Sick of fundraising

I’ve been following Leila Janah‘s work for a year or so. I forget how I discovered her, but both her Sama and LXMI ventures are great and frankly invigorating to follow. Her recent Fast Company interview is worth highlighting, particularly:

Janah, as usual, is feeling bullish about her mission, but she’s chafing at the strictures of the traditional not-for-profit model. Janah may run an antipoverty organization, but she is also a Harvard-educated former management consultant who believes in the startup ethos of experimentation, iteration, and the occasional pivot. Grant proposals, by contrast, typically compel organizations like Sama to detail programs step-by-step, in advance. “It basically requires you to predict what is going to happen in the future,” Janah says. …

For Janah, that is hardly enough—which is why she has dedicated herself to freeing Sama from the stifling not-for-profit funding process. This is a radical burst of independence, and Sama is already close to achieving it. Thanks to contracts with companies including Getty Images, Microsoft, and Qualcomm, Sama has generated enough income to cover the majority of its operating costs. “If we can show that not only can we provide this dramatic improvement [in Sama workers’ lives], but we can do it on a break-even basis, it’s revolutionary,” Janah says. “Let’s say you invested a dollar in 2009. The social return on that dollar will be infinite.”

Sama represents a new model for social impact: a nonprofit that is self-funding.

Earned revenue is where it’s at. This is increasingly what I’m trying to tackle in my own work.

Awesome board members

Anyone joining a nonprofit board should have a sense of what they bring to the table—not only at the actual meetings, but in between the meetings when the real work gets done.

This crowdsourced list of “25 things that awesome board members do, in no particular order” is a great reference guide for anyone on a board or considering joining one. In my own small experience, great onboarding and orientation for new members is usually more aspirational than real—but an overview like this one helps get you mentally prepared for the best way to make a great impact during your time.

I think the most important of the “25 things” is #4: “Love and believe in the organization. Awesome board members truly believe in the organization’s mission, vision, and values. They love the organization, they want to marry it, and it shows.”

You’re an evangelist if nothing else. It should show.

Creating value creates profit

Matthew Robare writes about a remarkable young businessman::

Southbridge, Mass., is one of dozens of New England mill towns that have fallen on hard times. These places were once prosperous, with traditional development built around walkable downtowns and streetcars. But today, the factories have closed and the downtowns are empty, thanks to economic collapse, antiquated zoning laws, and an automobile-centric transportation policy.

In many ways, Southbridge is typical of these towns. Its American Optical Company was once the largest manufacturer of eyeglasses in the world; now, the town’s structures are falling apart and few businesses are left. But in Southbridge, whose population numbers about 16,000, one native son is working to revive his hometown one building at a time.

A boyish, bespectacled 21-year-old, Hunter Foote entered the world of real-estate development as soon as he graduated college at the age of 17. Foote studied business at UMass-Amherst and found he was different from his classmates, who typically looked at a business career as a ticket to a lavish lifestyle. “I looked at business as creating value,” he says. “By creating value, the business is rewarded with profit. Profit is the method, not the goal.”

That outlook informs his work today. While many city governments seek huge government or corporate investments to come to their splashy rescue, Foote is an incremental entrepreneur. His company, Bellus Real Estate, works by buying distressed properties and renovating them. This style of small-scale development has low barriers to entry, is less disruptive to neighborhoods, and can produce a decent profit margin without ultra-luxury apartments or chain restaurants.

It also puts into practice many of the ideals of New Urbanism, a movement that seeks to recover the traditional patterns of urban development that prevailed before World War II. This time-tested model is characterized by walkable communities and buildings with storefronts and street-level windows and doors.

“Profit is the method, not the goal.”

Revisiting b-corporations

Earlier this year I wrote about Benefit-corporations and why I think they’re the future for most 21st century companies.

B-corps enable “holistic corporate valuation” because they allow a company to define its mission and measure its impact not only in the traditional terms of profit, but also in social and environmental terms. B-corps blur the line between for-profit and non-profit companies in a compelling way.

This Nature Conservancy interview is further proof to me that companies will find attractive ways to instill b-corp values into their corporate culture even if they don’t become b-corps themselves:

One of seven goals outlined in The Dow Chemical Company’s 2025 Sustainability Goal, the “Valuing Nature” Goal is a first-ever commitment by a corporation to consider nature in virtually all of its business decisions. It’s a big bet on the idea that there is a lot of unaccounted for value from nature, and a lot of undiscovered nature-based solutions to business problems. In fact, Dow is betting that they will find $1B by 2025, in business value from projects that are good for ecosystems and good for business.

And in the meantime we see how lack of b-corporation status for today’s companies still leaves room for the first step of evolving corporate culture:

One potential limitation is that the Nature Goal process will not add up all of Dow’s impacts to and benefits from nature; it is not designed to achieve a metric like net positive impact. Instead, it will focus on changing behavior across the company through improving decisions for thousands of projects a year. This project-based approach is intended to inform actionable decisions and create learning opportunities for project managers, while other sustainability goals at Dow address enterprise-wide impacts, such as greenhouse gas emissions and energy use.

Holistic corporate valuation

I wrote the other day about Albert Wenger’s “scarcity to abundance” mantra, where one of his points is that automation may necessitate something like a basic income guarantee. The concept is to decouple work from income, with the counterintuitive result that increased leisure time often leads to better education, time to think, time to tinker and build new innovative products and ideas. Leaving aside the question of a basic income guarantee, we don’t need to debate the critical value of automation and leisure in creating the context for social innovation. This is pretty much the entire point of Hans Rosling’s TED talk on “The Magic Washing Machine.”

All of this returns me to the question of how we value work and how we measure the importance of what we’re working on in a time when automation is on the brink of relieving tens of millions of people from certain types of work. Jobs we consider decent, honorable, and meaningful that will soon be done by machines. Drone ships on the high seas, drone trucks on highways, drone quadcopters delivering packages, etc. The intuitive answer for how to measure the value of work in the corporate environment is to answer “Whatever produces the greatest return to the shareholders.” In the nonprofit world, it’s slightly different: “Whatever produces the greatest return to the stakeholders.”

But if increasing automation collectively delivers millions of new hours of leisure time for young and healthy people, it seems likely that those measurements of the value of work will see redefinition.

I think we’re seeing the first steps toward redefining the value of work in both the corporate and investor spaces. in the corporate space, b-corporations enable companies to codify their mission in both an economic and social sense:

In the United States, a benefit corporation or B-corporation is a type of for-profit corporate entity, legislated in 28 U.S. states, that includes positive impact on society and the environment in addition to profit as its legally defined goals. B corps differ from traditional corporations in purpose, accountability, and transparency, but not in taxation.

Patagonia is an example of a compelling b-corporation whose structure ensures its board has to make decisions that go beyond simply considering the company’s return to shareholders. So b-corps I think represent a super compelling hybrid for companies that might previously have sought to be quieter and less ambitious nonprofit corporations. Then there’s the investor space, where Chronicle of Philanthropy predicts impact investing as one of this year’s trends:

Average investors will soon join the handful of foundations and wealthy individuals pioneering the idea of impact investing: putting money into a business, nonprofit, or government program with an expectation of both social change and financial return. “It’s no longer a question of if it’s going to happen; it’s just a matter of when,” says Jacob Gray, senior director for the University of Pennsylvania’s Wharton Social Impact Initiative. This year, Wharton will produce what it says will be the first-ever comprehensive analyses of the financial performance of impact investments.

I think these two trends could accelerate change in how we value work. These trends could also help eliminate a lot of the distinction between for-profit ventures and non-profit ventures, especially for non-profits that generate earned income. If you have a compelling mission that’s both socially and economically significant, it seems like there’s finally both the legal and financial context to make it work.

These sorts of companies could help create a more resilient economy, because a job whose value is measured by something more than its economic utility is probably more difficult to automate.