What’s Your Way to Better the World?

A “sleeping-bag” incubator for premature babies in remote regions – at 10 percent of the cost of standard equipment. An online support group for victims of rare diseases and their loved ones – built with free apps. Cold, hard cash, in small amounts, given to poor families, no strings attached – and measurably improving their lives. These are just a few of the ways that young entrepreneurs, with a vision for helping the world, are getting results for society.
 

• Month 1: What to do and how to fund it
• Month 2: The talent required to create change
• Month 3: Using technology and data to scale what works

The Future of Impact Investing

This blog post originally appeared on the Huffington Post.

Sir Ronald Cohen, widely regarded as the father of British venture capital, caused a stir with a recent post on the HBR-Bridgespan Insight Center: “Social Impact Investing is the New Venture Capital.”  The piece, co-authored with Harvard Business School’s William Sahlman, argued that impact investing (the practice of investing for both profit and social impact) will be as transformative for society as the institution of venture capital has been for the state of entrepreneurship globally. 

This point of view, part of a series on scaling social impact supported by the Omidyar Network (ON), provoked a conversation so rich that it begged for an encore. ON Knowledge and Advocacy Director Paula Goldman’s following interview with Sir Ronald portends his coming, free webinar discussion on Friday, April 19 at noon on HBR.org. All interested may register here.

Q.  We're intrigued by the parallel you draw between the early days of venture capital and the early days of impact investing. It took roughly 30 years for Silicon Valley to establish itself (from the time people starting doing venture deals to 1980 when Apple's IPO proved the model.) Do you think impact investing will take the same amount of time to prove the case?

Sir Ronald:  I feel impact investing is where venture capital was in 1983, 30 years ago. My experience of the growth of venture capital suggests that social impact investment will be established in the next seven years. I would hope by the end of the decade a significant number of institutions would have made an allocation from their investment pools to impact investing. These institutional investors are likely to include charitable foundations’ endowments, pension funds and family offices.

Q. What's the number one obstacle preventing the impact investing market from taking off?

Sir Ronald: In my view the first challenge is to get charitable foundations to accept that the fulfilment of their mission would be aided by impact investments made from their balance sheets. I believe the asset class of impact investment should be able to deliver a 7-percent return, uncorrelated with equity markets. If I am right, this would enable charitable foundations to pay out 5 percent of assets each year and maintain the value of their endowment while achieving significant social returns.

Q.  There are some who fear that impact investing will divert money from worthy nonprofits because wealthy individuals will believe that grants are no longer necessary. What's your take on this?

Sir Ronald: Impact investment focuses on releasing assets from balance sheets, not grant allocations. If successful, this will significantly increase, perhaps even double, the flow of money into nonprofits. The discipline that comes from measuring social performance or evidencing it in other ways should hugely increase the impact that the social sector achieves.

Q. You've been the driving force behind social impact bonds. Tell us about one of the currently outstanding bonds you're most excited about and why.

Sir Ronald:  At this stage all social impact bonds are exciting. I think the one launched by the Private Equity Foundation to equip vulnerable teenagers for employment is particularly exciting. It is very focused on improving their lives and measuring the results it achieves. It combines passion for the mission with the management skills required to achieve scale in tackling such a widespread social issue.

Q.  Paint us a picture of what the impact investing market looks like 10 years from today.

Sir Ronald: Ten years from now, a social investment firm will be a recognised entity and social investment a recognisable asset class. Social entrepreneurs of every age will have innovated in the ways we tackle different social issues and they will be admired for it.

Q. So many young people are looking to start their careers in impact investing—what advice do you have for them?

Sir Ronald:  Impact investing is the next Big Thing. Society cannot continue to cope with prevailing social issues in the traditional way. We need to harness entrepreneurship, innovation and capital to achieve in the social area what they have achieved in the creation and growth of entrepreneurial firms in general, and technology firms in particular.

(Interviewer Paula Goldman, director of knowledge and advocacy for the Omidyar Network, is an advisor to the HBR-Bridgespan Insight Center on Scaling Social Impact)

Making Organizational Learning Stick in Philanthropy

Over the last year, my colleague Katie Smith Milway and I have convened nonprofit and philanthropic leaders around the country to hear what it takes to make organizational learning “stick.” We explored this theme by anchoring squarely on two questions leaders ask most frequently: What knowledge is useful to capture? And with whom will we share what we learn? The resulting article, which appeared last week on Nonprofit Quarterly’s website, provides an easy framework and examples from both nonprofits and philanthropy for thinking about the answers.

Concurrent with—but quite separate from—this effort, The Bridgespan Group launched “Conversations with Remarkable Givers,” a series of video interviews with over 50 philanthropists and foundation leaders who share what they’ve learned through their own experiences. Many of them talked about their own learning journeys and what they did to shape a learning mindset within their organizations and across grantees.

Here is a sampling:

Melinda Gates talks about the importance of a continuous learning mindset.

Paul Brest takes a provocative approach to getting staff to talk about lessons learned.

Henry McCance on getting reluctant grantees to share what they learn with one another.

In addition to these stories, we were struck by the increased desire for learning across philanthropic communities. Grantmakers for Effective Organization’s report, “Learn and Let Learn,” includes six case studies of groups that came together with shared knowledge goals. In each instance, the process proved as instructive as the product. Definitely worth a read.

What have you seen? When philanthropy is at its best, what does organizational learning look like? What about at its worst?

The Rise of Social Entrepreneurship in B-Schools in Three Charts

This post originally appeared on the HBR-Bridespan Insight Center on Scaling Social Impact.

By Katie Smith Milway and Christine Driscoll Goulay

Twenty years ago, on two different business school campuses a continent away, the seeds of social entrepreneurship were planted.

At INSEAD, two students Philippe Dongier and Katie (co-author of this post) sent a school-wide email asking if anyone was interested in cultivating coursework and careers related to nonprofits. Overnight, 126 students, staff, and faculty responded — a number equal to 50% of the newly arrived class. With a student-faculty steering committee and 50,000 Euros of seed funding from the school's administration, they founded INDEVOR, INSEAD's social enterprise club.

Across the pond, John Whitehead, the former managing partner of Goldman Sachs and the board chair for several nonprofits, approached the dean of Harvard Business School with a similar idea. He asked how could HBS apply its distinctive competencies to help improve management within the social sector? Over the next few years, he provided small amounts of money to seed experiments and to challenge the institution to come up with innovative approaches to address his question. Like a venture capitalist, he said if these experiments delivered on their goals, more funding would follow. From this, the Social Enterprise Initiative was born.

In Europe, the seed planted at INSEAD grew steadily over the years and led to the development of the INSEAD Social Entrepreneurship Initiative, which now coordinates conferences and other forums, sponsors research, and supports students to learn more about the link between social impact and business.

In Boston, the HBS Social Enterprise Initiative was experiencing a similar growth trajectory.

INSEAD and HBS aren't the only schools where the drive for social change has taken hold. Across all of the top MBA programs there has been soaring interest in social enterprise in recent years and schools have grown their offerings to meet the demand, as this data from The Bridgespan Group shows.

Dr. Nora Silver, the director of the Center for Public and Nonprofit Leadership at UC Berkeley Haas School of Management, which today offers nine courses specifically related to social or public sector management (up from eight at the time of the Bridgespan study), told us, "This generation of students is the first that was required or expected to do community service in high school and college. These students grew up expecting to integrate social impact into their work — no matter what sector they join."

Across the programs studied, Yale School of Management topped the chart with 95% of its course offerings in 2009 incorporating social benefit content.

Faculty interest has grown too, fueling research with social sector practitioners, which translates into new cases and discussion for the classroom. Valerie Malter, Director of Social Impact at the Wharton School at the University of Pennsylvania noted in the Bridgespan study: "The level of interest from faculty members is extraordinary in this whole area."

MBA programs today are minting not just captains of industry, but also crusaders for social good. Any program teaching business skills needs to train their graduates to serve both companies and society. This means equipping would-be entrepreneurs with an understanding of multiple bottom lines and equipping would-be corporate professionals with intrapreneurial vision to connect business interests to social value. Steeped in both social and business principles this new breed of MBAs will be able to navigate complexity and create opportunities to sustain the world we live and work in.

Katie Smith Milway, a partner at The Bridgespan Group, was co-founder of INDEVOR, INSEAD’s social enterprise club, and the founding publisher for Bain & Company. Christine Driscoll Goulay is director of the Social Entrepreneurship Initiative at INSEAD.

Birth Alert: HBR & Bridgespan’s New Social Impact Space

December. It’s a busy time of year, and for those of us with kids, a time of spectating. Watching your daughter’s triangle solo in the school concert or your son play shepherd no. 4 in the winter pageant. My three kids are teenagers now, but my enthusiasm for seeing them perform, even the smallest of roles, feels evergreen. Your own baby fascinates, always.

Books and articles can feel like babies, too; the longer the birthing process the more attached I find I become. To that end, I and Knowledge Team colleagues at Bridgespan have been collaborating with Harvard Business Review this fall, supported by the Omidyar Network, to birth a new publishing space for our sector. Consider this a  “birth alert” with thanks to many advisors who have provided input and brainstormed topics with us through the fall.

The babe’s name is The "HBR-Bridgespan Insight Center on Scaling Social Impact" — a blog-centric digital space. Here, voices from the for-profit and nonprofit sectors have equal footing in the interest of raising the most important questions related to strategy, funding, talent, and technology that propel social innovation. Here, leading lights in impact investing can be in conversation with the next generation of leaders in social enterprise around questions such as:

• What is the role of profit in social impact?
• Which sectors offer the best platform to make change?
• In what new ways are organizations using technology to scale ideas?
• What data is needed to prove what works?

The birth date is January 9, 2013, and you can register for an alert from HBR.org by clicking this link: http://vovici.com/wsb.dll/s/1549g51f33?wsb2=bspn.

As a thank you, you’ll be able to download for free  “Convergence: Creating Opportunities Across Sectors — Today's Young Leaders Find Passion and Purpose in Cross-Sector Careers,” a chapter from Passion & Purpose by John Coleman, Daniel Gulati, and W. O. Segovia.

Mark your calendar, too, for a free launch webinar at noon on January 17 with Michael Chu, of Harvard Business School on the topic "Are profit and purpose at odds? What is the role of profit in scaling social impact?"

So that’s our baby news. Feel free to spread the word!