This week, as my dear friend Salah Boukadoum wrote here, our community lost its most ardent champion for social innovation … for equity … for humanity in its most basic form: unfiltered, unselfish, unquestionable LOVE.
“Serena Simmons Connelly, beloved wife, mother, daughter, and sister, died on April 22, 2020 in Dallas, Tx at the age of 50. “
The Dallas Morning News’ Obituary
I was texting a friend that Serena’s loss carved a big hole in our community. (See my prior blog on her work here.)
My iPhone autocorrected ‘hole’ to ‘hope.’
I like to believe that Serena took over Siri for that second.
May we each honor her legacy as she would challenge us to do: by putting our shoulder to the wheel of justice, and pushing as hard as we can.
Rest in the most beautiful peace, Serena Connelly. My life, my work, and my community are better and brighter because of you.
Countless times over the past decade or so, I have received the following basic email/phone call/LinkedIn message:
“I recently met someone who wants to start a nonprofit. They are incredibly passionate about their cause and would be great at it, but they need some help with raising money. Could you speak with them and tell them how to get started?”
I almost always accept the call, because there are few people I enjoy meeting more than social entrepreneurs (and yes, I know this is a heavily debated term, but I mean it here simply as someone who wants to start a business whose primary mission is social impact instead of financial return). These are people who care enough about others to pour their time, talent, and treasure into launching a venture dedicated to improving the world.
They are, without a doubt, some of the best conversations I have ever had.
And yet, they are also some of the hardest. I have nicknamed myself “The Dream Crusher,” because I am honest with them about my opinions on their ideas.
And I am shocked at how few of them have given any thought to ….
via GIPHY
The most important question to ask: Why does the world need another nonprofit?
According to the National Center for Charitable Statistics (NCCS), there are more than 1 million public charities in the U.S. alone! There are also another 368,000+ other types of nonprofits, such as chambers of commerce, fraternal organizations and civic leagues.
Whatever your idea is … there are probably hundreds, if not thousands, of other established organizations trying to do the same thing. That doesn’t mean that you don’t have an innovative idea that could do a better job. But, there are some alternate paths to explore before going through the pains (and expense) of launching a new 501(c)(3) nonprofit.
Another question to ask yourself: Why are you doing it?
You need to be ruthlessly honest about this answer. If the answer is “to help others,” a far more effective way to do so is to help other nonprofits instead of starting a competitor for limited funds.
For the vast majority of people with whom I have spoken, they were well-meaning and thought of themselves as following a calling. And yet, for most of those, the real reason was … they wanted it for themselves.
Don’t get me wrong: they want to do good work for others. But what matters more is them being the ones to do the good work, not ensuring that the work is done.
You might call that ego. You might call it a savior complex. Or perhaps it is merely a desire to find a job that they truly believe in. But, if you are on this journey, you have to own the reason why: because you are going to be tested on it when you invite others to support your mission.
I know this well, because ego was a big part of why I started my own nonprofit once. And why I started multiple companies. I am not judging you…. I just want you to gain clarity on what compels you.
If you reflect on that, I would challenge you to again ask yourself: is starting a new nonprofit really necessary? And please pay attention below to the section about joining an existing organizations — perhaps as a volunteer, or perhaps even as a new employee who raises their own salary — to see if this work justifies an independent organization.
I promise you, if you dig hard, there is likely a better path forward than starting a nonprofit.
But, if you are dead set on doing so, just skip ahead and read this informative article, “How do I start a nonprofit organization?,” via GrantSpace, for technical details on what to do to start a 501(c)(3).
So, you wanna start a nonprofit?
First of all, thank you for giving a damn. That’s the common thread amongst the many people with whom I have had the conversations above. They all want to make the world a better place. If we had more people like you … perhaps we wouldn’t need a million nonprofits to meet society’s challenges?
Second, understand that “starting a nonprofit” is NOT your goal. Delivering your mission is the goal (e.g. helping kids who are exiting the foster care system … or supporting veterans returning from war … or whatever it is that drives you to pursue this venture).
And there are many ways to deliver your mission WITHOUT starting a 501(c)(3).
Here are the questions I always ask people like you:
1. Is there an existing organization with whom you can partner to simply expand their work into a geographic/programmatic area they do not currently address?
For example, you want to open an after-school program in your neighborhood. Could you instead partner with Boys and Girls Club, YMCA, Camp Fire, or another after-school provider to bring their programs to your area? Or maybe you have such programs in your area but they are not delivering the programs the way that you believe they should. Could you explore collaborating to help them improve their work, expand their offerings, etc.?
Whether you want to serve kids, seniors, veterans, the homeless, or anyone else… there is almost certainly an established organization dedicated to doing the same thing. In the same way that franchising is often an exponentially easier to open a for-profit business, partnering with one of these providers to raise money to expand their work is a much more more efficient way to meet your mission. Starting a 501(c)(3) nonprofit involves significant expenses — like hiring a CPA to handle your annual tax filings and to conduct an annual independent financial audit; setting up an administrative office to handle payroll, accounting, etc.; launching brand new fundraising efforts that compete with those of existing organizations; etc. — all of which are avoidable by partnering with an existing organization.
NOTE: Almost every serious potential donor for your new venture will ask you this question. You need a better answer than, “Yeah, but I want to do it my own way.” The only way that I can interpret that response is that you care more about being the one helping people than actually ensuring that people get the help they need.
2. If the answer to #1 is “no,” is there a way to incubate the new nonprofit as a program of an existing organization so that you can avoid all the administrivia cited above?
Doing so would also leverage some of the existing organization’s financial credibility in terms of administration, which is often a major barrier to securing funding.
This doesn’t even have to be a related charity (though it helps). While it would be odd for a new pet shelter to be incubated as a program of a prep school, it would certainly be easier than setting it up as a stand-alone organization. There also are “umbrella” organizations whose broad missions could feasibly encompass the incubation of such ventures, like your local United Way, nonprofit management center, Social Venture Partners affiliate, etc.
It is more complex than scenario #1, because the incubating organization has to setup some internal controls and likely run separate financials for the program, but there are also some practical benefits to this scenario that you don’t receive in the ones below:
Administration is already setup and running smoothly — so you don’t need to worry about bookkeeeping, annual tax filings/audits, payroll, liability insurance, etc. This is the greatest advantage.
Employees would be a part of a larger workforce, which could result in better health benefits, access to more human resources options, and potentially a better work environment (even if they don’t work in the same office, they might be able to participate in activities organized by employees of the incubating organization).
The board for your venture would only need to be an advisory board, and not have to worry about being a governing board with legal and fiscal responsibility for the organization (which can make it easier to recruit high-powered advisors, since many wealthy/well-connected people are hesitant to expose themselves to the liability of being a governing board member for a startup charity).
There can be some challenges with fundraising, particularly in the area of foundation grants (e.g. if your program is a strong fit for a grant from a foundation that already donates to your fiscal sponsor, that scenario has to be explained very clearly so that the two requests are not seen as coming from the same organization … which could result in neither getting funded). However, all of this can be cleared up with a simple MOU (“Memorandum of Understanding”), or similar document, that outlines the fiscal arrangement between the organizations.
Technically, such an arrangement is called a fiscal sponsorship. More details on the more traditional fiscal sponsors below.
(There is a really detailed article about fiscal sponsorship here that includes links to the Fiscal Sponsor Directory, “a tool created by the San Francisco Study Center to help connect community projects with fiscal sponsors.” One such foundation that does this is the Edward Charles Foundation. For organizations that are already raising over $500K per year, or that have a $1M+ commitment to get launched, companies such as Arabella Advisors offer a premium model of fiscal sponsorship that can allow you to launch not only a 501(c)(3) but also a 501(c)(4).)
3. If the answer to #2 is “no,” could you set it up as a fund of a community foundation to achieve similar objectives?
This is how I first established Executives In Action, which operated for years as a fund based out of the Communities Foundation of Texas. In North Texas, The Dallas Foundation also has a specific program for this outlined here.
These foundations are 501(c)(3)’s themselves, and they often can setup an agency fund that operates like a donor advised fund. They often have fairly low minimum amount to get started, sometimes as low as $10-25K. They then charge a modest percentage of the amount you raise to operate the fund and cover their costs, much like the fiscal sponsors above; this fee typically ranges from 5-10%, depending on the services they provide (e.g. are they simply a passthrough for funding to your organization, or are they hiring contractors/employees for the fund, supporting compliance efforts, assisting with bookkeeping, etc.).
Another advantage: you can rapidly get started. Typically, it takes less than a month to get a fund setup; by contrast, it can take over a year to establish a 501(c)(3) via the IRS.
4. In any of these cases — including proceeding with launching your own 501(c)(3) — focus on collaborations whenever possible.
That helps to leverage the credibility of existing orgs — even if you just use their curriculum or consider them program advisors — to avoid the very valid criticism of, “why do we need another nonprofit?!”
As above, I strongly encourage you to document these collaborations via MOU’s.
5. Please, for the love of God, follow Peter Drucker‘s advice: do one thing well. Demonstrate results, prove outcomes, then go to market to raise money based on that successful model.
Too many social entrepreneurs launch with a scattered vision of solving all of the world’s problems. I understand that your dream might be to operate a green homeless shelter that is entirely off the grid and that includes an organic farm in which the residents can secure living wage jobs producing vegan, gluten-free foods while also learning to speak English, manage their addictions, save 50% of their income, and launch their own tech startup … all while managing a pet shelter for orphaned animals.
But start with one of those.
Offer an ESL program for the homeless in one of your community’s existing shelters.
Partner with an existing affordable housing provider to dedicate a few units for people escaping addiction with your support.
Develop a company that specializes in helping existing nonprofits to go green… or add a farm to their property …. or raise goats.
The key is to focus on the unique thing that you thing will: a) make an impact, b) fill a gap that no one else is filling; and c) engage others in the vibrant nonprofit community to leverage their existing investments of time, money, energy, and creativity.
And last, if you’re going to do it: GO BIG OR GO HOME.
That likely sounds crazy considering what I just wrote. But if you have found a way to appropriately acknowledge the role of ego in your desire to found a nonprofit; you have identified a way to make a big impact; you have done the research to ensure that no one else is doing something similar whom you could help; and you have explored ways to collaborate with others to maximize efficiency and leverage existing community assets … then go for it.
Don’t go small. Build a multi-year plan for impact. Go to market with an idea of how much you need in the first 3-5 years of your work. Commit to raising those funds as quickly as possible so that you can focus on execution.
If that sounds exhausting or impossible, and you want to start small, I encourage you to go back to the top: see if you can just support someone else who is already doing great work that is similar to your vision, and see if you can help them to improve it.
That would not be a failure, because it doesn’t matter that YOU are not the one doing it. What matters is that it gets done; if you have to do it yourself, then do it. But if you can help someone else, you will likely find yourself doing much more of the work you love (helping the homeless, running a garden, caring for animals) than if you spent the next few years raising money, setting up QuickBooks, talking to lawyers, designing spreadsheets, etc.
Again — thank you for caring so much about the world/others that you would consider throwing everything into it. I would love to hear from you; if you need help, I am always happy to chat and give you my advice. You are not alone.
At the Prison Entrepreneurship Program, we just announced one of the most significant milestones in our organization’s recent history … the acquisition of a master franchise for the entire state of Texas by our for-profit subsidiary, the Communitas Auto Group.
Over the next twenty years, we will develop around 20-30 automotive repair shops under the brand of The Auto-Lab Complete Car Care Centers. These shops will provide hundreds of living wage jobs (many of which will be for graduates of PEP); by 2023, we anticipate they will also grow to provide around $1 million per year in revenue to support PEP’s mission.
Those facts alone are worth celebrating. But there are two aspects of this initiative that get me even more excited… because they are far larger than just PEP.
First, this effort represents a seismic shift in the franchising world. There are fewer than 100 franchise stores that are owned by nonprofits; most are in the food services arena, like Ben & Jerry’s, Nathan’s Famous, Annie’s Pretzels, etc. And in the majority of cases, nonprofits only own a single store.
Through our subsidiary, PEP owns the rights to the entire state of Texas for The Auto-Lab. Within a few years, we will likely own more franchise stores than any other nonprofit in the country.
This will be a game-changer for nonprofits, because we will prove the value that nonprofits can bring to the franchising community as BUSINESS PARTNERS. After all, here are some of the assets that PEP brought to the table that most typical franchisees lack:
A robust governing board and advisory board structure that includes 50+ experienced business leaders whose expertise we can tap to guide the venture’s growth;
Immediate access to a qualified and motivated workforce of strong potential employees and store managers (i.e. our graduates);
Thousands of active relationships with potential customers in multiple cities across Texas (i.e. our volunteers and donors, not to mention our graduates and their families).
The latter is particularly valuable for franchisors. Once we open a store in Houston or Dallas, we will have thousands of people in those markets who already know about PEP and who would be willing to give our store a try. And for a new entrant to the market, that is an invaluable asset to tap.
Further, within each of those three groups above, we have not only potential customers and employees … but potential investors. And more importantly — potential franchisees.
Yes, this venture will provide jobs for our graduates and revenue for PEP.
But the broader impact will be on how we can transform the way
that the franchising community looks at nonprofits.
Thankfully, the remarkable leaders at The Auto-Lab had the vision to see what we could offer. Yet throughout this process of securing a franchise, we encountered a high degree of skepticism from other franchisors about working with a nonprofit (let alone one that worked with felons!). The success of Communitas Auto Group will force other franchisors to take notice … and, we hope, become much more open — indeed, eager! — to engage nonprofits as franchisees.
That is the first reason why I am excited.
But the second makes me even more so.
To fund this initiative, we pioneered a new financial model, with the help of software similar to what is offered by Synario, that we believe could serve as a template for how to finance social enterprises and earned income initiatives owned by nonprofits. Thanks to the guidance of our board and some very wise counsel from one of the preeminent Houston corporate law firms, we have built a model that allows the Communitas Auto Group (“CAG”) to harness the power of private equity while maintaining PEP’s long-term ownership of the venture. This is definitely a step in the right direction, but that’s not to say that we won’t need the help and guidance of somewhere like Sidley Austin in the near future to ensure that we get the advice we need to be successful in our ventures, as well as staying within the appropriate law.
In brief, CAG is incorporated as a for-profit company. As explained in the link at the top, CAG was capitalized with an initial investment from Mike Humphrey of Houston, Texas. Mike is now the majority owner of the venture, but PEP was granted a sizable carried interest in CAG at essentially no cost. There is a mandatory distribution to PEP of $50,000 per year from CAG, and a scheduled buy-back of the equity from the initial investors through the profits generated by the business. This will allow PEP to fully own the company within approximately ten years, if CAG grows in line with our conservative financial models.
Once that occurs, we anticipate that CAG will be contributing approximately $1MM per year in unrestricted revenues back to PEP. That is the equivalent of building a $25-30MM endowment for the organization … only this is one that creates hundreds of jobs along the way for our graduates.
All without relying on philanthropy.
THAT is what is really sexy about all of this. We are blazing a new trail in how mission investors can complement their charitable giving with strategic investments that create both market returns AND social benefits.
And when we can do that … we exponentially multiply the amount of funding that we can access. After all, just look at the world of grant-making foundations. They distribute, on average, 5% of their assets in the form of grants. But the other 95% is held in investments.
By tapping into that 95% … we effectively multiply the base of support available by a factor of 19X.
That’s no different for major donors. However generous they are, the vast majority of major donors have more money in their investment budgets than in their charitable giving budget. By tapping into those far larger pools of capital, we dramatically expand the percentage of “wallet share” that can be tapped by the social sector.
And THAT is something that our team will be very proud to leave as part of our legacy.
“Injustice anywhere is a threat to justice everywhere.” – MLK
My friend Salah Boukadoum is the founder of Soap Hope, an amazing company with an even more amazing mission. In brief, they sell all-natural, organic, high-quality products … and invest 100% of their profits in microloans to impoverished women. Their model — which Salah calls the Good Returns model (click for his TEDxGrandRapids talk on the topic) — can equip any company to generate a sustainable impact on the world at no direct cost to them other than a year of interest.
But that is not why I am writing about Salah. I am writing about him because I was shocked into a stupor by a very poignant question that he asked on Facebook. I post in its entirety below… and welcome your thoughts.
Why, when a skier is lost on the mountain, do we deploy a search party using helicopters and snowmobiles to see if it’s possible to find him and save his life, but we don’t deploy anything for the child whose life is in grave danger in a village in Africa? The skier consciously made the decision to take a dangerous path, but we don’t hold that against him and give up on his life. The child made no decisions, and was just born in a place of grave danger. If we abandoned the skier on the mountain, we would be accused of being heartless and inhuman. But we abandon the child every day.
The reason boils down to who we consider to be in our community. This is the same reason we celebrate when a plant moves from Mexico to Texas, and denounce a plant moving from Texas to Mexico – the job in our community is more important than the job in “their” community. It’s the same reason that a massacre in our country is worthy of a trillion dollar global mission, but a massacre in Syria is not worthy of any action at all. Because “they” are responsible for “their” problems, and “we” are responsible for “ours.” Who counts in the “we” and who in the “they”?
If we are going to express the full potential of humanity, we will need to expand our understanding of our community to include all people, in all places. Because determining the value of a human life on where you happen to be born, or where you happen to be at this moment, is the same as determining the value of human life by rolling dice.
More powerful updates from the inimitable Robert Egger, founder of the DC Central Kitchen, and the V3 Campaign … which has been reborn as the even more awesome, and far more powerful CForward (a PAC aimed at endorsing and supporting political candidates who have a strong platform for engaging the tenth of the economy known as the nonprofit sector):
The sector engages another 90 million people as volunteers.
Collectively, the sector controls about 10% of the GDP. In Texas, the nonprofit sector employs more people than the oil industry.
And yet — none of the politicians asking for our vote have ANY plan for how to engage us, our creativity, our passion, our entrepreneurial spirit . . .
Among the many privileges of my career, I have the honor of working alongside some of the best nonprofits in town. This morning, I was invited to speak to the students of the Network For Teaching Entrepreneurship (NFTE) at their 3rd annual Young Entrepreneurs Rally.
NFTE is a remarkable organization that is always on my short-list for year-end donations. They are a national nonprofit organization that partners with public school systems to offer a course on business basics and entrepreneurship to students (primarily focusing on children from low-income families). While they have created many entrepreneurs who have grown up to launch successful businesses, this is actually not their primary goal.
Their primary goal is to use the theory of entrepreneurship to build a bridge between the core academic curriculum in the public schools and the way to make money in the real world. It is very hard to get a teenager excited about algebra… but it is remarkably easy to get them excited about making money. Teenagers like the thought of making money, so teaching them from a young age how to save and make money is one way of teaching them important life skills. For example, lessons on maths don’t interest a 15 year old. However, lessons on saving certain amounts of money (perhaps by using coupons like eBay coupons, or selling clothes) will grab their attention for a lot longer.
By building this bridge, NFTE is successfully increasing school attendance, grades, test results and — most importantly! — graduation among a group of children who are at the highest risk of dropping out.
Here is a shocking number: in 2008, Dallas had the nation’s worst dropout rate among cities with over 1 million people.
NFTE Dallas directly targets this problem by connecting one of these children’s primary desires — to make money! — with the necessity of making good grades and graduating. I think that this is a very elegant solution to the otherwise intractable problem of low academic achievement in public schools. When you combine this model with my deep respect for the organization’s board and staff (who will manage to engage over 2,000 kids in their program this year), you can see why I would be so happy to join them on a beautiful Saturday morning for a few hours.
Today’s event was at my alma mater, University of Texas at Dallas. I love driving into the campus, which is markedly more beautiful than when I completed my MBA here in 2006 (thanks to the generosity of Mrs. Eugene McDermott). The tree-lined drive up to the Naveen Jindal School of Management provided a serene backdrop for me to prepare my remarks for the day.
After parking my car and walking up to the school, I finalized my idea for how to present on the topic that I was assigned: “Money Matters: How to Raise Funds for Your Business.”
Sources of Capital
Needs and Wants: Of the Business, and the Business Owner
How much debt can you afford?
Costs of Capital (i.e. basic lecture on the preposterously high rates charged by payday lenders and title loan shops)
Q&A
I only had about 30 minutes for the presentation, so this seemed like a lot of ground to cover — especially because I prefer conversations to lectures. When the students started walking into the classroom, I realized again how hard it can be to be a teenager … regardless of whether you are from a wealthy family or not.
This class of 18 was comprised of students from 4-6 different high schools. Most had never seen each other before. Needless to say, this group of aspiring entrepreneurs was not feeling incredibly talkative when the class began.So, of course, I did not make silence an option. We started by having them brainstorm possible sources of capital. While I have had this conversation many times before, today’s responses shocked me.The first response was “ask a wealthy person.” Then, silence.Finally a second response: “you could start a lemonade stand.”
Basically, the student’s idea was that to fund a larger/riskier venture, you should first start another, less lucrative one that has more of a guaranteed income. Other students agreed — with another idea coming to do a car wash.
I prodded some more. No one had any ideas. Finally, the student who had the lemonade stand idea said: “Maybe a bank?”
We wrote all of these down. And then I mentioned some others, including CDFIs (microlenders) like the PLAN Fund. I then told them that the most common way to fund a business is to raise capital from friends and family.
The response was mostly blank stares and a few eyes rolling. Here I was, a white guy in a suit-and-tie, talking to a predominantly black and Hispanic group of public school students about raising money from friends and family.
The facts are not foreign to me. Around 90% of students in the Dallas Independent School District are on the free- and reduced-price lunch (i.e. their families have incomes less than 185% of the federal poverty level).
Later, when we were talking about the students’ ideas for businesses, one soft-spoken girl in the back row raised her hand. She said that she had a business idea but that it would “not be something that people in my community could afford,” and she wanted to know how she could learn about building a business, whether it be an internet sharing business (https://www.rmhbangor.org/how-to-start-an-internet-sharing-business/) or anything else, to serve the wealthier demographics of other communities.
It was a fair question. In many ways, it is no different than any other entrepreneur asking how to learn about accessing a new market where they have little knowledge or few relationships. But somehow, all of the lessons that I learned in this very same building about “expanding businesses into new markets and geographies” did not apply here.
Her question did not just arise from curiosity about opportunities in new areas.
It sprung forth from the same source that caused many of these students to roll their eyes at my proposal that they could raise initial funds from their family and friends:
It arose from these children’s basic self-definition as being outsiders. Being “low-income,” or — worse — “at-risk.”
Instantly, my thoughts turned to my own daughters. I could not imagine them ever self-identifying as “at-risk” for anything other than physical health problems handed to them by their genetic code.
Yet here was this girl — someone else’s child, the daughter of a stranger — who could not fathom her community providing her with the initial support to launch her dream . . . let alone the on-going support to sustain it.
As she spoke, heads nodded around the room. This was not just about this girl. This was about all of these children, and the thousands more who fill the classrooms of the DISD each day.
What dreams lie within their hearts, unspoken for fear of watching them die? How many amazing entrepreneurs, artists and leaders lie hidden even from themselves because of an inability to see a path for their talents to be utilized?
What dreams do we hold for our neighbors’ children? for those whom we will never meet, yet whose lives are so intimately tied to our own that we cannot truly separate our own dreams from theirs?
What Dallas do we imagine handing over to the next generation — one in which opportunity is allocated merely by selecting the right parents, or one in which the dreams of every child are provided rich soil in which to grow and mature if provided the right love and care by their owner?
I do not know. But I do know this — the work of NFTE, the PLAN Fund, and hundreds of other local nonprofits all give me hope that the answers to those questions will be better for the children of the children with whom I spoke today.
But that is not enough. We cannot write off entire generations of children under the banner of “slow and steady progress by the charitable and educational institutions” of our community.
We need business leaders to volunteer with NFTE to walk into these classrooms and inspire these young people to believe in themselves. We need them to mentor these kids — not just throw canned goods at them through food pantries and keep them locked in free after-school programs during the hours when we don’t want them out on the streets.
We need to dream not just of our own future, or of the futures of our own children, but of all children. We need to collectively will our community into achieving its own potential, which can only be the case when there is no child whose greatest barrier to their own success is their inability to believe in themselves.
There are many different kinds of marketing tools out there, from Salesforce customer service chat tools to the wild west that is social media. Social media and marketing initiatives related to it can be difficult for one to wrap their head around. Seemingly lighting in a bottle, successful social media campaigns can be difficult to replicate if one does not know what makes it successful. Business 2 Community is an “independent online community focused on sharing the latest news surrounding Social Media, Marketing, Branding, Public Relations & Much More.” With this site, marketers are hoping to gain better insight into social media marketing campaigns.
The future of marketing will be turning your customers into your salesforce. The initial foray into this area has begun with retailers offering discounts to customers who can prove that they “checked in” to their store on Facebook, Foursquare, etc. We are also seeing more and more campaigns that provide incentives for connecting to a company’s social media presence.
This trend will continue, and possibly extend into the “rewards card” programs; customers could be rewarded over a long-term basis by attracting
other customers who use these cards; many grocers have been doing this for years with their nonprofit partners (i.e. donating 1% of purchases to a charity whose donors register their rewards cards with that charity’s number).
Webinars as an educational and marketing platform saw a huge rise in popularity in 2011, and will continue to grow in popularity in 2012.
“The only one that’s ever felt this is you / The force that’s forcing you / To feel like busting up a Starbucks.”
I admit it: my family probably spends more money at Starbucks than at the grocery store. So, I was grateful to hear the news that our daily addiction might actually fund something useful in the world:
Starbucks and Opportunity Finance Network® (OFN) are working together to create and sustain jobs in underserved communities… The Starbucks Foundation is donating the first $5 million. And starting November 1, you can give, too, and we’ll direct 100% of your donation to OFN. When you give $5 it can help provide $35 worth of financing for community businesses. As a thank you for your donation, you’ll get a wristband to wear proudly as a symbol of your support.
This is pretty impressive — not just from a charitable impact basis, but from a marketing angle. After all, this economy has hit everyone’s Starbucks budget pretty hard. When you’re unemployed, it’s hard to justify $4+ for a cup of hot, dirty water.
(And with an angle like this… you can probably serve a lot more coffee to the swarming hordes of protestors in the Occupy movement who might have otherwise been against supporting a “chain coffee store.”)
So, kudos to Howard Schultz and his team for giving their company an innovative fit within the hottest P.R. issue facing our country — the persistent unemployment crisis.
And let’s be honest. This is not about charity. This is a marketing program: although they are taking shareholders’ dollars and giving them away to charity, they are doing so in a way that will generate an even greater return for their company.
In fact, it’s better than marketing. It’s tax-deductible P.R.
So far, they have a pretty good return building. Check out these sweet-as-a-caramel-latte articles that they received…. for free …. in response to their initial $5,000,000 investment:
(And this doesn’t even include any of the articles about Starbucks launching a lighter “blond” line of coffee that also mentioned the “Create Jobs for US” program… and which may not have made it to press without this additional angle)
Nothing against basic human relief, but a $5 million donation to the nation’s largest network of food banks, Feeding America, never would have generated this kind of positive press.
And not just positive press, but positive press that has been read by millions of customers and potential customers. Positive press that is not about doing good, but being good. Big difference there.
Better yet, a number of the smaller blogs that I did not cite above even said something along the lines of: “Now, I am not a Starbucks fan, but this is pretty cool.”
You just can’t buy that kind of goodwill with $5 million of advertising, especially from key influencers among your brand’s detractors.
In fact, it’s not even that easy to do it with $5 million of philanthropy. For example, run a Google news search for articles on Chase Bank’s recent $5 million gift to microlender Accion Texas-Louisiana; you mostly get a bunch of local news sites and PR wires… not national headlines and swarms of editorials and blogs. Why didn’t this other gift create the firestorm of coverage that Starbucks has created with its campaign?
Starbucks will be selling these ‘Indivisible’ bracelets in nearly 7,000 cafes across the country.
Because Starbucks has adopted a brilliant approach to not only making a cash gift, but leveraging their nearly 7,000 storefronts in a way that will engage their millions of customers in supporting their campaign.
Even while this intentionally focuses the campaign within the context of a Starbucks, it manages to make the campaign stand for far more than just the company. Even their beneficiary — the Opportunity Finance Network — is not a single entity like Accion, but a network of the best microlenders in the country. Starbucks’ gift will be leveraged by these best-in-class organizations to maximize its impact across the country.
In fact, this leverage is the real brilliance of their donation … as pointed out by The New York Times… this money will be leveraged to the hilt, creating an even more exponential return for Starbucks:
“Here is the most beautiful part about the whole arrangement. The donations to Create Jobs for USA will not be loaned to the CDFIs (Community Development Financial Institutions). They will be turned into capital — equity that can be leveraged. Pinsky and others told me that that equity can be leveraged 7 to 1, meaning that if 10 million Starbucks customers donate $5, that will support $350 million worth of lending. That’s real money.”
And this article, like many others, ends with effusive praise for Starbucks:
“(Starbucks CEO Howard Schultz) is hoping that Starbucks customers will flock to it in droves. So am I.”
And honestly, so am I. We need this to work.
At the recent Microfinance USA conference in New York (one of the world’s largest annual gatherings of such organizations), the organizers launched the event with the profound statement that: “if 1 in 3 of our country’s small businesses created a single job, that would create enough jobs to eliminate unemployment.”
The combined microloan pool for every CDFI in the country stands at around $250 million. This one Starbucks campaign could more than double that.
So, this gift will do great things for the microfinance sector and for the small businesses that we support.
And yet, the point of this blog is that the “Create Jobs for US” campaign will also do great things for Starbucks itself. And it should.
If it does, it will cause more companies to look at how they can leverage their brands and customer relationships to make a positive impact on the larger world and on their bottom line.
For the past three years, this company has endeavored to provide a living wage with benefits, vacation and flexible hours to employees who could not traditionally access them. Then, today, I received emails from Serena Connelly confirming that the venture was closing its doors.
But then, an amazing thing happened. Rain did not pour through that little crack that had appeared in my heart — instead, sunlight burst forth from it.
This is not a day of mourning, I realized. This is a day of celebration — albeit a different celebration than we’d like. After all, for three years, Serena Connelly reshaped the discussion around poverty in our community. She focused many of these conversations on the issue of “living wage,” a concept that is radically different from minimum wage and that changes the dynamic of the employer-employee battle for prosperity.
I say that this is a victory because the ripple effect of her work has “bent the arc of the moral universe towards justice,” as MLK might say.
Yes, this one business is closing. Part of the problem is that her commitment to social justice was expensive, right at a time when the economy was taking a huge dip — and a $4 cup of coffee suddenly became much more of a luxury than it was before.
But look at what she has done:
Provided a living wage, benefits, flexible hours…. and dignity to a workforce that might otherwise find it hard to secure employment, let alone the self-respect that comes with being able to provide for your family. Here her talk about it on KERA’s “Think” show here.
Secured significant media coverage for their venture, exposing thousands of people to their ideas. Like here and here and here. Oh, and here. And the podcast on the bullet above.
Bolstered the hopes of countless other social entrepreneurs. I know that Soap Hope, Chooze Shoes, Banner Theory and many others were inspired by her work… and much of their future success will be paved down trails that Serena and the Demeter Project team all blazed for them.
Personally, I also know that this coffee shop provided an amazing venue for conversations about these issues and a great environment for the local nonprofiteers, social entrepreneurs and do-gooders to gather. Indeed, for the first few months after I left the Center for Nonprofit Management to start Executives in Action, I was virtually officing out of their coffee shop!
I often joked that “Norm had Cheers, and I have It’s a Grind.” So, I will confess, it will be harder to enjoy my morning coffee without It’s a Grind’s amazing employees there to provide it for me. I will no longer have a “go-to” meeting place for my gatherings with my fellow nonprofiteers.
And yet today, my heart is full of joy and gratitude for this amazing venture and all that it added to my life and to our community over the past three years. Thank you to Serena and everyone at the Demeter Project for throwing such a large rock into the pond of economic justice — may the ripples of your work create a wave that raises the tide for all boats!
(UPDATE: Serena passed away in April, 2020. See Salah’s beautiful goodbye letter here. See her obituary here.)
Click to learn more about my first children's book, which explains incarceration to children with a parent in prison. You can also buy the book on Amazon here.
Click to learn more about the children's book I created for the North Texas Food Bank, which explains food insecurity to children who want to help others. Rather than emphasizing charity, the book integrates a participatory model that demonstrates how to engage those who suffer from hunger in co-creating an equitable community solution to it.
