The Imaginations of Unreasonable Men (26 page)

Most failures are not failures of planning, strategy, resources, organization, or discipline, but failures of imagination. There is always the temptation to point the finger of blame
outward. “If only someone would give us more money.” “If only we’d been given more time.” “If only the consultants would deliver what they promised.” The necessary resources always seem just out of reach. While the constraints are real, they are often just symptoms of a more fundamental issue: timid adherence to conventional wisdom. Seemingly intractable problems get solved when someone looks at them in a new way, challenges the very premise of the problem itself, and creates a solution that, until it exists, could not even have been imagined.

Having devoted his entire career to other attempts at creating a malaria vaccine that proved unsuccessful, Hoffman was fully aware of how impractical a whole-parasite vaccine would be. Even nearly a decade after proposing it at a major conference of malaria experts, he recalled what happened when he said, “What about making it into a vaccine?”: “You could have heard a pin drop. Not one person thought that was a reasonable thing to do at all. They thought it was ridiculous.”
⁴
But Hoffman never assumed it was ridiculous just because everyone else in the room did. Instead, he persisted, and he has spent years of his life trying to find out if it’s possible.

For decades, global health activists sought to cajole large pharmaceutical companies into investing in drugs for neglected tropical diseases. They were mostly unsuccessful. Then Victoria Hale conceived an idea that had simply not been previously imagined: a nonprofit pharmaceutical company, which became the Institute for OneWorld Health.

Or take Teach for America. What could be more impractical than founder Wendy Kopp’s vision of placing lightly trained college graduates into some of the toughest urban schools in America, and having them teach poorly prepared teenagers? Impractical? Arguably so. Impossible? Hardly. Wendy’s vision allowed her to bridge the imagination gap. In 2007, there were twenty colleges around the country that had 10 percent of their graduating class applying for Teach for America, and ninety colleges that had 5 percent of their graduates applying. With more than 3,000 corps members, the organization ranked number seven on Bloomberg BusinessWeek’s 2009 list of “Best Places to Launch a Career.”
⁵

Leaps of imagination are something quite different from the qualities of creativity that are often desirable in problem solving. Creativity implies generating new ideas or making new associations between old ideas and concepts. But leaps of imagination are not so much about new ideas as about a new conviction of what is possible.

Agents of change tend to be creative designers more than engineers. They are able to invent solutions, but not always able to make the solutions economical enough to be sustainable. They leave that job to others, usually government. But in the last quarter of the twentieth century, government, lacking sufficient resources, stopped playing that role. Typically those
who start or lead an organization to pursue some sort of change end up retrofitting it, belatedly, to include economic considerations. But this is like building a beautifully designed car without installing a gas tank or fuel line. It will go only so far as it can coast.

It is incumbent upon social entrepreneurs to not only develop solutions but to make them affordable. As Dr. Peter Hotez of George Washington University said of the hookworm vaccine he is trying to develop, “If I can’t make it for a dollar a dose, I might as well not make it at all.” It may be a lot to ask of molecular biologists, tropical medicine physicians, and nonprofit executives to bring not only their creative ideas to their work but to also bring the skills, experience, and wisdom of MBA’s, and yet, failing to do so dooms their chances of success.

This point goes to the heart of the nonprofit culture because a prerequisite to scaling an enterprise is investing in the enterprise itself, not just its programs. It’s what venture capitalists do to help start-ups—invest not only in their products but in their capacity to produce the products along the lines of an economic model that is sustainable. But this is rarely the way nonprofits and their funders behave.

Clara Miller is executive director of the Nonprofit Finance Fund, which helps nonprofit executives understand the tools of commerce and has lent more than $160 million to organizations for capacity building. One of the clearest thinkers in the country about how nonprofits can use financial
strategies to grow, sustain themselves, and increase impact, Miller distinguishes between an organization’s programs and the health of what she calls the overall “enterprise.” “Philanthropy tends to be enterprise blind and therefore enterprise unfriendly,” she told me. “We want to create social value everywhere all of the time. But we have no equity investors, no one to put their arms around the enterprise and protect it.” Everyone involved in a nonprofit puts those they serve ahead of the sustainability, even the very survival, of the organization itself. It is noble in the short term, but almost a guarantee that the nonprofit won’t be effective in the long-term.

Miller went onto explain, “The path to scale invariably involves profitability. But the challenge in the nonprofit world is that the competition is typically for subsidies, and the bigger you get the worse off you are economically. The enterprise gets exploited again and again in favor of current services. The solution is not necessarily even about capital. It is about
full cost recovery pricing
. We need to embrace the tools of commerce without fooling ourselves that the economic propositions are the same.”

Many of the organizations that have been mentioned in these pages—College Summit, Share Our Strength, Teach for America—find themselves admired for their core ideas, but challenged to get to scale. All of them need to explore the economics that will enable them to find their version of a product or service that can be delivered for “a dollar a dose.”

When markets don’t exist, they must somehow be created; or at least proxies or substitutes for market forces must be employed as an alternative. “Market” is in some ways just a euphemism for the wider public support that must be marshaled to amass the resources necessary for solving big problems.

Philanthropy itself is a response to the failure of market forces, and within philanthropy proxies for market forces can take many forms. They represent most of the major philanthropic innovations of the past fifteen years, and many fall under the rubric of social entrepreneurship.

Venture philanthropy, a form of grant making or philanthropic investing that adopts venture capital investing strategies and “equity-like” investments for building nonprofit capacity, is one form of proxy for market forces. It often involves long-term commitments of deep financial investment tied to the acceptance of strategic management assistance. For example, when Venture Philanthropy Partners in the greater Washington region invests in a youth-serving organization such as The Seed School, which is an urban, public boarding school, they take a seat on the board, set milestones that will trigger future funding, and provide both cash and expertise in hiring, management, and growth decisions.

Community wealth creation, in which nonprofit organizations actually create new wealth through earned income
streams, rather than redistributing charitable wealth, is another example. Sometimes this means leveraging an organization’s assets into a business venture whose profits will be devoted to subsidizing and extending the reach of the non-profit’s mission. The Cuyahoga Valley National Park Association, for example, has begun doing facility rentals for social events. It’s one way of leveraging the organization’s assets to generate incremental revenues that can be used to support and expand the organization’s mission in preserving the parks.

Or it may mean the launch of a cause-related marketing campaign in which a corporation and its consumers share the cost and credit that goes with earmarking a percentage of the sale of an item. During the Charge Against Hunger campaign, American Express donated two cents to Share Our Strength every time an American Express card was used for any type of purchase, and the result was $22 million to expand Share Our Strength’s anti-hunger activities. Other times this strategy takes the form of fee-for-service programs aimed at segments of the market that can afford to pay. This is what happened when the Jewish Social Service Agency of Rockville, Maryland, began providing home health care to high-income individuals to generate profit that could be used to increase the amount of home health care they provided for the low-income families that were part of their critical mission.

Sometimes a secondary market can be used to subsidize the primary market, which is how Hoffman thinks about the way travelers and military personnel would become
customers for his vaccine, helping to generate the revenue needed for his primary focus: the African children malaria is decimating.

The solutions that garner the most support, which in turn gives them a better chance of success, are often those that are biggest and boldest and embody the promise of solving a problem once and for all, not just ameliorating it by placing Band-Aids on its symptoms. Finding such a solution requires walking the fine line that the writer and social activist Jonathan Kozol suggested when he advised, “Pick battles big enough to matter but small enough to win.”
⁶

We learned the same lesson at Share Our Strength when we changed our goal from feeding children to ending childhood hunger. The former, feeding children, is both simple and satisfying, and consequently very popular. It is where most funders want to put their money and where most of their traditional grant recipients want to spend it. The knowhow exists for doing it, and the attendant risks are low. But the kind of emergency food assistance that is offered at soup kitchens and shelters, while necessary, does not treat the underlying problem. And focusing on it exclusively would virtually guarantee that childhood hunger would continue to exist in America.

On the other hand, ending childhood hunger, so that children won’t need emergency food assistance in the first
place, holds the promise of long-term reward. It also lacks immediate gratification, because it will take at least five years to accomplish, possibly ten. But once we set it as our goal—once we shot down the notion that it was just not possible—it proved ambitious enough to inspire both current and potential future supporters, yet realistic enough to be achieved. Share Our Strength began to grow faster than it ever had before.

Melinda Gates made the same challenge when, in October 2007, at the three-day forum in Seattle, she demanded that malaria not be just managed, but eradicated. She said: “Any goal short of eradicating malaria is accepting malaria; it’s making peace with malaria; it’s rich countries saying, ‘We don’t need to eliminate malaria around the world as long as we’ve eliminated malaria in our own countries.’ That’s just unacceptable.”
⁷

There is greater risk of failure when the bar is set so high, and certainly the likelihood of greater expense and complexity. But the reward is a solution worth striving for. Such solutions inspire us. They attract new talent and new resources. They justify the enormously hard work that is required to make a difference.

Though it is not often openly acknowledged, and though nonprofits don’t usually behave competitively, the many good organizations and initiatives aimed at addressing social problems do in fact compete directly for the attention and resources of key stakeholders, whether defined as staff talent, financial supporters, policymakers, or all of the above. The
pool of philanthropic dollars at any given point in time is finite. Increasingly, knowledgeable and sophisticated donors look for “return on investment” even though it cannot be measured as precisely as it can in the world of for-profit business investments. What return could be better than eradicating a problem once and for all? That’s one of the factors that makes solving a problem, rather than improving or ameliorating one, so compelling.

In the social sector, everyone calls for collaboration, which of course has its merits. But competition, at its best, has its merits, too, and what’s needed in the nonprofit sector even more than collaboration is a commitment to compete. It is only by competing that nonprofits can avail themselves of the advantages of competition.

I am on the board of the Timberland Company, which makes boots as well as other footwear and apparel. It is my first corporate board experience. I’ve been on five or six nonprofit boards, but the focus of the Timberland directors is quite different. At Timberland the board is intently focused on whether the company is going to out-perform and out-compete its peers. Board members look at the talent within the company, how it is organized, what products it is making, and other matters through this lens. The most important thing I’ve learned there is that to compete at any level you must compete at every level.

At Timberland they don’t just see themselves as competing to get consumers to buy their footwear. They see themselves as competing to get the best people in the footwear and apparel industries to work at Timberland and to stay there longer than they do at rival companies. Timberland’s human resources department measures how long Timberland retains its top talent compared to competitors like Nike, Ecco, Reebok, and Merrill. Likewise for their investments in corporate social responsibility, brand building, and the like. To compete at any level, you must be competitive at every level.

Nonprofits have the opposite instinct. They want to do things with volunteers. Not with the best resources, but with the best leftover resources or donated resources. Such choices are based on noble intentions, and going that route may be economical in the short run, but it completely undermines one’s long-term competitive strengths.