Once upon a time, there was a farmer with a goose that laid golden eggs. When he first got the goose, he was delighted. What could be better? Without doing anything, each morning he woke to discover a new golden egg. He was rich! Soon he was richer than his neighbors and got infinite pleasure in buying new, expensive toys for himself and his family. After awhile, the farmer was spending so much money on frivolous things that he stopped farming. He bought cheap corn for the goose —which resulted in smaller golden eggs. He stopped feeding the other geese and as her friends and family began to die, the farmer’s special goose became unhappy and stopped laying eggs altogether. Soon the thin, sad goose laid down and refused to get up. The next day she died.
As the farmer sat despondently at his kitchen table, he glanced across the road at his neighbor’s farm. How had he not noticed that his neighbor had become successful? The farmer wandered over in the hope of discovering his neighbor’s secret. When he walked into the gate he saw miles of fields planted with healthy crops, trees lush with fruit, and then he saw the most surprising thing of all: a large, clean coop full of happily clucking geese laying lots of golden eggs. The farmer was astonished. He found his neighbor and asked him where he’d bought all those geese because he wanted to go buy more. His neighbor looked at him and laughed. “I didn’t buy all these geese, I grew them. I started out with one. With careful cultivation, I found out what foods helped her grow, which foods helped her lay golden eggs. Soon she was raising a family and heading up a community of geese all laying golden eggs.” He looked at his friend’s ramshackle farm across the way and said, “Surely you haven’t forgotten. We are farmers not merchants. Our job isn’t to buy things to sell, it is to prepare the soil for things to grow.”
This adaptation of the well-known parable came to me as I was thinking about the ongoing debate of whether capitalism can or should be a driving engine for social change. I wholeheartedly believe it can. Capitalism can develop “mission along with margin” but the success of the venture in creating lasting social change is, I believe, dependent upon understanding who you are: a farmer or a merchant.
In this oversimplified parable, farmers are concerned with creating the conditions for growth, because an organic increase in soil fertility creates a farm that is a better ecosystem of productivity. Merchants are primarily concerned with creating products that, when sold, give some immediate benefit. Both are good. Both are necessary. But they are necessary in different situations. In microfinance, for example, farmers may be needed, but in the development of solar panels, we may need merchants. As a grantmaker, one will likely set different financial and programmatic objectives based on whether a grant is funding a merchant or a farmer.
Here in Asia, the contrast between creating conditions for long-term growth or products for immediate benefit is being played out in daily news reports on the rapid rise, and equally rapid decline, of SKS Finance, the microcredit company with backers such as by billionaire Vinod Khosla and George Soros. SKS raised $358M in its closely-watched IPO. But the rockstar rise of SKS has been matched by the rapid tumble its stock has taken. Reports of a rash of suicides allegedly caused by high interest rates, clients who were overextended on credit, and tough repayment requirements are said to have affected the crash.
In a matter of one month, a company that had been the exemplar of microfinance-going-to-scale stands on the brink of major changes that may dramatically reshape the players and the way microcredit operates.
SKS has been contrasted with other players in microfinance such as Grameen or ACCION. To be clear, these two organizations charge high interest rates. And they also engage in the practice of collecting repayment on a weekly basis. But some evidence suggests that the differences between them and SKS are as important as the similarities. Microcredit organizations that fall into the “farmer” category focus on social support as a key element of success and repayment. They develop long-term relationships with clients. They recognize that microcredit may be an ideal central organizing tool, but it is only one tool that poor women need to get closer to self-sufficiency. These microfinance organizations use their profits to create farm insurance products that help the poor avoid losing everything due to bad weather. They create savings programs and educational loans to build skills that take people beyond subsistence. In other words, they use revenue to cultivate the soil, not prematurely take profits.
Don’t misunderstand me: profit-making and profit-taking are not bad. However, the idea of calling a purely capitalistic business that “also happens to do good” a social enterprise seems to be a bit of a fantasy. There are always trade-offs. The social enterprise makes profits while asking what more it can do to re-invest those profits into the communities, people and relationships it is helping to build.
The story of SKS is not over. Some say this incident is but a stumbling block on the path to even greater microfinance expansion. But the question I would ask is, are those changes technical or fundamental? “Merchants” may look at Grameen or ACCION and say, “We can sell that product too,” but they are missing the point. “Farmers” focus on all the inputs needed for long-term growth in the community, not just the products that generate short-term profits. It remains to be seen whether SKS and others are nurturing or killing the golden goose.
This piece is co-posted at the Center for Effective Philanthropy blog.
2010 ushered in do-goodism 2.0. The opportunities to check-in, check-out, or slack-out “for good” have never been greater. Voluntourism is on the rise, as people want to see and feel more of their vacation destination than a five-star resort may offer. But there are downsides, as I recently discovered at a cocktail party fundraiser.
The otherwise delightful woman to whom I was speaking was explaining how she and her husband had recently traveled to Cambodia with their kids in order to give the teenagers an understanding of poverty and their responsibility to help others less fortunate than themselves. I was interested.
When planning the trip, she explained, her kids had immediately dismissed Habitat for Humanity and other “traditional” groups because they wanted an authentic, personal experience. Prior to the trip, they’d gone online and researched places they could go and things they could do. They’d found a small village that was building a library and some houses and that needed materials and books. “Perfect,” she thought. Emails were exchanged, arrangements were made.
But, she then went on to explain, the trip had all but been ruined by the fact that when they arrived the locals took the books and materials they’d brought and proceeded to build the structures themselves. Her kids, who had planned what they wanted to do and how they would direct the building process, were sidelined by locals who took over and did all the work themselves. Her kids were invited to participate, but they weren’t allowed to lead “their” projects. The goal of the trip, she complained, had been for her kids to feel how they could make a difference and this experience hadn’t provided that at all. “Overall, it left a bad taste in their mouths for future volunteer work,” she concluded.
It was then that I yelled, “It’s not about you!”
In my head.
Aloud, I asked her politely, “Whose volunteer experience is this anyway?”
Nick Kristoff’s recent New York Times piece on Do It Yourself Aid raised similar feelings. While it is great to get out and feel like “I’ve made a difference,” shouldn’t the emphasis in that sentence be on “made a difference” and not “I?” When the primary purpose of volunteerism or aid work becomes our own experience of self-fulfillment, we’ve crossed a line. And unfortunately, sometimes the term social entrepreneur with its emphasis on one person, is synonymous with a “me” orientation that is antithetical to strategies that have been effective in creating lasting social change. Similarly, some social enterprises may be praised for taking a bold approach that makes perfect sense to donors, but which might not be highly prioritized by those receiving. Recent criticisms of TOMS Shoes and other “buy one, give one” programs raise important issues. If TOMS Shoes are being sourced and made locally, then that is sustainable change. If they are shipped in, then it’s mostly plain vanilla charity with excellent marketing. Almost by definition, these donor- or giver-centered approaches can leave out indigenous/local groups that are working to help themselves, but keep getting left out of others “solutions.”
So that begs the question, how much should one’s own need for achievement, media, or notoriety influence decisions about giving? Volunteering? When, as funders, do our demands for metrics and causality shift from necessary rigor and become instead attempts to assign egotistical ownership? When is our desire to develop a strategy that is “unlike other foundations” truly innovative, and when is it merely chest thumping?
For foundations, I think strategic philanthropy, as outlined by many of CEPs studies and reports, gives a great framework for allowing impact — not ego — to drive action. And personally? Well I love feeling that I’m making a difference, whether it is buying green products or volunteering or contributing to organizations I love. By doing these things I create a sense of community, connection, and empathy that benefits me as well as those on the other end of that support. The act of giving is mutually beneficial. But at the end of the day, it’s not only about me. Giving, volunteering, and the work done to support nonprofits becomes transformative when the goal is something much larger than just one person’s pride or fame or even self-actualization.
Do you have strategies for keeping your ego in check?
This piece was originally posted on the Center for Effective Philanthropy’s blog which can be found at http://www.effectivephilanthropy.org. I am a member of CEPs board of directors.
This piece was originally posted on the Center for Effective Philanthropy’s website where I have been a guest blogger. The Center for Effective Philanthropy (www.effectivephilanthropy.org) provides foundations with comparative data to enable higher performance.
A recent Harris Interactive poll suggests that Americans intend to give less in 2010 than in 2009. A combination of high unemployment and economic uncertainty have caused generous people to feel slightly less so. Despite this fact, it is also clear that Americans are giving more in new ways this year than ever before. Five years ago, we didn’t have the option to Tweet for Change, or, through Foursquare, Check-in for Change.*
One young woman who was interviewed about “check-in giving” through the CauseWorld app said, “CauseWorld makes me feel like I’m doing some good in the world every day. I don’t have much money to give to charity these days, like most people, so having a chance to direct money to some really important causes means a lot to me.” Declines in charitable giving have occurred in the past, but never before has that decline been coupled with the rise of so many other quick-hit ways to express generosity.
If the desire to be generous can be assuaged by directing someone else’s money, will we still feel compelled to give? Will we be willing to sacrifice our own money to support the causes we care about? For example, Starbuck’s has tested making charitable contributions as a benefit of checking-in. While this may be an appealing experiment to Starbucks regulars, it should be noted that these $4-latte-lovers are not offering to drop their Starbucks habit in order to direct those funds to charity.
Questions such as these were raised by Malcolm Gladwell’s New Yorker piece as well. Will casual support displace deep commitment? The jury is still out, but I think the potential difference in how nonprofits receive funding from individuals could, over time, be quite important. In aggregate, annual giving—usually defined as contributions from individuals—represents a core, stable funding base for many nonprofits. In fact, annual giving is often the counterweight to time-limited or non-renewable funding from corporations and foundations.
If, over time, nonprofits receive more and more funding from these embedded giving/contribution consolidators, will that negatively affect nonprofits’ cash flow? One recent study by Network for Good suggests the answer is yes. When offered a gift, the question nonprofit leaders often ask is not just “how much?” but “how often?” They all know that a consistent gift of X is almost always more valuable than a one-time gift of X+. So that leads to another question, how can nonprofits convert those casual givers to become regular givers?
In order to help nonprofits do this, foundations need to support the development of fundraising practices that help nonprofits engage with these new giving vehicles. Nonprofits shouldn’t simply be passive recipients of grants from social media philanthropic aggregators, they should be active participants. But as Beth Kanter regularly points out in her blog posts, an effective nonprofit social media fundraising strategy requires thought and time (and funders, that means money).
Nonprofits will need to learn how the ease of transaction (“Press # now on your cell phone to give a dollar to Haiti relief efforts”) can be maintained without nonprofits having to cede the entire relationship to a charity portal. In his recent Harvard Business Reviewpost, Dan Pallota also points out the importance of foundations placing strategic emphasis on their grantees’ fundraising capacity. While I am a strong advocate of general operating support, I think that foundations should go further to engage with grantees about fund development and adapting to the changing technological landscape.
Those of us who fund nonprofits can often be heard criticizing the lack of strategy and financial planning among nonprofits. But if embedded giving allows people to express support for many groups, will that lessen people’s allegiance to specific groups? Maybe funders should be putting more thought, research, and money into helping nonprofits creatively respond to these new fundraising challenges and amazing opportunities.
* Geo-location sites like Foursquare and Gowalla are game-like mobile phone applications that invite people to “check-in” when they have arrived somewhere and give a quick status update, similar to Facebook. On most sites, people gain points or credits the more often they check-in. Companies are beginning to offer coupons or time limited deals when people check-in. Causeworld is a similar site which gives people points they can use like frequent flyer miles to make donations to charities.
This piece is my first post for the Center for Effective Philanthropy as a guest blogger. The Center for Effective Philanthropy (www.effectivephilanthropy.org) provides foundations with comparative data to enable higher performance. Over the years, CEPs surveys of grantees has changed the way the foundations I have worked at have operated. And CEP provides benchmarking that helped us compare ourselves to similar foundations and to our own performance over time. Despite my move to Singapore, I continue to sit on CEPs board. These blogs will be a few of my thoughts on philanthropy, NGOs, aid, Asia and effectiveness.
When I was fresh-faced and just starting to work in philanthropy at a woman-focused community foundation, I made lists. I would write down the problem or issue I wanted to tackle, then make a list of reasonable solutions. For example:
- Make it a crime
- Lock up the criminals
- Get women legal services for safety & to pay for the divorce
- Provide counseling for the kids
- Get mom a job
Then I would look at the money I had available (never enough) and divide it equally among each of the reasonable solutions. Confident I was doing all I could to address the problem of family violence, I talked earnestly with the board of directors about the importance of our “multi-faceted” approach. (now, that word looks quaint, but trust me you used it a lot in the 80s too).
Next, I would turn to the giant map of Los Angeles we’d hung on the wall and divided into what we called neighborhoods, but which were really more economic descriptors than geographic locations—South Central LA (Compton but not Ladera), Westside (Venice, but not Santa Monica), Hollywood (but not West Hollywood).
We would push pins into the places where we made grants—red for violence prevention, blue for economic development, green for arts, etc.—and we aimed to distribute those pins fairly and evenly from the San Bernardino mountains to the shining sea.
I did due diligence – financial assessments and site visits – on every organization that received a grant. We gave project but not general operating support. And we considered ourselves partners with the groups we funded.
And that’s how we did it.
This was what we called our strategy if someone had asked us that question, which really no one ever did. Far more frequently, what people wanted to know was “why should I give to a women’s foundation?”
Why I could talk about passionately:
– Because the status of women is a barometer of equality in any society
–Because if women flex our giving muscles to demand that solutions have a gender lens we will develop better solutions
– Because women are the backbone of financial decisions in most families and communities
– Because well-educated women give a lot more of their joint wealth to their husbands’ alma maters than they do their own
– Because sisters are doin’ it for ourselves.
The list went on and on.
At the core of the answers to “why?” was a belief that women didn’t want to be saved. Women wanted tools to make good decisions for themselves and their families. Women wanted the opportunity for hard work to result in something more than 63 cents on the dollar.
And that belief saved us from ourselves. It put us in partnership with the (mostly) women’s organizations we funded. Over the years, those partner nonprofits joined our grantmaking committee and our board of directors. They challenged our approach—why not general operating support? They challenged our funding partners—can Virginia Slims buy a table at an event? Uh, no. Their staff members wrote checks contributing their hard-earned dollars to the Women’s Foundation* because they felt like we were all part of the movement. And they helped us to understand how to prioritize “solutions” by telling us which ones mattered most in which communities, which ones were dead wrong in others, and how to add ones we’d never thought of ourselves.
We practiced an early form, I think, of what Peggy Saika recently called “democratic philanthropy.” Now not every foundation is willing or able to be as fully participatory, but it makes a huge difference if you can be. I learned, in those early years, that folks did not take kindly to the notion that their communities or their lives were problems to be solved. By starting from a place where we stated our “why” values and listened to theirs, we found we were in alignment. And that alignment allowed us to be on the same side of the table in determining “how.” And even working through massive disagreements on “how.” But that’s what partnerships are about.
In short, we found that good strategy starts with listening. And not just sporadic listening, but listening that is built into the processes of our grantmaking. If we understand how our grantees see the world, it makes us smarter, better partners.
* I am pleased to say that the Women’s Foundation of California has come a long way since my early days of strategy development at the Los Angeles Women’s Foundation 24 years ago. The Women’s Foundation of California is one of the most thoughtful, grassroots and policy oriented foundations I know and I owe them so much for helping me learn what I know about philanthropy and social change.