Nonprofit Chronicles

Journalism about nonprofit organizations and their impact

41ZFjrDx10L._AC_UL320_SR216,320_In the last decade or so, an array of nonprofit groups have creatively and persistently worked to deploy the power of business and markets to drive social and environmental change.  They include the Marine Stewardship Council (advocating for sustainable fisheries), Verite (just supply chains), GoodWeave (eliminating child labor from the rug industry), Ceres (an investor-environmental coalition), B Lab (setting standards for responsible business), Digital Divide Data (“impact sourcing” to employ and train poor young people) and FairTrade USA (you know).None is a big NGO. All punch well above their weight.

Not coincidentally, they are all awardees of the Skoll Foundation, along with 84 other so-called social entrepreneurs, including such celebrated nonprofits as Health Care Without Harm, Partners in Health, One Acre Fund and Water for People. Social entrepreneurs who are chosen for the awards — you can’t apply — get $1.25 million in unrestricted funds from Skoll, which was formed in 1999 by billionaire Jeff Skoll, the first president of eBay.

And what, you may ask, is a social entrepreneur? Sally Osberg, the president and CEO of the foundation since 2001, and Roger L. Martin, a business school dean who has been on the foundation’s board since the beginning, address that question in an excellent new book called Getting Beyond Better: How Social Entrepreneurship Works (Harvard Business Review Press, $30).

I sat down recently with Osberg and Martin to talk about the foundation and its strategy, and then chatted briefly by phone with two Skoll award winners, Nina Smith of GoodWeave (see my blogpost, here, for more) and Paul Rice of FairTrade USA. Unsurprisingly, Smith and Rice profess love for the Skoll Foundation. “They’re amazing,” said Rice, who was part of the first class of award winners. “We were small, still, so getting $1 million had a real impact in driving our growth.” Both said the connections they made through the foundation, which holds a forum every spring in Oxford, have been invaluable. Skoll brings in other donors, as well as experts in story telling, a passion of Jeff Skoll’s.

At first glance, Skoll’s approach to philanthropy appears simple:  Identify smart, energetic and creative people who want to change the world, and give them money to do so, no strings attached. It’s the mirror image of the approach taken by many big foundations, which identify causes or projects, and fund nonprofits to deliver specific outcomes. The Skoll approach puts most of the power in the hands of the grantee, not the funder. Its assumption is that knowledge is dispersed, not centralized.

Of course, there’s more to the Skoll method than that. Getting Beyond Better begins with a useful taxonomy that divides the nonprofit world into social service providers, advocacy groups or social entrepreneurs.They write:

Unlike social service providers, social entrepreneurs explicitly aim to permanently and systematically transform a miserable or unfair societal condition. Unlike social advocates, social entrepreneurs act directly, creating a product, service or methodology that spurs the transformation of the status quo.

I asked Osberg and Martin what makes a social entrepreneur different from a socially responsible business. Didn’t Google, Patagonia, Starbucks, Tesla and Microsoft all begin with big ideas, designed to transform the status quo?

The difference, they said, is that social entrepreneurs set out to work on behalf of underserved populations. They want to disrupt an equilibrium that causes the “exclusion, marginalization or suffering” of people who lack the financial means or political clout to bring about change on their own.  The foundation, they say, aims to support people at the point where they have shown that they can intervene to topple that unfair situation and create a new equilibrium that delivers broad social or environmental benefits.

Sally_Headshot_2010_400x400“These aren’t early stage entrepreneurs,” Osberg told me. “It’s not just people and ideas. We look for a venture with a track record that’s poised to move. There’s an inflection point that we can help them to achieve.”

So, for example, Rupert Howes and the Marine Stewardship Council have established a system, flawed as it may be, to certify sustainable fisheries and then persuade retailers and consumers to reward their better practices. Paul Rice and Fair Trade USA unlock the buying power of conscious consumers to deliver benefits to distant workers at the bottom of coffee, chocolate and banana supply chains, among others. B-Lab has made rapid progress is establishing a trusted and rigorous ratings systems for responsible companies; nearly 1,500 companies in 42 countries have been certified as B Corporations. Having covered the social and environmental impact of business for more than a decade, I can attest that these groups (as well as other grantees like GoodWeave, Verite, Digital Divide Data and Ceres) do good work.

 

How much impact have they had? That’s hard to know, which leads me to one of the two reservations that I have about the Skoll Foundation. Some of their grantees, like One Acre Fund, do a rigorous job of measuring their impact; many do not. They don’t have public, time-based goals against which they can be measured. Nor does the foundation employ third-party evaluators, and — like most foundations — it does not make its evaluations public. This is a missed opportunity for learning. 

Which isn’t to say that measuring the impact of social entrepreneurs is easy. “Measurement is tricky in any new field,” said Roger Martin. “Don’t think you’re going to get clear metrics tomorrow.”

Said Osberg: “One of the challenges is that nonprofits can measure all kinds of stuff, and there’s a lot of noise in the system.” True enough, but that creates an opportunity for Skoll to apply the same kinds of skills and energy to evaluation that it has applied to developing the field of social entrepreneurship. Skoll and its grantees could start by sharing insight about their failures and frustrations, as well as their successes.

My other reservation–and this, too, is an industrywide issue–is that Skoll isn’t as clear or timely as it could be when reporting on its own operations. We’re less than six weeks away from 2016, and the most recent Form 990 on its website covers 2013. An audited financial statement for 2014 for the Skoll Foundation also appears, but there’s no comparable report for the Skoll Fund, a separate entity which shares “grant-making, program, and administrative resources” with the Skoll Foundation. Untangling the relationships is difficult, so it’s hard to say how much money the Skoll entities spend each year on grants, staff, and the annual forum. Together, as best as I can tell, they have about $1 billion in assets.

My takeaway: The Skoll Foundation demonstrates that it’s tempting to overthink philanthropy, an industry with no shortage of consultants, strategic advisors and buzzwords. By contrast, Jeff Skoll has been guided by advice he got after leaving eBay from John W. Gardner, the former cabinet secretary and founder of Common Cause, as well as president of the Carnegie Corporation. Gardner told him: “Bet on good people doing good things.” So far, that approach seems to be working very well.

[Disclosure: In 2014, I was paid to do a writing assignment for Jeff Skoll.]

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