Monthly Archives: March 2009

Thoughts on Starting a Non-Profit

Here are some questions I was recently asked regarding starting a nonprofit. I didn’t address the fact that this economy also presents a very, very challenging landscape in which to start a nonprofit and to attain solid funding. However, anyone with true passion will find a way to bootstrap their vision, at any time. Anything is possible!

What are the right and wrong reasons to start a non-profit?
 
Starting a nonprofit must come from the head and the heart. It’s a true balance.  Most people think you need to have strong passion and loyalty to a cause, and you do. But one must also have a strong desire for effective business planning and operations in order to ensure you deliver your product, in this case service to the community, effectively.   At the same time, you can’t be ‘all business’ but we are compassionately serving others in very dire circumstances; in the case of UniversalGiving (http://www.universalgiving.org), we are helping people who live on $800 annually, which is 70% of the world.
 
This balanced viewpoint of head and heart is often more identified along the lines of social entrepreneurship. It’s also often tied into revenue (see answer to the other questions below.)
 
The wrong reason to start a nonprofit is because you think it’s a ‘cush’ job or comes with less demands. Your responsibility increases. Fundraising is tough.  And, if you fail to deliver, you are dealing with people’s lives, and the fact that they might not receive truly dire services.  Your job can become one of helping others through life and death.  It’s not just that your product line failed; here, a lifeline could have failed.
 
How do you determine your salary? 

The board determines the CEO’s salary.We take into account whether the position is fulltime or part-time; qualifications (past entrepreneurial experience); results; fundraising success; and business qualifications.  We also look at comparative compensation across similar size nonprofits, in similar locales with cost of living. 
 
Are there other ways to raise money for your non-profit besides grant writing and fundraising?
 
Absolutely. In fact, I believe nonprofits should be able to monetize some part of their service, in order to demonstrate market interest and increase and diversify your funding.  For example, UniversalGiving (http://www.universalgiving.org) allows people to give and volunteer with the top-performing projects across the world. We vet all organizations and projects with a 10-stage Quality Model.  100% of your donation goes to the nonprofit. So this service is free to the public, because we want people to give with trust and transparency, and to get as much funds to deserving people as possible.
 
So how do we do this?  We also have a customized service, UniversalGiving Corporate, which helps companies launch their CSR programs. We help them lead and manage their international giving and volunteer programs. We set up programs in the cities where their employees live and work; vet nonprofits; market out to their employees to increase giving and volunteer results. All of this helps companies operate on the global level, increase their brand, increase employee and client loyalty.  UniversalGiving is paid to perform these services, which also meet our mission.
 
Therefore I highly recommend nonprofits provide both services, which support their mission and their longterm financial viability.

Do you need to have an attorney set up your NP or can you do it yourself?
 
You can set up the 501(c)3 structure yourself.  You can find a book which will help you walk through the process. It’s not difficult, but does take some time.  I did do it myself for UniversalGiving. However, you can pay an attorney to do it for about $3,000-$5,000; some attorneys who are friends will do it for you for free. It’s not a bad idea to get this probono attorney support early on. As a nonprofit professional, you should consider probono services as a constant part of the mix and your resources.

Positive News: The Emerging Market Middle Class Rises

It’s time for some positive news.

Exciting is the emergence over the past 60 years of  a veritable middle class worldwide. A middle class that can pay for education for their children.   Take a stand for the right to vote.   Think about healthcare.   Promote democracy.  These are some of the exciting characteristics of the emerging market middle class.

1950s.  Here we had 22% of the world economy was middle class.  And we’ve been spouting the statistic that nearly 70% of our world lives on less than $2 per day. Not anymore.   Now nearly 50% of the world can be defined as middle class.

This emerging market middle class is making $13-$50 per day (World Bank).    The World Bank separates this merging country middle class into two tiers:  Lower middle class is $2-$9 per day (upper annual income being $2340), with upper middle class at $9-$13 (upper annual income being $3380).   The number of “upper middle class” rose 95 billion in the 15-year-period between 1990-2005.   To be specific,  the World Bank found that in China, this “upper middle class” surged 632 million in 15 years.   And the number of “lower middle class”  rose 1.2 billion.

Nearly 1.3 billion rising out of the poorest tier of $2 per day. It’s a significant surge forward of progress, and with it comes with the ability to think on another level, about

Quality of Life.

I saw this when I was volunteering in Nicaragua 10 years ago.  We were volunteering in the barrios outside of Nicaragua, helping to build and run a school,  and eventually a dormitory. The community all lived right around the school.  And 90% of them could not afford to send their children to school. 

It was too expensive.

It was $1 per year.

But too expensive.

And the school was right there. 

And meanwhile the sewage runs rampantly down the hill between their open shacks.

But change is occurring. Now we’re seeing that people in Nicaragua who earn $1 per day spend about 5% of their income on education;  if people earn $2-$4 per day, they are likely to spend 8.6%.   And if one earns $6-$10 per day, the percentage rises again to 9%.  This is true not only for Nicaragua, but also for Mexico and Peru, in addition to other countries.

A New Playing Field: Think

But  if you are now making $9  per day, rather than $2 – you have some more leighway. So instead of being consumed for the need to get food, water and shelter on a daily basis, millions more people can finally begin to think about what they want their lives to look like.  Pew Research Center found that the middle class (as defined by $4,286 annual income) had the ability to start thinking, forming opinions and taking action on defending human rights, addressing global warming, requesting freedom of the press, seeking fairness in the application of laws.   Or choose the color of paint for their home, vote for a leader they believe in, choose a hobby,  plan how many children they’d like, publish their thoughts.  It’s about showing their voice to the world, and claiming the freedom that is their right in all areas of life.

It doesn’t mean we are out of the woods.    This global middle class now have bank accounts; equity in homes; sometimes stock.   All good growth – and all hit. And they are severely affected by our global crisis, just as everyone else in the world, with values of homes, investments, bank accounts plummeting, and with little or no safety cushion.  And we can’t forget the bottom billion that Paul Collier speaks about so urgently in his latest book  The Bottom Billion.   These impoverished people must be helped directly, immediately.  

We Have To Think, Too

But the rise is still there. We must claim this as wonderful progress.   There’s no reason we can’t see hope in increased quality of living for millions – now over a billion – who can think more about where their lives are headed.   

We cheer them on and must now think about how our philanthropy can be engaged differently. What sorts of programs will philanthropy need to address? What is the design of helping a middle class family stay in the middle class, and how can we help them achieve the next tier of growth?  Supporting businesses, providing cushions, establishing affordable education. That’s our duty in how we address this emerging middle class.   $9 per day  is still $9.  We also need to begin thinking.   About how our philanthropy needs to be different in order to impact the new needs of the global middle class. 

The Emerging Market Middle Class Rises.

Social Entrepreneurship–Part Three

In the final section of my article, I look at the evolution of social entrepreneurship, and give my Five Key Questions to Ask Re: Social Entrepreneurship and my Top Three Factors of Good Social Entrepreneurs

Five Questions and Three Factors

The landscape today necessitates that Social Entrepreneurship evolve even more rapidly, with an eye on results.  We now have increasing pressure for forprofits, nonprofits, and hybrids to incorporate both business operations and a commitment to caring about our community. The goal is to provide demonstrable results, but at the same time to not lose the heart and soul of serving.  Add to that an increasingly challenged global economy, the recent loss of $1 trillion in value people’s assets, and decreased funding sources, and the import of social entrepreneurship delivering results increases.

 

 

The definition of social entrepreneuship varies; each story is unique.  However, the following Five Key Questions To Ask Regarding Social Entrepreneurship, as well as Top Three Factors of Good Social Entrepreneurs, can provide some helpful guidelines regarding your initiative.

 

 

Five Key Questions to Ask Regarding Social Entrepreneurship

 

1-     Is the organizational structure nonprofit or forprofit?

2-     Does the organization generate revenue?

3-     Does the organization plan to achieve full profitability or sustainability?

4-     What is more important: The actual service provided or the revenue?

5-     Are its services scaleable across the globe?

 

These are questions that should be asked and debated, thought through and discussed, particular to each new or existing social entrepreneurship initiative.  In a quick summary, I’d posit that social entrepreneurship can be forprofit or nonprofit, but, the entity should generate revenue. The service should be valued by both the heart – and the head.  The ideal goal of a social entrepreneur would be to achieve positive cash flow, generating revenue to cover all and more of its expenses, along with delivering worldwide impact for its intended communities.

 

For UniversalGiving we chose nonprofit because I felt it would best build the UniversalGiving brand and our integrity as a social entrepreneurship organization.  Since we are dealing with philanthropy and volunteerism, we wanted to solidify our pure intent of serving our communities.  We wanted no questions as to our motives.  Secondly, if we did need to make a decision between the service or the revenue, we could choose service. I could choose to help an impoverished person over revenue. If we were forprofit, I’d say one’s responsibility must be to the revenue first, due to your organizational structure and responsibility to shareholders.

 

 

We do and should generate revenue from corporate clients. We plow it right back into our public service, making it stronger and more personalized so that donors, volunteers and NGOs who visit the UniversalGiving™ website can benefit.  Therefore, it is indeed a delicate balance.  Every social entrepreneur needs to find the unique model which fits their social entrepreneurship motive best.

 

 

Top Three Factors of Good Social Entrepreneurs

 

In summary, I’ll leave you with the top three factors of being a good social entrepreneur:

 

1- Value Both Service and Business. You have to love the service you are providing (such as serving impoverished people across the globe), as much as running a business.  You need to engage with and be inspired by leadership, strategy, sound business planning, revenue.  The days of the nonprofit leader who has only heart… are over.  Heart is wonderful and needed, and must be balanced with a strong desire to execute with business principles.

 

2- Generate Revenue.   Simply leading a well-run nonprofit, in my opinion, is not enough to be called a social entrepreneur.  Truly think through the value your service provides. How can it be monetized?  In UniversalGiving’s case, we provide the initial service for free to the public. Anyone can give and volunteer, with 100% of their donation going to the project or nonprofit of their choice.  But we then approach companies, provide them value with our international CSR management and NGO expertise, and get compensated for doing so.

 

3- Scale Your Efforts.  If you aren’t thinking about how your venture can replicate itself in other areas, then I’d state it’s not social entrepreneurship. The highest definition of social entrepreneurship designs its products and services to grow in multiple populations, in hundreds of cities across the world.  Local organizations and nonprofits are always needed and should be encouraged. But to reach an advanced level of social entrepreneurship necessitates looking beyond your locale.

 

Social Entrepreneurship is an exciting and now practical concept. Let’s accelerate the rate at which we can achieve good in our communities, through both sincerity and heart, as well as sound business principles and planning.  At UniversalGiving, that translates into our vision: “Create a World Where Giving and Volunteering Are A Natural Part of Everyday Life.”  We want everyone to think about giving and volunteering, just as they would pay their cellphone or heating bill.  It should be natural. And so is social entrepreneurship —  as one part of the solution to providing increased service, effectiveness and impact in our world.

 

Social Entrepreneurship–Part Two

To continue with my thoughts on social entrepreneurship,this next section looks at international volunteering and how I was inspired to found UniversalGiving.  I also address the paramount importance of considering quality in achieving effective work.

International Volunteering, UniversalGiving, and the Importance of Quality

My volunteering graduated to the international front, striving to understand and serve people who were living on 16 cents, 50 cents or $1 per day. I volunteered in many countries, including rural communities four hours outside of Bangalore in India, helping with microfinance; working on sustainable farms in Guatemala; in the earthquake crisis of El Salvador. From these experiences, I wanted to find a way that people could find quality, trusted ways to give and volunteer.  I founded UniversalGiving  (http://www.universalgiving.org) a web-based organization which helps people give and volunteer with the top-performing projects across the world. People simply choose a country of interest (such as China or Thailand) and an area of interest (such as education or the environment) and find a list of vetted opportunities to which they can donate money or give their time.  We don’t take a cut on the donation and 100% of your dollar goes to the project.  We help thousands of people find the most trusted and effective way to give and volunteer in more than 70 countries across the world. 

 

 

In order to establish trust, we developed an in-house proprietary Quality Model  which vets all projects and organizations with a ten-stage vetting process.  As I volunteered, I saw that Trust was paramount. I was continually asking myself: How can we highlight the excellent work of these local leaders? How can we provide assurance and trust to our donors, so that they know they are giving to effective projects?  As with any endeavor, there were organizations and leaders that were stellar, and others that were faltering. We had to find the best of the best, and our Quality Model reflects numerous objective and subjective factors. Our goal is to increase the top ways of giving and volunteering all over the world.

 

Part of our Quality process, which we see as integral to our standards as social entrepreneurs, revolved around the culture from which we operate, Silicon Valley.  We developed our Quality Model  partially based on venture capitalists: How would they review a new idea? First, they would review the business plan. If they liked the idea, the very next thing they would ask is: “Who’s leading it? Whose the management team?”  And so we ask ourselves the same questions. To this day our NGO partners and leaders are featured on UniversalGiving  in part due to their leadership qualities and the long-term personal relationships we have with them. 

  

Critical to our social entrepreneurship model, UniversalGiving has two services: A public service that allows anyone to give and volunteer, and a corporate service that generates revenue. Since our public service is free, we needed to determine what was of value about our service, and how we could provide that value to paying customers.  UniversalGiving Corporate (UGC) is a customized service helping companies manage their global Corporate Social Responsibility (CSR) Programs.  UGC helps ensure that a company’s giving and volunteer programs are successful all over the world.  We help with strategy, operations and management, and NGO vetting.  Our goal here is to help the company establish strong relationships in their local community, which also increases corporate brand image; employee attraction/retention; and client attraction/retention. We focus both on improving a company’s bottom line while also serving the community. 

 

For example, in our work with Cisco Systems, we help launch their Civic Councils, which are employee-led community engagement teams.  UniversalGiving Corporate helps their employees increase giving and volunteering in each local city that employees live and work.  We help determine strategy and operations; we help with virtual management of more than 30 Civic Councils across the world. We operate on their behalf, fielding questions from employees and helping ensure NGOs are vetted and uploaded into our web application.  We scale the positive work and best practices from each Civic Council city to the next one, compiling a best practices manual for future Civic Council management.  In essence, we are helping Cisco be top leaders in CSR because we establishing long-term relationships and management plans that solidify their presence in the community.   Critically important, Cisco values this work and pays us accordingly, which in turn is invested back into UniversalGiving to help serve more of our impoverished communities.  In that way we offer two services:  One that is free to the general public; one that is paid for by our corporate clients.  The end result is a solid blend of service and business that embodies social entrepreneurship.

Social Entrepreneurship–Part One

I recently wrote an article about social entrepreneurship for the book, Great Enterprise Publication: The People’s New Deal: Creating a New Civilization through Social Entrepreneurship.  I’d like to share this article with you here, divided into a few focused sections.

For those of you interested in social entrepreneurship, here’s a bit about my personal journey.  Comments welcomed!

In Service to Our Communities, Pamela

Beginning in Mexico

Over the past decade, Social Entrepreneurship has been leading the charge as “the innovation” which will impact our communities.  It’s generating a new wave of leaders: Social entrepreneurs are seen as a catalyst to deliver high impact results in our communities.  At its best, social entrepreneurship is a balance of business and service.  I’d like to share part of my journey in practicing social entrepreneurship while founding UniversalGiving, as well as identify the Top Three Factors of Good Social Entrepreneurs which may help new and existing social entrepreneurs.

 

At the age of 12, I had a moving family experience in Mexico: I’d been walking in the community with my father, and we stumbled upon a cult-de-sac of maimed, begging, unwashed children. I was shocked and deeply hurt to see humanity in this condition. I remember something to the effect of ‘UNACCEPTABLE’ being stamped across my mind. It’s stayed with me every sense, this relentless drive to serve and help provide opportunities for others.

 

At that point I decided to devote myself to our communities and began volunteering.  As time progressed, I enjoyed the service component, but was challenged by the lack of efficiency in some organizations. Critical in my development as a social entrepreneur was this balance between 1) service and compassion and 2) an organization led by business principles. It’s important to note, however, that inefficiency can happen in nonprofits, forprofits, governments, churches. It’s not fair to label nonprofits inefficient; it’s not the legal structure.  It’s about positive, effective management and governance, which can take place in any entity.  It’s about leadership, which led me to Bill Drayton and Ashoka.

 

 

I’d heard of Bill Drayton and his early work on social entrepreneurship in the 1960s, which I had found very inspiring.  At such an early stage, he seeded and mobilized thousands of social entrepreneurs all over the world. The emphasis was on evaluating the qualities of leadership of the self-starter entrepreneurs, who due to their leadership, ethics and integrity, led and managed effective initiatives that could be scaled worldwide. I also studied and met with Jed Emerson at the Roberts Economic Development Fund, which focused on nonprofits running a business, or businesses providing a social good, which provided some very successful social models.

 

A pivotal moment surfaced in graduate school: An extremely inspiration speaker and serial social entrepreneur, Peter Samuelson, challenged us to consider ‘entrepreneurial philanthropy’ as a new way to operate. At the time, he stated, “It’s either social entrepreneurship, or entrepreneurial philanthropy” – the ability to create and scale high performance organizations and services in a rapid fashion. We must adopt this mindset that we can effect change across the world with increased acceleration and efficiency. I’ll accept nothing less.  Do it today.”  

 

I was hooked, inspired; mouth gaping.  I had finally found my calling: the marriage between my drive of soundly run business, and still serving the community!  As I spoke with my father and shared my inspired, teary revelation at age 25, he encouraged, “That’s great! Now how do you get paid for this?”  Good question.   To get it right, I knew I wanted to be a part of creating the social entrepreneurship leadership and culture.   At that point I completed my graduate studies in communications, bent on being a social entrepreneur.