Results tagged “finance” from Uncivil Society
Cross-published on JustMeans:
Recently President Obama signed into law the Serve America Act, which, among other things, established a Social Innovation Fund. The aim: to identify innovative & effective nonprofit social ventures and to take them to scale. As set forth in the statute, the Fund will accomplish this by giving money to "eligible entities" (i.e., existing grantmaking institutions or government partnerships) that will then in turn make grants to suitable "community organizations," provided the subgrantee is able to secure the requisite matching funds from government, nonprofit or commercial sources.
The initiative has generated considerable excitement in the social enterprise community. Judging from the language, I can see why: the new law speaks of "national leveraging capital," "investments," "institutional capacity," "measurable outcomes" and a host of other things that pretty much spell "win" for anyone playing social enterprise buzzword bingo.
Yet for the life of me, I don't see how any of this is innovative.
At its core, the program follows a model that's all too familiar from comparative administrative law--a government program that gives money to subgrantees who in turn give money to other subgrantees, managed through the relentless documentation of how stated program goals were met. For example, Russia moved to precisely this model recently, channeling social funds through grantmaking intermediaries, and USAID has been doing it for years.
Yes, I know that on the surface this is different--SIF isn't just making grants to grantmaking subgrantees for nonprofit subgrantees under the rubric of statutorily mandated reporting standards, it's leveraging investment in social entrepreneurs and building capacity for measured outcomes. However, this is not a distinction I could repeat with a straight face. When it comes to interpreting a statute I'm a stone cold pragmatist, and it seems to me that when you cut through all the jargon the two structures are essentially the same.
I don't say this merely to be contrary--studying existing institutions can provide invaluable insight into how SIF could spin out. If you have experience, say, with USAID, you know the culture that tends to grow up around such programs. The reality tends not to match the rhetoric--lift the rock of civil society & social change and you'll find a swarming mass of professional intermediaries, stultifying standardization and the awarding of spoils to the usual suspects with marginal scraps for unorthodox unconnected outsiders.
The potential for this in SIF is quite real--the requirement of matching funds alone will skew the grants to nonprofits that are already established, particularly groups that have substantial support from governments and major funders. Moreover, the statutory requirements for measured effectiveness, evidence-based decision-making and so forth may sound good, but in practice this provides an institutional mandate for centralized regulation and extensive paperwork.
I know the people who promoted SIF had a much more enthralling vision, but that train has left the station--the new law puts us on the cross-country Amtrak. In the immortal words of T.S. Eliot, "this is the way the world ends/not with a bang, but Corporation Monitoring Planning Assessments."
Wallstrip, for those of you who never watched it, was a fun and informative video site dedicated to explaining the world of Wall Street. Good production values, sharp writing, engaging wit--Wallstrip was often a model of how educational video could work.
Making money, though, was not its strong suit.
And that's the thing. I've had social enterprise folks approach me about doing online video, but the pitch is typically accompanied by starry-eyed visions of making millions of dollars from productions that didn't have one-tenth of Wallstrip's infrastructure support. Funding operations through online educational media is a lot more difficult than a lot of folks think--and if the Wallstrip example isn't enough, just take a look at how many educational & charitable podcast series die after a few episodes.
Adam Ostrow's conclusion is spot-on:
The problem here is a simple economic one: though relatively inexpensive to produce and distribute (compared to network or cable TV), the costs of professionally produced online video are exceeding the revenue being generated by ads. And thatâ€™s a problem thatâ€™s not likely to be solved soon between the economic slowdown and the fact that the revenue thatâ€™s out there is flowing towards big media content being re-purposed for the Web. In fact, despite being 20x smaller in terms of video views, some estimates have Hulu catching up to YouTube in revenue this year.
Will we still see individuals making a living from compelling online video that spreads virally? Absolutely. But the economics of trying to re-create the network television experience on the Web are quickly falling apart, and unless either the audience suddenly surges or the ad market quickly pulls a 180, WallStripâ€™s demise could just be a sign of whatâ€™s to come.
Below: a couple of classic Wallstrip episodes:
Marrying for health care
Glengarry Glen Salesforce
That's the cover story of this week's Christianity Today. The article itself is a trenchant counterblast to the marketing of faith--and an instructive example of the culture clash that can result from remaking a social mission as a product to be sold.
Marketing has problems if it makes the consumer pant for the dead opposite of what you are trying to sell. . . .
The difficulty with the pro-marketing arguments, however, is the failure to recognize that marketing is not a values-neutral language. Marketing unavoidably changes the message--as all media do. Why? Because marketing is the particular vernacular of a consumerist society in which everything has a price tag. To market something is therefore to effectively make it into a branded product to be consumed.
If you want to know what it's like to chat with charity folks experiencing Madoff effects, their reaction is a lot like the picture above.
The Chicago Cultural Center has eliminated its Volunteer Department, much to the dismay of this correspondent:
The Volunteer Department has been around for 12 years, organizing a force of more than 150 people willing to give their time and energy to make public programs happen, such as weekly concerts, weddings, annual holiday events, not to mention all the office tasks and mailings that have been expedited by these helping hands. You can imagine my surprise when I went into the volunteer office recently and found out that, come the end of November, it will be no longer. The director and the department -- gone.
I was stunned. Of all things to cut -- the hub, the person who has not only built this program from the ground up, but also motivates, manages and maintains hundreds of people willing to give their time and knowledge and energy free of charge.
This cut seems like it will lead to an inevitable dissolution of many of the cultural programs that characterize this wonderful city. How disheartening.
Or perhaps just more efficient?
If you were unfortunate enough to hear me give a talk over the past couple years, chances are at some point you heard me predict that when--not if--the latest market bubble collapsed, it would have serious implications for the social enterprise movement. Two things in particular: a resurgence of resistance to nonprofit business and a tightening of viable low-margin ventures.
A couple news stories that came across my virtual transom today illustrate the problems:
The first one is truly sad, as a jobs & socialization program for the mentally challenged loses its employment contract with a local warehouse, which decided to cut costs by taking the work in-house. If a replacement isn't found, the rehabilitation services charity may have to shut down. When social enterprise rah-rah types exult in how the economic crisis will lead to a boom in socially responsible business, remember this, will you?
And from the Pottstown, PA Mercury (Berks County represent!), an op-ed on why nonprofit hospitals aren't really nonprofit. Its point: that nonprofits use high salaries and expensive projects as an accounting trick to net out expenses and revenues. Lawyer types will say the writer gets the law wrong, but that misses the article's potential effect, particularly on legislators--critiques like this are what gets the law changed in ways that make it harder for nonprofits to survive.
For the past few years, the endowment managers at top universities have reported record returns--and making big bucks themselves. Turns out they invested in the stuff that's now tanking.
Factory, by Alexander Blok
Translated from the Russian by me
In a neighboring building the windows are yellowed.
In the evening--in the evening
Ponderous bolts screech,
People approach the gates.
And the gates are locked shut
But on the wall--but on the wall
A motionless someone, someone in the dark
Counts people in silence.
I hear everything from my height:
With a brazen voice he commands
The crowd gathering beneath
To bend their worn out spines.
They enter and disperse,
They pile the sacks on their spines.
While in yellowed windows there's laughter,
About how they put one over on these poor souls.
Long day--still catching up from the past few weeks--but I took a few minutes off to catch some fresh air. Along the way, I stopped by the Italian American Museum, housed within what was once a bank. There you can see the safe, original documents, old equipment--as it were, a teller window into the past.
One thing that stood out for me was the vivid reminder of the artificiality of segregating out so-called social benefit institutions. The bank was a social hub, a social benefit, a business that was equally extension of its owners and the community they served. Rather than twist into contortions to maintain a firewall between commerce and charity--one that didn't exist in the earliest Italian banks, by the way, which were legally both--it's far more productive to try to understand how they converge.
A great pull quote from the 10/7 WWD by the Nicole Miller CEO. One of my current projects explains why this has been happening.
Hint: Roswell, fluoride and the Freemasons. Trust me on this.
Bruce Nussbaum has a round-up of useful thoughts. I'll add my own soon enough.
Perhaps it is an overstatement, but Britain has been one of the key leaders in the world recently in applying design thinking to non-business, civic society problems such as transportation. Coming up with a new choice, not making a better choice among existing options, is at the heart of that process.
Recent events give this commercial new meaning. After all, who hasn't had a similar reaction after looking at their stock portfolio?
As the stock market falls, one social investment rises:
â€œSince the market has been going down, our business has been going up â€” itâ€™s unbelievable,â€ said Sam Zherka, the owner of the V.I.P. Club in Chelsea, who estimates that about 80 percent of his clients are Wall Street types.
. . .
In a moment of shrewd business, perhaps, Mr. Zherka and the club decided to introduce a premium product: the $1,000 lap dance package.
The package will buy a 20-minute lap dance, a bottle of Dom PÃ©rignon and a private Champagne room. Not to mention, as Mr. Zherka did, they also â€œget to keep the girlâ€™s G-strings.â€
That raised eyebrows. Does she take off the G-string there (seems illegal), and if not, how does the customer know itâ€™s really the G-string she was wearing?
Mr. Zherka replied: â€œShe canâ€™t take off the G-string in the room with the guy. She has to go out to the locker room and take it off.â€
But management, he assured, was going to reinforce the G-string distribution. (Apparently, the G-string is even going to be autographed, as amNewYork noted this morning.)
What is the normal rate for a lap dance at V.I.P. Club?
Itâ€™s $20 for a song, or about three minutes of lap dancing, Mr. Zherka said.
A quick calculation showed that the lap â€œdanceeâ€ could get more than 20 minutes of lap dancing for only $140.
Mr. Zherka responded: â€œYeah, right. But you are not getting the G-string, you are not getting the bottle of Dom PÃ©rignon and you are not getting the Champagne room.â€
. . .
Over the years I've read my fair share of comics designed to teach basic principles of the global financial system. Here's one from a nonprofit series that I imagine won't ever get finished.
I'm still catching up & moving forward re writing in other areas, but I couldn't let the above NT Times headline from 1914 pass.
Via Paul Kedrosky, who is essential reading re the financial crisis, both on his blog & Twitter feed.