Competition: Nonprofits are constantly targeted by the business-minded as lacking efficiency due to the fact that NPOs are not competing in an open market. As a result, the need for innovation is removed. Which is not to say that innovation isn’t necessarily occurring in the nonprofit world, but it tends to be driven internally (as in, “Hey we feel like we want to do this”) rather than externally (as in, “Hey we have to do this if we want to survive”). The competition element is increasing, however, as nonprofit watchdogs, like Charity Navigator, and private foundations are relying on industry best-practices to evaluate the relative effectiveness of nonprofit organizations. This in turn is informing where foundations invest their funding and encourages individual donors to also do their research when giving.

Collaboration: There seems to be two main camps of nonprofits: those who play well and those who don’t–and these two are often easy to distinguish. Nonprofits who play well with others collaborate with complementary organizations in order to better achieve their mission and further define their social niche. For these organizations, there are formal and informal partnerships, co-sponsored events, etc. Those who don’t play well tend to feel threatened by organizations who are “encroaching” on their funding territory and will not only avoid any sort of collaboration, but may even try to sabotage their competitors’ efforts (yikes!).

Communication: Talking with folks in the social enterprise and nonprofit world, something you hear all the time is the lack of communication happening between organizations. Maybe part of that is related to the competition element, where NPOs feel like they only need to communicate with their funders. Maybe part of that is related to the collaboration element, where NPOs don’t feel like sharing what is working well for them because it may threaten their  success relative to others. Either way, the lack of communication is decidedly a factor leading to many organizations simultaneously inventing the wheel…and maybe even simultaneously re-inventing the wheel. Both of these scenarios are pretty inefficient.

What does this mean? In the business world a lack of communication (like trade secrets) are part of what give businesses their advantage over others (for example, Coca Cola’s secret formula). But Coke’s competitors are using private investor money to develop their competing product and  (assuming they believe in the product otherwise they wouldn’t be investing in it) are expecting a return on investment (ROI).

In the social sector, does it make sense to fund Organization A with $10,000 to learn how to best to do X and also to fund Organization B with $10,000 to learn how best to do X? It sounds really obvious, but it happens all the time.

Furthermore, what are the ethical implications of inefficiently (or maybe even irresponsibly) using funding? How can we reduce a lack of communication and collaboration to encourage more efficiency? If Organization A learns how best to do X  with its $10,000 and shares this information with Organization B, then Organization B can learn how to do Y (the next step after X) with its $10,000 and in turn share that information.This would lead to a higher social ROI, because now, instead of having 2X for $20,000 we would have 2X+2Y for $20,000.

“Wait wait! This sounds crazy! But then they would be direct competitors and one would clearly fail!” Well, yes that would happen if they both provided the exact same service. The trick is for these organizations to find niches–which can be geographic, programmatic, population-based, etc. For example, maybe Organization A works in San Francisco and Organization B works in South Africa. Or, Organization A works with environmental issues and Organization B works on hunger issues. Or, Organization A works with elementary school children in NYC and Organization B works with college students in NYC.  Rather than spending time co-learning how to do X+Y, both organizations can now spend the rest of their time perfecting their program based on their niche.

“This sounds like a horrible idea.” Well, it may be a horrible idea, BUT! Look at what open source has done for the mobile technology community. Apple could have made its API a “trade secret” and have a monopoly on the applications that were sold for the iPhone. However, they made it open source and the number of iPhone apps has exploded because individual developers can create applications for the iPhone that they can then sell to iPhone users. So, while Apple isn’t solely benefiting from the income from app sales, they have dramatically increased the value of their product by passive collaboration and communication via open sourcing. [You can also look at WordPress the successful open source blogging platform--which I am currently using .]

Kiva has taken a hint from this and has open sourced their API in order to speed up the development of their online micro-finance program. They even include a list of things that they would love to see someone develop, including:

• An application for iPhone or Blackberry that let’s you keep up with Kiva on the go
• A service where lenders can register for alerts on new entrepreneurs they want to fund
• Integration into a social network where friends can engage around each others’ activity and loan updates on Kiva
• A map that simulates the realtime transfer of funds across the globe

The take-away: Open sourcing is a great way to share information, increase efficiency, and increase innovation because it offers others incentive (whether that is bragging rights and exposure or actual monetary benefit) to participate in your larger development process. It also naturally increases communication, collaboration, and competition (which of course feedback into increased efficiency and innovation). So, the next question is: What are ways that the nonprofit sector can open source?

The article is full of very useful information outlining alternative nonprofit funding options (like fiscal sponsorship or collaborating with an existing nonprofit) and highlights the need for sufficient research to be conducted as well as preparing viability plans.

According to the National Center for Charitable Statistics, there are currently 956,760 public charities, 112,959 private foundations, and 443,464 other types of nonprofit organizations registered with the IRS. That’s a lot. I am sure that many of these organizations have overlapping missions, serve similar communities, and feed off of similar funding sources. But does that mean that no new nonprofits should join this large community? And that especially goes for new, small nonprofits?

This is where it starts to get tricky, I think, for a couple of reasons:

SURVIVAL OF THE FITTEST: “Small” does not necessarily mean “unplanned,” “not well strategized,” or “not likely viable.” Although, sometimes (maybe more often than not) that is the case. The Bureau of Labor Statistics reminds us of this fact with its statistics on small business survival rates: “Two-thirds of new employer establishments survive at least two years, 44 percent survive at least four years, and 31 percent survive at least seven years.”

What does this mean: Not every idea will make a great business. And, not every person who has an idea will make a good business owner.

FIGHTING FOR THE DOUGH: More nonprofits means more people “fighting for the dough.” Let’s look at environmental nonprofits as an example. Just because there are already a number of very large, very successful, and very well known environmental nonprofits out there, like the Natural Resources Defense Council (NRDC) and Environmental Defense (ED), doesn’t indicate that smaller environmental nonprofits don’t have a place. What it does indicate, though, is that when you are looking for environmental grants on the Foundation Directory you are going to see very long lists of grants awarded to NRDC and ED and substantially less grants awarded to smaller nonprofits that you may have never heard of before. What should a small, start-up nonprofit take away from this picture? Large, successful nonprofits are well-oiled fundraising machines that know what they are doing, have large fundraising budgets, and have built strong relationships with their funders over many years.

What does this mean: Competition for funding will be a serious issue for a teeny, tiny nonprofit and having a strong understanding of nonprofit fund development and philanthropy (or building up a team with fundraising experience) should definitely be a part of your “business plan.”

ENTREPRENEURSHIP & THE “AMERICAN DREAM”: Maybe my main issue with discouraging small nonprofits, is that entrepreneurship is heralded as the key to economic vitality and sustainability. The Ewing Marion Kauffman Foundation; has front-and-center on their homepage: “Searching for a way out of the current economic crisis? Entrepreneurs have led the U.S. out of every recession of the last 100 years.”

In addition, the Bureau of Labor Statistics provides the following interesting statistics on the impact of small firms in the United States:

Small firms:
• Represent 99.7 percent of all employer firms.
• Employ about half of all private sector employees.
• Pay nearly 45 percent of total U.S. private payroll.
• Have generated 60 to 80 percent of net new jobs annually
over the last decade.
• Create more than half of nonfarm private gross domestic
product (GDP).
• Hire 40 percent of high tech workers (such as scientists,
engineers, and computer workers).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97.3 percent of all identified exporters and produced
28.9 percent of the known export value in FY 2006.

What does this mean: Lots of data supports the fact that small and micro businesses play a huge role in the U.S. economy and are a real vehicle for economic development. I think it makes sense to overlay this reality with the possibility of small social ventures and teeny, tiny nonprofits providing the same sort of social and economic boost.

Small nonprofits and small social ventures have the potential for significant social as well as economic impact. Smaller nonprofits are able to have much more focused niches, work on a grassroots level, make meaningful collaborations with small corporate sponsors, engage individual donors interested in more personalized philanthropy, and more. However, in order to be successful, small nonprofits and social ventures (like successful small businesses) need to realistically assess their “business plan” and thoroughly research all aspects of the endeavor they are planning to pursue. If it isn’t a sound investment, people either will not or should not invest–either financially or in-kind. While a start-up nonprofit can rely on an army of volunteers to get its feet of the ground, is it really ethical to ask people to donate their time to an enterprise you have not thoroughly developed, researched, or planned for? I say, “Go ahead! Start a nonprofit or a social venture!” But I caution, “Do your homework. And be prepared because it is not only going to be a lot of work, but also a lot of responsibility.” It may be philanthropy, but its not free–you will be accountable to not only your donors but also your volunteers.

For some more reading on entrepreneurship, I recommend checking out this Ventureneer post: “There is Never a Bad Time to Start Up a Company.”

American Red Cross on Twitter

 

What Do You Tweet About?

 

Much of the confusion about social media applications for businesses and nonprofits is that it is seen as an invasion into one’s personal life or that it is simply used for trivial purposes. But, you control what you publish. If you want the world to know that you are “Eating a burger at Shake Shack, good times!!!” (actual tweet via @hand2handnet) you can. But, if you want to let the world know that: “Ashoka Fellow Jack Sims is making a difference, one toilet at a time. How is he doing it? Your chance to find out & ask.” (actual tweet via @changemakers) you can do that as well. You can use Twitter as a means to publish headlines about activities your organization is conducting, events you are planning, conferences you are attending, and relevant news articles you are reading. You can even publish a headline about eating a burger at Shake Shack if it is relevant to the message your organization is trying to convey—for instance, maybe your organization is interested things to do in New York City parks. 

What Do You Read About?

Twitter is a two-way street: you share information with others and you receive information from others. I tend to think of Twitter as my own personal newspaper with interesting headlines regarding my industry in general (Nonprofit and Social Enterprise) as well as specific niches within that industry (ie. Microfinance, New York City, Fundraising).

There are lots of organizations and individuals who tweet exclusively about issues that your organization is likely interested in. Twitter users publish information on upcoming trainings, fundraising events, news articles, blog posts, online discussions, films, and more. Twitter users will also “re-tweet” (see below) posts that they find particularly interesting or of high value—which can help highlight popular topics. Twitter offers an opportunity to have access to lots of information that is specifically tailored to your organization’s interests—while cutting down on the amount of work that would be required to gather that information otherwise. The type of information you receive will depend on the users you follow. Here is a sample of some of the users I follow on Twitter:

@echoinggreen

@idealistinnyc

@FCWashington (Foundation Center, DC)

@ashokatweets

@kenscommentary (Ken Berger, President of Charity Navigator)

@NICentral (Net Impact)

@Philanthropy (Chronicle of Philanthropy)

@mashable(Pete Cashmore, CEO of Mashable)

To Do: Research potential Twitter users to follow by using Twitter’s Search function or by going to organizations’ websites (many people have Twitter buttons that link to their Twitter page right on their site). Scroll through their tweets and learn about the way they use Twitter and about the types of information they are publishing.

Re-Tweet

“Re-tweeting” (or RT) is when a Twitter user re-publishes someone else’s tweet. Standard practice is to reference the original poster either by “RT @username” if the tweet is identical or by “(via @username)” if the original content is modified significantly.

Getting Started

• Set up a Twitter Account at www.twitter.com. Include a link to your organization’s website, a 140-character biography, and a good icon.
• Commit to tweeting one or two times a day (to start).
• Research organizations you are interested in and follow them on Twitter.
• Select the best tweets of the day and send them out in a daily email to members of your organization to keep them abreast of interesting news.

This is the reason why I am particularly interested in organizations that have inserted “coolness” into their equation for addressing youth development. Being cool does two things: (1) It’s great marketing. Everyone wants to be a part of something that is cool. (2) It’s great program development. It shows that your organization is carefully listening to its audience. Things are considered “cool” because people are interested in them and therefore more likely to be invested in participating, resulting in service delivery and mission fulfillment.

I first read about Stoked in Time Out New York’s Cause of the Week (which, as a side note, I think is an awesome feature). Stoked is a “nonprofit action sports organization for at risk youth with the mission of developing successful teens with opportunity, knowledge, experience, and determination through the use of action sports, mentoring, and coaching.”

Stoked offers a one-year program that matches pre-screened mentors and mentees–who agree to meet a minimum of 4 hours per month and receive ongoing training and coaching by Stoked Program Managers. During the year, mentoring pairs skateboard, surf, and snowboard–what could be cooler than that? Operating out of both Los Angeles and New York City, Stoked gives urban American youth an opportunity to participate in very cool, skill-based, and age-appropriate activities that often have barriers to entry (i.e., equipment, transportation, knowledge).

On the other side of the Atlantic Ocean, a 34-year-old Aussie skateboarder, Oliver Percovich, unintentionally discovered, while skateboarding around Kabul, that Afghan youth think skateboarding is cool too. The New York Times article, “Skateboarding in Afghanistan Provides a Diversion from Desolation,” describes Percovich’s mentorship to Afghan youth who have shown an interest in skateboarding. After a couple years of showing up to an empty concrete fountain with half a dozen skateboards strapped to the back of his motorcycle, Percovich started Skateistan, Afghanistan’s first co-ed skateboarding school that “engages the growing numbers of urbanized youth through skateboarding and provides new opportunities in cross-cultural interaction and education.”

The construction of Skateistan’s 1,750 square meter indoor skate complex is underway and will include professionally-manufactured ramps, two classrooms, girls’ and boys’ locker rooms, an office, and a canteen. Skateistan’s “About Us” page is particularly impressive and clearly outlines the organization’s mission and philosophy as well as the need for youth development programming in Afghanistan. They also nail the question “What are the benefits of skateboarding to youth?” right on the head:

Skateboarding in a non-competitive global sport requiring minimal supervision and resources. Achievements in skateboarding are individual and depend on balance, creativity and personal expression. Skating can be practiced anywhere there is a smooth surface and gets young people active and engaging with each other.

Both Skateistan and Stoked are using skateboarding (and in Stoke’s case snowboarding and surfing) as a means to an end: the positive development of youth. And, much of the brilliance in this approach is its irony: that skateboarding for a long time was associated with a subversive, delinquent and rebellious subculture–which made it cool.