Social Good Is about More Than a Bottom Line

“Raising children isn’t scalable,” according to Jacob Lief, the founder of the Ubuntu Education Fund, a holistic “cradle to career” education and health organization for orphaned and vulnerable children in Port Elizabeth, South Africa.

Ubuntu seeks to provide “what you would give your own children,” Lief explained, “what all children deserve – everything.” Many funders, while well-intentioned, he observed, are quick to make judgments about things like overhead costs and “scale” that are inconsistent with transforming lives. In the case of Ubuntu, “impact” is achieved by going “deep” and working with a child over many years, in many ways. It’s not cheap.

Lief, author of the new book I am Because You Are, spoke at a recent event at New America NYC of his experiences as a social entrepreneur, among them what he has learned about the world of philanthropy. What Lief would rather see, as he described in conversation with Echoing Green president Cheryl Dorsey, Social Entrepreneurs Fund president Liz Luckett, Karim Abouelnaga, the founder and CEO of Practice Makes Perfect, and New America Senior Fellow Georgia Levenson Keohane, are funders, and by extension the organizations they sponsor, willing to cast a wider net and take a longer view. That means supporting projects that produce experiences—like education, mentorship, and emotional support—that are sometimes hard to measure in one bottom line.

Metrics matter, of course. Take the case of Donors Choose, a successful and fast growing organization that allows public school teachers to request resources from donors online; today, only fourteen cents for every dollar go to overhead and that number decreases every year because they are more efficient. While these types of models are important, Lief noted, they are not always the right benchmark for all nonprofits; many must make larger investments in people and organizational capacity to achieve their mission.

The other discussants noted similar tensions and contradictions in the way organizations must raise “capital” to address entrenched social and economic problems. “We have a structural problem that for those of us who run nonprofits, quite often our customer is different than the constituents we serve,” said Dorsey. Her organization, Echoing Green, focuses on social investment, identifying and supporting social entrepreneurs like Abouelnaga, an Echoing Green fellow working to close the achievement gap through summer enrichment programs for students in Kindergarten through 8^th grade. “We are pulled in different directions and it totally distorts the marketplace,” Dorsey said.

Many new philanthropic donors are coming from places like Silicon Valley that have embraced risk, innovative thinking, and even failure. Yet, despite relentless focus on things like cost, these business principles are sometimes thrown out the window when the individuals who have mastered them donate for the social good.

“If I tell one person about a pilot initiative that didn’t make it, I may lose my funding from them,” said Lief. “It doesn’t make sense.” And indeed sometimes nonprofits should be treated more like for-profit companies. If an organization reaches its goals, isn’t that most important?

That blurring of nonprofits and for-profit companies is already happening in the world of social entrepreneurship. Dorsey said that before 2006, all of the business plans her organization saw were for traditional nonprofits. But in 2007, they began to see a rise in for profit or “hybrid” organizations seeking grants. “50 percent of our submissions have double bottom line or triple bottom line businesses” she said.

Indeed most companies have some kind of “impact,” noted Luckett. Etsy, for example, allows people to become entrepreneurs; Uber has created more efficient transportation; cellphone operators have helped to build a mobile money industry. As an impact investor, Luckett is looking for companies around the world that purposefully set out to create access to these kinds of products or services for underserved populations – start-ups like Pigeonly, a provider of low-cost communications between inmates and their families, or Liberty and Justice, a fair trade apparel manufacturing firm in Liberia.

The bottom line for the speakers was that philanthropy doesn’t fit into neat categories. Impact isn’t restricted to nonprofits. Innovation shouldn’t only be the realm of large corporations. Investments need to be strategic everywhere.

And perhaps the most important quality to both nonprofits and for-profits is leadership. “We need to do more in our sector to not only tolerate failure but to celebrate it or embrace it, especially with the younger generation,” said Dorsey. When her company selects leaders to support, one quality they look for is resilience. “We know you are going to fail,” she observed. “It’s about the journey.”

Just like raising children, fostering true leaders isn’t scalable—and their journeys aren’t always straightforward.