Skoll at Oxford: A Changing Time for Philanthropy -- Part 2

OnPhilanthropy's Tom Watson was invited to blog from the Skoll World Forum which recently gathered the globe's leading social entrepreurs at Oxford. Here is his Part 2 of his report:

Time and again in the Skoll sessions, committed social entrepreneurs talked about how hard it is to raise funds - donations, capital, "investments" etc. - for innovative ideas that don't fit into what foundations and philanthropists believe about funding projects. Outside of the self-funding ventures in micro-enterprise, the money it takes to fire up major movements like tackling global warming, eradicating poverty in Africa and south Asia, preserving delicate environments, and empowering poor women generally comes from fundraising.

Jacqueline Novogratz, the CEO of the Acumen Fund, admitted that fundraising remains central - that social enterprises "always came back, somewhat reluctantly, to philanthropy - to finding a few big supporters." Nothing I've heard here changes that formula, particularly for start-ups - entrepreneurs have always had to battle, to scratch, to promise their first-born to get the capital they need to launch something. For social entrepreneurs, that means major donors.

Said Novogratz: "Look, we need philanthropic money still."

Edward Skloot has been involved in what is now popularly known as social entrepreneurship for a long time; he's the executive director of the Surdna Foundation, started New Ventures back in 1980, and is a board member of Venture Philanthropy Partners. So when he speaks, two things happen - he tends to frame his thoughts in the long term, and he wears his skepticism rather proudly. Though a friend to the social entrepreneurs, Skloot brings a perspective from a career in government, in the foundation world, and as someone involved in venture philanthropy - the catchphrase of the late 90s.

Ed Skloot said it best: "Scaling up is a very big topic in the states, and there was a big dollar infusion [for social entrepreneurship], and now we're having difficulty in the capital market. That may be the Achilles heel."

JB Schramm, founder and CEO of College Summit, agreed: "We face what so many nonprofit organizations face - the fact that innovation is strangled by fundraising constraints, that [major donors] tend to have a concentration on programs."

Innovative Funding

He described a fundraising innovation that puts the organization's financial needs on a single term sheet, with quarterly goals and metrics - donors simply buy into the term sheet, and follow the quarterly reports on goals. And he asks them to commit for three years. This takes the "program focus" of donors out of the equation and orients the donors toward the overall success of the organization.

A report released at the conference, Growing Opportunity: Entrepreneurial Solutions to Insoluble Problems, by SustainAbility, Ltd., gave a clear-eyed snapshot of social entrepreneurship and its conclusions identified several real challenges to the movement. The first is money: fully 72% said raising money for their social ventures was a problem, and 74% said they were primarily funded by that very old-school financial instrument - the foundation.

And yet, new financial models were on everyone's lips in Oxford; ideas for building self-financing ventures to bring about change - and strategies for avoiding a paternalistic view of the poor.

"Poor people are left out of the global economy," said Novogratz, recalling a discussion at Acumen when she reached a crucial realization - that social entrepreneurship was about extending capitalism, changing the capitalist system to offer opportunity for the poorest human beings.

'Future of Capitalism'

"I said look where this field is hurtling us toward - that's the future of capitalism...The first thing we need to do is to find entrepreneurs that look at the poor as viable customers, and not as passive recipients of charity."

"Social entrepreneurship, as a term, is still to a degree up for grabs," said Dr. Alex Nicholls, Skoll Centre for Social Entrepreneurship, conference organizer. "It has moved from being almost exclusively in North America, to being much more global. There is a much richer understanding of what social entrepreneurship might mean."

Social entrepreneurs tend to see "capitalism as the driver of change," Novogratz said. But since the dawn of the first industrial age, it has also created an insurmountable gap between rich and poor, powerful and non-empowered. Because of the newly-wired world, "for the first time in history, the rich can see how poor the poor really are - and the poor know how poor they are."

Novogratz touched on some of the points that Yunus hit upon the first night in the gathering twilight under the Sheldonian's ancient beams - that "social investing" shouldn't be just about "helping the poor," but should actually involve the poor. She described products, specifically some well-designed mosquito netting aimed at the poor. "Rich people should not have a premium on beauty, on comfort, on design, and on liveability - there's a power in the market that if combined with empathy and compassion can lead to solutions."