What’s So Wrong with Nonprofits Playing by Market Rules?

Here’s the thing about markets – they have this uncanny way of being candid, sending demand signals that companies need to pay attention and adapt to in order to thrive, if not survive.

So why is it that the nonprofit sector is uncomfortable with embracing more market-based approaches to its work? This week’s feeding frenzy of articles criticizing the Council on Foundations for its experiment to host a $40,000 pitch competition to identify new organizations and approaches to drive social change is an example of this discomfort. In fact, the frenzy was so severe, that the Council decided to cancel the pitch competition and instead host a discussion on the merits and drawbacks of new approaches to grantmaking.

One of the pillars of our work at the Case Foundation is “revolutionizing philanthropy.” We believe that the practice of mobilizing private capital for public good is in need of a major reboot. In order to keep up with the pace and scope of major social challenges, the resources and tactics going into addressing these challenges and the organizations managing those resources need to be more efficient and effective. And as a sector, we need more catalytic, collaborative and creative solutions.

That’s why we’ve tested programs like the Make It Your Own Awards, the first campaign to open up a part of the grantmaking process to an online public vote. Or the America’s Giving Challenges (in 2007 and 2009), which mobilized over 150,000 donors to give $3.8M to over 14,000 causes, most of which were small and scrappy. That’s why we created the Be Fearless campaign – because we believe that in order to create more innovation in our approaches to social change, we must all take risks, embrace and learn from failure and make big bets. And that’s why we consistently provide catalytic funding to partners that are experimenting with new approaches and hoping to find breakthrough solutions and collaborations.

We’ve long championed the potential for prize and challenge programs – including initiatives like pitch competitions – to discover breakthrough innovations. We know that sometimes the people with the most innovative solutions to big problems will be found in unlikely places – just take the wedding dress designer who played a critical role in helping to dramatically improve the design of the Ebola Protective Suit worn by health care workers treating the disease, thanks to a challenge hosted by USAID’s Global Development Lab. The U.S. government has broadly embraced the use of prizes and challenges, which kicked off with the Summit on Innovation that we co-hosted with the White House in 2010, leading to the creation of Challenge.gov, which hosts hundreds of prize and challenge competitions across 50 federal agencies. And we were proud to join some of the philanthropic sector’s leading innovators – Bloomberg Philanthropies, the Joyce Foundation, the Knight Foundation, the Kresge Foundation and the Rockefeller Foundation – in publishing a 2014 report on the ways in which incentive prizes are transforming the innovation landscape.

We love to see new practices for crowdsourcing ideas, pooling resources, disrupting old ways of doing business, testing new approaches and massively publicizing – if not competing – new programs. Why? Because, quite frankly, despite a massive amount of good accomplished with billions of nonprofit dollars, the evidence base for impact remains unsatisfying. We’re not saying that we should swing the pendulum completely toward prizes, challenges and other experimental approaches – but deploying tactics that can help us discover new ideas from unlikely places is desperately needed.

We have a saying at the Case Foundation based on an old African proverb – if you want to go fast, go alone; if you want to go far, go together. What if, instead of trashing the Council on Foundations for trying something new, we embraced it as a fearless attempt to disrupt the status quo with the hope of finding a better way? Sure, we might each have our tweaks on how to make it better (e.g., having a panel of judges, not the audience, vote on the winner). But as a tactic, it brings a fresh market-based approach and has the potential to expose innovative people and ideas to a broad community of funders, who just might decide it’s worth pooling their resources for greater and faster impact.

We look forward to the discussion on the merits of new grantmaking approaches at the Council’s conference, but we’ll wistfully be wondering what it would be like with the pitch competition in full swing, tapping into the “wisdom of the crowd” and fully embracing of the idea of democratizing philanthropy, making it easier for anyone to participate in the efforts to solve big, hairy problems.

Want to continue the conversation? Tweet us @CaseFoundation with the hashtag #CFBlog

Milken Global Conference Recap: Impact Investing Gains Steam

Last week, the Case Foundation team, including our founders, Steve and Jean Case, had the pleasure of participating in the 17th Annual Milken Institute Global Conference with more than 3,000 investors, policymakers philanthropists, and thought leaders from around the globe.

We were particularly struck by the momentum and buzz around impact investing at the conference. Jean and Steve joined CNBC live for a short discussion on the topic, and shared their thoughts into the potential for impact investing to move from a niche concept to a mainstream investing strategy. The room was packed for the panel, “Investing for Impact: What’s in Your Portfolio?” featuring Jean Case, and moderated by Matthew Bishop from the Economist. Double bottom-line innovators, including Tracy Palandjian (Social Finance), En Lee (LGT Venture Philanthropy), and Michael Schlein (Accion), also joined the panel the growth of social capital and shared more on their efforts and early successes. Impact Investing was also the source of great conversations in a number of other forums, from hallway discussions to formal dinners, and the growing interest in the space from this important group of conference-goers was apparent.

While at the conference, we also released a draft of our Short Guide to Impact Investing, under the leadership of our Entrepreneur in Residence, Sean Greene. The guide is designed to help investors – including high-net-worth individuals, foundations, family offices and others – explore the impact investing market and help guide their decisions as they hope to move towards investing that incorporates intent, measurement and transparency when it comes to generating both financial and social returns. We’re currently accepting public comments on the draft, and we thank the many of you who have already given us tremendous feedback that will help sharpen and improve the guide before we publish the final version in the coming months.

In addition to impact investing, Jean and Steve had the opportunity to take the stage to discuss other topics they’re passionate about. Jean joined some of the world’s most innovative philanthropists for the panel discussion, “Philanthropy Now: Prizes, Purpose, and People.” Moderated by the Templeton Foundation’s Jim Pitkofsky and also featuring Australian philanthropist Andrew Forrest, Tsitsi Masiyiwa of Zimbabwe’s Higher Life Foundation, Dick Merkin of the Heritage Provider Network and Faster Cures, and George Weiss, the panelists shared their own experiences on innovating in philanthropy through a number of approaches, including prizes and challenges. The Case Foundation was an early experimenter in prizes and competitions in philanthropy, beginning with the Make It Your Own Awards, which was widely acknowledged as the first time a foundation has allowed the public to play a role in grantmaking decisions. The panel also featured a lively discussion on incorporating the principles that made one successful in business to their philanthropic endeavors.

Our chairman, Steve Case, joined Salesforce.com CEO Marc Benioff and tech entrepreneur and academic Vivek Wadhwa for a panel on “Adjusting to the Tech Revolution: Surfing the Wave or Swept Away?” moderated by Dennis Kneale. In a spirited conversation, they examined how industries and consumers navigate the tech revolution as it snowballs through all aspects of society, from our personal lives to business and banking, health, education, transportation and communication.

Steve also joined Bonin Bough (Mondelez International), Ryan Kavanaugh (Relativity Media) and Lynn Tilton (Patriarch Partners) to guest judge a fast pitch competition, hosted by Daniel Gorfine of the Milken Institute. Companies judged included Nightingale, Immudicon, VirtualU, Sension, and Skip. In this first-ever Milken Institute-Kairos Society pitch competition, student entrepreneurs from each company pitched their concepts in front of a packed, pressure-filled theater. Congratulations to Catalin Voss, selected by the audience as the winner of the competition.

Watch Jean and Steve’s panels and the pitch competition from the Milken Global Conference online at the links below. Check out more from the Milken Institute online HERE.

Public-Private strategy session with White House takes citizen participation to the next level

This morning, I have the honor of kicking off the public-private strategy session we’re hosting with the White House on driving innovation and civic dialogue through the use of prizes, challenges and open grantmaking.

I feel a great sense of excitement as we head into this dialogue that focuses largely on new, breakthrough opportunities to more fully engage citizens in our public sector efforts. Here at the Case Foundation, we began to see the potential in these types of approaches to ignite civic participation, especially when combined with new interactive technologies, when we launched the Make It Your Own Awards in 2007. Since then, we have seen that potential grow as both the philanthropic and corporate sectors have continued to experiment through programs that incent the public to participate in decision-making.

Now, we have the opportunity to take lessons we’ve learned – and those of peers – from these early innovations and apply them to a sector where they have the potential to make the most impact on the public – in the federal government. Through the early experimentation, we’ve seen that there is a clear appetite from the public to have a more active role in making decisions that affect their daily lives and their communities, and now it’s time to capitalize on that appetite by creating opportunities and moments that capture the best ideas and move them forward.

Earlier this week, I was asked “why now?” when it comes to the government’s adoption of prizes and challenges. Frankly, I don’t think it was possible until now – the merging of the movement toward improving transparency and reducing bureaucracy at the federal level, with the evolution of Web 2.0 technologies has opened the door for the creation of programs that can successfully engage the public and encourage their direct involvement in driving innovation and improving how government serves them.  At its core, this is an opportunity for government to return to the roots of democracy – a government that is for the people, and more significantly by the people.

And since this day-long session is all about reaching new audiences to identify new solutions and engaging all citizens in decision-making, we’re particularly excited about the fact that we’ll be able to bring the day to the public – no matter where they are. We encourage everyone interested in this topic to join our interactive CaseSoup Q&A sessions featuring leading innovators in this space, taking place online and live from the event. The schedule includes an exciting mix of public and private sector experts and practitioners, including Sonal Shah of the White House Office of Social Innovation and Civic Participation, Peter Diamandis of the X Prize Foundation, Aneesh Chopra, U.S. CTO, the team from the Pepsi Refresh Project and others. We’ll hope you’ll join us on this exciting day!

The White House embraces wisdom of the crowds. What do you think?

This post was written by Michael Smith on behalf of the Case Foundation:

On Friday, April 30 we’re teaming up with the White House Office of Science and Technology Policy and the Domestic Policy Council (where the Office of Social Innovation resides) to bring the private and public sectors together to discuss lessons and strategies from experiments in prizes, challenges and open grantmaking – big and small.

This meeting is part of our continued efforts to encourage citizen involvement in decisions that affect them, and it’s part of the Obama Administration’s Open Government Directive, which requires agencies to tap the expertise and ingenuity of the American people to bring the top talent & best ideas to bear on our nation’s most pressing problems.

As I said in my blog post launching our series on Citizen-Centered Solutions last month, we have been experimenting with programs like this since we launched our Make It Your Own Awards and America’s Giving Challenge in 2007 – and we could not be more excited about the flood of similar programs that have come since then…  everything from the American Express Members Project to this year’s Pepsi Refresh Project and now the White House telling agencies to tap into the knowledge and innovation of the people it serves! I may be a bit of a civic engagement nerd, but the possibilities of breaking down barriers and moving beyond the stale and stagnated when we commit to reaching new audiences and democratizing problem solving gives me goose bumps…  really.

The meeting on Friday will highlight leading private sector innovators like the X Prize Foundation, American Express, PepsiCo, and the Knight Foundation along with cutting edge federal government innovators from DARPA, NASA, and the Department of Education. More than 100 federal government workers who are charged with implementing these new programs will listen to panels, participate in interactive discussions and Ignite sessions (where select participants will have three minutes to present new ideas) and hear from six senior officials from across the White House.

Prizes and challenges have proven to be effective in mobilizing the masses and identifying brilliant new ideas; however, we will be asking ourselves the tough questions, like…

  • How do you ensure transparency in decision making?
  • How do you ensure quality and impact?
  • How do you determine what problems should be tackled by an in-house team, contracted out, or opened to all through a prize?
  • And, how do you wade through the bureaucracy that makes innovation and taking new paths seem almost impossible.

We don’t want to take on these questions alone. So, while the capacity of this room may be limited we want to expand this discussion to as many people as possible. That’s why we’re hosting a day long series of live, interactive CaseSoup interviews with speakers from the event giving you a chance to hear from them and ask questions via social media. That’s why all panels and keynotes will be filmed and made available to the public the week of May 3rd. And, that’s why today, we’re asking that you take a look at the agenda and comment on this blog post with any questions that you would ask or any thoughts you have on what we’re trying to accomplish. So, let your voice be heard. What do you think?