Sustainability

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.