What do Social Entrepeneurs and Sesame Street have in common?

Blake Mycoskie of TOMS recently had appearances to both SXSW in Austin, TX and the Association of Fundraising Professionals (AFP) International Conference in Chicago.  I learned about his inspiration and motivation around his now famous TOMS brand and one-for-one movement.

Combining social good and the power of consumers is nothing new.

I came across a great article by Allen R. Bromberger, A New Type of Hybrid.  In it, he discusses how social entrepreneurs are using a hybrid model to combine the for-profit and nonprofit models.

Museums and performing arts organizations create for-profit retailers to sell merchandise, such as posters, jewerly, and books. And the hybrid model is nothing new to public broadcasting. The Children’s Television Workshop, owners of the Sesame Street characters, use separate nonprofit and for-profit organizations to both achieve business objectives and further a social mission.

Dan Pallotta, in his book, Uncivilized, points out why this arm's length model is used for supporting social good with commercial activities. Rather than being politically or economically motivated, it was a religious view held by the Puritans who came to America in the 17th century. They believed that any commercial activity was sin. However they also understood it necessity, so to atone you could perform charitable activities and - never the twain shall meet.

In his article, A New Type of Hybrid, Bromberger discusses how modern social entrepreneurs are using separate, but contractual linked entities to accomplish their goals.

For any nonprofit concerned with the legal implications of UBIT (Unrelated Business Income Tax), or for-profit entities concerned that the pursuit which want to pursue a social mission, a single hybrid structure that contractual binds the nonprofit and for-profit entities may be a solution.

But Bromberger points out, it isn't simple.

In the article, Bromberger describes various types of legal entities typically used in social entrepreneurship including, B corporations and benefit corporations and how they differ as well as the low-profit limited liability company (L3C) option.

He describes legal options to enter into activities together to achieve social good.

• Parent-subsidiary model - where a nonprofit creates for-profit subsidiary
• Commercial transactions and collaborations between nonprofit and for-profit companies (arm's length model)
• Corporate sponsorships and commercial co-ventures 
• Contractual hybrids

There is also a great discussion of legal ramifications of some of the various options and Bromberger spells out the particular IRS rules to consider.

• Joint Ventures
• Private Benefit
• Unrelated Business Income Tax
• Conflicts of Interest
• Related Party Transactions
• Form 990 

The lively comments are also a must read.  One commentor notes a new option being considered in California which would allow the formation of a Flexible Purpose Corporation (Flex Corp.) You can read more about it in California to Allow Corporations to Blend Mission and Profit at corpgov.net.

I also loved Milton Friesen's comment about using the open source model - create a platform upon which individual organizations can built new models - like allowing developers to create apps for an app store.

So what does all this very geeky, public policy mumbo jumbo mean? 

Through open collaboration, we can essentially crowdsource innovation in social good and social entrepreneurial models! How cool would that be!

SXSW: Nonprofits and Free Agents in A Networked World

In an interactive session with Beth Kanter (@kanter) CEO, Zoetica; Danielle Brigida (@starfocus) Digital Mktg Mgr, National Wildlife Federation; Jessica Dheere (@jessdheere) Founder/Dir, Social Media Exchange; Mark Horvath (@hardlynormal) InvisiblePeople.tv at SXSW Interactive 2011, I learned how nonprofits can leverage free agents to support their cause.

First, Beth Kanter introduced the concept of a fortressed organization as one that is “opaque and impenetrable to outsiders.” (The Networked Nonprofit, B Kanter and A Fine, 2010)

And what happens when a passionate, capable, and agile free agent who is eager to help meets this fortress? They crash into a wall.  

Instead, organizations must strive to be network nonprofits.  Networked nonprofits are more connected to the ecosystem of free agents (both individuals and other organizations.) They use more collaborative ways to issue and accept requests for work, for example, using social media to locate graphic designers.

According to Kanter, in order to exemplify a Networked Nonprofit, you must be comfortable with supporters experimenting with the organization’s brand.  Bridgida recommends getting buy-in from legal to allow them to do so.  Free agents don’t care about your branding document. Be sure your lawyers know not to send a cease and desist order when you support what the free agent is doing. Use creative commons licensing to freely allow certain uses of your organization’s intellectual property.

Free agents can sometimes accomplish things that the organization itself cannot, such as operating on the ground in foreign countries. Dheere points out that it is difficult to work as an NGO in certain societies due to cultural and government restrictions, especially with respect to open access to data and content.  This is one area where working with free agents isn’t just helpful, it’s crucial. 

Free agents have responsibilities too. They have to demonstrate how they help, not hurt, the cause.  Kanter mentioned having a code of conduct for free agents, so expectations and boundaries are clearly outlined.

Craig Newark and Beth Kanter

Craig Newmark (@craignewmark), founder of craigslist.org and Craigslist Foundation, and free agent extraordinaire, was in attendance.  He pointed out that free agents help charities and NGOs stay connected with the people they serve at the ground level.

A couple of key actions that you can do now to implement your strategy to becoming a “Networked Nonprofit”

• Be a network weaver. Start by mapping out the relationships within your organization and you will probably find you are talking to the same people.
• Develop an engagement strategy for people outside your organization and follow it
• Fail fast and fail cheap. Reassess afterward.

Remember: “These networked nonprofits work as social networks, not just in them.” (Ibid)

I was lucky enough to meet Kanter after her session and briefly discuss how it went, including the integration of international free agents through live conference calls and recorded videos, as well as her informal moderation style and breaking down the physical barriers between audience and panel to facilitate the discussion.

Myself and Beth Kanter

All in all, this is one the BEST sessions I attended this year and I would highly recommend the book, The Networked Nonprofit (B Kanter, A Fine) to anyone interested in learning more.

The twitter hashtag for this session was #netnon.

Beth also has a great write-up of her reflections on this session on her blog.

Text-to-Donate Fundraising for Non-Profits

In a core conversation with Bridge Communities, Amy Van Polen, Resource Dev Dir, discussed her experiences with text-to-give campaigns. The results surprised me.

Typically, text-to-give campaigns involve using a for-profit ASP (application service provider) to act as the trusted third party between the phone carrier and the nonprofit. This ASP provider manages the short codes and keywords and typically charges a monthly fee ($79-$99/mo) and a per text charge ($0.48/txt). Bridge Communities used Give By Cell.

Then they shared this little tidbit of information:

Really? Breaking even a success? She also mentioned her costs to be approximately $4000 to run the campaign for a single special event. This price tag is beyond the reach of most NPOs.

In addition to the high cost, the delay between the donors text and funds actually being received by the charity can be as long as 30 to 60 days.

The process for text-to-give campaigns can be complicated. When a donor texts to donate, they receive a confirmation message to which they must reply to complete the donation. There is an average 30% dropoff rate for Bridge Communities. Many donors were kids on family plans, and carriers frequently do not permit ad hoc text charges on family plans.

My biggest takeaway from this case study is that with text-to-give campaigns, the NPO does not have the ability to collect donors’ personal information such as name or email address. This makes it impossible to follow up with a thank you or develop a long term relationship. Instead, consider text-to-pledge campaigns.

With text-to-pledge, organizations collect vital donor data with which to follow up and collect the pledge, so they can develop the relationship with the donor.

Another consideration was the judicious promotion of the text-to-give campaign. Since the minimum donation on the web campaign was $25 and the text campaign was set at $10, Bridge Communities carefully promoted the text campaign where it would not cannibalize their web and other donations.

For maximum success, Amy recommended using emotional appeals, making it fun, and using an emcee or other high energy spokesperson at the event to create a sense of immediacy and encourage attendees to pull out their phones and donate right then.

For more comments on this topic, read the tweets on #text2donate Twitter hashtag.

SXSW wrapup: Let's Hook Up: Brands, Celebs, and Non-profits

In a panel (click for recording) with Iraq and Afghanistan Veterans of America (@IAVA) and LIVESTRONG (@LIVESTRONG) panelists, Katie VanLangen (@kvanlangen), Dir of Strategic Partnerships, and Paul Rieckhoff (@paulrieckhoff), Exec Dir of IAVA and Chris Brewer, Sr Mgr, Dev Comm with LIVESTRONG discussed using sponsorships and celebrity endorsements for your cause.

The key is to find a sponsor who really cares about your cause and then demonstrate the ROI to their brand.

Be sure your cause is a good fit with their personal interests. This will help alleviate possible problems when and if conflicts arise, such as for scheduling appearances. A sponsor who has an early morning flight will be much more likely to stay late at your gala if they truly believe in your cause than one who only has a passing interest.

If you are going to involve a celebrity in your special events, ensuring their security and comfort is paramount.

They also mentioned Movember as a great example of how nonprofits can use the power of social media to engage supporters. Read more about Movember on Wikipedia.

Check out the comments for this panel on the Twitter hashtag, #letshookup.

SXSW book reading: The Future of Nonprofits

From a book reading (click for official SXSW archive recording) of The Future of Nonprofits : Thrive and Innovate in the Digital Age with Randal C. Moss (@randalc) and David J. Neff (@daveiam) I learned that nonprofits are still businesses, they just spend their profits differently. They cannot be lazy when it comes to new initiatives.

David J Neff and Randal C Moss book signing for The Future of Nonprofits

Charities also must pay attention to the rise of the individual fundraiser. Don’t be satisfied for supporters to simply like your cause, engage them and call them to take action.

Awareness is dead. Advertising is in. Organizations must make a business case for each new idea. Ask; is it revenue positive or revenue neutral? Is it sustainable?

If you are not structured to innovate, you won’t innovate. Organizations must create cultures that encourage new ideas from staff and have procedures in place which facilitate the adoption of new ideas.

Check out the slideshare from David J Neff. Or for more tidbits of knowledge, 140 characters at a time, read the comments on the Twitter hashtag, #thefutureofnpos.

SXSW and NTC wrapups

As you have read here, I attended the South by Southwest interactive festival in Austin, Texas, March 11 - 16, 2011. Immediately following, I went to the Nonprofit Technology Conference in Washington DC, March 17 - 19, 2011.

There was so much brain-filling information and best practices shared that it is too much for one post. Therefore, I will be posting wrap-ups and summaries from several of the sessions I attended here on this blog over the coming weeks.

Watch for lots of nerdy, techie, geeky, nptech goodness coming at you soon!

Lena Rose is moving

No, she isn't crawling yet! But she is moving to a blog all her own!

If you would like updates on what the most beautiful baby in the world (no bias) is up to lately, please follow her here:
Rose is a Rose
http://helenaroselauriat.blogspot.com/

This blog here (Tomato's Garden) will be reserved for my thoughts and comments on nonprofit management and technology, geeky things, and my life, in general.

Thanks for reading! And don't forget to comment!

Stacy

Washington DC moonrise

The best full moon event in 18 years and all I have this little camera phone. Still beautiful to watch from the National Mall.

SXSW Interactive Festival - Austin, TX

Nerdy, techie, geeky goodness abounds!

Lena Rose, Gator girl

Helena Rose has declared herself more than willing to be part of a Gator household showing that at 4 1/2 mos. it's never too young to show the spirit!