What is Giving in L.A.?

Giving in LA Giving in L.A. is a go-to source, an aggregator for strategies and points of view about trends and issues in giving, challenges for philanthropists and philanthropic organizations, tools and techniques for individuals or families, insights and opinions from experts, and more – all centered on Los Angeles County.

March 30, 2015 ~ 3 Comments

Ten Things We Don’t Know About Nonprofit Systems

Top-10-sizedBy Denise Tom

The nonprofit system in Los Angeles County has an identity problem. If you Google it, you won’t find much there. In today’s digital world, if Google can’t find you, you’re not “trending” and therefore not worth people’s attention. So here is a list, a la BuzzFeed, of the 10 things we don’t know about nonprofit systems, in no particular order:

1. What impact does the nonprofit sector have on the economic and social well-being of the society it serves? We’re not sure, because marketing itself is not a high priority of a sector that is too entrenched in the challenging work that government can’t do. Some in the sector also feel that marketing contradicts a mission directed at something more than self-interest.

2. Why isn’t systemic change part of every nonprofit’s mission? If it was, that premise alone might propel them to collaborate more to find solutions. They would look for interdependencies and partner up more with other nonprofits and across sectors to find leverage points to help create change.

3. Why can’t nonprofits and funders get past the “power dynamic”? If they approached each other as equal partners, each needing the other to fulfill their missions, they would be able to find what Nancy Olson of Southern California Leadership Network calls a “triple bottom line,” the sweet spot that connects the two with the needs of the community.

4. Why do people still start nonprofits? If they knew that there are 30,000 nonprofits in Los Angeles County — most of them with annual operating budgets of $100,000 or less — competing for limited foundation and corporate dollars and with missions that cover the gamut of issue areas, they might instead serve on a board, volunteer, contribute financially or get involved in some other way.

5. Are funders  listening as much as they should to the nonprofit sector? Yes, funders hold the purse strings and regularly participate in panels at which they share their funding priorities and processes with nonprofit organizations. (See No. 4) But there needs to be more of an intentional effort to have real conversations about strengths, weaknesses, opportunities and threats to the nonprofit system, as well as how nonprofits and funders can work together on shared goals to solve a particular problem.

6. Can we better understand the business models of nonprofits, which are unique to each organization? Funders need to know not only the mission and goals of the nonprofits they support, but also their business strategies and the rationales behind how they create, deliver and track the value they provide to the community. Nonprofit leaders need to ensure their staff members are armed with that same knowledge, so that they understand how their business models lead to their missions.

7. What are the organizational cultures of nonprofits, each of which has its own set of values, norms, beliefs, assumptions and work habits? Understanding why and how nonprofits work will lead to a deeper knowledge about the challenges they face in effectively fulfilling their missions and sustaining their operations. Only then can funders and nonprofits work together to strengthen the sector.

8. Why do organizations spend so much time and effort solving the wrong problems? Is it because they have been in operation a long time and have not diverged from what is expected and what has worked in the past? Is it because they are focused on activities rather than outcomes?

9. What is a nonprofit system? Google aside, we still don’t really know. That’s because the nonprofit system doesn’t see itself as a system and therefore doesn’t see the whole picture of how it connects with and interacts with other systems, like government and business. And what are the right outcomes? Will they lead to systemic change? Perhaps the larger questions are: is the work they do relevant, and do they have the ability to evolve to stay relevant in rapidly changing times?

10. Finally, does the nonprofit system have the ability and the will to think in an increasingly systemic way about problems that need to be solved? Does it have the discipline to spend the needed time to diagnose problems rather than jumping straight to intervention and solutions?

The answer to all of these questions is “we don’t know.”

But here’s what we do know: organizations today are increasingly cooperating, coordinating and collaborating on their own across sectors — sharing thoughts, knowledge and expertise about problems that need solving. They are working together because they know that collaboration with a shared purpose, as muddled as it can be at times, promotes teamwork, deep listening and accelerates change.

And that’s worth knowing.

Denise Tom is the program manager for health care at California Community Foundation. 

March 11, 2015 ~ 0 Comments

What’s Your Nonprofit Start-Up IQ?

IQ

By John E. Kobara

For good reason, people today are seeing the status quo as unacceptable. Regardless of where you sit, there are tremendous challenges all around. Things that have to change if we want a more just and humane world. But when we have impulses to change something, we often fire first, then aim. We leap before we look; we act before we think; we over-simplify.

Many people have on their to-do list to start a nonprofit organization to enact change. It might sit on a list with writing a book, traveling the world and deepening proficiency in a hobby.

Over the years, I have encountered hundreds of executives, philanthropists and other well-meaning humans who see nonprofit work as the stuff of leisure and retirement. Softer, fluffier work that requires less rigor and brain power. “How hard can that be?” I have been queried hundreds of times.

They might have the best of intentions, but the label “nonprofit” gives some people the impression that it is a lower form of organization than its better-understood cousin, the “for-profit.” To the inexperienced eye, nonprofits can seem like quaint do-gooder organizations that are very easy to master.

But one must not be so quick to dismiss a U.S. industry with more than $1.65 trillion in annual revenues and more than 1.44 million employers (the third largest industry employer after retail and manufacturing). There are even more people employed in the nonprofit/non-governmental sector than in the entertainment industry in Los Angeles!

That’s hardly quaint.

The backbone of our social, educational, health and cultural programs are provided by public charities. Health clinics, child-care centers, YMCAs, arts programs, community gardens, food banks, Goodwill Industries, American Cancer Society and the Red Cross are all nonprofits we depend upon for critical services. And in many cases, the nonprofit infrastructure provides the vital safety net for the ever-increasing poor and underserved.

Too many people with time and/or money on their hands want to change the world–usually somebody else’s–by just jumping in. Anyone can file an IRS form to start a nonprofit and instantly become the change you envision.

Simple, right? Not so fast.

Years ago, I developed and administered my “Two-Question IQ Test to Run Nonprofits” to hundreds of people:

Instructions: Pass both questions below and you can run a nonprofit. Fail one or both, and you have to promise you will NEVER run a nonprofit.

Question #1: Do you know how your computer/laptop/iPad works? (“Is this part of the test? Why are you asking this?”) Because most nonprofits, and especially new ones, have no IT department! This surprises them.

Answer: “Yes, I think so.” (Always a bit shaky, but always yes.)

You’re halfway there. One more correct answer and you can run a nonprofit!

Question #2: Can you ask your friends, family and strangers for money to support your nonprofit over and over and over and over again? (Heads start shaking. “No, I would never do that. I would hire a fundraiser. I don’t want to fundraise.”) The head of the nonprofit has to fundraise. In fact, every employee and every Board member has to fundraise, too. At least 50 percent of your job is fundraising.

Answer: “No, no, no.”

Okay, raise your right hand and repeat after me, “I will never run a nonprofit!”

Having a business model that requires you to ask for donations to pay for everything is crazy hard. Of course, like for-profit businesses, unsophisticated leadership and poorly designed plans will also doom an organization. But growth is dependent on results and asking for more money. Growth does not bring in revenues, so scaling the nonprofit requires scaling fundraising.

I can hear some of you grumbling that we need a different business model. Yes, social enterprises, social impact bonds and several other income enhancers are helping on the margins, but all of the top nonprofits get the lion’s share of their income from individual gifts–about 75 percent of all revenues. And giving has remained flat for 12 years, so nonprofits are still in a recessionary mode.

The harsh reality is that we don’t need more nonprofits to try and raise money in a sea of other nonprofits. Most will struggle and fail. More than 272,000 tax exempt organizations lost their status in 2011. The number would be much higher if you couldn’t keep the shell of a nonprofit going almost forever while doing very little.

In Los Angeles alone, we have an estimated 35,000 nonprofits–the largest number of any county in the United States. The unfettered proliferation of nonprofits has created a glut in some places. Organizations competing with identical organizations.

So the California Community Foundation and 11 other organizations are leading one of the largest merger and acquisition programs in the country called the Nonprofit Sustainability Initiative (NSI). That’s right: it’s nonprofit M&A! NSI assists nonprofits to take serious and risk-free steps toward mergers and deep partnerships that will save money and increase impact. NSI pays for each phase of the process from exploratory to severance payments, if necessary. We are trying to reduce the number of nonprofits and increase efficiency.

When the urge hits you, think about joining and improving the best nonprofits you know or find, before setting up your own shop. Take a look around the community and you will find amazing and courageous organizations that are fighting the fight you are interested in. They are great resources on what has worked and what hasn’t. And they would love–and need–your innovation, energy, passion and resources to improve what they do. So join them before you compete with them.

Friends don’t let friends start nonprofits. If they fail the IQ Test and go ahead anyway, while they spend time trying to learn the business model and raise money, that change they envisioned may start to slip away.

John E. Kobara is Executive Vice President and Chief Operating Officer of the California Community Foundation, which has partnered with Grameen America to launch microfinance in Los Angeles. This article originally appeared as part of his blog on Huffington Post, in which he writes regularly on philanthropy and Los Angeles County. You can follow him on Twitter @jekobara.

January 22, 2015 ~ 0 Comments

Macro Impact Coming From Microloans in LA

Yunus and Borrowers2

Los Angeles entrepreneurs and Grameen America borrowers with Grameen founder Professor Muhammad Yunus.

What is entrepreneurship, after all? Bigness is not the issue. Poor people are the ones who take challenges every day. The guy who sells a hot dog on the street is as much an entrepreneur as anyone else. — Muhammad Yunus, Nobel Peace Prize Laureate and Grameen America Founder

We need to rethink our image of the entrepreneur.

We all know the stories of the savvy young entrepreneurs changing technology. Major financial institutions and venture capitalists take a gamble on their incredible ideas with the goal of seeing a handsome return on investment. But there is another entrepreneurial movement in our midst. It may not be as sexy, but the socioeconomic return on investment is boundless — and felt in our neighborhoods and communities every day.

It starts with $1,500.

I’ve seen what a loan of this size did for Sarah, a housekeeper with no formal business training or credit. She decided to grow her tiny business by buying a carpet cleaning machine to reduce her costs. She discovered that she could rent the machine to other housekeepers and repaid her loan in six weeks. She then turned around and bought another machine for herself, adding another revenue stream to her family. Her family is more secure and more hopeful. She sees more opportunities ahead.

This is what an entrepreneur does. And this is what our country is built upon — the initiative of the immigrant who pursues the American dream.

This is the beauty of microfinance — really a misnomer since the potential to change lives is far greater than the word implies. Borrowers like Sarah have nowhere to turn for capital and support. The “payday” lenders charge 400 percent interest. Borrowers like Sarah need a chance to earn a livelihood and improve the well-being of their families and communities. These “micro” loans keep hope alive and the doors of small businesses open. These “micro” loans create jobs and give thousands of women a sense of purpose in their lives.

Officially launched in Los Angeles County, Grameen America is bringing this to our entrepreneurs — all of whom are women and many of whom are immigrants. Grameen’s globally-successful model is aimed at giving low-income women business owners the incentive they need to start or grow a business. With first-time loans of up to $1,500, Grameen America is not only helping entrepreneurs achieve the American dream, but helping communities thrive.

I can’t think of a better place to unleash this concept than in Los Angeles, where our future is being driven by small business entrepreneurs, especially immigrants.

Los Angeles is a city of dreams. We have among the highest entrepreneurial activity in the country. We have more than 300,000 women-owned businesses. Los Angeles is now home to the largest diaspora outside of 39 countries; but also the largest population of families in poverty in the United States.

Grameen America has recognized that this mix of great need with great opportunity is a perfect storm to make a big and lasting impact. A story like Sarah’s can transform a family and a community. This is a long-term, sustainable investment in the dignity and promise of L.A. entrepreneurs, in addition to the region’s economic well-being.

We have already piloted $4.2 million in loans in Los Angeles County and plan to expand that to $650 million in the next few years. Grameen America borrowers here have a repayment rate of 98 percent — not something most traditional banks can say.

There are no collateral requirements, credit checks or notarized documents.

Here’s why the model works: The loan is combined with financial training that teaches borrowers about loans, savings and credit building. They form groups of five for weekly peer support meetings to stay on track for repayment. These women are empowered to take control of their finances and invest wisely in their businesses. They are given the opportunity to learn from small groups of women who are going through the microloan process and share best practices.

In other words, these women are set up to succeed. It’s a success where everyone wins. Women improve their businesses and the lives of their families and, ultimately, strengthen the local economy.

The concept of microlending goes back to 1976. Muhammad Yunus, an economics professor and social entrepreneur from Bangladesh, believed microlending could be a viable business model. He started with a $27 loan to 42 women in the Bangladeshi village of Jobra and quickly saw the huge difference a small loan could make in their lives.

Seven years later, he officially established Grameen Bank (“Village Bank”). He went on to win the Nobel Peace Prize in 2006 for pioneering this revolution and for his “efforts to create economic and social development from below.” Grameen was founded on the principle that everyone can be an entrepreneur.

Yunus has said: “Grameen is a message of hope, a program for putting homelessness and destitution in a museum so that one day our children will visit it and ask how we could have allowed such a terrible thing to go on for so long.”

Recognizing the need for this program in the United States, he expanded microfinance in 2008 through Grameen America, which now has branches in 11 U.S. cities with plans to scale and incorporate technology to make lending, borrowing and repayments even easier.

I’m heartened by the stories of economic and personal triumph around the world — including in my own backyard — that start with a microloan and supportive services and convert that into a macro opportunity for dignity and independence. I’m excited that we in Los Angeles are unlocking the spirit and ambition of our entrepreneurs every day. Our whole community benefits as these entrepreneurs turn their dreams into reality.

In the spirit of this season of giving, I urge you to get involved by learning more or contributing at www.GrameenAmerica.org.

John E. Kobara is Executive Vice President and Chief Operating Officer of the California Community Foundation, which has partnered with Grameen America to launch microfinance in Los Angeles. This article originally appeared as part of his blog on Huffington Post, in which he writes regularly on philanthropy and Los Angeles County. You can follow him on Twitter @jekobara.