Tag Archives: venture philanthropy

Philanthropy and Social Investing: Blueprint 2010, by Lucy Bernholz

@@@@ (4 out of 5)

Lucy Bernholz is a blogger with a Stanford Ph.D. who has been consulting with foundations about program research and design or otherwise working in the foundation sector for two decades. In this brief monograph,published online by the Stanford Social Innovation Review and available for the Amazon Kindle and as a PDF, she examines the wide and fast-proliferating options available to philanthropists and socially minded investors today — and offers guarded predictions about the future course of several key present-day trends in this field. Bernholz does a masterful job of covering the waterfront, scanning every new development from the B Corporations and L3Cs on the frontiers of Triple-Bottom-Line business in the U.S. to the social capital exchanges coming into being in Brazil, South Africa, and England. She leaves no stones unturned.

Bernholz identifies three high-potential trends as likely keys to the future financial undercarriage of the social sector: impact investing, hybrid organizational structures, and new platforms for information. These seem as good a set of choices as any. Impact investors, in Bernholz’s view, are “funders focused on using investment funds as well as grant dollars to pursue their goals.” Hybrid organizational structures “bring together familiar business practices — such as earned revenue or return on investments — with the mission and purposes usually associated with the social sector.” In this category, she singles out B Corporations (for-profit companies dedicated to public benefit) and L3Cs (low-profit, limited liability companies) for special attention. New platforms for information, mostly online, encompass an extraordinary variety of efforts to make widely available the hard data demanded by all investors and most philanthropists before they will put their money to work in the business of social change. Among them are the Web sites (such as GlobalGiving and Kiva.org)  that link individual donors or investors with specific projects,  a growing number of collaborative efforts linking donors or social investors to one another, and online communities for foundation staff and trustees.

Squarely zeroing in on conditions in 2010, Bernholz asserts that nonprofits, already reeling from a year in which a majority laid off staff, will face even harsher conditions this year. Many of the 1.5 million organizations in the U.S. nonprofit sector were widely predicted to go out of business   in 2009. They may actually do so in 2010, Bernholz believes.

There’s a lot more that’s worthy of comment in this very slim monograph. I’ll refrain from writing more, though, since I’m fearful that this review might end up longer than the work it reviews! If you’re involved in any sort of effort to promote social betterment through either investing or philanthropy, read this little book.

FYI: my company, Mal Warwick Associates, is a Founding B Corporation and a Certified Green Business, and I have been a member of the Social Venture Network since 1990.


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Small Change, by Michael Edwards


@@@@@ (5 out of 5)

Small Change should be required reading for every foundation board member and program officer, every major donor — in fact, philanthropists of any description. In this tiny volume, Michael Edwards lays bare the fatal flaws in the philanthropic world in America today and offers a prescription for healing the field that could play a major role in putting our country back on track to leading with its values.

Oddly enough, Edwards did not set out to write a critique of American philanthropy. The book is subtitled Why Business Won’t Save the World, and the author’s stated objective was to debate the dubious claims of the “philanthrocapitalism” espoused by The Economist’s Michael Bishop and others, the “creative capitalism” offered by Bill Gates, the “fortune at the bottom of the pyramid” of C. K. Prahalad, “corporate social responsibility” of the window-dressing variety, and “social enterprise” in virtually all its guises. His goal, in short, was to reject the role of business, business thinking, and the market as solutions for the ills of the nonprofit sector.

Michael Edwards is brilliant, articulate, and extremely knowledgeable about philanthropy, civil society, and social change, all of which are major themes in this book. For nearly ten years, he directed the Ford Foundation’s Governance and Civil Society Program, and he has spent a total of three decades in the nonprofit sector. On matters involving business he is less sure-footed. In the course of writing this book, he conducted extensive research on the role of business and business thinking in the not-for-profit world. That research shows clearly in Edwards’ eloquent critique of philanthropy that either comes directly from corporate sources or is guided by the metrics-driven methodologies of the business world. He is on shakier ground when writing about social enterprise, which he appears to believe is dominated by profit-seeking companies.

“Social enterprise” is, of course, a fuzzy term, and ultimately its definition lies in the eyes of the beholder. However, there’s no disputing the fact that a huge proportion of social change efforts undertaken under that umbrella are, in fact, nonprofits — many of them engaged in the sort of bottoms-up, grassroots organizing efforts that win Edwards’ praise. Thinking otherwise, he dismisses the world-changing work of Ashoka’s more than 2,000 social entrepreneurs in over 60 countries around the world. Unlike the true “philanthrocapitalists” who are imposing top-down approaches and burdensome measurement and reporting requirements on so many of the nonprofits they support, Ashoka Fellows are achieving impact not just in the communities where they work but on a nationwide scale, through the many policy changes that have resulted from their efforts.

Edwards believes the authentic role of philanthropy is to foster transformative social change — change that addresses society’s injustices and inequities in fundamental ways. (I agree!) “No lasting change has been successful,” he writes, “without large numbers of people acting consciously and collectively around human values of solidarity and social justice, not market values. Markets are a great way to do some things, but not to fashion communities of caring and compassion.”

Unfortunately, as Edwards seems to recognize, it’s not just the new breed of philanthrocapitalists who are getting in the way of social change. Traditional philanthropists play an even larger role in directing resources not to genuine social change efforts undertaken  by what Edwards calls “civil society” but to “safe” charities, often ones that cater to their own personal interests and tastes. (Think already-well-endowed universities, art museums, ballet companies, symphony orchestras, “nonprofit” hospitals — admirable institutions one and all but in no way related to changing the balance between haves and have-nots in American society.) He believes, as I do, that the proper role of philanthropy is to combat “the realities of injustice, such as racism, sexism, homophobia, and the abuse of human rights — terms that rarely appear in the strategic plans of any of the new foundations.” But putting those buzzwords in strategic plans is far from enough. As Edwards himself points out, just 11 percent of philanthropic resources in the U.S. is channeled to “social justice grant making.” And I’ll wager that only a tiny fraction of that 11 percent is devoted to community organizing and grassroots advocacy as opposed to plugging holes in the human-service safety net.

So, you can see why most of the people who should read this book undoubtedly won’t. Read it yourself, though, if you want to gain a truly insightful perspective on the world of philanthropy today.

ISBN-10: 1605093777

ISBN-13: 978-1605093772


Filed under Business, Nonfiction