Act Global: Tips for Next Gen Donors Looking to Volunteer Abroad

By Deborah Goldstein, principal, Enlightened Philanthropy

According to groundbreaking work by 21/64 and the Johnson Center at Grand Valley State University, I can be considered a member of Next Gen Donors. The research focuses on Gen X and Gen Y/Millenials ages 21-40 who will inherit $40 trillion in the coming years.

Like me, you may not be anticipating an inheritance. However, you might share some of the traits found among this cohort:

  1. Are you driven by values, not valuables? Next Gen Donors honor the legacy of their parents and grandparents in their giving, while exploring emerging tools and opportunities.
  2. Are you focused on impact? Next Gen Donors want to see an impact as a result of their philanthropy. They are focused on strategic philanthropy.
  3. Do you give your time, talent, treasure, and ties to causes you are passionate about? Next Gen Donors give at a much deeper level, a very engaged, hands-on level. And they’re willing to bring their network or ties to the table, too.
  4. Are you engaging in philanthropy now? Next Gen Donors are engaging in philanthropy NOW instead of waiting until later in life. In the process, they are crafting their philanthropic identity by engaging in ways that allow them to learn more by seeing and doing.

Hawksbill_Sea_Turtle_(Eretmochelys_imbricata)_(6161757878)In August 2013, I had the opportunity to travel to Nicaragua for two weeks to work with two conservation organizations—the Eastern Pacific Hawksbill Initiative (or ICAPO-Iniciativa Carey del Pacifico Oriental), and Paso Pacifico. I have been passionate about sea turtle conservation for decades and was finally able to personally rescue sea turtle eggs for protection in a hatchery and release hatchlings safely into the ocean.

For those of us who are Next Gen, experiences like this are critical to our engagement with philanthropy. They help us understand the issues and craft our philanthropic identity in a way that merely writing a check cannot.

Have you been looking for a way to give back and have some fun too?

If so, I urge you to JUST DO IT!

Three Tips for Volunteers:

  1. This is NOT a vacation. The term volunteer “vacation” is a misnomer. You will be lending yourself to the organization to work. This doesn’t mean you won’t have a blast along the way, but you have to remember, you’re there for work and not play.
  2. Be open to how you’ll be helpful. I hadn’t imagined any type of work except for helping rescue turtles. So, when I was asked to put together a brochure that promotes ICAPO’s tours and volunteer opportunities, I realized I had the skills to help the organization in an unexpected way.
  3. Learn the language. When you’re in a remote part of the world, the likelihood of the locals speaking English is slim. While I’d brushed up on my Spanish prior to departure, I couldn’t speak at length with the locals who patrolled the beaches or managed the hatchery. This is one opportunity I feel I missed—being able to really connect with the people with whom I was interacting. Thank goodness for sign language and smiles and laughter AND translators!

By the end of my second week in Nicaragua, I felt fully immersed in the culture and its conservation issues. I left a more emboldened and passionate advocate than I had arrived. I left with the fulfillment of having traveled for a purpose—to learn more about a cause that is important to me and help conserve endangered species. And I left with a desire to travel more often with a purpose.

So, what are you going to do with your dream to help others? The ends of the earth really are your only limit!

1Deborah Goldstein is the principal of Enlightened Philanthropy and is dedicated to guiding the next generation in giving. She advises multi-generational families and youth as they explore the world of philanthropy. She is also a certified 21/64 trainer. More thoughts on her trip to Nicaragua can be found on her blog

Prosperity, Sisterhood, and Honeybees

Two years ago, in my work as founder of Honeybee Capital, I was trying to describe investing that is truly connected to the world, to the people, to the products and entities that provide meaning and value to our communities. The language I needed was elusive. I examined terms used in the various “integrated health” indices for economies, but Gross National Happiness, while a great broadening from Gross National Product, did not quite hit the mark. Sustainability is also a wonderful term, but I was aiming to describe something even more than that. A type of investing that is regenerative and renewing, thoughtful and full of (dare I say it?) joy.

Prosperity – that is the word that truly describes what I sought.prosperity_opportunities This is a term with both depth and breadth. Prosperity is defined as “to thrive or succeed in a healthy way.” That little word “healthy” is so important – it nods to a more complete view of success, one that includes physical, mental, emotional, and economic well-being; one that extends beyond the individual to include whole families and whole communities. Another layer of meaning is found in the root words – Latin terms for “hope” and “fortune” are, quite literally, the roots of prosperity. So Prosperity is success, yes – but it’s healthy success, broad-based and full of hope.

It was right around this time that I met Prosperity Catalyst, the nonprofit, and Prosperity Candle, the sister enterprise that serves as product marketing specialist. Siiri Morley, the Executive Director, presented to the Pipeline Fellowship, a women’s angel investor training network, where I was a member. So right from the start, we were united by the idea of women helping other women. Actually, much more than that – women investing in other women, and in their prosperity.

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Prosperity Catalyst does not come by its name lightly – it earns that name every day, in the work of all who are connected with the group. The organization trains women to run their own businesses. Prosperity Candle, the sister organization, provides the direct link to the market for the Catalyst’s women to sell their creations, ensuring that all of that training and production is both useful and use-able. With this model, Prosperity links locally-focused training and business leadership to broader global markets. This is not an isolated process of training for training’s sake, but a strategy that melds strategic and tactical. Plus, the candles are so beautiful! Siiri and her team helped me to plan the first-ever corporate gift for Honeybee Capital, a beautiful beeswax candle.

The light from those candles is lovely, steady and clear – but it is nothing compared to another sort of light I see coming from Prosperity Catalyst. The most important element I have come to appreciate in this organization is a subtle one: it’s how their program and the people involved are modeling leadership in a powerful and different way. Siiri and the entire Prosperity Catalyst team demonstrate leadership that is bold and attention-grabbing – while also service-oriented and nuanced. They are effective and efficient – and still deeply human. They are determined and devoted – while embracing flexibility and creativity. This is the kind of leadership I want to see in the world.

For all of these reasons, I am delighted to be able to support Prosperity Catalyst. I hope you will join me.

katherineKatherine Collins is Founder and CEO of Honeybee Capital, and author of the forthcoming book, The Nature of Investing.  After a long and successful career in traditional equity management, Katherine set out to integrate her investment philosophy with the broader world by traveling as a pilgrim and volunteer, earning her MTS degree at Harvard Divinity School, and studying the natural world as guide for investing to add value in an integrated way, beneficial to our portfolios, to our communities, and to our planet.  

See more about Katherine’s work at www.honeybeecapital.com or follow her on Twitter @honeybeecap.

 

Our Young Selves: Learning, Serving and Celebrating

With the new school year approaching, I’m thinking about fresh starts—for my 15-year-old daughter and for me. She and her peers seem interested in volunteering, but I wonder if it’s more about building a college résumé than offering community service. A study last year reports that the Millennial generation (roughly ages 18-29) actually volunteers and donates more than any previous one. The trick is connecting a young person to a community need that resonates, prompting a lifetime of service and an enthusiasm for giving back.

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The Young Woman’s Guide is a nice start. Aimed at women and girls ages 15-35, YWG provides educational opportunities, partners mentors/mentees, and works on a global scale. I also love DoSomething.org, a site devoted to helping those 25 or younger (nearly 2 million at last count) to “kick ass on causes they care about.” (If, like me, you’re “old” by their standards, their Old People FAQ gives us some ageless guidance on how to start volunteering.)

A recent Women 2.0 article underscores the urgency of training young women to give, contribute, and lead. Now at 40% ownership, women are anticipated to launch a full 50% of the 9.72 million new businesses expected in the U.S. by 2018. That’s just five years from now. Maybe my daughter won’t be thinking about finding a job but, rather, becoming one of the many women creating a company of her own.

These are exciting times for women, young and “old” (ahem, over 26).

 

Young Women Funding Social Impact

Catalytic Women gathered in San Francisco in June to hear three experts talk about engaging younger women who are defining their own ways of giving back. While I may not be of this generation, it was such a treat to hear from them and to feel their energy. This is my favoriate audience for our work – the enthusiasm, creativity and optimism is absolutely infectious.

Our panelists were, likewise, three dynamic young women:

L.Volftsun

Lana Volftsun

Lana made clear some of the obstacles for giving that younger donors face:

  1. Affordability. So many images of “philanthropy” are of older donors, often men, making very large gifts. This is ironic for 3 reasons: women make most giving decisions; the cumulative impact of individuals giving at modest levels now can be so much more significant than a single, large legacy gift; and few of us see ourselves as able to make million dollar donations.
  2. Knowledge. With over 1.5 million nonprofits in the U.S., thinking about finding the best fit is downright daunting. It can be hard to know where to start.
  3. Impact. We all want to know that our dollars, at whatever level of giving, make a difference. Sounds so simple, but it’s not.
Erin Geiger

Erin Geiger

I’m a big fan of the “dumb question” – I find it opens dialogue by making it OK for others to admit not knowing it all. Erin answered mine: What is the definition of a Millennial? And, as expected, lots of others jumped in to ask their own questions. None were dumb.

Millennials are between 18 and 25 years old. Next Gen seems to have a broader interpretation, including Gen X and Gen Y. Panelists agreed that these latter tags relate more to life experience and association than to quantitative standards.

We heard other illuminating answers to words commonly used in discussing social impact. Not surprisingly, these answers led to some of the vehicles that young women are using to engage as donors and social investors.

  • Microfinance is a platform, a portal, between those of us interested in making smaller gifts (or loans) and those living in poverty without access to banks and traditional financial resources.
  • Crowdfunding is an online platform where many people can support a single project.
  • A giving circle is the reverse: a group where many people work collaboratively to find one or several organizations to support.
  • Impact investing creates both a return on investment (ROI) and a positive social and/or environmental impact.
  • Impact considers a company or organization’s ability to create positive benefits that are social (e.g. provide jobs or affordable housing) or environmental (such as sustainable land use or clean energy).

Affordability

Leigh Moran

Leigh Moran

Leigh shared Calvert Foundation’s philosophy of changing the way that capital flows: it is not mutually exclusive to raise money from investors and to deploy it for social impact across the global. Their Community Investment Note allows an individual to invest as little as $20 in creating a financial and social return.

One Percent Foundation has the goal of mobilizing Millennials to give just that: 1% of their income. This September they will launch new giving circles – and Catalytic Women is excited to be partnering with them.

Knowledge

Younger donors aren’t the only ones struggling with learning about options for impact and building financial confidence in how to fund change in the world around us. As Leigh put it, one of their goals is for Millennials to see themselves as investors. By offering ways to invest in causes that are a person’s passion, through initiatives like WIN_WIN_RGB_2inches-1Women Investing in Women (WIN-WIN) and Engaging Diaspora Communities, Calvert Foundation is exploring ways to engage some of the largest groups of potential funders: young adults, diaspora communities with a common origin in a geographic region, and women.

Camp Start Up, Kiva’s summer program launched this year in partnership with Independent Means, provides financial education to young adults and inspires social entrepreneurship. At either end of the spectrum – extreme poverty or extreme wealth – it can be difficult to discuss money.

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DoSomething.org is the largest network in the U.S. educating and mobilizing teens for social impact. Why wait until we feel that we have enough to give? All the better if we can start that education earlier (or, in my case, help my daughter build her financial confidence and impact).

Impact

One participate asked, If an investment can be made in either a nonprofit or for-profit enterprise, what’s the difference between an investment and a donation? As more giirs-logohybrid options become available, this line seems to blur. Perhaps the larger question is, does it matter? Yet the metrics used to evaluate social impact, such as Global Impact Investing Rating System (GIIRS) and IRIS, are a good place for us to create awareness about impact in any kind of funding for social change.

Storytelling is a powerful way to engage and create impact. One young woman told of a call from her alma mater telling her she was a VIP among alumni donors. She wondered how this could be, with the modest amount that she gave. Yet others were giving less; to them, she was an example of action and impact.

Act

How can young women fund social impact? Their options are available to us all. Here were some of the many possibilities that emerged from the conversation with our experts:

  1. Invest a small amount and get hooked. Put as little as $20 into a Community Investment Note through Calvert Foundation or take $25 to start a lending team with Kiva.
  2. Tell your story. Even better if you tell your story in your own voice – take a video on your phone and post it to Facebook or LinkedIn.
  3. Connect with others around giving. Join a giving circle to meet other women who give, or bring a giving circle – like One Percent Foundation or Catalytic Women’s giving circles – to another group, like a professional network.

Catalytic Women has resources on all the above. Just email me at melanie@catalyticwomen.com and we’ll point you in the right direction for making your own, personal impact in your own way.

Women’s Leadership by Investment: Drop by Drop We Can Fill a Bucket

Editor’s Note: Yesterday we gathered young women funding social impact for a Catalytic Women event. I’m continually energized to see how women in their 20s and 30s either don’t perceive gender barriers or, simply, aren’t deterred by them. Our guest blogger Suzanne Sheuerman offers a terrific step that any woman can take to use her wealth with a gender lens for greater impact. [MH]

As a woman in Corporate America, I have come to realize that women must collaborate to bring about change. As you can guess, the change to which I am referring is related to women and their role in Corporate America. Having been the highest ranking woman in a Fortune 100 company with no real chance of ever becoming the CEO, my story may be relatively typical of a 58-year-old woman. I can get close, but no cigar. In my view, close just isn’t good enough anymore.

After studying the facts, one would come to the rational decision that women at very senior levels of business are vital to operational excellence. A Credit Suisse study conducted in August of 2012 demonstrated that companies with a woman on the board performed better in most metrics than comparable companies. [And Catalyst has done fascinating reports on gender roles, with similar findings.] Having read the article with great interest, I suddenly had an “ah ha” moment: Why can’t we build a “portfolio” of women-led companies?

As I began my research I was (sadly, not) surprised to find there are not even enough women CEO’s in the Fortune 500 screen to create a sector-diverse portfolio. Looking more broadly to the Fortune 1,000, I was able to find more women-led companies.

Then I looked at my definition of “woman-led” and reflected that one woman on a Board is simply not adequate. Why reward that? A woman-led portfolio deserves a more robust standard. So I screened for companies with boards that had three or more women, or were comprised of at least 30% women. Delightfully, I had a very nice list of potential publicly traded companies.

When asked by one of my friends if I had included companies that may not have a woman CEO, but did have “C Level” women at the top, such as a COO or CTO, my answer was an emphatic “no.” I felt the CEO designation for leadership was critical for the purposes of the portfolio I wanted to create, and I just couldn’t find enough women in that role. While there were lots of companies who had women in “second best” roles, in my view they were not as deserving of my investment.

This is my one small step as a woman to support other women. Adding an element to my own investments that includes women-owned companies is my drop in the bucket. It is my personal, happy drop in the bucket that, I hope, we will work together to fill.

As you think about where you can make an impact, I ask you to join me. Think about the companies where you invest as a tool to support women’s leadership. Help fill our bucket.
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Suzanne Sheuerman is a First Vice President, Portfolio Management Director and Financial Advisor at Morgan Stanley Wealth Management in San Jose, CA. Formerly she was a Managing Director at Household International where she worked for 18 years. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates. We are very pleased that Suzanne is a Professional Member of Catalytic Women.

Elizabeth Share: America’s Worst Charities

When I heard that The Center for Investigative Reporting (CIR), for whom I work part-Screen Shot 2013-06-17 at 8.36.37 AMtime, was researching the practices of “America’s Worst Charities” I was skeptical. One-off exposés of bad nonprofit practices are nothing new.  Over the years, I have railed against many of them as being unfair. Yet when the series launched on June 7, my eyes were opened and my skepticism disappeared.

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Kendall Taggart

Mining ten years of data, 26-year-old novice reporter Kendall Taggart, her editors, and a fellow reporter at the Tampa Bay Times (The Times) revealed corruption on a scale much grander than I could have imagined (more than a billion dollars in donations misappropriated) and exposed the failures in our regulatory systems that allow these practices to continue.

Consider this vignette from the first story in the series:

“The worst charity in America operates from a metal warehouse behind a gas station in Holiday, Fla.

Every year, Kids Wish Network raises millions of dollars in donations in the name of dying children and their families.

Every year, it spends less than 3 cents on the dollar helping kids.

Most of the rest gets diverted to enrich the charity’s operators and the for-profit companies Kids Wish hires to drum up donations.

In the past decade alone, Kids Wish has channeled nearly $110 million donated for sick children to its corporate solicitors. An additional $4.8 million has gone to pay the charity’s founder and his own consulting firms.

No charity in the nation has siphoned more money away from the needy over a longer period of time.”

CIR knew it was on the right track when it learned that in response to its investigation, Kids Wish hired Melissa Schwartz, a crisis management specialist in New York City who previously worked for the federal government after the 2010 BP oil spill.

The methodology behind the series was rigorous. CIR and The Times analyzed tens of thousands of pages of public records collected by the federal government and 36 states and flagged charities that pay for-profit corporations to raise the vast majority of their donations.  By analyzing a decade of data, the reporters ensured that they were not focusing on new charities using these services to get “off the ground,” as many do.

Among the findings:

“The 50 worst charities in America devote less than 4 percent of donations raised to direct cash aid. Some charities give even less. Over a decade, one diabetes charity raised nearly $14 million and gave about $10,000 to patients. Six spent nothing at all on direct cash aid.

Even as they plead for financial support, operators at many of the 50 worst charities have lied to donors about where their money goes, taken multiple salaries, secretly paid themselves consulting fees or arranged fundraising contracts with friends. One cancer charity paid a company owned by the president’s son nearly $18 million over eight years to solicit funds.

Some nonprofits are little more than fronts for fundraising companies, which bankroll their startup costs, lock them into exclusive contracts at exorbitant rates and even drive the charities into debt. Florida-based Project Cure has raised more than $65 million since 1998, but every year has wound up owing its fundraiser more than what was raised. According to its latest financial filing, the nonprofit is $3 million in debt.”

In addition to the reporting, the series includes:

  • A database of the 50 worst, with links to their tax returns and snapshots of their practices over the decade;
  • A searchable database of disciplinary actions that includes about 8,000 regulatory actions taken by states against all kinds of charities and solicitors;
  • A link to share a tip on a charity you suspect needs to be investigated.
  • Advice on how not to be fooled by these solicitations.
  • A video by CNN’s Anderson Cooper about the charity that received the dubious distinction of being the ranked “worst of the worst.”

I have worked in the nonprofit sector for thirty years and yet I have fallen for scams like this in the past.  One solicitor called after my mother-in-law died to ask if I would continue her twenty-year legacy of generosity.  Another called one week after a flood in my town to replenish an emergency fund on behalf of my local fire department. Well-timed, well played.

I’d like to think this series could lead to a large chunk being cut out of the profit made by these players.  Share it widely if you agree.

Elizabeth ShareElizabeth Share is the founder of Wise Giving, a consulting firm the helps individuals, foundations and nonprofits maximize their impact through wise philanthropic investments and greater organizational effectiveness. Catalytic Women has been honored to have her serve on our Advisory Board

What is a Social Entrepreneur?

india.PBS.15YoungGoGetters

Everywhere I look, I see this term. While I think I know what it means, I got to wondering how others define it.

But first, a confession. Having begun my career in corporate finance, my curiosity often starts with finding the market mechanisms that leverage social change. There are so many different directions to go in learning about social entrepreneurs (including Babson College’s Social Innovation Lab that we heard about at an event last month). I’ll start here with a few thoughts on how a person can invest in a social entrepreneur, and the global change that is their unique vision.

Wikipedia tells us that social entrepreneurism is the process of pursuing innovative solutions to social problems; social entrepreneurs relentlessly pursue opportunities to create and sustain social value, while continuously adapting and learning.

Two PBS specials offer examples. The New Heroes says that a social entrepreneur identifies and solves social problems on a large scale. Just as business entrepreneurs create and transform whole industries, social entrepreneurs act as the change agents for society. Agents for Change gives us 15 Young Go-Getters You’ll Want to Meet.

If you’re near the SF Bay Area, these events are worth attending to learn more. (And let me know of others to share!)

  1. Pipeline Fellowship Changing the Face of Angel Investing in San Francisco next Wednesday, June 12 at 9am. Catalytic Women and S.H.E. Summit are collaborators.
  2. HUB Ventures Demo Days at Facebook HQ, also next Wednesday, June 12 at 6pm.
  3. Young Women Funding Social Impact in San Francisco, Thursday, June 20 at 8am: Calvert FoundationKivaOne Percent FoundationSparkSF and Young Women Social Entrepreneurs are event partners (with Catalytic Women) and they know a lot about social entrepreneurs.
  4. Startup Weekend Women, September 13-15 in San Francisco, is an intensive weekend profiling female founders. There will definitely be some remarkable social (and traditional) entrepreneurs on stage.

Imprint Capital and Equilibrium Capital are firms specializing in impact investing — investing in social entrepreneurs. Here’s some language that they use to describe their focus.

  • Investments made in companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.
  • Investment strategies rooted in hard economics and macro challenges, such as expanding consumption in developing nations, rising costs and constraints of natural resources, increasing financial and environmental risks from pollution and climate change, creating sustainable lifestyle product choices based on health and well being, shifting supply chain strategies, and creating policy and regulatory changes to manage limited natural resources.

One investment that Imprint Capital and RSF Social Finance mention is the Root Capital Women in Agriculture Initiative fund, which targets underserved women-run and women-centered businesses in Africa and Latin America. RSF’s Social Investment Fund allows anyone with $1,000 to invest in a direct loan fund funding nonprofit and for-profit social enterprises.

ImpactAssets goes one step farther. They offer donor advised funds that leverage investments to earn a return and create positive social and environmental impact, and also increase the amount of capital flowing to high impact social and environmental enterprises.

Calvert Foundation, which incubated ImpactAsset, offers various community investmentoptions starting at a mere $20, including WIN-WIN (Women Investing in Women Initiative).

Social entrepreneurs go deep on a particular issue that can change the world. Last week 4,500 leaders and social entrepreneurs gathered in Kuala Lumpur for the Women Deliver conference to learn about partnerships and solutions to help prevent 350,000 deaths each year of girls and women from pregnancy and childbirth-related causes. Their vision for social change: maternal health is both a human right and a practical necessity for sustainable development.

As I write and am awed to know so many people — women and men — who are leading this work, including a few who’ve just returned from Kuala Lampur. What about you? How do you fund social entrepreneurs? We’d love to build a program around it this fall.

Photo of one of the participants in Nest, an organization that offers business consulting in developing countries. Photo courtesy of Nest and PBS NewsHour.

5 Steps to Impact Investing With a Gender Lens

Two weeks ago in Boston I had the extraordinary pleasure of hearing from three women I admire greatly: Jackie VanderBrug, Siiri Morley and Cheryl Kiser. They spoke about the complexities of social impact at a Catalytic Women event. Their perspectives spanned the full range of engagement in social impact.

In this emerging field of social entrepreneurs and gender lens investments, I see the smartest people I know struggling with definitions and metrics and models. It’s confusing — and exciting. The opportunities have never been better for women. I’m jumping in.

Care to join me? Here are a few, easy steps to help you start, from our experts who spoke to a group of Catalytic Women on May 2 in Boston.

  1. Be the brand. Women make most consumer purchases and each dollar we spend has an impact. Leverage your power when you shop. Look for products made by women. Have you seen Prosperity Candle’s beautiful selection of gifts for self and others? Siiri spoke of the women who create these products and use candle-making as a business to lift themselves out of poverty in some of the world’s harshest places. Jackie also told a story of looking for a special purchase for herself and taking the time online to find a source that has a positive impact on its community. The Internet has never made this easier.
  2. Focus your philanthropy. Jackie’s US Trust and Boston’s own The Philanthropic Initiative have a High Impact Giving Guide focused on gender lens philanthropy. She also spoke about a Monitor Institute/Packard Foundation report on enterprise philanthropy. Prosperity Catalyst, the nonprofit sister organization led by Siiri, is creating a special hands-on learning community for donors who support their work at $5,000 as Founding Catalyzers (perfect for Catalytic Women!) and will have opportunities to see the impact the organization makes in reducing poverty.
  3. Invest in a woman entrepreneur. Prosperity Candle is funding a royalties program so that their global women candle makers have inventory and supply expenses covered, minimizing their initial outlay of $20,000. Kiva and Catapult offer microloans to women around the world starting with as little as $20. WINWIN (a fund of Calvert Investments), WAGES (US Trust Investment for Women and Girls Equality Strategy), and the Raise for Women Crowdrise challenge allow investments in women entrepreneurs. Join Pipeline FellowshipAstia Angel or Golden Seeds to invest seed funding to women-led startups.
  4. Leverage your company’s giving and marketing funds. Make the case in your own business or to your corporate leaders: devote a percentage of your company’s philanthropic budget towards social enterprises with shared values; create marketing partnerships with companies looking to shift the gift and create more meaningful event and corporate swag; or invest in programs that train social entrepreneurs, like the Social Innovation Lab at Babson College.
  5. Ask questions. No one has all the answers in this space of social enterprise, impact and gender lens investing. And only a minority of financial advisors are familiar with these tools for ROI with a social benefit. If clients aren’t asking, advisors have no reason to learn. Ask your wealth manager: What is the impact of my portfolio on women and girls?

A bit more about the experts who offer these strategies…

C.Kiser

Cheryl Kiser, as head of The Lewis Institute for Social Innovation and Babson Social Innovation Lab, knows the challenges of becoming (or not) a social entrepreneur.

S.Morley

Siiri Morley brings experience as a founding team member of social enterprise Prosperity Candle and nonprofit Prosperity Catalyst, and spoke of the risks and benefits of these contrasting for/non-profit business models for social impact.

J.Vanderbrug

Jackie VanderBrug, as an early leader in gender lens investing and in her new role leading social investing strategies at US Trust, explained the myriad ways to invest in enterprises run by women, benefiting women, or both.

And let me know where your journey into gender lens investing and supporting social entrepreneurs leads you — or how Catalytic Women’s network and resources can help.

Women Who Create, Disrupt and Collaborate

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Big problems require lots of people (and resources) looking for patterns of disruption. Yet traditional philanthropy tends to be risk averse. This can be a conundrum — one that women may be particularly well positioned to solve.

Women now own most wealth in the U.S. and make most giving decisions. I believe we can be a bit curious about investments with a social impact, new models for social impact and, especially, creativity and disruption. Evidently, I’m not alone.

I recently read two articles, both in the Harvard Business Review, on women challenging the status quo. Tara Mohr (entrepreneur, author and member of Catalytic Women) spoke about the challenges of “good girls” (Haven’t we all been, or wanted to be, at some time or another??) learning to be disruptive.

And what about Mukti Khaire’s new Harvard MBA course about Creative High-Impact Ventures profiling entrepreneurs who changed the world in six “culture industries”: fashion, publishing, art/architecture/design, film, music, and food. Perhaps social entrepreneurs have a lot in common with serial entrepreneurs, who must persist until they succeed.

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Collaboration plays into creativity and disruption in a big way. Khaire talks about the 4Cs. “Commentary influences Culture, which influences what we Consume, which is influenced by what is actually out there in the market [Commerce]. If you can shift one of these elements you can actually create a new market.” Her HBS colleague and author Amy Edmondson says “using thoughtful design to solve big problems in the world… I became interested in how people come together and work together to innovate, to problem-solve, to do better things.”

If you’re looking for ways to collaborate for social impact, here are a few ideas:

  • Be part of a collaborative event — let us create a panel on your favorite issue or organization, or come listen & learn.
  • Join the only nationwide network of women funding social impact at any level and to every issue area. It’s free.
  • Help financial advisors create the content that women want on leveraging their wealth, intellect and values.
  • Attend an upcoming event on social impact. (See the full calendar in our members’ only online library.)
  • Think like a serial entrepreneur and create disruptive change. Share your story of creating change. (Read some of our favorite articles on disruptive women, below.)
  • Read more ideas on collaborating

I’m looking forward to collaborating with you to innovate, problem-solve, create and disrupt.

Tools & Tactics: Understanding Nonprofit 990s

Last week I had the pleasure of hearing Jessica Prue’s vast knowledge on reviewingcw_eventLogo_02262013 nonprofit financial statements to understand and interpret indicators of fiscal health, including the IRS Form 990, annual reports, balance sheets, and online tools for evaluation. In short, appearances (in dollars) may be misleading.

cw_picJPrue_03Jessica works with the Nonprofit Finance Fund, a community development lender, and is a wealth of information on a topic that few master. Her discussion was part of Catalytic Women’s Tool & Tactics programs, focused on hands-on learning to help us make more effective choices in giving for social impact; members may download the program webcast from our online library. While Guidestar has much of the information she discussed, assuming you have time to review and evaluate, Jessica made a very generous offer forCatalytic Women members to subscribe to their FinancialSCAN at a discount of 20%. This is a terrific resource. (Email us if you’d like more information about the discount, this program, or an introduction to Jessica.)

Jessica is quick to point out the complexities involved. Nonprofit financials are different from corporate financials. (Wondering why? Read on.) And financial data only helps us understand one piece of the pie in assessing the effectiveness of a nonprofit. Specifically, she walked us through some of the primary differences between nonprofit and for-profit finance, and the benefits and drawbacks of using 990 data. Her insights really helped me begin to understand an organization’s sustainability and capacity for growth using financial statements. Lastly, she shared some great tools, besides the publicly available IRS Form 990, that can help a funder analyze data and compare organizations. If you’re interested in financial due diligence in your grantmaking process, or simply wish to learn how to simplify fiscal analysis and hold productive conversations with potential grantees, then you’ll learn a lot from Jessica’s expertise, which is also available in this video.

Before I launch into details, let’s see the world through the eyes of Jessica Prue.

Jessica works with both funders and nonprofits across the Western U.S. as part of the Advisory Services team at the Nonprofit Finance Fund. Grounding her work in rigorous financial analysis, she works with nonprofits across sectors to help management teams understand the implications of strategic decisions such as expansion, facilities projects, hiring new staff, and scaling back programs. This expertise gives her valuable insight into understanding an organization’s financial stability and capacity for program growth. She is also involved in NFF’s national work with Financial SCAN, an online platform for nonprofit financial health analysis. She has experience working with an artisans’ cooperative in Paraguay, a microfinance organization in Bangladesh, and a refugee resettlement agency in Syracuse, New York, and a foundation in Washington DC. Outside of her work at NFF, she serves on the boards of The One Percent Foundation, a foundation I admire greatly that engages next gen philanthropists, and At the Crossroads, a homeless youth organization in San Francisco. For fun, she completed her first Iron(wo)Man triathlon in 2012. This Renaissance Woman has a BS in Applied Economics and Management from Cornell University and a MPA from the Maxwell School at Syracuse University.

So here are highlights on what I learned about nonprofit financials…

  • Reviewing financials is not an end-all. It should be the beginning of a healthy dialogue with a nonprofit that you admire and support.
  • Big budgets and fundraising success don’t mean financial stability. Jessica told a “fundraising success” story that went bad. More money raised doesn’t necessarily mean it can be spent well. Reviewing financials helps us understand: What is the right amount of money for an organization?
  • Audits are the most in-depth financials, but 990s are the most accessible. It’s practical to start there, but understand there are limitations.
  • Some for-profit best practices don’t translate to the nonprofit world. Take economies of scale: more isn’t necessarily better in social service; and growth for a nonprofit doesn’t often generate additional revenue, but rather requires subsidies since clients usually don’t pay for cost of service.
  • Not all nonprofits are required to file the annual 990 tax form (e.g., religious organizations, new groups not yet granted tax-exempt status, state institutions like universities, and organizations with less than $250,000 annual revenue). If filed, 990s are public documents and available for free from Guidestar and the Foundation Center.
  • Understanding all the components of financial health takes a 4-hour workshop at the Nonprofit Financial Fund! Key elements of this 45-minute conversation included operating performance (Do they bring in unrestricted operating revenue that is in excess of expenses?), balance sheets (Does an organization have the ability to handle risk and pursue opportunity? And why is the distinction so important among unrestricted assets, temporarily restricted assets for specific programs, permanently restricted assets held in an endowment, and any property owned).
  • Net worth looks different in the nonprofit sector because of restricted funds. Revenue-less-expenses does not give an accurate reflection because unrestricted, restricted and endowment revenue are all lumped together, yet are not equally accessible. “Temporarily restricted assets” must, by law, be held earmarked for the specific project they support. Beware of Line 19 on the 990, which is not a true reflection of surplus revenue!
  • Rankings of program/admin/fundraising ratios are misleading. Effective organizations need to invest in infrastructure.
  • There are no magic ratios for earned (fee for service) vs. contributed revenue (donations) because the nature of nonprofit service delivery models can vary so dramatically. The more relevant comparison would be looking at an organization’s ratios vis a vis others doing similar work, and over time.
  • Using all the above, we can calculate nonprofit liquidity. Yet an organization with two weeks of cash may not be ready to double in size, but it may be fiscally well-managed. Having two to four weeks of cash is typical of nonprofits operating in low income communities. Nonprofit Finance Fund surveys over 5,000 organizations a year and in the last survey, 60% had less than three months of liquidity! (Typically, only universities with large endowments have over six months’.)

In Jessica’s words, “You should never, ever make a grant based solely on financial health. Doing your due diligence will inform how you can make a grant and what type of grant an organization is ready to absorb.”

Besides Jessica and her organization, I wanted to share a few other resources related to this issue:

  • Make use of GiveSmart’s online donor due diligence tool.
  • Listen to another perspective. To Jessica’s point about being cautious about overhead ratios and how effective nonprofits use financial resources differently than for-profit business, Dan Pallotta also makes the case in his TED .

My biggest takeaway? The best thing we can do as donors is to learn about the nonprofits we support — by trying to understand nonprofit financials in all their messiness and, especially, by having conversations with program staff or leaders of the organization — is to satisfy ourselves that they do effective, valuable work and are well-managed, and then to make unrestricted contributions in support of their work. This is especially true of organizations with less than three months of unrestricted cash on hand: they can most use your unrestricted operating support if you believe in their work and how they do it.

Just my two cents, which you may see if you look really closely at the financials.