As published via LinkedIn
It wasn't the first time I heard this, and I know it's not the last. During a standard prospecting call with a well-known impact fund (i.e. nonprofit) based in Europe, a potential client emphasized his need for investors, not just donors. "We are trying to transform lives here, not just put a bandaid on them" he indicated, ensuring I got the point. Not only did I get the point, but this notion of transformation, investment, impact and long-term change is rearing its head in virtually every call I have with potential and existing clients.
"We are not a nonprofit, we are an impact fund." "We don't just implement projects, we change lives."
He continued to share with me the rationale for investment, why a rate of return on this fund's projects is better than putting money into a similar European government fund, and why the projects this fund is leading are poised to systemically transform communities in several parts of East Africa. He sent me prospectuses, investor profiles and testimonials.
I kept thinking, but you are a nonprofit, not a stock or debt instrument.
He repeated one more time, before we ended our call, why corporate donors in particular would want to invest in his fund. "We offer a higher ROI than most impact funds in our area of expertise. We can guarantee measurable impact within 5-years."
Guarantee impact? Definitely music to a corporate social impact investor's ears.
Catch the drift here?
The .org is effectively dead. What is growing in its place is the impact fund.
Whether it's due to declining donor engagement, mission creep, donor fatigue or something else, the role of the nonprofit is slowly declining. Nonprofits are rebranding themselves, or coming up with new models to engage more innovative sources of funding and longer-term investment. Donors want a return, they want to show shareholders that valuable dollars go towards true impact, not just into another nonprofit-led, 3-year project. Gone are the days of bilateral philanthropic money handovers by corporate philanthropists to special causes or charities. Employee engagement is the new volunteerism, and you better believe that this engagement program deliver on business aims at the same time. Impact, purpose, mission, cause. The words are all jumbling together but the aim is the same. Organizations want to make a difference and they want to see their money spent wisely.
What does this mean for nonprofits? It means funds are harder to come by. It means being more direct with messaging and prospecting. It means figuring out how partnerships with companies, governments and foundations can be game-changing and not just about a tax write-off.
We have seen an insurgence of social enterprises popping up in developing communities, identifying ways to create lasting change and market-led programming. My company is getting inundated with requests from small social entrepreneurs in every corner of the world, wondering how to tap into the evolving funding pools from USAID, MCC, OPIC, corporates or foundations that are keen to turn a dollar into two. Economics are driving a sea change whereby "market-led" is a priority. Traditional .orgs that simply provide handouts must evolve.
Harsh? Maybe. But it's true.
To my .org friends out there, don't lose sight of what your work is doing to change the world. Figure out how to shift gears and focus on the long-term gains. Make sure your messaging is resonant with the changing winds of donors and keep in mind that these donors also want to be investors.
They want to see a changing world... One where they make money too.
No. This is not a political statement. Instead, it is a story about a billionaire who has established a corporate vision for our generation that could single handedly save us from ourselves. I am not speaking about Michael Bloomberg, although some may argue that this description fits him too.
Laurence Douglas Fink was born in 1952 in California, a son of an English professor and shoe store proprietor. A successful business student and eventual MBA, Fink started in the bond business in the 1970s when bond business was just starting to hit its stride. Laurence (or Larry for short) weaved in and out of the financial markets until the late 1980s when he founded BlackRock, an asset management firm that has since grown to be the world’s biggest, with $6.5 TRILLION under its auspices. One may think that Larry Fink, the billionaire who he is, and with the success he’s achieved, would be pleased amassing wealth and prestige, not thinking about much else. Perhaps in the older days of his asset management career that was the case. Nowadays Larry is most known for setting the high bar for corporate executives to lead with purpose and intent, and to make the world a better place.
Every year Larry sends out a letter to the companies in which BlackRock invests as part of the company’s Corporate Governance program. In 2017, Fink recalibrated on his 2016 letter where he suggested companies needed to start thinking longer term for greater value to shareholders, by suggesting that going forward, BlackRock will make determinants on investments based on the key ingredients that support long-term value, which include environmental, social and governance functions. Sustainability was mentioned several times in the 2017 letter as a key determinant of how companies are looking at growth. That growth isn’t just about shareholder returns and short-term gains, but about how a company can invest in global improvements.
By 2018, Fink’s letter took on a more urgent tone, requesting that recipients of investment dollars think strongly about the way the public is depending on companies to make a positive contribution to society given the pressing issues of our time. Fink says “without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose license to operate from key stakeholders.” Fink’s letter goes on to question the role companies indeed play in society, and whether companies want to be known for being stewards of the environment and communities in which they operate.
When we live in a time when politics, business, philanthropy and technology seem to swarm with billionaires, and when society begins to doubt the audacity of said billionaires to give back in a way that is impactful and can effect change, it’s hard to give credence to these moves by Fink to inspire companies to do the right thing. That said, the waves Fink made by writing his imploring letters, and subsequently the changes we’ve seen in big companies wanting to play a bigger hand in the space of sustainability, are monumental. Whether you take these actions at face value, or like some, see them as a pure money making ploy, that’s your choice. My perspective is that leading companies are figuring out how to represent their business interest in a way that has positive humanistic and societal implications. Stakeholders and shareholders are responding well, and that will only continue as investors, partners, governments and ultimately consumers support those companies doing the right thing, without question and without hesitation.
Do you ever think about how to improve the challenges our world faces when we can control so little outside of our own actions? Have you considered how the efforts you put into making a change jive (or not) with those of others? Whether you are a business owner, nonprofit executive, leader at a large company, entrepreneur or any individual trying to make a positive impact, it seems near impossible sometimes that we will be able to make a dent in our greatest challenges if we don’t do so by working together.
I’ve spent my career trying to solve problems that seem near insolvable. Anyone who knows me knows that I am a stalwart champion for effective collaboration to address these challenges given their complexity and scope. Ensuring every person on this planet has access to basic necessities, for example, like water, food, shelter and education may seem like a moonshot project, but it doesn’t have to be. Effective collaboration can truly make a difference.
It may be easy for someone like me to talk incessantly about partnership for problem solving, though, when that’s what I do every day. For others not used to working with partners to find solutions to challenges big or small, collaboration may not come naturally. I’m often asked how organizations can begin finding the right partners to work with if collaboration is a need or of interest. It’s a really important question actually. To put it simply, I often look at partnership through the lens of comparative advantage.
What is comparative advantage? Comparative advantage is a way of measuring degree of skill and strengths. For example, if one nonprofit is skilled at fundraising, and another nonprofit is able to do fundraising well, but isn’t as skilled as the first nonprofit, than the first nonprofit has the comparative advantage. This means that as the two nonprofits enter into partnership, the first nonprofit should really be the one managing fundraising, and the second should be working on a skillset where they have the comparative advantage (maybe M&E).
Comparative advantage helps you think about the types of skills that you bring to a partnership, versus where skills are needed to advance a certain mutual goal or deliverable.
Through comparative advantage, collaboration can be more structured, and thus roles, responsibilities and deliverables are easy to agree to. This makes goal delivery more effective and efficient, and helps us get out of our silos as well.
If this notion of partnership with a focus on comparative advantage, is interesting to you and yet you still are quite sure where to begin, start by thinking about what skills you bring to a partnership and what skills you still need. Helping you think through some of this is what we spend a lot of time doing at Connective Impact. We’ve also created an online set of tools to help too. Once you get started focusing on collaboration, whether using comparative advantage of your own set of tools, hopefully you will land on a solid approach to find your own set of moonshot goals to address and overcome.
In December, 2017 my company, Connective Impact, became a B Corporation. Are you familiar with B Corps? Maybe you’ve seen the big, bold B label indicating a company has been certified as a B Corp? Perhaps you’ve heard B Corp Patagonia’s CEO Rose Marcario share why being a socially and environmentally minded company is so important both to the consciousness and bottom line of Patagonia. You may have even seen the B Corp logo when eating a pint of Ben & Jerry’s ice cream. B Corporations are certified companies balancing purpose and profit. They are companies as big as Patagonia, Ben & Jerry’s, Seventh Generation, Kickstarter, or Eileen Fisher, or as small as Connective Impact, using business as a force for good. Does it matter whether businesses care about purpose? Do conscious missions drive profits? Can businesses shape a new paradigm to advance opportunities that heal us or advance us?
You can read my take in my new book Purposeful Profits: Inside Successful Businesses Making a Positive Global Impact, out May 22nd.
You can also see mention of the role purpose and mission play in corporate decisions the world over if you pay any attention to how companies are evolving in the new generation of millennial leaders. What a company says, does, invests in, produces and how it advocates (or not) for certain issues matters. The B Corp movement is deeply involved in advancing the message that business can and should be a force for good, politically, socially, environmentally and economically.
As a B Corp, and a woman-owned business, Connective Impact is also part of a unique group of companies run by B Corp Female CEOs (18% to be exact). As one of these unique creatures, I was invited this past week to attend a convening at Eileen Fisher’s Learning Lab in upstate New York with 100 other B Corp Female CEOs to discuss how we, as women leaders, can effect the greatest change with our businesses, within our communities and our partners. Over the course of 1.5 days we worked within working groups, in small listening sessions, brainstorming about inspiration and challenges, fears and opportunities. We addressed ways to engage on political issues like climate change and gender equity, we discussed ways to shift capital so women-owned businesses (and especially diverse-women-led businesses) can get better access to funding, we talked circular economy, peer-to-peer networking and business development. We had delicious food and even more delicious dialogue.
To kick off the day we heard from Eileen Fisher herself, a pioneer in the mission-driven business space, as well as Nancy Green, CEO of Athleta and Mary Powell, CEO of Green Mountain Power. These women leaders shared unabashedly their own inspirations, sense of fears, struggle with balance and feelings of opportunity for the future. Capping off their presentation was the signing of the We the Change Manifesto (see below), which we all signed in support of a paradigm shift led by women-owned businesses.
The day was about focus, intention, authenticity, honesty and shifting power. It was about Purposeful Profits, women support, collaboration at its finest, and a commitment to make a change for future generations that is built on respecting our planet and each other. There’s nothing more pertinent in the notion of being a B Corp that that.
If you aren’t yet familiar with the B Corp movement, visit BCorporation.net. To learn more about the B Corp Women CEOs working groups, contact me anytime.
Joanne Sonenshine is Founder + CEO of Connective Impact, a partnership strategy advisory firm helping mission-driven companies advance social, environmental and economic impact through collaboration, and author of ChangeSeekers: Finding Your Path to Impact and Purposeful Profits: Inside Successful Businesses Making a Positive Global Impact.
We were asked to compile a list of the best ways to find new partners for mission-driven businesses looking to increase their impact, while staying focused on their business. Rather than keep those creative ideas close to the vest, we wanted to share with our readers. We hope you find one (or more of these ideas) useful!
If Connective Impact can be helpful as you seek new and diversified partners (for funding or project development) reach out to us! Our new course, Partnerships, Purpose and Profit is also available to help you develop your partnership strategy and advance your mission.