Scale Up for Extinction

Last week, I attended two forums on social entrepreneurship: the World Skoll Forum and the Ashoka Globalizer. Though with slightly different focus, both were themed around the subject of scaling up social change. The World Skoll Forum was a general conference that covered a broad range of topics, while the Ashoka Globalizer was targeted at helping specific social entrepreneurs (Ashoka Fellows) scale their impact globally.

Many ideas were floated about the methods that social organisations can apply to increase their impact. Not surprisingly, a key message was that we exist in ecosystems and, often, the whole ecosystem is required to solve a social problem at scale. Thus, collaboration and networks are important for any social organization that seeks to make a meaningful difference to society.

Related to this, one of the concepts I found useful in the Ashoka Globalizer was that of a “smart network.” Many organisations, while they recognize the value of networks, put themselves at the centre of the network and focus on how they can leverage the network to grow the organization.

Instead, the smart network places the mission – not the organisation – at the centre of the network. The organisation is but one node in the network. Each node has its part to play in carrying out the mission, be it palliative care, alleviating poverty or rebuilding slums.

Dr. Cecily Saunders, founder of Christopher’s Hospice in London in 1967, was cited as an example of a social entrepreneur who effectively harnessed a smart network. Instead of seeking to grow Christopher’s, she spawned a movement on palliative care. Through her innovations on care for the sick and dying (of which Christopher’s provided a working example) as well as her teachings at the Yale School of Nursing and her many speeches, she changed attitudes and public policies in many countries on end-of-life care. She is widely recognized as the founder of the modern hospice movement. Today, some 35 countries have integrated palliative care or hospice care in their health systems.

The message here is that scaling impact is not the same as growing the organisation. Not all paths to scale impact require enlarging the organization. One Ashoka Fellow clearly got it when he said, “My idea is not to be a BINGO (Big International NGO) but to see how we can find and develop partners to change the world.”

This resonates with a previous piece I had written in SALT about how social organisations should seek extinction rather than growth for growth’s sake as is typical in the commercial world. This is because social organizations should be mission driven and when they have accomplished their missions, they are redundant.

One of the frequent rebuttals that I receive to the notion of organisational extinction as an end goal is that some social problems such as poverty will never be solved. My response has been that each organization (which is part of a larger network) should define a mission, aspirational as it may be, but which is within practical reach. 

The idea of a smart network reinforces this position. Each player in the network performs its role based on its strengths and capacity. At some point, a specific player may no longer be relevant to the broader network and movement. It’s then time for that player to become extinct. And that player could even be the one that started the movement. The social cause is not yet over, but the capabilities and contribution of that specific organization (though perhaps not the ambitions of its founder) is spent.

At the Skoll Forum, I was inspired by the story of Jenny Bowen, an American who adopted a Chinese orphan girl and then started the Half The Sky Foundation in China in 1998 with the mission of improving care for children in Chinese orphanages. After twelve years, the foundation had grown to a staff of 1,500 and ran five innovative programmes for providing nurturing family-like care in Chinese orphanages that has helped over 40,000 children.

However, through the network it has successfully developed with the Chinese government and orphanages, it is up-scaling its impact by downscaling its operations. From 2011, Half The Sky will no longer operate any of its programmes in the orphanages. Instead, in partnership with China’s Ministry of Civil Affairs, its methods will be the mandated national standard of care in China, and Half The Sky will only focus on training and mentoring child caregivers. In this way, it will scale up its impact from the 40,000 children to date to 211,000 more children by reaching out to every orphanage in China.  

We need more people in the social sector who think like Cecily Saunders and Jenny Bowen – leaders who are less focused on building personal empires but more focused on their mission and impact.

Climate Justice can Help End Poverty

In some circles it has become politically acceptable to state that poverty cannot be eradicated in our lifetime: that the means are not available, that there is a lack of political will, or even that those who “can’t keep up” need to assume more responsibility for their own lives. Others are politically correct enough not to say any of this aloud, yet their actions (or lack thereof) expose them. Even the Millennium Development Goals call only for a halving of the proportion of people who suffer from hunger. In other words, the international community will consider itself successful if by 2015 “only” about 500 million people are left starving in the world (a target we do not look set to meet).

I would ask those who do not believe we can eradicate hunger to travel to the developing world — better yet, to travel to the slums of their own countries — and meet some of the close to one billion people who currently go hungry every day. Meet these people so that numbers become faces and faces receive names. After bearing witness to the suffering and even the deaths of these people, they might then find the means to make poverty history. It can be done; there is still enough food on this planet to feed all of us, it is how this food is allocated that needs changing.

In the meantime, while 50,000 people die from preventable causes daily, what we need is the universal will to make change. October 17 is the International Day for the Eradication of Poverty and this year the call is for Climate Justice to End Poverty. 

Because climate change causes drought, floods and other natural disasters that affect food production, it has become one of the greatest threats to reducing poverty, advancing global development and realizing human rights that the world has ever seen.

Two years ago, Kofi Annan’s Global Humanitarian Forum estimated that 300,000 people had died of the results of climate change. It’s a good bet that close to all of these people were among the world’s poor and were least responsible for the climate chaos we find ourselves in.

The year 2010 looks to be the hottest ever recorded and predictions for the coming years are grim: warmer temperatures, less and more erratic rainfall and more extreme weather events. The list of what we can expect as a result of increased global warming is frightening: resource scarcities, unstable weather conditions and higher food prices. Most people living in the developed world, have so far been spared most of the more dangerous phenomena, but we are reaching a point in time when fewer of us will be able to escape climate change related ravages; we are, for example, already effected by higher food prices. 

Last Sunday during the world’s first ever Global Work Party on climate change, organised by a range of activist groups, including the tcktcktck campaign, 350.org, Greenpeace and the Global Call to Action Against Poverty, people in 188 countries took part in over 7,000 events meant to establish new habits that will help curb the carbon emissions that cause climate change. The Global Work Party was a cry to governments that people want action, that enough is enough. We will not sit idly by and watch as our planet and millions of the people who live on it are slowly destroyed because those in power would not make the changes necessary to curb catastrophic climate change and help eradicate poverty.

History teaches us that when decent people take risks and engage in struggle for principles, peacefully and courageously, pursuing civil disobedience where necessary, then those who occupy the instruments of power, whether in government or in the financial sectors, will listen and understand. Last weekend was a good first step, but it will take an unprecedented alliance of people from all walks of life to force fundamental changes in the institutions that are holding us back: from environmentalists, faith-based organizations, human rights activists, trade unions, educators and those on both the left and the right who have never considered how the natural world affects their lives. 

We must work in the places where the actions causing climate change can be reduced — in our own homes and workplaces as well as the rainforests of Brazil, Congo and Indonesia and the coal mines of West Virginia and Poland. We must direct much more of our resources to the developing world for training in how to adapt to the irreversible consequences of the climate change already under way.

I have seen people die from completely preventable causes and wouldn’t wish the experience on anyone. By eradicating poverty and hunger, and vigorously addressing climate change, many such deaths may be prevented. Hopefully politicians will learn to act before it is too late.

Singapore – ‘You drop it, you break it, its finished’

In his new book, Hard Truths, former prime minister Lee Kuan Yew warns that his country must adapt to climate change.

Sometimes today’s abnormal holds useful clues to tomorrow’s normal. Singapore is very far from normal, something that Lee Kuan Yew, the city-state’s prime minister from 1959 to 1990, is at pains to point out in his new book, Hard Truths. It’s one of the most gripping and personal accounts of the thrills and spills of politics that I have read.

Surrounded by countries that do not wish it well, and in competition with rising neighbours in Asia, Singapore’s future is far from guaranteed. One reason why the city-state is so keen on water recycling and desalination, for example, is that Malaysia has periodically threatened to cut off the critical water it supplies. As a result Singapore plans to be self-sufficient in water by 2061, when their agreement to draw water from Malaysia ends.

This propensity to think long is shot through Lee’s book. In one memorable section – and there are many – he recalls a visit to Boston in 1968, where he had an eco-epiphany. Like Sherlock Holmes and the dog that didn’t bark, he noticed that that the trees and other vegetation in the city centre were a rich, verdant green. He asked why they weren’t as dusty and diseased as in Singapore? The answer: vehicle emissions were tightly controlled – something Lee promptly put into force back home.

Dismissed as “Disneyland with the death penalty” and as “an antiseptic island peopled by a passive citizenry and governed by paranoia”, Singapore demonstrates the power of triple bottom line strategy at the country level: economic competitiveness, social inclusion (up to a point) and a cleaner environment for all. It remains to be seen whether the People’s Action party (PAP), that has held power for over 50 years, survives Lee’s eventual death (he is still a cabinet member), but he aims to ensure his successors – perhaps seduced by consumerist lifestyles – do not forget how fragile the city-state’s success is.

While in the city last week, I spoke to hundreds of people in government, business and civil society, and found a growing interest in corporate social responsibility and sustainability. Although Lee is pessimistic about the likelihood of nation states getting a grip on the climate disaster he sees threatening the region, he is determined that Singapore adapts to climate change and develops new industrial clusters in areas like clean technology.

Their tiny country, Lee warns the rising generations of Singaporeans, “is like a chronometer. You drop it, you break it, it’s finished. Some countries, you get a second chance, you buy spare parts, you put it back again. I’m not sure we’ll ever get a second chance.”

And I’m not sure, if he’s right about climate change, whether by 2061 a huge number of Asians won’t find themselves more than inconvenienced in a Humpty Dumpty future. Our best hope: to win over cities, city-states and countries to the “one planet” way, before we lose our grip.

John Elkington blogs at Johnelkington.com, tweets at @volandia and is a member of The Guardian’s Sustainable Business Advisory Panel. This post first appeared on The Guardian Sustainable Business.

Australia’s Philanthropy 25 Years On

The Macquarie Group Foundation that I chair celebrated its 25^th anniversary recently. In celebration, I had reflected on philanthropy in Australia over the last two decades. I had also made some predictions for the future, which I will share again here. This is no tribute to my foresight: the harbingers of change are already evident.

Within a sector that will continue to become larger, I’d expect to see further developments in 3 key areas.

First, I anticipate that the increased capacity and scale of many economically-significant NFPs will see them evolve into true social enterprises. They will retain the vision that inspires their members, donors and volunteers but increasingly couch their benefits in terms of a blend of social and financial value. Already around 20,000 Australian community organisations trade to fulfil their public mission, reinvesting their surplus income (their ‘profit’) into improving their organisational capacity and scaling-up their activities.

Second, I expect to see new investment vehicles emerge to raise funds which will complement the donations of philanthropists. A contemporary challenge, which will be overcome in the near future, is building and accessing a capital market for social impact. Investors need to be able to make low-interest loans to or acquire equity in social businesses. The early signals are encouraging. The Commonwealth has recently announced a Social Enterprise Development Investment Fund and the WA government has budgeted for a Community Development Investment Fund. Both are intended to harness loan capital for community benefit.

The initiatives are intended to corral social impact investment from those who seek not only a modest financial return but an opportunity to do good. This is the bold business model underpinning GoodStart, which has emerged to manage around 600 of the ex-ABC Learning childcare centres. It’s dependent not on government grants and philanthropy but loans which offer lower than market returns. That’s just the beginning. Expect to hear in the near future of new vehicles such as social impact bonds or a social stock exchange.

Third, and in some ways most influential, the measurement of social and environmental impact will increasingly be incorporated into government measures of national well-being. The social costs (of externalities) and benefits (of community activity) will long before 2035 be fully integrated into measures of Australian economic income and growth. The extraordinary value of community engagement will be accounted for in our national statistics. The social economy, and the contribution which it makes to community well-being and civic engagement, will at long last be properly accounted.

Blog coordinator’s note: For info on the Centre for Socal Impact, please see http://www.csi.edu.au/.

Good things take a little longer

 I got expelled at 15 when I did my first protest. It didn’t stop me.

My activist friends got killed. It didn’t stop me.

And I have been jailed. It didn’t stop me.

You don’t have to go through any of that to make a difference.

But to younger people involved in the fight for justice, I want to say, one thing is important – commitment.  It is a marathon, not a sprint.

It takes time to listen and understand people and their problems.

It takes time to build relationships.

It takes time to educate yourself, your supporters, your audience.

It takes time to gather the right resources.

It takes time to try out creative ideas.

It takes time to move from anger to peaceful nonviolence.

It takes time to heal from pains that result from the journey.

It takes time to make deep change.

The social and environmental movements need your time, your talent, your unique way of seeing problems and solutions.

If you want to see a different world, get involved and stick around a bit.

Good things sometimes take a little longer.

Should Churches be Charities? – Part 2

In my last blog post, I looked at the general question, “Should churches (or religious organizations) be designated as charities?” and concluded, for practicality reasons, in the affirmative, on the basis of history, and the widening (a long time ago) of the legal definition of charity from being of just helping the poor and needy to being for the community good.

In this blog post, assuming this conclusion, I would like to examine the specific case question: when should a church, or a religious organization for that matter, not qualify to be a charity?

First, the charity sector and the charity regulator have pretty much set out the standards and criteria which charities, once qualified, are expected to meet to continue to be designated as charities. These include good corporate governance practices, accountability to donors and other stakeholders, financial management, and staying true to their missions. There are enough of these rules and expectations, and most board members of charities will tell you that we do not need any more for charities to properly function.

All charities, whether religious-based or not, have to abide by these rules and standards. Errant charities can, and will be, dealt with. In this context, any discussion of which organization should not be charities should apply equally to religious and non-religious charities.

What is it then about religious charities that they provoke so much discussion on the question of religious organizations as charities?

 In my view, the reason lies with religious leaders and their link with divinity.

The leader of a regular nonprofit organization may very well be charming and popular with his people (staff, donors, beneficiaries, etc) but he is nevertheless a mortal who is expected to follow the rules. If he abuses his position, he can, and will, be taken to task, not just by the regulator but also by his own people and the public at large. Case in point is the old NKF where excesses of its management led to a public outcry and what has come to be known as the NKF saga.

A religious leader has a lot more going for him. He is often regarded as the earthly representative of God (or equivalent). He is less likely to be questioned by his flock that sees itself as being a part of a cause that is greater than the leader and the organization. The leader’s pronouncements on many matters can be near-absolute as they are deemed to have come from “above.” The prospect for abuse of such power in such situations can be high.

For charities, the upmost concern in the eyes of the public tends to be financial wrongdoing. The risk for financial abuse in the mainstream churches, however, tends to be generally low because of the selection, formation and code of conduct of their religious leaders. For example, in the Catholic Church, a priest is ordained only after an intensive period of scrutiny and formation of eight or more years, upon which he takes a vow of chastity, obedience and, sometimes, poverty. He is expected to live less than modestly. In Singapore, Catholic priests are paid $500 per month although their board and lodgings are provided by the Church. I only know this because I am Catholic (making my declaration here) but I reckon the situation is similar for the other mainstream (Anglican, Methodist, etc) churches. That is not to say that there is no abuse, but hopefully these churches have also built into their internal structures and systems, the mechanisms to prevent, surface and deal with such occurrences.

On the other hand, some “new age” churches and religious organizations may not have the same set of entry requirements, formation process, lifestyle expectations and controls in their selection of the leaders. Indeed, in some cases, leaders emerge by virtue of their charisma and ability to win followers who believe that their leaders’ messages are divinely inspired. Should such a charismatic leader have a flawed character, he (or she) can do untold damage. In extreme cases, these will be classified as cults, which are, of course, banned in Singapore, but not some other countries.

Coming back to the question of charitable organizations, the public expects charity leaders to function with financial prudence, if not, frugality. They would generally take a dim view of charity leaders who reward themselves handsomely from the largesse of their followers and donors, and live extravagant lifestyles. On the other hand, it is unlikely for the mesmerized followers of religious leaders to either notice or reject such extravagance.

This then is the conundrum for regulators and those outside looking in: What do they do about any perceived financial improprieties when scrutiny, objections and even information are not forthcoming from the inside?

There is no easy answer. What I think may be best is greater scrutiny and rules requiring greater transparency and accountability of those religious (and non-religious) organizations where the risk of abuse is higher.

This, however, does not appear to be the current approach of the charity regulator. Currently, charity regulations are skewed by the size of the charities: the bigger the charities are, the more controls and scrutiny are needed. Yet, it is in the smaller organizations (which are able to keep under the regulator’s radar) where there is often more room for manipulation.

In monitoring charities and in the rules requiring transparency and accountability, the basis should be the risk profiles of the organizations. Size count, but that should not be all. There are also other risk factors such as the governance structure and the people involved. And of course, we should also take into account the particular nature of the sector and its players. Yes, the religious sector has the peculiarity with respect to the power of its leaders. But when we get to the other sectors, there are elements of each which will also affect their risk profiles.

For Whom the Boom Tolls

There’s a housing boom in my neighborhood in Chiang Mai, Thailand, and throughout Asia. Every morning a blue truck rolls down the street, bounces to a halt in a lot outside my window, and delivers a dozen construction workers, rain or shine. It seems that no matter where you are, some nearby house is going up, coming down, or changing its look.

Housing is a major piece of Asia’s socio-economic puzzle. It’s an industry that employs vast numbers of people. It’s a huge challenge in city planning. To Asia’s growing population of low-income home buyers, housing represents many things: opportunities, an asset, and an achievement. Housing is also one nexus of the citizen sector, where social entrepreneurs are changing the very rules of the puzzle itself.

Here are 3 examples:

Workers – Rajiv Khandelwal is an inspiring social entrepreneur in India, a vast land with 100 million rural, seasonal migrant workers.  He founded Aajeevika Bureau to help workers from rural Rajasthan and Gujarat to construction sites in distant towns.  His clients are not only seeking opportunities in the city, but adapting to some major change in their previous way of life, especially the steady agricultural decline. Rajiv’s take is straightforward: rather than try to prevent seasonal migration—which doesn’t work—  India should help its migrants thrive.

Cities – As houses go up and cities expand, urban annoyances can mushroom into major problems in city life. Noise pollution is one example.  Sumaira Abdulali is a courageous citizen of Mumbai who is putting together India’s first citizen-led effort to curb noise pollution. Her Awaaz Foundation is bringing to the forefront the issue of noise control in city planning—controlling the noise emitted by the booming cranes and shovels.

New Rules – The housing boom offers an avenue for Asia’s poor to own decent housing, but the barriers to ownership must be removed. This is the goal of Ashoka’s own Housing for All program, which lines up commercial deals to provide goods and services, capital and financing, and marketing for a very low income housing market, typically people working in the informal sector such as market vendors and rickshaw drivers.  Ashoka’s program is demonstrating that such deals can work, by bringing together the right lenders, builders, and social entrepreneurs.

Keeping Perspective on Fundraising Costs

The issue of fundraising costs is always a tough one for the profession. It’s a very emotional issue, as we’re talking about dollars that donors have given away freely of their own will with the expectation that they’re supporting a charitable cause.

It’s also a very nuanced issue. As the old saying goes, it takes money to make money, and that adage is proven time and time again in charitable fundraising. Given all of the various factors that affect fundraising, it’s impossible to devise one universal, set-in-stone fundraising cost limit that would apply to all organizations.

Fortunately, governments are starting to realize this. For example, the Canada Revenue Agency, in its fundraising cost guidelines that were developed last year, specifically acknowledges that fundraising costs can vary dramatically annually and that organizations with higher costs aren’t necessarily unworthy organizations.

Unfortunately, some media outlets still don’t do the research or simply don’t have the interest to understand the nuances of fundraising costs. A good example is a recent article by the CBC on fundraising contracts by for-profit solicitors, or as the article terms them, third-party fundraisers.

There’s SO much to not like about the article—inaccurate comparisons between costs and funds raised, complete misunderstanding of the difference between fundraisers and solicitors, lack of discussion about telemarketing fundraising costs, and key information about the scope of telemarketing by solicitors buried in the middle of the article. AFP responded to the CBC with this letter, and has also developed some talking points that fundraisers can use for their own responses or when speaking with donors and members of the public.

The issue of fundraising costs is always a tough one for the profession. It’s a very emotional issue, as we’re talking about dollars that donors have given away freely of their own will with the expectation that they’re supporting a charitable cause.

It’s also a very nuanced issue. As the old saying goes, it takes money to make money, and that adage is proven time and time again in charitable fundraising. Given all of the various factors that affect fundraising, it’s impossible to devise one universal, set-in-stone fundraising cost limit that would apply to all organizations.

Fortunately, governments are starting to realize this. For example, the Canada Revenue Agency, in its fundraising cost guidelines that were developed last year, specifically acknowledges that fundraising costs can vary dramatically annually and that organizations with higher costs aren’t necessarily unworthy organizations.

Unfortunately, some media outlets still don’t do the research or simply don’t have the interest to understand the nuances of fundraising costs. A good example is a recent article by the CBC on fundraising contracts by for-profit solicitors, or as the article terms them, third-party fundraisers.

There’s SO much to not like about the article—inaccurate comparisons between costs and funds raised, complete misunderstanding of the difference between fundraisers and solicitors, lack of discussion about telemarketing fundraising costs, and key information about the scope of telemarketing by solicitors buried in the middle of the article. AFP responded to the CBC with this letter, and has also developed some talking points that fundraisers can use for their own responses or when speaking with donors and members of the public.

High fundraising costs are definitely an issue, and I have no problem with the CBC investigating them. In fact, I think it would be interesting to find out how many of these high-cost contracts involved percentage-based compensation, which AFP finds unethical. But it would also be nice to have some discussion of the role of telemarketing and the costs associated with it.

Those of us from the nonprofit world, especially those involved in fundraising, need to respond aggressively to articles like the CBC’s that paint an inaccurate and misleading picture of the fundraising environment.

Hedge Funds & Sustainable Investing: Can the twain meet?

Generally speaking, Hedge Funds are viewed as opportunistic investment vehicles using complex strategies involving a mix of assets and investment practices, while Sustainable Investing seeks to generate profit by integrating social and environmental factors into financial investing practice. The two are seldom considered together.

In fact, they are often deemed at odds with each other: Hedge Funds as evil while Sustainable Investing is good.

Recently, I have come to believe that aspects of Fundamental hedge fund investing may be consistent with, though distinct from, Sustainable Investing. Specifically, practices such as adoption of a long‐term investment horizon, consideration of off balance sheet risk represented by environmental and social factors, heightened transparency, a focus on governance and other investor considerations are synergistic.

How did I get here?

In 2008 when I first joined Uhuru Capital Management (an investment firm which offered a fund of hedge funds product and intended to allocate 25% of its performance compensation through a foundation funding nonprofits working to build the field of social entrepreneurship), we were focused upon making a commercial return for our limited partner investors and then using some of the Firm’s returns to make impact investments through our Foundation. While interested, we were not focused on Sustainability.

But as the firm staffed up and fully launched in 2008, a funny thing happened on the way to the capital markets—well, actually, not so funny in that those markets imploded! Suddenly institutional and individual investors who had been making consistent returns had lost twenty, thirty and forty percent of their assets; while some portfolios of “social investments” returned four to six percent (which was a bit of a shock for mainstream investors now being told the new “up” was a 20% loss!). Last fall, the financial world as defined by traditional measures of risk and return was rolled on its head—and we saw how intricately social capital was woven through supposedly “objective,” rational markets with the rise of investor panic, market uncertainty and, in some cases, a betrayal of trust shutting those markets down.

As Uhuru Capital Management was a start-up, we were not yet invested in the 3rd quarter 2008. While we waited for the dust to clear, our CIO and I began a dialogue regarding the nature of Fundamental hedge fund investing practices. As we explored those practices and I learned more about how he approached hedge fund investing, I was struck by how many of the aspects of Fundamental investing (as described to me) were similar to investing practices of Sustainable finance. Not the same, mind you, yet quite similar nevertheless.

Simultaneous to this internal dialogue, an external dialogue evolved with investors that Uhuru was engaged with around our work. These investors raised a related question: While they appreciated the attributes of our core Fundamental strategy, they asked if we couldn’t create a truly “sustainable” fund of hedge funds product. What they sought was a “Long/Short” investment strategy pursued in a manner consistent with an investor’s commitment to Sustainability. Was such a thing possible?

These conversations became the genesis of a paper I then wrote to explore that question: Beyond Good vs Evil.

Now, I do not believe Fundamental hedge fund investing alone meets the sustainability bar for many investors. I do not believe Sustainable investing alone will save capital markets and asset owners from their worst inclinations as either individuals or investors. Yet I continue to believe it is worth exploring the various ways sound mainstream investing practice and Sustainable investing are in fact two parts of a single, evolving pursuit of Value.

What I sought to present in the paper was not “an answer” to the challenge Sustainable investing poses to hedge fund investors, but rather a set of questions and issues I believe worthy of our attention. If you do get a chance to read it, I would appreciate your feedback.

Should Churches be Charities?

With the interest surrounding the recent investigation of the City Harvest Church in Singapore, I have been pulled into quite a few discourses on the subject of churches as charities.

It seems to me that the subject can be tackled on two levels: general (should churches be charities?) and the specific (which churches should not be charities?).

In this blog post, I will focus on the general question: Should churches or, for that matter, religious organizations, be designated as charities?

My short answer is: theoretically, “no,” but, practically, “yes.”

Let me explain.

For the theoretical answer, we need to go back to an understanding of what charity means. If you ask the man in the street, he will likely say that charity is about helping the poor, the disadvantaged and the needy of society. This is the most common understanding of what charity is about.

Using this yardstick, it is hard for most churches (or religious institutions) to qualify as charities. To be sure, church congregations include some, maybe even many, who are poor and needy, but that is just a coincidence. Membership of churches is not based on an individual’s particular station in life; rather it is based on a person’s subscription to certain religious beliefs.

Of course, many religious organizations are charitable in that they can be kind and giving towards the poor and needy – they raise money from among their followers to give to the poor and needy, and they have specific programmes such as shelters and soup kitchens for those in need. In such cases, these particular arms of religious institutions can properly qualify to be charities, but not the main institution which caters to a more diversified membership base.

Why, then, do the authorities generally allow a church to register as a charity?

The answer is historical. Sharifah’s chapter on “Different kinds of kindness” in the book provides a good historical account of how the definition of charity has evolved.

The significance of this legal definition is that the reach of charity was expanded from being merely about the alleviation of poverty (the first category and what most people understand charity to be) to include all and sundry causes that benefit the community. Over time, Commonwealth governments have used the last category (“other purposes beneficial to the community”) to specifically add new causes. For example, Singapore added sports as a charitable cause in 2005.

There are, however, unintended consequences of broadening the definition of charity. First, community resources and support that could have benefited the poor are diverted to other more glamorous but non-poor causes. Secondly, it reduces the accountability and due process for public projects that obtain money under the charity umbrella. (See here for a further read on this)

The reason for including religion as a major category of charitable clauses was that, at the time of the Act, much of the charitable work of providing for the poor and needy were being done by the Church of England. The government and the courts saw benefit in extending this feature and provided recognition for the Church’s efforts.

Today, the situation has changed; we have a plethora of churches and religious organizations. Most are not targeted specifically at helping the poor and needy and, some are arguably not even good for the community. In such a context, one can make a strong case for excluding religion from being a charitable cause.

But, in my opinion, it would be wrong to narrowly target religion for exclusion as a charitable cause.

If religion is excluded – meaning we revert to the layman’s notion of charity as helping the poor and needy – we need to also exclude sports, the arts, heritage, animals, education, environment, healthcare and a whole gamut of other causes of “community good” that have grown over time in the broad-based legal definition of charity. In my view, many of these other causes should go first before we remove religion.

As long as we do not change the legal definition of charity from the community good to only being about the poor and needy, we should keep religion as a charitable cause. Most religions do exist for the community good. They mostly preach goodwill and kindness towards our fellowmen and their leaders are generally selected for their good human qualities. Of course, some do not meet these criteria, but that’s when we get into a discussion about which specific religious organizations should not qualify to be charities.

Permission to Do Great Things

Once, when Ashoka Fellow Karen Tse, founder of International Bridges to Justice, was speaking in Singapore, she was asked, “Which quality have you had to develop the most during your journey as a social entrepreneur?” Karen paused, then replied, “radical self-affirmation.”
           Radical self-affirmation—Karen’s striking words express an idea we should all consider. For one who wants to make a better world, to be a changemaker, the right attitude is central to success.
            What is this attitude? I would say they are:
–          Give permission
–          Define yourself
–          Believe
            The first part is granting yourself permission to do big things—to confront a pressing human need, see a solution, and say I will allow conscience and intuition to inspire me.
            There is no ritual to giving oneself permission; no single solemn declaration. Instead it’s a habitual resolve to focus attention on what is right, constructive, effective, rewarding.
          During start up, reasons for not taking action will attack from every angle: you’ll starve; you’ll put your career at risk; you’re not an expert; the problem cannot be solved; you are led astray by idealism. Other objections are downright demoralizing, especially if such doubts come from within: Why do you think you can solve this when no one else has? What makes you so special that you can fix this? Can you handle the disapproval and conflict that will inevitably arise?
            Self permission means resolving to answer, ignore, or overcome these doubts, knowing they sprout from a fear of failure.
            Inaction is to be feared far more than failure, which is a patient teacher. So every changemaker should meditate on the question: have you given yourself permission to take on and accomplish something great?
            The second attitude is defining yourself.
            Following conscience can lead to great opportunities. The citizen sector is a wonderfully open space. The sector is growing, so there is today an exciting admixture of skill, background, and experience. Having the right attitude means defining who you are in this environment.
     Will you enter the field as an equal contributor to its great efforts and conversations? Even as a novice, could you imagine your part—perhaps sharing some existing skill or knowledge or insight?  At a summit of the world’s top practitioners, would you delight in discourse and dealmaking, or escape to a backbench seat?
            The third attitude is to believe in yourself and your dream.
            Belief that change is possible is the nucleus of social impact. Belief allows us to pose ambitious goals and expect to meet them. Consider two hypothetical vision statements in urban housing:
–          “To improve housing conditions in urban slums”
–          “To transform all slums into thriving, secure communities”
      The first vision hopes for mere improvement, not transformation. A path is assumed, along which only modest steps may be taken. By contrast, the second statement is full of optimism and offers an image of the future. Belief is the agent that enables the latter kind of vision.
            All changemakers want to have a pattern-changing impact on the real world. Just as real is the attitude you need to cultivate to do that. Habitually affirm to yourself that change is possible and that you have an important role to play. And grant yourself permission to seek great impact. Only you can do that – nobody else.

The Impact Economy

Globalization, long-term demographic trends, changing consumer preferences, and the state of public finances are driving the emergence of an “Impact Economy” for the first time in human history.
   Analogous to the New Economy, the Impact Economy will fundamentally transform business, the public sector, and civil society: A multi-trillion dollar integrated social capital market; companies who seek authentic engagement instead of PR-focused corporate social responsibility; and private risk capital funding the design and delivery of public goods are around the corner.  
   The financial crisis and the recent G-20 commitment to reducing public debt levels will accelerate the transition.
    Many new ventures and projects are under way to cover subsets of the Impact Economy. Beyond philanthropy, take microfinance, bottom-of-the-pyramid investments, clean energy and social investment banking.
   It feels like the early days of a gold rush. As in any innovation phase, some firms will succeed and grow. Many will fail without ever reaching scale.
    Meanwhile, the Impact Economy will change the way we consume, invest, and work.
   For more thoughts on the Impact Economy, see paper.

Giving away $100m

“If you had $100 million to give away, what cause would you give it to? And why?”
   This was the closing question that moderator Jenny Santhi of UBS posed to the panel at a UBS-INSEAD Forum on Philanthrocapitalism this past April.
   It was an interesting question. It was totally unplanned and our responses were equally spontaneous.
   Matthew Bishop, author of Philanthrocapitalism: How giving can save the world, said he would invest the money in data. Coming from the number-crunching financial world, he finds a dearth in the quantity and quality of data in the social sector. He believes that such data, if readily available, can make a significant difference to the quality of giving and the actions taken in the philanthropic and social space.
   Pushan Dutt, Associate Professor of Economics & Political Science at INSEAD, said he would use it to fund causes that are “less glamorous” and therefore attract less attention. He suggested oral re-hydration tablets for diarrhea.
   Mathias Terheggen, global head of UBS Philanthropy Services, said he wouldn’t tell anybody that he had $100 million to give away. He would get a professional to advise him and he would spend considerable time trying to figure out what he really cares about and wants to focus on in a targeted way. In doing so, he would also think about what else he can bring to the table, beyond the money, in terms of skills and capacity to make his effort impactful and sustainable.
   Me? I said that rather than a specific cause, I would put it into a fund that I would name the St. Jude Fund, after the patron saint for desperate cases and lost causes. I have seen far too many worthwhile causes such as human rights and migrant workers (both of which were mentioned by the audience earlier) that continually struggle to get the necessary money to operate. I would then find a few smart and empathetic people, put them in charge of the Fund, have them make a call for applications and let them distribute the money to those they deemed most worthwhile but that are unable to find funds from other sources.
   Of course, I am also hoping that the Fund trustees will give me some money if I need, since, as my wife will vouch, I, too, am a lost and hopeless cause.

Live Life

In the Singapore Straits Times recently, it was reported that there were 401 suicides last year compared to 364 a year ago – more than one a day. Samaritans of Singapore identified the 20-29 age group as “high risk” – 51 took their own lives, almost double the number from a year before. The increasing rate of suicides, especially among the young, is an increasing problem of developed societies like Singapore.
                I personally struggle with why these people who are jut beginning life are so desperate as to take their own lives. I wish I can advise them otherwise.
                Some friends of mine suggest that perhaps some are badly in debt and cannot see their future as bankrupts. Or they may be heartbroken over unrequited love. Or they may not want to face up to mistakes they have made. We all make mistakes but we should learn from our mistakes and get on with life.
                I believe that it is the feeling of self worth that makes a person do foolish things. We need to have a greater sense of self worth. The worst thing a person can do is to depend on other people’s perception for their worth. Doing that is allowing other people, including those with bad values, to define who we should be. It should always start with each of us. We should look at ourselves and start counting our blessings.
                The majority of us with the blessing of sight, hearing and mobility should realize that it places us way ahead of the many who are disabled. If persons with disabilities can face the challenges of living, then surely those of us with sight, hearing and mobility can do better.
                Do we judge ourselves by our possessions?  What is the use of having lots of material things but to be heavily indebted because of the overuse of credit? During the economic recession, the richest people were those who were debt free or had little debt. After all, one does not need much to have a decent life. It is not the material things which bring happiness. There are few things which we need in order to have a life – nourishment, shelter, and clothing are the main items. Most other things like cars, big houses, annual holidays and branded goods are nice to have, but they are not essential.
                People allow themselves to feel depressed when their relationships break up. They are heartbroken. That surely is self inflicted torture. Usually depression results from having formed a crutch on another individual and then feeling betrayed, feeling regret from that attachment. Love cannot be forced on others. We should love freely and true love should not be conditional upon the response.
                I find it tough to imagine what can possibly be so bad as to drive a person to suicide. I may go into a period of depression and desperation if I were to suddenly lose my sight. But I will eventually snap out of it and get on with life. After all there are millions of visually impaired persons coping well with life.
                I wish everyone will start off the day counting their blessings and be grateful for them. Waking up in the morning with sight, hearing and mobility should be enough to make us happy and be mentally ready to face the challenges out there. Mental states are usually a reflection of our choice of thoughts. Why choose depressing thoughts when there are so many things to be happy about. Live mindfully. Appreciate that cup of coffee, bowl of noodles, the smile of a child, the wave of a neighbour – we are surrounded by happiness. The sprouting of a new blade of grass gives hope as it is life after being trodden on. A butterfly bursting through its cocoon, tadpoles hatching from eggs almost invisible to the eyes, – there is life all around us.
                I wish I can tell those who commit suicide before they do: Don’t give up your life just like that.

Agenda for a Sustainable Future

Amid the economic discontinuity, a paradigm shift toward a more equitable and sustainable future is underway.

            Leading the charge into what could be called the Phoenix Economy are 50 identified pioneering organizations. Many are leading social purpose organizations, some are mainstream companies, and a couple of them are governments.

            These organizations share a common model for scaling change: from the recognition of an opportunity, to experimentation, and then achieving critical mass—first at the enterprise level, next at the ecosystem level, and finally at the economy level.

                The Phoenix Economy can be more rapidly achieved with concerted action around an Agenda that comprises three building blocks: a Manifesto that drives necessary change in the public sector, a Prospectus that shapes investor and business decision making and strategy, and a Syllabus that informs future business education.

Stepping on the Accelerator of Social Change

 The results of social innovation—new ideas that meet unmet social needs—are all around us. They include fair trade, open source software, restorative justice, distance learning, and microfinance.

            Innovation is not just a matter of luck or inspiration. It can, and should, be managed, supported, and nurtured. There are hundreds of methods and tools for innovation, from developing the ideas to creating impact, some overlapping with those used in fields such as business and science, and some very different. These methods and tools can be grouped into a framework of six stages of social innovation. 

                More significantly, there is an increasing focus on accelerating social innovation through the development of a social innovation field, the creation of dedicated social innovation incubators and intermediaries, the emergence of “social Silicon Valleys”districts dedicated to social innovation), and increasing cross-sector collaboration. Such acceleration of the accelerator of social change is needed in a world where there is a wide gap between the scale of the problems and the solutions offered.

Rallying for Real Change

The world has many problems, but civil society is rising to deal with them. While most of these civil society organizations are local and national, a growing minority are international and making waves.

            Global civil society has its own set of problems. Some of these issues are similar to those it champions against in governments and businesses: accountability, the rich/poor divide, and self-interest.

                However, the reformers understand the need for reform and are responding to the challenges. Three pragmatic solutions can help drive global civil society toward its ideal: multilateral institutions that work, multi-stakeholder campaigns that foster solidarity, and capacity building for nongovernment organizations.

Financing Change, Changing Finance

It has long been accepted that financial capital is critical to social change efforts. Yet, it is only recently that social finance has been viewed as a defined and important marketplace.       

Today, a myriad of financial instruments, ranging from the traditional grant to complex debt/equity hybrids, are available to nonprofits and social enterprises. These instruments come from a variety of sources, from the traditional grantmakers to new social investors.

At the start of a new decade and after a turbulent economic stress period, social finance offers unprecedented opportunities to innovate within capital markets for impactful investment and sustainable change.

Rebooting Technology for Society

Technology is constantly changing the way our world works. Historically, its uptake has been most evident in the nonsocial sectors. However, the social sector is increasingly recognizing the power of technology to foster innovation and solve society’s more difficult problems.

            This applies in particular to four clusters of technologies with high potential and relevance for social transformation: environmental technologies (wind power, solar power, hydro power, and clean water), health technologies (accessible and affordable health-care solutions), robotics (rehabilitation and socially assistive robotics), and info-communications (from back office applications to social media).

                However, technology is a tool that can also be abused. To harness the full value of technology, its use should be properly planned and integrated with the processes and the people upon whom it impacts. 

Technology is constantly changing the way our world works. Historically, its uptake has been most evident in the nonsocial sectors. However, the social sector is increasingly recognizing the power of technology to foster innovation and solve society’s more difficult problems.

            This applies in particular to four clusters of technologies with high potential and relevance for social transformation: environmental technologies (wind power, solar power, hydro power, and clean water), health technologies (accessible and affordable health-care solutions), robotics (rehabilitation and socially assistive robotics), and info-communications (from back office applications to social media).

                However, technology is a tool that can also be abused. To harness the full value of technology, its use should be properly planned and integrated with the processes and the people upon whom it impacts.

Transformative Leaders Wanted

Growing social needs and other factors are creating a leadership deficit in the nonprofit sector. Many solutions are being worked on to increase the quantity and quality of nonprofit leaders.

                However, the world needs, above all, leaders who can lead transformational change in their organizations and the social sector. Many social issues of the day require transformative change, rather than mere social remedies.

                Transformative leaders need to be able to address the challenges of the new environment and cultural change with appropriate leadership strategies. Two new sources of such leaders hold promise: business leaders who are crossing over into truly problem-solving philanthropy, and social entrepreneurs engaged in pattern change.

Love, Law, and the Regulator

In the past decade, charity laws in many jurisdictions around the world have been subject to review.

            In the ensuing debate, fundamental questions have been raised about the role and workings of the regulator. The adjustments being made, and major charity law reforms in several jurisdictions, are resulting in regulators and regulations that are more in tune with the happenings in the charity world.

                However, the law will always, by necessity, struggle to keep pace with modern-day challenges such as increasing public service delivery by charities, new forms of social financing vehicles, the need to prevent charities from being a conduit for terrorism financing, and cross-border philanthropy.

Affirmative Government for Social Good

Government seeks to maximize the well-being of its citizens. The social sector has the same ultimate objective but it, and the multifarious stakeholders who seek to give it voice, may not always be seen by government to have the same agenda.

The attitude of government toward nonprofit organizations affects how it calibrates the conduct of its key functions of funder, promoter, regulator, and player. Government may view nonprofits alternately as “friend,” “filler,” or “foe,” depending on the time, circumstances, and organizations involved.

While government wields power and authority, it can seek to harness the power of the nonprofit sector through an affirmative approach that recognizes the mutuality of objectives. Such an affirmative government is marked by a whole-of-government and citizen-centric approach to decisions and interactions, recognition of the public good that nonprofit organizations provide, an agenda of social inclusion for citizen empowerment, and collaborative governance of the community and its constituents.

Amplifying the Social Beat

The media has long been known as a gatekeeper of information with a disproportionate influence over its audience. It therefore needs to be responsible in its role of news communicator, advocate, watcher, and participant.

            The major trend in the changes taking place within the media industry is the emergence of alternative media (online news, blogs, and social media) that are competing with traditional media forms (print, radio, and television). Alternative media can be a challenge and a boon to nonprofit organizations as a result of the increase in delivery channels, brevity of content, user-created content, and new leveraged opportunities.

                Neither the mainstream nor alternative media has done justice to the phenomenon of social entrepreneurship, social enterprises, and social innovation. The time is ripe for the media cultivation of a turnaround society, starting with the creation of an online integrated platform that can energize the community of these transformative movements.

Toward Moral Capitalism

 

Corporate social responsibility(CSR) plays a vital role in ensuring that corporate interests align with the broader social and environmental interests of the community in which businesses operate.

            However, the basis for CSR and what it entails is not well agreed among the players in the economy. A fundamental question is: Is CSR about good business or necessary ethics?

                There are different approaches to ensuring the take-up of CSR: from encouraging moral capitalism (such as celebrating corporate heroes) and discouraging brute capitalism (such as identifying and shaming corporate abuse), to mandating it through rules and regulations. Two new approaches—reporting companies’ CSR practices to investors, and potentially quantifying nonfinancial CSR variables—show great promise.

Matching the Supply and Demand of Volunteers

For many individuals, the act of volunteering lies at the core of being human. For volunteer host organizations (VHOs), volunteers provide the much-needed manpower and community engagement to fulfill their missions effectively.

                However, there is a mismatch in the volunteer labor market. Volunteers struggle to be placed, and VHOs struggle to find enough of the right volunteers. This mismatch has to be solved at two levels. At the market level, there needs to be more and better market information, brokering, and clearing mechanisms for the supply and demand of volunteers. At the participant level, VHOs must recognize the volunteer market realities, and develop and implement strategies to raise, manage, and retain volunteers.

Closing the Funding Gap

Many nonprofit organizations struggle for funds. Yet, going by current levels of giving relative to the capacity of givers, the potential for more funds is huge.

            Professional fundraisers and a fundraising industry have emerged to help with the important function of fundraising. The key to good donor management is understanding what donors want and what stewardship of the donor relationship involves.

                In this new environment of giving, there is much that nonprofit organizations can harness from new possibilities presented by the new rich and by online giving, while heeding the issues presented by third-party fundraisers and concerns over donor privacy.

Venturing into Entrepreneurial Philanthropy

 

From its springboard in Silicon Valley a decade ago, venture philanthropy has grown into a global movement.

            At its heart is a highly engaged partnership that offers development finance coupled with nonfinancial advice that social purpose organizations need in order to grow sustainably.

            The landscape of venture philanthropy contains a diverse mix of players, including neo-philanthropists, traditional foundations, the private equity community, and even governments, working with social entrepreneurs, social enterprises, and other investees.

                These venture philanthropists are creating new forms of social finance, and new ways to increase and measure the impact of their investees’ work.

Powering Philanthropic Passions

Philanthropy has often been associated with mega-giving and mega-givers. The fact is that it covers a multitude of donors, modes of giving, and beneficiaries. That said, all forms of philanthropy are experiencing unusual changes.

            Four major trends can be observed. The first is borderless philanthropy, with rising charitable giving beyond the US and increasing cross-border philanthropic flows. The second is e-philanthropy and the spread of giving, enabled by technology, in innovative ways. The third is philanthrocapitalism, with the engagement of business entrepreneurs and their many ideas, ambitions, and resources for increasing social impact. The fourth is collaborative philanthropy, as givers and even governments seek to collectively create greater social impact.

                All these trends are motivating the rich and not-so-rich to give more and in new ways, and thus powering philanthropy, leading it toward an exciting and, sometimes, surprising future.

Making Value Visible

In a commercial marketplace, prices paid for goods are generally accepted as the signal of whether or not value is being created. Imperfect though this signal is, it is a much clearer indication than can be found in the social economy.

In the social sector, the prices that beneficiaries pay (if any) are not usually a full reflection of the actual value being provided. In the absence of prices, a great deal of engineering is required to ensure that value is created, recognized, and supported. This is the role capacity builders play in the social sector; yet, they are often its unsung heroes.

                Capacity builders seek to increase the impact of individual nonprofit organizations and the social sector as a whole by performing roles as promoters, service providers, industry watchers, and grantmakers. They make efforts to incorporate new business models, technology, and information to improve the impact of social interventions. Recent trends suggest a focus on increasing the impact of these capacity builders themselves.

Of Pattern Changers and Changemakers

Over the last 30 years, social entrepreneurship has evolved from an arcane concept recognized by a few thought leaders to a widespread phenomenon embraced by people worldwide.

            What distinguishes social entrepreneurs from other social leaders is their pursuit of pattern change. They seek to change the rules, systems, relationships, economics, incentives, and behaviors in order to uplift the lives of their specific clientele in society.

                Inspired and instructed by these social entrepreneurs, people from all walks of life are becoming changemakers themselves. Such a vibrant citizen sector will ensure that society distills its highest empathetic ethics into the real hard stuff of social change.

Fulfilling the Promise of Social Enterprise

Social enterprises are in vogue. The promise of delivering both social impact and financial sustainability has excited many within and outside the social sector. The social enterprise movement is also bringing together the social and business sectors in new ways.

            However, to date, most social enterprises have floundered. It is hard to meet more than one bottom line at the same time. Business and social sector leaders have come to social enterprises underestimating the challenges of the other sector. And capital for scaling has been scarce.

                Tackling these challenges with the right strategies, the right people, and the right capital will, hopefully, result in a new generation of successful social enterprises.

No Charity for Charities

Charities exist to help the poor and the needy. However, well-run charities are few and far between.

            The key reason is that the same compassion that drove the formation of charities and their work can result in poor governance, low performance, poorly paid workers, and a narrow focus on the needs of the poor.

                To solve this, we need to remove the element of compassion when it is not necessary or appropriate in the workings of charity. Only then, will we have high-performing charities that can effectively deliver on their mission.

Different Kinds of Kindness

 

Charity has come to mean different things to different people.

At its core, charity is about kindness and providing for the poor and needy. However, over time, this idea of kindness has been stretched to cover all aspects of community good, leading to some unintended results in closing the rich/poor divide.

At the same time, charity work has not often been sufficiently extended to deal with the root causes—rather than just the symptoms—of social issues. For charity work to be effective, it must draw more on the head, rather than rely merely on the heart. In addition, a more hands-on approach will connect the giver more to the cause and the real needs of charities.

Scanning the World’s Social Issues

 

The work of the social sector has been to identify and seek solutions to unmet social needs, primarily from the ground up. Macro approaches to identifying these needs are few and far between. The UN’s Millennium Development Goals represents the most coherent global strategy thus far for tackling worldwide poverty.

                Looking holistically at global human needs through history, we can identify two broad levels of needs. The traditional basic needs of food, water, and health are intertwined with the causes and consequences of poverty. Higher-order needs are those that affect human prosperity and well-being, principally modern-day needs arising from human displacement, environmental challenges, and the problems of developed societies.

Transitions within the Ecosystem of Change

The ecosystem paradigm provides a framework for understanding and influencing the forces of change facing the nonprofit sector.

At the core of the social ecosystem are the social purpose organizations and individuals who are helping their beneficiaries, and the capacity builders who seek to help the helpers. Around them are the individuals and corporations in the community, the media, and the government (including its role as regulator) who collectively provide the resources, support, and scrutiny to ensure that the core players function as intended.

Four key enablers of change—culture, leadership, technology, and finance—have resulted in three broad macro-trends in the social sector: the rise of global civil society and its attendant issues; the acceleration of social change through innovation; and the fusion of ideas, models, and practices of the social and enterprise sectors.

Interestingly, the social ecosystem is uniquely positioned as the catalyst of change for the state and enterprise ecosystems. Thus, even as players in the social ecosystem seek to change the world at large, they must realize that they need first to cope with the change drivers and trends occurring in their own sector. In other words, the ecosystem of change has to change itself for the better—at the same time as it goes about its mission of changing the rest of the world.