because of intestinal worms. So, a very simple pill for $0.50 which clears the child of intestinal worms was a very cost-effective approach for getting the child to go to school. Because once healthy, they then attended school.

So this program now is in some sense a great example of the process of doing a careful test– finding out that something works, and something is cost-effective, too. And not just that the benefits are there, but that they’re actually… for a dollar spent…creating more benefits than other alternatives. And then, we took that idea and ran with it to donors and governments to help show them:  If this is a problem in your country–intestinal worms and low school attendance– then here is an approach to try to deal with that. And we’ve now seen over 100 million children dewormed through programs that we’ve coordinated. We’re very excited at the impact that this particular research has had on policy, and that our efforts in advocacy have had to help that bring that lesson to India and Kenya and other countries.

(more…)

THE BUSINESS OF GIVING VISITS THE OFFICES OF CECP!

 

The importance of corporate culture is overlooked by too many nonprofit organizations. Their belief that the mission and cause is enough to motivate employees is misguided. There are a number of nonprofits, however, who understand this and have invested time and resources to develop a robust and healthy work culture.

Better Than Most is a feature of the Business of Giving program that examines what makes these places so darn special. We kick off this series with my visit to CECP –The CEO Force for Good. In the podcast below you will hear from the staff on what makes for a healthy work environment.

One of the most important things they address is Clarity. Culture is simply clarity magnified….from the shared stories of why Paul Newman help found CECP to how everyone in the organization has a stake in the outcome of their work. There is a crystal clear and concise sense of expectations, priorities and accountability. When an organization has that they minimize the chance that confusion, chaos and internal sniping will occur.

Listen to this and the other observations made by the exceptional staff of CECP. My thanks and gratitude to those who participated: Daryl Brewster, Sara Adams, Jessica Albano, Jinny Jeong, Erin Peirson, Andre Solorzano, and Lauren Kahn.

Transcript

Daryl: I think CECP, the Corporate Force for Good, really plays at a powerful intersection between where business is and for-purpose or nonprofit organizations are. Founded by Paul Newman, the actor/salad dressing maker and leading CEOs with the belief that business can and should be a force for good in society.

Jackie: I have never had a chance to work for any company, nonprofit or for-profit that has been so concise in what is expected of us–from deliverables and priorities to just a general sense of the attitude that you bring to work. That is extremely helpful in knowing what I need to do to be successful at CECP. The sense of accountability is also very concise: you know what you are suppose to do everyday, you what you need to do and how to get there. But you also know who you can talk to if you need help. And you know that you have to be a responsible person. Things in that other people holds you responsible to deliver on.

Andre: I was having a discussion with my best friend and he’s looking for a new job because one of the things he’s totally hating at the place where he works is that he doesn’t know what’s going on at his company. He doesn’t really know what are his supervisor’s goal or what’s the roadmap–that doesn’t create any sense of stability for him. So that definitely is not the case at CECP and I’ve mentioned to him we indeed have a weekly staff meeting which we can share our priorities, what everybody’s working on and ask for help if you need it. So that’s something that I really appreciate.

Sarah: In some of the other organizations I’ve worked at, you’re very much in a silo. You’re very much just working on your own team; not really sure what’s going on on another teams, but and it might be a product of communications where I’m on that team. We have to know what’s going on in every other team, but we do really a good job of not only the Monday team meetings but we do quarterly planning. We do an annual retreat. We’re thinking about the big goals of the company together. We’re all very invested in the strategic planning of the organization. We understand the mission and the vision.

Lauren: I would say that I’ve really, out of everywhere that I’ve worked, I’ve had the chance to blossom here. From the work life fit balance that we have, from having the freedom to be able to discover new projects and also the myriad of opportunities to explore professional development. Programs has really changed me and turned me into a really well-rounded professional and I’m so happy to be a part of the organization

Erin: What do you brag about? I think the single biggest thing that I can brag about is being able to rub shoulders with people like the President of the Ford Foundation or the CEO’s of Walmart or UPS. I’ve never thought that I would have that kind of opportunity and it’s fun to be able to talk to a friend who works for that company and say, “I’ve met your CEO”. So it’s a real testament to the importance and stickiness in CECP that we’re able to have these substantive conversations with some of these amazing amazing individuals.

Jinny: And what inspires me to succeed everyday. I believe that the confidence in what CECP is able to deliver in terms of our knowledge and our expertise in the field helps to insure that we’re being inspired everyday. We know that CECP is the only one that’s able to deliver specific data or specific knowledge. Harnessing the experience of the staff as well as our former interactions in our everyday communications with different companies. It’s that confidence that we’re the only ones out there who can excel, who could deliver, who can produce specific results that companies need.

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Also, hear my recent interview with Daryl Brewster, the President and CEO of CECP. CECP is a coalition of CEOs united in the belief that societal improvement is an essential measure of business performance.

In this interview from The Business of Giving, Daryl Brewster, CECP’s chief executive officer and the former president of Nabisco, discusses what influences companies’ decision on what causes to support. He also shares advice on how nonprofits and corporations can partner more effectively offers thoughts on the future of corporate social responsibility.