Every community has human and

by francine Hardaway on May 11, 2002

Every community has human and social issues in addition to business issues. Although most of us are buried in our businesses, the impact of the social issues is always felt: the legislature will always take away economic development incentives and programs to fund new jails, for example.

In my spare time, I’m on the boards of several not-for-profit organizations, including Social Venture Partners Arizona. This is a group dedicated to venture philanthropy: doing more than just writing a check. SVPAZ has an investment committee that makes investments in not-for-profits and then goes in and helps them with their business models, technology needs, marketing issues, and anything else they need to be more effective.

Unfortunately, Social Venture Partners only funds half a dozen organizations a year, and according to very strict guidelines (Children’s issues and education issues). All the other not-for-profits are out there hanging by their thumbs. And many communities across the nation don’t even have an organization like Social Venture Partners. Most major foundations just go through a grant cycle, read a lot of applications, write a check and hope for the best.

This week, I’ve been thinking that it is time for an incubator or a CEO/Founder’s Roundtable for not-for-profits. After all, in the for-profit arena, founders and CEOs receive coaching on how to perform effectively to accomplish a mission.

They are taught how to present to investors, how to build a team, how to keep the books. Some entrepreneurs have MBAs (although recent research has shown that the MBA is a poor predictor of success as a CEO.) If they don’t learn, they are replaced by more professional CEOs who accompany funds into the company. The founders are bought out, shoved out, promoted, demoted, and otherwise gotten out of the way.

For the past three years, Stealthmode Partners has been the life support system for many entrepreneurs. Although it hasn’t been easy, we’ve been able to keep many of them alive (if not well) and slowly working toward their goals. It’s been a form of group therapy from which we have all become stronger.

Could Stealthmode Partners bring the same skill sets to Executive Directors that it brings to the for-profit community: help them set up the *business* end of the organization so it contributes to the charitable mission, rather than detracting from it? Large not-for-profits often receive management consulting help, either through their boards or through fee-for-service. Smaller ones are left in the cold.

Our idea, which I’m exposing here because I’m looking for feedback, is to form groups of about ten executive directors who would meet with us on a monthly basis, share their issues with each other and us, and receive the benefit of our large network of community resources. To make this affordable for the EDs, some of it could be underwritten by foundation grants (although I’ve been advised that the not-for-profits should have to pay part of the cost so they will take it seriously). (Perhaps a university would be interested in running this as an executive program in “Social Entrepreneurship” and giving the attendees in our groups credit for their participation.)

I started this conversation earlier in the week with an employee of our local community foundation. She told me that many of the not-for-profits they funded would not be “ready” for such change. I told her in response that it was the responsibility of the funding sources to *make* them ready. When a venture capitalist invests in a start-up, he/she often comes with a new CEO in tow. To get the money, the company must accept the CEO.

A founder of a not-for-profit who is not ready to accept a new business model is like the founder of a technology company who develops the product and then is asked to step aside when the money comes in. It’s strange that we require so much proficiency and training from our corporate professionals, and not from our not-for-profit leaders. After all, business is just business, but many not-for-profits deal with life or death issues.

If we’re not in a position to run companies inefficiently, we certainly cannot afford to run charities that way.



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