Innovation Leaders: 3 Questions for Non-profit & For-profit Innovation Leaders

By David Wilcox, ReachScale

Innovation Leaders: 3 Questions for Non-Profits & For-Profits

I returned home to Boston after a 10 day conference “intensive” – the Council on Foundations in Chicago, the World Healthcare Congress in Washington, D.C. and the Skoll World Forum on Social Entrepreneurship in Oxford – looking forward to a Patriot’s Day holiday to recover and enjoy a beloved Boston tradition, the Marathon.

Of course, that fateful day did not unfold as expected. During the week of grief and being asked to shelter in place that followed, I thought a lot about quiet heroes who run toward a blast, not away.

The suddenness and unexpectedness of that scene in Boston and the coming together of skill and courage to address life-threatening outcomes raised questions about the slow moving challenges where we need skill and courage to come together, many of which were showcased in Chicago, D.C. and Oxford.

From Money to Data: A Rude Awakening

Sessions with leaders from global and corporate foundations explored new avenues of innovation and collaboration to yield better outcomes. Lucy Bernholz, a Stanford professor speaking at the Global Philanthropy session, pointed out that while philanthropy has been managed by the rules of money in the past, in the next century it would be driven by the rules of data.

As I listened to Lucy Bernholz, I found myself thinking about a provocative piece from another leader in the foundation ecosystem, Clara Miller, which questions the basic assumption of what to measure with the data. In The World has Changed and So Must We, Miller describes the “rude awakening” of the post crash economy:

Decades of effort to bring the poor into the mainstream where “a healthy and growing labor market” would enable a steady income (and for some, even prosperity) have been shattered as “more Americans experience poverty today than at any time in the 53 years the Census Bureau has published such figures.”

Questioning the assumptions that got us here and describing the scene from her vantage point, Miller suggests that “business as usual” must change:

“If our field is to address a more fundamental set of issues, our tactics must change, broadening our approach to go beyond a traditional set of activities. Admittedly, this emerging approach lacks some of the theoretical certainty of the dominant view, which sees access and ownership strategies as reliable steps into mainstream opportunity.”

“Yet given the reality that access strategies have been helpful but not adequate, we must be intentionally experimental. Only by rigorously questioning and transcending our own cherished assumptions will we progress.”

Philanthropy, Impact Investing & Social Enterprise: Three Questions

In the spirit of the provocative visions and admonitions of Clara Miller and Lucy Bernholz, the following questions surfaced from the many viewpoints heard at these conferences regarding philanthropy, impact investing, and social enterprise.

(Note: The royal “we” in each question below encompasses philanthropy, business, non-profit, investment, government, multi-lateral organizations, and most importantly, the communities and leaders where change is desired.)

1. How can we come together–with skill and courage–to get beyond the for-profit vs. non-profit dichotomy that often prevents even envisioning sustainable solutions?

At the Council Global session, social enterprise was featured as a “big idea” alongside “shifting money rules to data rules.” Social entrepreneurs are applying business models to solve social challenges, and they represent some of the most intentionally experimental leaders in the world. The rich range of hybrid, leveraged, and social business models offer multiple paths to move from non-profit to sustainable.

What is lacking: cross sector commitment to engage, evaluate, invest and scale the most innovativeand sustainable models. The need for this shift and this commitment is reinforced each time a Clara Miller says, “We plan to invest 100 percent of our endowment, as well as other forms of capital, for mission.” These are some of the models that can make mission sustainable.

The separation of non-profit church and for-profit state creates significant hurdles to sustainable solutions, however. For example, NGO Source, just announced in Chicago, enables U.S. Foundations to provide unrestricted grants to organizations in other countries that have been qualified as valid U.S. non-profit equivalents. The dedicated team from TechSoup Global and the Council on Foundations spent five years working on this breakthrough.

Yet, NGO Source simply extends U.S.-centric money rules to the global landscape.

The near term cost is the lost competition of non-profit programs with more sustainable models. IRS rules of money favor less sustainable and scalable models. The much larger cost is the massive loss of innovation that could come from engaging community, philanthropy, non-profit, social enterprise, business and government leaders across global north and south opportunities to invent and scale sustainable solutions.

2. How can we collaborate to scale “best solutions” now while advocating and changing the rules so that data (and sustainable models) are more influential in allocating resources to global, country and community engines of economic development?

The knowledge silos and non-profit money rules limit our innovation visions. Simple questions like the difference between social innovation and social entrepreneurship are not well understood. Even organizations who understand the distinctions and know proven innovators who could scale, continue to over-invest in adding new pilots and enterprises and underinvest in scaling these proven winners—begging the question: Where Will All the “Household Names” in Social Enterprise Come From?

The value of getting to scale was clearly discussed at the World Healthcare Congress. I had the privilege of moderating a panel on the rise of social business models in global health care, which featured Nobel Prize innovator Mohammed Yunus and Kaiser Permanente CEO George Halvorson.

No one has done more to call on leaders to expand their vision of “Progress Out of Poverty” than Yunus. “Whenever I found a problem, I started a business to solve it,” he has said repeatedly. The$30 billion micro-finance markets grew from that “I started a business to solve it” premise and the understanding that poor women are some of the world’s best entrepreneurs.

Grameen Bank, started by lending $27 to 42 of these entrepreneurs. Now it goes into the villages of Bangladesh each week to imbue courage and skill and collect payments from 800 million borrowers and bank owners who hold $1.5 billion in entrepreneurial assets. When Yunus encourages the sons and daughters of these entrepreneurs to invent their own jobs, he uses the example of their heritage as expressed in the simple statement:

“Of course you can do it. Your mother owns a bank.”

And George Halvorson leads one of the most innovative healthcare delivery companies in the U.S. and created a similar “Aha moment” when he announced that Kaiser Permanente is a social business. Kaiser’s unique model of prepaid healthcare ensures coincident incentives to keep its clients healthy with clients paying a premium for their healthcare, not for individual procedures.

When clients stay healthy, Kaiser has more money to invest in improved services. For three years, Halvorson has written a weekly letter to his entire staff celebrating each achievement in keeping clients healthy.

3: How can we engage and collaborate with innovators and entrepreneurs in every sphere of influence to leverage the entrepreneurial human spirit?

We see from Mohammed Yunus’ example that successful leaders and models are those capable of tapping the entrepreneurial human spirit. When people who must “innovate to live” (immigrants, for example) engage with leaders who are motivated to share these innovations, the potential isenormous. Social entrepreneurs demonstrate that these stretch goals are achievable and could result in scale and profit.

These leaders are solving complex problems for broad populations by combining community leadership, technology, social marketing, silo busting, policy levers, movement building and partnerships often in ways that standard for-profit organizations have never considered.

An important next step: to invite multiple stakeholders to design and build scaling engines that streamline scale commitments and reduce risks so portfolios of “most innovative” social enterprises can be scaled.

As Thomas Freidman recommended, we need a radical middle ground for revenue and for sustainable business that leverages the best of both non-profit and for-profit thinking. Social enterprise shows us multiple pathways to move towards sustainability. The intentional experimentation advocated by Clara Miller will empower new leaders, policies, partnerships and models tailored to our underutilized human and economic assets.

We simply must adopt the best examples and never underestimate what talented entrepreneurs can do, no matter where we find them.

Editor’s Note:

This blog was first published on CSRWire and is reproduced with the permission of the author.

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