Articles by Theresa Newhard

I went the FINCA International networking lunch last Friday afternoon to learn about their village banking model and hear about the types of opportunities available to recent graduates.  With 20 years of experience in microfinance, FINCA targets the poorest of the working poor, and has served over 700,000 clients in 21 locations across the globe.  Like Grameen, FINCA uses a group lending model, taking advantage of the human capital that exists in villages in lieu of collaterol needed to secure capital.

FINCA has a great career track called the Senior Banking Leadership Program, which grooms mid-career professionals to become the chief operating officers of their regional offices.  FINCA also has a fellowship program, which apparently opens on Monday. Forty-five positions are listed on FINCA’s website.

The FINCA representative highlighted the need for strong financial and language skills and international experience.  We have “lots of Wall Street talent now,” she explained, alluding to the new pool of financial expertise that the current economic situation has provided.

Random tidbit: you don’t have to have international experience specifically in the financial access or microfinance industries to get a job at FINCA.  Our speaker landed her position because of her travels as a Dutch Olympic high-diver.

Despite the fact that I am not allowed to bring my coffee into this next session, I am pleasantly surprised by the change of pace setting from a panel discussion to an enormous PowerPoint projected on the wall and our speaker walking around the front of the room instead of sitting in her chair. Kellie McElhaney, Founding Director of UC Berkeley’s Center for Responsible Business, is leading a session on branding and communicating corporate social responsibility.    Here are a few key takeaways of the session:

One message to all:  Create an integrated communications strategy!
CSR messages should be repeated everywhere: annual report, every speech, employee communication, CEO speeches, sales strategy, PR messages, company product branding.  It should be one message – not a series of messages for different stakeholders.

Internet trumps all as most credible communication channel.
Kellie’s research confirms the fact that consumers view website information about CSR as the most credible.  Employee ambassadors are the second most credible source. Magazines, radio, tv etc rank much lower.

We always care first and foremost about what’s happening in our back yard.
No surprise here.  Corporate, sometimes global CSR strategies will be most effective when developed with a localized approach.

There are 7 principles for branding and communicating CSR:

1)    Know thyself
2)    Get a Good Fit
3)    Be Consistent
4)    Simplify
5)    Work from the Inside Out
6)    Know Your Customer
7)    Tell Your Story: stories trump facts 10 times out of 10, period.

To hear more of Kellie’s thoughts on the subject of CSR, pick up a copy of her new book, Just Good Business: The Strategic Guide to Aligning Corporate Responsibility and Brand.

It’s 9 a.m., day two of Net Impact.  I grab my compostable coffee cup and head into the session on social intrapreneurship.  The panel focuses on corporate changemakers working inside businesses to deliver innovative market solutions for the world’s toughest social and environmental challenges.  Among the panelists is Acumen Fund Fellow alumna Jocelyn Wyatt who currently serves as the Head of Social Impact and Business Factors at IDEO, a global design consultancy.

Jocelyn came to know about IDEO during her Acumen Fellowship while visiting VisionSpring in India.  IDEO was interested in bringing in someone to build out the firm’s social impact work, so she wrote her own job description – knowing nothing about design and having never visited the firm itself – was made an offer, and then started the job.

One of her biggest surprises was that she had to figure out her job once she got there.  She was also surprised to discover a thriving group of social entrepreneurs who were already on board at IDEO.  Jocelyn realizes that the biggest asset in being able to make changes in a company is having a team of like-minded people who share the values of bringing services to the poor.  She started an e-mail list called “social impact at IDEO.” After that, she launched a social impact wiki page where people post resources and social impact projects.  The group then started meeting over Monday lunch hours for strategy meetings and social labs with entrepreneurs in the field.  “Everything is really transparent and open,” said Jocelyn.

During a two-week trip in June to various IDEO offices, Jocelyn put out a call out for people to start social impact initiatives at the local level.  Some have started this, some haven’t.  But, according to Jocelyn, IDEO’s social impact work has been able to withstand the current financial crisis because it is fully integrated into its normal business operations and because social impact services are priced at market rate.

Unlike Jocelyn, Henry Gonzalez of Morgan Stanley only gets to spend 25 percent of his time on social impact work, but his work as a patient advocate enabled him to found and integrate a Microfinance Institutions Group into the firm’s work.

“Your interests could evolve in the firm – whether you are the cheerleader, taking on your issue as an extracurricular project outside of the 9 to 5 p.m., or whether the firm eventually fully integrates a base of the pyramid strategy into everyday efforts,” said Henry.  “The more you can embed your initiative into the current business practice, the more the social impact work is unstoppable.”

The two intrapreneurs agreed on the importance of name affiliation in their ability to create a social impact movement.  If you’re a new social entrepreneur, but don’t have the name backing of Morgan Stanley, SustainAbility or IDEO, you’re not going to get asked to speak at conferences like Net Impact, they said.

I arrived at Net Impact Philadelphia with a duffel bag, laptop bag and an umbrella only to discover the Wharton did not offer coat or bag check – though they did loop a goody bag on my one free hand and slung a free t-shirt over my shoulder.  With over 2,000 attendees, the conference was beyond capacity.  This posed some logistical problems, but it was a huge testimony to the dedication of students and professionals to creating environmental and social value in their business enterprises.

After the opening keynote, I headed to the first session of the day – Scaling Nonprofits.  (Choosing break-out sessions is harder than you might think: the conference guide book provided 140+ pages of descriptions and information about the speakers).

I choose the scaling panel largely because of my interest in panelist William Foster’s philosophy about the need for philanthropies to reward high achieiving nonprofits with growth capital (I wrote a few months ago about William’s thoughts on this topic here.) In addition to Bill Foster, a Partner at Bridgespan, Mora Segal, Chief Strategy Officer at College Summit and Aaron Hurst, founder and CEO of Taproot Foundation also spoke.

The panelists discussed the dynamics of the philanthropic sector, specifically addressing fact that the environment is not conducive to financing the best and brightest nonprofits out there.  Bill pointed out that there are only 144 nonprofits that have reached $50 million in size, and only 10 nonprofits that have raised growth capital funds.

“There is a limit to what philanthropy can do,” said Mora, who mentioned that College Summit just reached the $20 million dollar mark in large part because of a school fee system that covers the organization’s variable costs.  College Summit started a growth capital fund five years ago and successfully raised $15 million in the first six months.

“We need to talk about how we get foundations to stop giving inefficiently,” said Aaron, who likened the multitude of nonprofits with similar missions to the hundreds of Chinese restaurants across New York City. “All the restaurants serve dumplings, lomein”…to be efficient, “they should all be one Panda Express.”

Some may disagree with Aaron’s proposed monopolization of Chinatown, but his point in well taken.  The philanthropic sector could improve the net social impact by rewarding mergers and partnerships between nonprofits with similar competitive advantages who realize they could achieve economies of scale by working together.

Hopefully College Summit and others who are raising growth funds, like VisionSpring, will continue to speak about their ability to overcome some of the barriers to achieving scale posed by the current philanthropy model. It’s still early to tell if the growth capital model will work for all nonprofits, regardless of their mission, but it’s certainly encouraging to see the impact organizations of those who have been successful in crossing the ramp-up threshold.

An NYU Stern student with a traditional consulting and a nonprofit background talks about the difference between Net Impact 2007 in Tennessee and this year’s conference in 2008, and the trends he’s observed due to the financial crisis.

On the general vibe at Net Impact 2008:
I think people in general had a mix of fear and optimism depending on the sector they are interested in.  Those who want to work in healthcare and education feel a little more optimistic.  Non-profits, too.

Everyone brought their A game.  Last year, you didn’t see that.  This year 80% are business professional; last year, only 50%.  Some wore jeans.  Today everyone is wearing a suit.  You can tell that the job market has changed significantly

On the Career Fair:
This year it’s better than last year.  The level of professionalism was higher this year.  They didn’t just send HR professionals – which is what they did last year – this year they brought people who are a lot closer to the decision-makers in their companies.

It seems like the current crisis works in favor of the social sector. For example, there were a lot more people at the Bridgespan-type tables that there were last year. This is a good thing in the short term, but the non-profit sector needs to be cautious of cherry picking talent.  There would be long-term ramifications if these people weren’t truly committed to the field.

Finding the right balance of skills and commitment is really important – but it’s difficult.

Dr. Sono Khangarani, CEO of Acumen Fund investee Micro Drip and CEO of Thardeep Rural Development Program (RDP), was profiled recently in an article entitled “Breaking the Glass Ceiling” in the Dawn Review, a Pakistani newspaper. Dr. Sono has dedicated the past twelve years of his life improving the lives of the poor in the rural areas of Tharparkar, Mirpurkhas, Dadu and Khairpur districts of Sindh, Pakistan.

With the support from Acumen Fund, Dr. Sono and Thardeep recently set up a for-profit drip irrigation company – Micro Drip – that procures drip systems from India. Micro Drip then markets the systems to poor farmers in Thardeep’s network of 3,000 villages, with plans to expand to other water scarce regions in Pakistan. He has also led managerial, technical and social capacity-building efforts, including livestock management training, cooperative development and micro-credit initiatives.

Read the full article here.

In addition to holding the “billionaire title,” these three individuals share a commitment to a new movement of social change, according to Matthew Bishop and Michael Green, co-authors of Philanthrocapitalism: How the Rich Can Save the World.  Bishop and Green believe that Gates, Clinton and Jolie are part of a new generation of wealthy, powerful people who are changing the role of philanthropy by combining focused, charitable donations with “big-business-style” investment strategies. Their book profiles several of these new philanthropists, including those listed above and other influentials like George Soros and U2’s Bono.

Bishop, American Business Editor/New York Bureau Chief for The Economist, explained the basis for focusing on the super-rich as change agents in a recent interview with Alliance Magazine: “The point we’re making is that there are more super-rich people around than ever before and they have all sorts of problem-solving talents developed in their business lives that they are now looking to bring to bear on some of the world’s big problems.”

But while these philantrocapitalists may be willing to take greater risks with their checkbooks as compared to traditional philanthropic institutions, many of them have a deep interest in accountability and rigorous performance measurement. Bishop’s and Green’s Values blog recently published an entry on philanthrocapitalism’s need for robust impact measurement systems.  Acumen Fund’s new portfolio management system, called Pulse, was pointed to as one innovative “work-in-progress” solution aimed at addressing this challenge.

Bishop also recently interviewed Acumen Fund CEO Jacqueline Novogratz at the Clinton Global Initiative about Acumen Fund’s emphasis on market-based solutions to solving the problems of global poverty (the video can be viewed below or on The Economist’s website).

In reviewing the list of names and organizations included in Bishop’s and Green’s book, it is clear that philanthrocapitalism has as many distinctions in as it does similarities.  Though the movement is unlikely to settle on a precise spot along the scale of pure philanthropy to pure capitalism, an exciting, unifying theme emerges: there is great promise in connecting high net worth individuals with innovative intermediaries to move from social investment to long-term impact.

Recruiting for the 2009-10 Acumen Fund Fellows Program is off and rolling! The application closed this past Monday, October 20, with a pool of 342 candidates representing 49 different countries.

“It’s truly exciting to see such strong evidence of the growing appetite and global interest in supporting social enterprises,” said Abigail Keene-Babcock, Acumen Fund Talent Associate.

Now in its fourth recruitment cycle, the program has attracted applicants from Afghanistan, Finland, Mongolia, Iran, Georgia, Malta, Ukraine, Jordan, Liberia and Sudan, among other countries. By region, representation breaks down as follows:

38% from countries in Asia/Southeast Asia/Middle East
29% from countries in Africa
26% from US/Canada
6% from Europe
1% from Latin America/Caribbean

The purpose of the Fellows Program is to build an entrepreneurial community of professional talent with strong financial and operational skills, experience in low-income markets, and the moral imagination to build enterprises that meet the needs of low-income consumers. Selected participants are matched with Acumen investees and support senior management in tackling critical business issues.

Acumen Fund’s entire global team will be involved in resume review and selection process for next year’s class. To learn more, please visit the Fellows Program section of our website!

In The Search for Social Entrepreneurship, Paul Light writes, “If the idea is matters, so does management…to the extent that management is essential for scale-up and impact, socially entrepreneurial organizations need to embrace it.”

Light’s idea that high performing organizations should invest in management and organizational development systems makes sense, but in order for many social businesses to do so, the philanthropic landscape will need to change.

William Foster, partner at leading nonprofit consulting firm Bridgespan Group, recently wrote about the need for foundations to provide “growth capital” grants to later-stage organizations with sound business plans, strategic clarity and a sustainable financing model. In his Stanford Social Innovation Review article, “Money to Grow On,” he suggests that funding organizations should approach grantmaking in a similar way that venture capitalists approach making investments: high performing organizations with proven success should be awarded larger infusions of unrestricted cash to ramp-up and achieve long-term social change.

Foster writes, “Before venture capitalists invest in a company, they conduct a thorough review of the company’s management team, business model, and strategic plan, along with an analysis of the company’s competition and market. More often than not, they walk away from deals that are in many respects attractive. Few nonprofit donors undertake such rigorous due diligence. But they should. ”

For organizations working in the base of the pyramid space, this idea is already starting to take root. VisionSpring recently announced a prospectus, which is aimed at attracting $5 million in growth capital. The prospectus details how resources will be leveraged to create and measure increased social returns. Donors do not have to look far to reference past financial statements or catalogue other partners who are investing in their model — all these details are easy to find and effectively illustrated in the report.

Many of us in the base of the pyramid community, myself included, often wonder, is this business really making a social impact? Sure, there are real indicators of success, but what action drove that particular outcome? As I ponder the social impact of business, I’m reminded of an old marketing adage: We know at least 50 percent of our efforts are working “we just don’t know which half. (Hat tip to Brian Trelstad for bringing this up in a meeting.)

In order to build truly inclusive businesses, our sector must start tracking impact over time. This we can probably all agree on. But the challenge is not so much in creating buy-in around the idea of measurement, but in finding a way to integrate an effective and user-friendly system for doing so in an already resource-constrained work environment.

Because of these and other stumbling blocks in creating social metrics, Rob Katz and I were particularly intrigued by the newly released Measuring Impact Framework developed by The World Business Council for Sustainable Development (WBCSD). This framework, which has been in the works for nearly two years, is designed to guide companies from small enterprises to large multinationals through the process of measuring and assessing impact, and making better-informed future decisions within the context of a larger development paradigm.

The WBCSD framework is designed to be applicable across sectors and at varying points throughout a company’s life cycle. The core business activities suggested for analysis — governance & sustainability (including corporate governance and environmental management), assets (infrastructure, products and services), people (jobs, skills and training), and financial flows (procurement and taxes) are flexible, open-ended and non-exclusive.

As someone with a limited background in program and policy evaluation, I can see how this framework could be helpful in conducting an internal impact audit. The WBCSD is effective in outlining and defining the various parts of any good analysis: understanding the relationships between a series of business activities, company resources, direct and indirect outcomes and large-scale impact. Assuming the same individuals conduct the impact analysis over consistent time intervals, organizations can use the Measuring Impact Framework as a tool for identifying goals, achieving internal benchmarks and measuring their own progress over time.

But to gauge an organization’s positive and negative contributions within a broader development context, it will become increasingly important to consider counterfactuals and to establish standard indicators as part of the assessment. By measuring against peer organizations as well as against itself over time an organization can protect itself from its own bias and see itself as part of a greater competitive landscape. Only through this lens will business leaders be able to make integrated and inclusive decisions for change.

It may be a long time before the social business sector (a vague and multi-faceted term in-and-of-itself) can agree on a set of standard metrics; but the work of WBCSD and others such as the Aspen Network for Development Entrepreneurs is encouraging. If nothing else, the Measuring Impact Framework is a tool that businesses can use to improve reporting processes, identify and communicate priorities with stakeholders. Hopefully, it will also serve as a catalyst for shared effort and continued development on sector-wide measurement tools.