Capitalism's Human Face
From BusinessWeek Online
Social Entrepreneurs tackle the world's problems in the face of a global downturn.
PHILANTHROPY November 25, 2008, 5:00PM EST
Social Entrepreneurs Turn Business Sense to Good
As charitable giving dries up, new kinds of leaders are taking on the world's problems, using the for-profit world as a model
By Steve Hamm
As chief executive of Mercy Corps since 1994, Neal Keny-Guyer helped turn the Portland (Ore.) relief organization into a global powerhouse with 3,500 employees and a budget of nearly $300 million. But he was taken aback last year when one of his lieutenants proposed the radical step of buying a bank in Indonesia. Why would a not-for-profit disaster relief agency go the capitalist route and buy a bank?
Gradually, though, he warmed to the idea. He saw that, if Mercy Corps operated a wholesale bank that could offer capital to some 2,000 local microcredit organizations and had an ATM network, it could help turn microfinance into a powerful force in Indonesia. Keny-Guyer was in uncharted territory, however. In the last days before the acquisition closed in May, he feared the risky gambit would end in disaster. "I imagined a newspaper headline saying, `Mercy Corps' Bank in Bali Fails,' " he recalls. "I thought of the reaction of our donors to that bit of news."
Now, as the renamed Bank Andara cranks up operations, Keny-Guyer is hopeful. If the strategy works in Indonesia, he says, Mercy Corps may try it in the Philippines next.
This departure from business as usual in the nonprofit realm is part of a major shift in the way people are taking on the world's social problems. In developing nations and parts of the U.S., governments have failed to make substantial progress against poverty, disease, and illiteracy. Traditional charities and social service agencies often provide Band-Aids for problems instead of long-term solutions. Now a new breed of do-gooder—the social entrepreneur—is trying fresh approaches. While the term is used in many different ways, there's a narrow definition that gets to the heart of what makes these people stand out: Rather than depending solely on handouts from philanthropists, social entrepreneurs generate some of their own revenues and use business techniques to address social goals. "Traditional ways of doing things haven't produced the kind of progress we all hoped for, so we're trying to come up with new approaches that are truly transformational," says Keny-Guyer.
The idea of the social entrepreneur has been percolating for decades, but it has become a mass movement in the past couple of years. Thousands of people are launching ventures and trying out new business models, both for-profit and nonprofit. Now that the global financial crisis is squeezing charitable giving, socially oriented organizations are pushing even harder to reduce their dependence on donors and generate their own funds. Lehman Brothers, for instance, was a generous backer of both nonprofits and social entrepreneurs. No more. In this climate, only the most efficient and effective organizations will thrive.
Social entrepreneurs are being backed in part by a new generation of super-aggressive philanthropists and social investors, including Microsoft (MSFT) co-founder Bill Gates and former eBay (EBAY) executives Pierre M. Omidyar and Jeffrey Skoll. These guys expect results from their social investments and grants. Says Gates in an interview with BusinessWeek: "Nonprofits are applying what we've typically thought of as business strategies for better outcomes, and businesses are beginning to apply what I call creative capitalism strategies to increase the positive social impact of their work. That's a powerful combination." He believes the most effective way to make social progress is through partnerships among nonprofits, businesses, government, and philanthropists.
WHICH MODEL WORKS?
In this emerging social sphere, there's a danger of confusing enthusiasm with effectiveness. Many social enterprises, from microfinance organizations to those aimed at purifying water or improving agriculture, aren't being built to grow large or to last. They're poorly managed, undercapitalized, or overly dependent on philanthropic handouts. In India, for example, there are an estimated 1.2 million organizations aimed at addressing social problems. "Many are just too small to be effective," says Manoj Kumar, chief executive of Naandi Foundation, a large Indian social service organization.
In a sense, the social enterprise phenomenon is like an industry just starting to take shape. Think of the early days of autos or computers, when startups tried a variety of approaches to see what worked best. For this movement to have a major impact, it needs the same kind of dynamic business climate as Detroit in the 1920s or Silicon Valley a decade ago. What's necessary—once the global financial crisis eases—is free-flowing capital, a willingness by entrepreneurs to aim high and take risks, and a level of transparency that quickly makes obvious what's working and what isn't. "You have to get beyond the gee-whiz factor of social entrepreneurship," says Michael E. Porter, a professor at Harvard Business School. "Which of these models really works? How do you create a high social value per dollar invested?"
It's difficult to prove success in such an immature field. Nobody has come up with numbers quantifying the overall impact of social entrepreneurship. Some organizations make impressive claims. Grameen Bank, the pioneer of microfinance, says it has brought 65% of its 7.5 million clients out of "extreme poverty." Yet while Grameen's home base of Bangladesh is crawling with microfinance outfits, it remains one of the poorest countries in the world, with 40% of its people under the poverty line.
At the same time, there's much disagreement over which business models are best. Grameen founder Muhammad Yunus, who won the 2006 Nobel Peace Prize for his work, argues that social businesses should not make a profit off of poor people. In other cases, people who call themselves social entrepreneurs seem to be in it mainly for the money. Banco Compartamos in Mexico, for example, charges interest rates topping 100% per year, claiming that such rates are justified because it's expensive to operate a microfinance business (BW—Dec. 13, 2007). Yunus berates for-profit outfits for charging exorbitant interest. "When you charge high rates, you're no longer microcredit. You're a loan shark," he says (see a video interview with Yunus).
To others, the profit motive is crucial for addressing the needs of poor people. C.K. Prahalad, a University of Michigan Ross School of Business professor and author of the influential book The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, argues that the poor should be seen as consumers, not charity cases. Their basic needs can best be addressed by businesses that are attuned to dealing with them. "If we get entrepreneurship right, social entrepreneurship won't matter as much," he says.
Vikram Akula, a social entrepreneur based in Hyderabad, wants it both ways. He's out to prove you can make a healthy profit while serving—and not gouging—the poor. Akula grew up in Schenectady, N.Y., but returned to his native India in the mid-1990s after he got a PhD in economics from the University of Chicago and worked as a consultant at McKinsey & Co. He first worked for a government-run microfinance organization. But with limited funds, it couldn't expand fast. He says his conversion to the for-profit, faster-growth model came after an encounter with a poor woman he had to turn down for a loan because he couldn't operate in her village. "She said: 'Don't I deserve to get out of poverty, too?' " he recalls. "I decided to come up with a model that works so you don't have to say no to anybody."
Today, Akula is chief executive of SKS Microfinance, which has 9,500 employees and 3.3 million customers throughout India and is adding 300,000 new clients per month. SKS charges an average of 26% annualized interest. Given the cost of granting and servicing microloans, that's considered a reasonable rate by many industry observers. SKS had revenues of $48 million in the half-year ended in September, up 153%, and net income of $6.16 million.
A journey with Akula into the villages of India's state of Andhra Pradesh shows just how aggressive he is about applying business methods to economic development. In a schoolyard in Narayanraopet, a village of 3,500, three dozen women dressed in brightly colored saris sit in a circle in the shade of a spreading rain tree. K. Sandhya Rani, a self-assured 18-year-old SKS field assistant, takes attendance, collects weekly loan payments, and hands out new loans with all of the efficiency of an employee at McDonald's (MCD), which, in fact, Akula uses as a model of business-process excellence. (When he set up the company, he even tracked the time it took to do things with a stopwatch.) The whole meeting lasts just 25 minutes.
Afterward the women hustle back to their shops and farms. There, money from SKS pays for more goods and for the purchase of chickens and buffalo. A woman named Sarojamma carries in her hands a six-inch pile of currency with which she plans to buy rice, lentils, and other food to replenish the shelves in her four-year-old kirana, or mini general store. In the coming days, she explains, her husband will call on his mobile phone to suppliers in neighboring cities to find the best prices for the items they stock, then take a bus and a taxi to fetch the goods back to Narayanraopet. Sarojamma has a simple dream: "I want to make my shop bigger."
Sarojamma and people like her represent a new market opportunity for companies that hope to reach India's vast population of villagers. SKS's Akula is using his network of field agents and customers as a distribution channel for moving a wide variety of products and services on behalf of business partners such as Nokia (NOK). SKS helps sell mobile phones, insurance, and foodstuffs for shopkeepers. "The potential here is huge," says Devinder Kishore, Nokia's marketing director in India.
"BUSINESS IS BUSINESS"
While Grameen Bank's Yunus doesn't believe in profiting off the poor, he, too, sees his microlending network as a strategic jumping-off point for all sorts of economic activity. The bank's parent company, Grameen Family of Enterprises, is forming joint ventures with large multinationals in an effort to develop vast new markets and improve the health and livelihoods of poor people. The first of the ventures, Grameen Danone Foods (GDNNY), sells nutrition-enhanced yogurt to poor people in affordable, single-serving packages, with a portion of the deliveries handled by Grameen Bank customers.
But the strains between social goals and business imperatives are showing. Wahidun Nabi, the executive director of the venture, who came from Danone in mid-2007, says he's being forced by economics to sell larger packages and market to those with more money, which means he's doing less than he might have for poorer people. "For the success of the project, we must improve the bottom line," he says. "This is a social business, but business is business."
Such strains are even more intense in fledgling social enterprises. Belgian Bart Weetjens was focused purely on altruism when he started an organization called Apopo a decade ago. It trains African giant pouch rats to sniff out land mines on former battlefields. The mines, if they remain undetected, occasionally blow up and hurt people and animals. The program was a modest success, with mine-clearing operations in Mozambique and a contract to expand into Africa's Great Lakes Region. But Apopo ran into problems when Weetjens tried to secure a more dependable source of funding. An adopt-a-rat program launched on the Internet, HeroRATS.org, failed to attract many supporters. "We're living in uncertainty," says Apopo Chief Executive Christophe Cox. "If some of the main donors drop off, then we're finished."
So Weetjens and Cox decided to run Apopo more like a business and generate their own money from operations. Earlier this year they hired Virtue Ventures, a consulting group specializing in social enterprises, to help them write a business plan. And in the summer they brought four interns from the MBA program at Oxford University to their headquarters in Tanzania to help size up their money-earning potential. Options include expanding mine-clearing operations to the Middle East, getting into the cargo-inspection business, and forging aggressively into disease detection. It turns out the rats can sniff out the presence of tuberculosis, and perhaps other diseases, at costs dramatically cheaper than traditional laboratory tests.
The pressure of switching to a for-profit model is evident during a meeting of the two founders and their student advisers in Morogoro, Tanzania. The six gather for their weekly progress discussion in the war room, where interns work in stifling heat under two fast-spinning ceiling fans. It's not clear how big the long-term cost differential will be for their rats compared with other outfits that use European-trained dogs for mine-clearing. Cox cautions against exaggerating their advantages: "We don't want to compare the worst dogs with the best rats."
Weetjens, the organization's front man, says it now looks like Apopo may continue the mine-clearing operations on a not-for-profit basis but try to turn disease detection into a profit-maker. Their tests with Tanzanian health-care clinics are producing strong results in cost and quality.
For all the challenges that Apopo faces, there is anecdotal evidence that social enterprises can grow large and balance their social and economic imperatives. But it requires a lot of time and effort.
That was the case with Sekem Group, an Egyptian conglomerate with businesses in organic farming, garment manufacturing, herbal medicines, and food processing and distribution. The family-controlled company got off to a fragile start in 1977 in the desert 50 kilometers northeast of Cairo. Egyptian-born founder Ibrahim Abouleish had been managing a pharmaceutical-research facility in Austria but returned to his homeland after he realized that two decades of socialism had ruined the economy. His goal was to convert the country to organic farming and enrich Egyptian culture with a renaissance of art and education. Abouleish chose a place in the desert far from urban influences so he could create a self-defining community. It all started in a mud hut built for him by Bedouin.
The original hut remains as part of a guest house on a campus that now includes 20 sparkling-white buildings for offices, farm operations, and factory work. Sekem has 2,500 employees, 500 acres of nearby farmland, and a vast composting operation. The company, which has been growing at 25% per year, brought in $40 million in revenues and $3 million in net income in 2007—after spending much of its operating profits on schooling and health care for employees' families. Sekem just bought 4,000 acres of arid land on the Sinai Peninsula and in the Western Desert that it plans on converting to farming.
THE NEED FOR CAPITAL
For Abouleish and his son, Helmy, who now runs day-to-day operations, more important than the financial accomplishments is the impact of Sekem on Egyptian agriculture. When done right, organic farming uses a lot less water, and farmers don't spend money on expensive and polluting herbicides and pesticides. When Sekem started operations, there was no organic farming in Egypt. Today there are several other major organic growers, and Sekem has developed a network of 800 independent farmers on 50,000 acres whose produce it exports to major grocery chains in Europe. The company's nonprofit Sekem Development Foundation runs a school, a medical center, and economic development programs in the seven villages around the campus. But Ibrahim Abouleish is not satisfied. "What we have achieved is a great model. Now we have to change the whole country," he says. He figures it could take more than 100 years to reform Egypt from the bottom up.
While Sekem shows that such enterprises can grow up and make progress, there are many economic and social hurdles that need to be cleared for this phenomenon to become powerful. Money is a major issue. While philanthropies and investors are plowing hundreds of millions of dollars into social enterprises, that's still minuscule compared with the $35 billion in venture capital invested worldwide last year.
To attract more capital, social enterprises have started trying to better quantify their results. A group spearheaded by Acumen Fund, a nonprofit supporter of social enterprises, has begun gathering an ocean of information into one massive, easily accessible database. That way, results can be monitored by the funders and investors, and social entrepreneurs can see how they stack up with their peers.
Still, it's hard to justify most social enterprises on strictly financial grounds. In many cases, investors have to accept lower returns than they would expect from traditional investments. That trade-off has tormented investors in Freeplay Energy, a social business that sells hand-crank radios and lights for people in developing countries and Western nations. The company went public in Britain in 2005, but its revenues have been disappointing, and its stock price plummeted until it was taken private again this year. "It's hard to have a social mission in a capitalistic system," says Rory Stear, Freeplay's co-founder and co-chairman.
When Ramalinga Raju, chairman of India's Satyam Computer Services (SAY), set out to improve India's woeful health-care system, he decided to bring in government as his partner. His idea was that, by combining Satyam's technology and business-operations expertise with government resources, innovative new health-care initiatives could spread rapidly. Emergency Management and Research Institute, a free ambulance service he launched in 2005 in the Indian state of Andhra Pradesh, has branched out to two other states. The government pays 95% of operating expenses. "I have no doubt that this will be a model for the rest of the world," Raju says.
Maybe. Raju's ambulance service is catching flack from rivals. Sweta Mangal, co-founder of Dial 1298 for Ambulance, which operates in Mumbai, says EMRI relies too much on government support, which might be fleeting. She also doesn't think it's affordable for governments in emerging nations to offer free ambulance service for everybody. Her company charges wealthy and middle-class patients, which subsidizes free service for poor people.
This is just one of the debates that show how unsettled the world of social enterprise is—and may remain. Until today's entrepreneurs discover which business models really work, there will be uncertainty and wasted effort. The movement is growing and taking on more ambitious projects. But from Mercy Corps' Keny-Guyer to Satyam's Raju, these entrepreneurs know most of their work still lies ahead of them.
A Social Entrepreneurship Schism
In Philanthrocapitalism: How the Rich Can Save the World, Matthew Bishop and Michael Green argue that the wealthy can save the world by giving money to social entrepreneurs. But Michael Edwards wrote a sharp critique called Just Another Emperor? The Myths and Realities of Philanthrocapitalism. His concern: The hype will divert attention from the deeper changes he believes are required to transform societies.
To read Edwards' summary of his book, go to BusinessWeek Business Exchange; http://bx.businessweek.com/social-entrepreneurship/reference/
Hamm is a senior writer for BusinessWeek in New York and author of the Globespotting blog.
Showing posts with label green philanthropy. Show all posts
Showing posts with label green philanthropy. Show all posts
Sunday, October 11, 2009
Tuesday, July 21, 2009
Social Change Philanthropy
What is social change philanthropy?
"Philanthropy is commendable, but it must not cause the philanthropist to overlook the economic injustice that makes philanthropy necessary."
Dr. Martin Luther King, Jr.
For this post, we will explore Social Change Philanthropy. Dr. King's quote is spot on. Honest advocates for social justice must cut to the chase and help move our society beyond superficially addressing the many significant challenges we face. What is needed is an inclusive and effective engagement of the diversity of our nation for self-empowerment and economic justice. We will explore some of the trends and resources in the emerging field of Social Philanthropy which seeks to fund authentic social change from the grass roots up.
Resource Generation
Resource Generation is a national organization that works with young people with financial wealth who are supporting and challenging each other to effect progressive social change through the creative, responsible and strategic use of financial and other resources.
Our purpose is to promote innovative ways for young people with wealth to align their personal values and political vision with their financial resources to deepen their social and civic engagement. Resource Generation supports the ability of these young people to better understand themselves as philanthropists, their place in the socio-economic system, and their capacities to contribute to social change. Resource Generation builds cross-class alliances with people and organizations working for social, racial and economic justice.
http://www.resourcegeneration.org/home.html
What is social change philanthropy?
"Social change philanthropy focuses on the root causes of social, economic and environmental injustices. It strives to include the people who are impacted by those injustices as decision-makers. It also aims to make the field of philanthropy more accessible and diverse. In social change philanthropy, foundations are accountable, transparent and responsive in their grantmaking. Donors and foundations act as allies to social justice movements by contributing not only monetary resources but their time, knowledge, skills and access. Social change philanthropy is also sometimes called social justice philanthropy, social movement philanthropy, and community-based philanthropy.
http://www.resourcegeneration.org/Resources/giving_soc_change.html
Funders’ Network
The Funders’ Network for Smart Growth and Livable Communities is a non-partisan, not-for-profit organization that exists to inspire, strengthen and expand philanthropic leadership and funders’ abilities to support organizations working to improve communities through better development decisions and growth policies. It brings together foundations, nonprofit organizations and other partners to address the range of environmental, social, and economic problems caused by development strategies that fail to consider the big picture.
Poor planning and decision making at every level – national, state, regional and local – has resulted in sprawling metropolitan growth patterns that are rapidly consuming open space and farmland to provide housing and services for new suburban populations. At the same time, these decisions have encouraged the draining of population, jobs and other resources out of cities and older suburbs, contributing to a concentration of poverty in many urban neighborhoods. Rapidly developing suburbs also face their own set of problems as they grapple with the costs of growth—congestion, loss of open space, school overcrowding—without adequate resources.
http://www.fundersnetwork.org/
Social Change Philanthropy and How It's Done
HANDS ON: There are many paths to social change. Here's how funders dedicated to that concept go about supporting it.
by Alison D. Goldberg
"Social change philanthropy" is the term used to describe grantmaking that aims to address the root causes of social and economic inequalities.
A number of social change foundations were created in the last three decades to support community organizing, social activism and political advocacy. These foundations continue to adopt new methods for gathering and integrating the input, experience and leadership of community leaders and disenfranchised populations to make informed grant decisions.
Despite their growth in numbers, the ranks of social change foundations are still relatively small in the world of philanthropy. The National Network of Grantmakers estimates that less than 3 percent of all domestic, private, institutional grantmaking is distributed to social change causes. The numbers show that foundation resources have been overwhelmingly distributed to direct service programs providing important support in a climate of eroding safety nets but not effecting policy changes to solve social problems.
Economic disparity in the United States has worsened significantly during the past two decades, so that today the wealthiest 1 percent of the population controls 40 percent of household wealth. In the contemporary political environment, organizations working for social and economic justice have an immediate need for resources to support their work.
The Means Matters as Much as the Ends
What distinguishes social change philanthropy (also called "social movement," "social justice" or "community-based" philanthropy) from other forms of grantmaking is the central tenet that philanthropy's success is measured not only by where money is given, but also the process by which it is given.
Social change philanthropy strives to incorporate giving principles that provide access to those left out of grantmaking in order to support their campaigns for social and economic justice.
The following are core principles of social change philanthropy:
It focuses on marginalized and disenfranchised communities. Social change philanthropy focuses on social and economic justice issues that affect marginalized and disenfranchised communities. This includes protecting the rights of communities of color, low-income populations, women, immigrants, international communities, disabled people, and lesbian, gay, bisexual and transgender people.
The issues and campaigns that social change philanthropy supports include civil and human rights, political access, peace and nonviolence, worker's rights, anti-poverty strategies, environmental justice, corporate reform, prison reform, education and healthcare access, as well as challenges to international trade and privatization.
It addresses root causes. Social change foundations support work by community leaders that creates systemic or policy change to address the root causes of problems. Rather than applying Band-Aid solutions to problems, it aims to prevent the problems in the first place. Such work requires shifting the power dynamics in communities through grassroots organizing, advocacy, policy-related work, research and activism.
It strives to be accountable to marginalized and disenfranchised communities. Grantmakers are accountable to a board of trustees. Social change foundations recognize a second, equally (if not more) important level of accountability the communities where they make grants.
That's why social change foundations invite community leaders and the people affected by the foundation's programs to participate in the needs assessments and related decision making. Participation might range from establishing advisory groups to inviting members of the affected communities to serve as board members. Also, social change foundations investigate the demographics of grantees' leadership to determine whether the organizations are community-led.
It establishes inclusive processes. Social change foundations pay particular attention to the accessibility of their grantmaking processes for grassroots organizations, recognizing that generally these groups operate with very few staff members who have little time to spend writing proposals. They are concerned with grantees' access to information and whether their processes are respectful of grantees' time. Foundation staff often will take part in workshops or other training programs to evaluate their assumptions especially, those that guide their perspectives on social issues, and therefore, their grantmaking. Evaluating the power issues that inform the experiences of grantmakers will help them become more effective and improve their communications with grantees who are likely to have race and class backgrounds different then their own.
While traditional philanthropy also works to benefit marginalized and disenfranchised communities and to support the root causes of issues, the process, players and analysis of politics and power are what distinguish social change philanthropy from other forms of grantmaking. Peace Development Fund Executive Director John Vaughn puts it this way: "It is more than teaching people to fish. It's supporting their efforts to get a company to stop polluting the lake they're trying to fish in."
"Change Not Charity"
Social change philanthropy is not new. It dates back to the early twentieth century and has grown steadily since the 1950s. Support in the 1950s and 1960s went mainly to the civil rights and peace movements.
In the 1970s, the alternative funds that eventually became the Funding Exchange network were created. These public charities, established by wealthy inheritors, created funding boards that included or were made up entirely of local activists under the banner "change, not charity."
Since 1979 the Funding Exchange network (www.fex.org) has had a major influence in shaping social change philanthropy. The http://www.nng.org/ (www.nng.org), which was created 20 years ago, serves as a professional network for practitioners of social change philanthropy and currently is affiliated with more than 200 grantmaking organizations (see the profile of NNG on page 10 of this issue).
More recently, an infrastructure has emerged that supports social change philanthropy among specific demographic groups. The rapid growth of funds to support and promote philanthropy among women, African Americans, Asian/Pacific Americans, Native Americans, Latinos, as well as lesbian, gay, bisexual and transgender (LGBT) people and progressive religious communities are important components of social change philanthropy, providing learning and support networks. In addition, a "young donor organizing movement" has emerged with the development of a number of organizations and networks through which young people are using their financial resources for social change (see "Young donors support social change," page 36).
Varying Degrees of Intensity
Several foundations have incorporated components of social change philanthropy, in varying degrees of intensity, to address a wide range of issues. Examples of methods include: continue here.
"Philanthropy is commendable, but it must not cause the philanthropist to overlook the economic injustice that makes philanthropy necessary."
Dr. Martin Luther King, Jr.
For this post, we will explore Social Change Philanthropy. Dr. King's quote is spot on. Honest advocates for social justice must cut to the chase and help move our society beyond superficially addressing the many significant challenges we face. What is needed is an inclusive and effective engagement of the diversity of our nation for self-empowerment and economic justice. We will explore some of the trends and resources in the emerging field of Social Philanthropy which seeks to fund authentic social change from the grass roots up.
Resource Generation
Resource Generation is a national organization that works with young people with financial wealth who are supporting and challenging each other to effect progressive social change through the creative, responsible and strategic use of financial and other resources.
Our purpose is to promote innovative ways for young people with wealth to align their personal values and political vision with their financial resources to deepen their social and civic engagement. Resource Generation supports the ability of these young people to better understand themselves as philanthropists, their place in the socio-economic system, and their capacities to contribute to social change. Resource Generation builds cross-class alliances with people and organizations working for social, racial and economic justice.
http://www.resourcegeneration.org/home.html
What is social change philanthropy?
"Social change philanthropy focuses on the root causes of social, economic and environmental injustices. It strives to include the people who are impacted by those injustices as decision-makers. It also aims to make the field of philanthropy more accessible and diverse. In social change philanthropy, foundations are accountable, transparent and responsive in their grantmaking. Donors and foundations act as allies to social justice movements by contributing not only monetary resources but their time, knowledge, skills and access. Social change philanthropy is also sometimes called social justice philanthropy, social movement philanthropy, and community-based philanthropy.
http://www.resourcegeneration.org/Resources/giving_soc_change.html
Funders’ Network
The Funders’ Network for Smart Growth and Livable Communities is a non-partisan, not-for-profit organization that exists to inspire, strengthen and expand philanthropic leadership and funders’ abilities to support organizations working to improve communities through better development decisions and growth policies. It brings together foundations, nonprofit organizations and other partners to address the range of environmental, social, and economic problems caused by development strategies that fail to consider the big picture.
Poor planning and decision making at every level – national, state, regional and local – has resulted in sprawling metropolitan growth patterns that are rapidly consuming open space and farmland to provide housing and services for new suburban populations. At the same time, these decisions have encouraged the draining of population, jobs and other resources out of cities and older suburbs, contributing to a concentration of poverty in many urban neighborhoods. Rapidly developing suburbs also face their own set of problems as they grapple with the costs of growth—congestion, loss of open space, school overcrowding—without adequate resources.
http://www.fundersnetwork.org/
Social Change Philanthropy and How It's Done
HANDS ON: There are many paths to social change. Here's how funders dedicated to that concept go about supporting it.
by Alison D. Goldberg
"Social change philanthropy" is the term used to describe grantmaking that aims to address the root causes of social and economic inequalities.
A number of social change foundations were created in the last three decades to support community organizing, social activism and political advocacy. These foundations continue to adopt new methods for gathering and integrating the input, experience and leadership of community leaders and disenfranchised populations to make informed grant decisions.
Despite their growth in numbers, the ranks of social change foundations are still relatively small in the world of philanthropy. The National Network of Grantmakers estimates that less than 3 percent of all domestic, private, institutional grantmaking is distributed to social change causes. The numbers show that foundation resources have been overwhelmingly distributed to direct service programs providing important support in a climate of eroding safety nets but not effecting policy changes to solve social problems.
Economic disparity in the United States has worsened significantly during the past two decades, so that today the wealthiest 1 percent of the population controls 40 percent of household wealth. In the contemporary political environment, organizations working for social and economic justice have an immediate need for resources to support their work.
The Means Matters as Much as the Ends
What distinguishes social change philanthropy (also called "social movement," "social justice" or "community-based" philanthropy) from other forms of grantmaking is the central tenet that philanthropy's success is measured not only by where money is given, but also the process by which it is given.
Social change philanthropy strives to incorporate giving principles that provide access to those left out of grantmaking in order to support their campaigns for social and economic justice.
The following are core principles of social change philanthropy:
It focuses on marginalized and disenfranchised communities. Social change philanthropy focuses on social and economic justice issues that affect marginalized and disenfranchised communities. This includes protecting the rights of communities of color, low-income populations, women, immigrants, international communities, disabled people, and lesbian, gay, bisexual and transgender people.
The issues and campaigns that social change philanthropy supports include civil and human rights, political access, peace and nonviolence, worker's rights, anti-poverty strategies, environmental justice, corporate reform, prison reform, education and healthcare access, as well as challenges to international trade and privatization.
It addresses root causes. Social change foundations support work by community leaders that creates systemic or policy change to address the root causes of problems. Rather than applying Band-Aid solutions to problems, it aims to prevent the problems in the first place. Such work requires shifting the power dynamics in communities through grassroots organizing, advocacy, policy-related work, research and activism.
It strives to be accountable to marginalized and disenfranchised communities. Grantmakers are accountable to a board of trustees. Social change foundations recognize a second, equally (if not more) important level of accountability the communities where they make grants.
That's why social change foundations invite community leaders and the people affected by the foundation's programs to participate in the needs assessments and related decision making. Participation might range from establishing advisory groups to inviting members of the affected communities to serve as board members. Also, social change foundations investigate the demographics of grantees' leadership to determine whether the organizations are community-led.
It establishes inclusive processes. Social change foundations pay particular attention to the accessibility of their grantmaking processes for grassroots organizations, recognizing that generally these groups operate with very few staff members who have little time to spend writing proposals. They are concerned with grantees' access to information and whether their processes are respectful of grantees' time. Foundation staff often will take part in workshops or other training programs to evaluate their assumptions especially, those that guide their perspectives on social issues, and therefore, their grantmaking. Evaluating the power issues that inform the experiences of grantmakers will help them become more effective and improve their communications with grantees who are likely to have race and class backgrounds different then their own.
While traditional philanthropy also works to benefit marginalized and disenfranchised communities and to support the root causes of issues, the process, players and analysis of politics and power are what distinguish social change philanthropy from other forms of grantmaking. Peace Development Fund Executive Director John Vaughn puts it this way: "It is more than teaching people to fish. It's supporting their efforts to get a company to stop polluting the lake they're trying to fish in."
"Change Not Charity"
Social change philanthropy is not new. It dates back to the early twentieth century and has grown steadily since the 1950s. Support in the 1950s and 1960s went mainly to the civil rights and peace movements.
In the 1970s, the alternative funds that eventually became the Funding Exchange network were created. These public charities, established by wealthy inheritors, created funding boards that included or were made up entirely of local activists under the banner "change, not charity."
Since 1979 the Funding Exchange network (www.fex.org) has had a major influence in shaping social change philanthropy. The http://www.nng.org/ (www.nng.org), which was created 20 years ago, serves as a professional network for practitioners of social change philanthropy and currently is affiliated with more than 200 grantmaking organizations (see the profile of NNG on page 10 of this issue).
More recently, an infrastructure has emerged that supports social change philanthropy among specific demographic groups. The rapid growth of funds to support and promote philanthropy among women, African Americans, Asian/Pacific Americans, Native Americans, Latinos, as well as lesbian, gay, bisexual and transgender (LGBT) people and progressive religious communities are important components of social change philanthropy, providing learning and support networks. In addition, a "young donor organizing movement" has emerged with the development of a number of organizations and networks through which young people are using their financial resources for social change (see "Young donors support social change," page 36).
Varying Degrees of Intensity
Several foundations have incorporated components of social change philanthropy, in varying degrees of intensity, to address a wide range of issues. Examples of methods include: continue here.
Sunday, June 7, 2009
Cause Marketing
Cause Marketing: Examples, Discussion and Stats
August 26, 2008 at 6:14 pm ·
Haagan Dazs have created a cause marketing campaign to help endangered bees.
Bees are an endangered species and also a vital part of our ecology. Did you know that we rely on bees for one third of our food supply?
They have a pretty little micro-site up at http://helpthehoneybees.com/ promoting the fact that honey bees are in danger and that you can help them help the bees by buying their “Bee-Dependent” flavours.
Through purchasing one of their “Bee-Dependent” flavours Haagan Daaz will contribute funds to help save the bees! The site is fun to use and has a download-able lesson plan. I think this gives it some authenticity and extends the campaign further than it being just a branding exercise.
The site has a viral mechanism – send a bee – where you can design your own bee avatar and send an e-card with a message to a friend.
They also have a bee shop where you can purchase merchandise and a percentage goes towards helping the bees.
I have written a bit on this blog outlining the benefits of cause marketing for brands. You can find some more ranting about cause marketing here, and some other examples of campaigns here: Nokia’s N96 Campaign and Ben and Jerry’s Whirrld Peace Campiagn
According to research:
“KANSAS CITY (PR WEB) October 23, 2007 – The 2007 PR Week / Barkley Cause Survey reveals that philanthropic activities can drive business success. In fact, 72% of consumers say that they have purchased a brand because it supports a cause they believe in. Furthermore, corporate respondents say they see positive PR (65.3%), an increase in sales/retail traffic (26.7%) and an enhanced relationship with their target demographic (52%), as a result of their cause marketing efforts.”
Cause Marketing is not new. It began in the 1980’s when American Express kicked off a campaign whereby every time someone used one of their credit cards they would donate money to the Statue of Liberty fund (also their icon image – NB a well selected charity in line with their brand.)
Stats prove it…this is really where it’s at. Help the world – help your brand make money – and help consumers feel good about themselves. It really is a win – win!
Here is a list from 2004 listing many other examples of cause marketing and stats from as far back as the 80’s.
If you are interested in executing these types of campaigns for your business check out the Cause Marketing Forum, Market Watch also a very good post on the subject, and perhaps this article “Cause Marketing Tps: Boost Business by Giving Back” aimed at small businesses may help.
Distribute Press Releases
Send PR to 100,000 Global Contacts. Free Account - No Contracts/Fees!
www.PRWeb.com
Green Branding
Brand innovation for the new consumer.
www.bbmg.com
Cause Partnerships
Customers Buy from Caring Companies cause + business = abundance
www.tlnpartnerships.com
http://jaxinteractive.com/2008/08/26/cause-marketing-example-hd-loves-hb/
Cause Marketing The New Corporate–Nonprofit Engagement
Corporations have long been involved in supporting community, but when
the first cause-marketing programs were successfully implemented, it signaled a
dramatic shift in nonprofit–for-profit relationships: one that recognized corporate
community support could be positioned at the intersection of business objectives
and societal needs.
Cause marketing was initiated over 25 years ago. At the time many nonprofit
professionals viewed it as a fledgling idea, one that should not be considered part
of any serious fund development or nonprofit program. As well-constructed programs reaped benefits for companies and nonprofits alike, the number of programs continued to grow. Now more than two decades later, cause marketing has evolved and developed into a firmly established practice, a new way for corporations and nonprofits to achieve significant bottom-line results and community impact.
http://media.wiley.com/product_data/excerpt/09/04717175/0471717509.pdf
Cause Marketing Emergedgtl
Did you know cause-related marketing promotions can increase your sales as much as 74%*? Nothing builds trust with your brand or service like a connection with worthy causes. You show you stand for more than profits, and the message resonates with your target audience.
We’re an interactive agency specializing in Cause Marketing using online social and viral media. Our cost-effective, innovative campaigns will connect you with non-profit charitable causes, encouraging your most valuable audiences to participate. Using the power of social media, we’ll help spread the word and show the impact of your campaign through the web.
Contact us to discuss ideas for your next Cause Marketing campaign, or to strategize on how to make Cause Marketing part of your online marketing plan.
*2008 study by Cone, Inc. and Duke University’s Fuqua School of Business.
http://cause.emergedgtl.com/?gclid=CMzA1IbA-JoCFRKAxgodCjYgdg
Cause marketing: Altruism or greed?
June 4th, 2009
(PhysOrg.com) -- Companies that join with social causes to sell products not only enhance their image but also improve their bottom line, say University of Michigan researchers.
Build Trust, Do Good. - cause.emergedgtl.com
We bring your cause marketing campaigns to life.
"Cause marketing, in which firms donate part of the proceeds from sales of certain products to a specified cause, is now a strategy adopted by hundreds of firms to increase sales for a wide variety of products, from coffee to cars," said Aradhna Krishna, the Winkelman Professor of Retail Marketing at Michigan's Ross School of Business. "But it is often associated with price increases, as well."
A few well-known examples of cause marketing include Project Red, which encompasses several companies such as the Gap, Motorola, Apple, Converse, Dell, Microsoft, American Express and others to raise money for the Global Fund to fight AIDS, tuberculosis and malaria; 3M's Post-It Super Sticky Notes imprinted with pink ribbons to help fund cancer research and treatment; and Snapple's bottled water sales to help build playgrounds in poor communities.
In a new study forthcoming in Management Science, Krishna and Uday Rajan, an associate professor of finance at Ross, found that cause marketing can increase sales—but can also raise prices—of the cause-related product, as well as of other products that the company sells.
One underlying reason for the price increase that Krishna and Rajan identify is the additional benefit that consumers get from buying a cause-related product. Consumers feel good about the firm selling the product, and also about themselves when they purchase such a product. Further, consumers can even feel good about buying a different product from the firm, one that is not related to a cause.
It's this spillover effect to a company's other products that can make cause marketing worthwhile, the researchers say. In fact, even if a firm is unable to increase the price of a cause-related product enough to compensate for the donated money or if it simply ties a low-selling product to cause marketing, it can still increase its profits—as long as consumers feel good about buying the company's other products.
Moreover, firms that raise prices on both a cause-related product and other non-cause products earn higher profits than if they don't participate in cause marketing at all. In addition, companies will never place their entire portfolio or product line in a social cause campaign.
"Firms can use cause marketing to increase prices and profits, but should be aware of the implications of placing different products on cause marketing," Rajan said. "For public policy officials and consumers who may believe that cause-marketing firms are more caring firms and are genuinely interested in helping others, it may be insightful to understand that cause marketing also allows firms to increase their prices and profits."
Provided by University of Michigan
Cause Marketing - Moving to Win-Win-Win (NAMA 2009)
http://www.slideshare.net/DrakeCo/cause-marketing-moving-to-winwinwin-nama-2009
August 26, 2008 at 6:14 pm ·
Haagan Dazs have created a cause marketing campaign to help endangered bees.
Bees are an endangered species and also a vital part of our ecology. Did you know that we rely on bees for one third of our food supply?
They have a pretty little micro-site up at http://helpthehoneybees.com/ promoting the fact that honey bees are in danger and that you can help them help the bees by buying their “Bee-Dependent” flavours.
Through purchasing one of their “Bee-Dependent” flavours Haagan Daaz will contribute funds to help save the bees! The site is fun to use and has a download-able lesson plan. I think this gives it some authenticity and extends the campaign further than it being just a branding exercise.
The site has a viral mechanism – send a bee – where you can design your own bee avatar and send an e-card with a message to a friend.
They also have a bee shop where you can purchase merchandise and a percentage goes towards helping the bees.
I have written a bit on this blog outlining the benefits of cause marketing for brands. You can find some more ranting about cause marketing here, and some other examples of campaigns here: Nokia’s N96 Campaign and Ben and Jerry’s Whirrld Peace Campiagn
According to research:
“KANSAS CITY (PR WEB) October 23, 2007 – The 2007 PR Week / Barkley Cause Survey reveals that philanthropic activities can drive business success. In fact, 72% of consumers say that they have purchased a brand because it supports a cause they believe in. Furthermore, corporate respondents say they see positive PR (65.3%), an increase in sales/retail traffic (26.7%) and an enhanced relationship with their target demographic (52%), as a result of their cause marketing efforts.”
Cause Marketing is not new. It began in the 1980’s when American Express kicked off a campaign whereby every time someone used one of their credit cards they would donate money to the Statue of Liberty fund (also their icon image – NB a well selected charity in line with their brand.)
Stats prove it…this is really where it’s at. Help the world – help your brand make money – and help consumers feel good about themselves. It really is a win – win!
Here is a list from 2004 listing many other examples of cause marketing and stats from as far back as the 80’s.
If you are interested in executing these types of campaigns for your business check out the Cause Marketing Forum, Market Watch also a very good post on the subject, and perhaps this article “Cause Marketing Tps: Boost Business by Giving Back” aimed at small businesses may help.
Distribute Press Releases
Send PR to 100,000 Global Contacts. Free Account - No Contracts/Fees!
www.PRWeb.com
Green Branding
Brand innovation for the new consumer.
www.bbmg.com
Cause Partnerships
Customers Buy from Caring Companies cause + business = abundance
www.tlnpartnerships.com
http://jaxinteractive.com/2008/08/26/cause-marketing-example-hd-loves-hb/
Cause Marketing The New Corporate–Nonprofit Engagement
Corporations have long been involved in supporting community, but when
the first cause-marketing programs were successfully implemented, it signaled a
dramatic shift in nonprofit–for-profit relationships: one that recognized corporate
community support could be positioned at the intersection of business objectives
and societal needs.
Cause marketing was initiated over 25 years ago. At the time many nonprofit
professionals viewed it as a fledgling idea, one that should not be considered part
of any serious fund development or nonprofit program. As well-constructed programs reaped benefits for companies and nonprofits alike, the number of programs continued to grow. Now more than two decades later, cause marketing has evolved and developed into a firmly established practice, a new way for corporations and nonprofits to achieve significant bottom-line results and community impact.
http://media.wiley.com/product_data/excerpt/09/04717175/0471717509.pdf
Cause Marketing Emergedgtl
Did you know cause-related marketing promotions can increase your sales as much as 74%*? Nothing builds trust with your brand or service like a connection with worthy causes. You show you stand for more than profits, and the message resonates with your target audience.
We’re an interactive agency specializing in Cause Marketing using online social and viral media. Our cost-effective, innovative campaigns will connect you with non-profit charitable causes, encouraging your most valuable audiences to participate. Using the power of social media, we’ll help spread the word and show the impact of your campaign through the web.
Contact us to discuss ideas for your next Cause Marketing campaign, or to strategize on how to make Cause Marketing part of your online marketing plan.
*2008 study by Cone, Inc. and Duke University’s Fuqua School of Business.
http://cause.emergedgtl.com/?gclid=CMzA1IbA-JoCFRKAxgodCjYgdg
Cause marketing: Altruism or greed?
June 4th, 2009
(PhysOrg.com) -- Companies that join with social causes to sell products not only enhance their image but also improve their bottom line, say University of Michigan researchers.
Build Trust, Do Good. - cause.emergedgtl.com
We bring your cause marketing campaigns to life.
"Cause marketing, in which firms donate part of the proceeds from sales of certain products to a specified cause, is now a strategy adopted by hundreds of firms to increase sales for a wide variety of products, from coffee to cars," said Aradhna Krishna, the Winkelman Professor of Retail Marketing at Michigan's Ross School of Business. "But it is often associated with price increases, as well."
A few well-known examples of cause marketing include Project Red, which encompasses several companies such as the Gap, Motorola, Apple, Converse, Dell, Microsoft, American Express and others to raise money for the Global Fund to fight AIDS, tuberculosis and malaria; 3M's Post-It Super Sticky Notes imprinted with pink ribbons to help fund cancer research and treatment; and Snapple's bottled water sales to help build playgrounds in poor communities.
In a new study forthcoming in Management Science, Krishna and Uday Rajan, an associate professor of finance at Ross, found that cause marketing can increase sales—but can also raise prices—of the cause-related product, as well as of other products that the company sells.
One underlying reason for the price increase that Krishna and Rajan identify is the additional benefit that consumers get from buying a cause-related product. Consumers feel good about the firm selling the product, and also about themselves when they purchase such a product. Further, consumers can even feel good about buying a different product from the firm, one that is not related to a cause.
It's this spillover effect to a company's other products that can make cause marketing worthwhile, the researchers say. In fact, even if a firm is unable to increase the price of a cause-related product enough to compensate for the donated money or if it simply ties a low-selling product to cause marketing, it can still increase its profits—as long as consumers feel good about buying the company's other products.
Moreover, firms that raise prices on both a cause-related product and other non-cause products earn higher profits than if they don't participate in cause marketing at all. In addition, companies will never place their entire portfolio or product line in a social cause campaign.
"Firms can use cause marketing to increase prices and profits, but should be aware of the implications of placing different products on cause marketing," Rajan said. "For public policy officials and consumers who may believe that cause-marketing firms are more caring firms and are genuinely interested in helping others, it may be insightful to understand that cause marketing also allows firms to increase their prices and profits."
Provided by University of Michigan
Cause Marketing - Moving to Win-Win-Win (NAMA 2009)
Cause Marketing - Moving to Win-Win-Win (NAMA 2009)
View more OpenOffice presentations from Steve Drake.
http://www.slideshare.net/DrakeCo/cause-marketing-moving-to-winwinwin-nama-2009
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