Question of the Week

Question of the week 1/15: Does the proliferation of product certifications dilute their meaning and effectiveness?

Fair Trade, Rainforest Alliance, Organic, Wild Harvested, Heart Healthy, what do they all really mean? Each certification has different standards and a different emphasis on social, environmental, and labor practices. While certificaitons assure consumers that their purchases are ethically sound, does the proliferation of certifications, especially in the food industry, dilute their meaning and effectiveness?

Multiple certifications can confuse consumers. Consider Fair Trade vs. Rainforest Alliance, their standards are dramatically different. These variations give producers the ability to choose their prefered certification based on service and price, while consumers are left largely in the dark.  Kraft has been a registers Rainforest Alliance member and major donor since 2003. Consumers should ask if Kraft’s donations influences the laxity of the certification.

According to Fairtrade.org, the labeling intends to connect consumers with producers. But with so many labels out there, and businesses choosing their preferred certification, producers may actually be disconnecting from consumers.

Join the conversation here

Question of the week 9/15: who needs to take the lead on sustainable consumption – producers or consumers?

This month’s Fast Company magazine has a great interview with Jeff Swartz of Timberland. Swartz has long been seen as something of a poster boy for how companies can incorporate values of human rights and environmental sustainability into their supply chain and remain succesful. But as financial pressure mounts on Timberland, the article asks how long he can retain his job if he can’t keep financial return callibrated with social mission.

There’s a lot of great stuff in the article – including his termination of Timberlands relationship with Chinese manufacturer kingmakers – but it’s a comment toward the end about the consumer that really grabbed my attention:

So the consumer shares the blame?

The consumer says, “I’ll have a conversation with you; it will be all on my terms. Your product is going to have to be visually beautiful, technically perfect, and distinctive. And it has to be available where I shop at a price I’m willing to pay.” Now, if it is all of those things, you gain the permission, in the one minute the consumer deals with your brand, to devote about 10 seconds to the issue of values. And if you miss any step along the way, you are talking to yourself, which is a terribly sad place to be.

Its a fair point: people are thrilled about the social values business can create, but only if the product is still just as convenient to find and (more or less) as cheap to purchase. In some ways, it seems to me like a ‘have your cake and eat it too’ mentality where we get the moral satisfaction of thinking ethically even though we’re not willing to make trade-offs (or, to use another word, sacrifice).

The flip side is, of course, while consumers are talking to each other more and more, businesses still have incredible power to speak directly to consumers and shape demand – whether its around a new product line or ethical production in general.

So here’s the question: how do we increase the correlation between the social value of a product produced ethically, sustainably and responsibly with the economic value people are able to put forth. And not just in specific but in general? Who has to take the lead – consumers or producers? And how do they do it?

Comment HERE

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Question of the week: is donating 1% of pre-tax revenue an appropriate baseline determinant of whether a company is socially responsible?

An article in BusinessWeek online this week posits that, despite PR to the contrary, corporate philanthropy is down from 25% ago, with companies donating just 0.7% of their pre-tax revenue to charitable organizations.

They suggest that:

Badly needed is a meaningful voluntary commitment by the business community to “ante up” a minimum budget for corporate philanthropy. A reasonable requirement for any company that wants to call itself a “good corporate citizen” ought to be to spend at least 1% of its previous year’s pretax profit for philanthropic purposes.

Where the article gets dicey for me is when they begin to assert that philanthropy is a more important fundamental requirement of corporate social responsibility than “fair treatment of employees, making or selling safe products, paying taxes, and complying with environmental standards.”

I think this is a wrong-headed assertion. Bifurcating corporate philanthropy from supply-chain practices and the environment creates the potential (if not the likelihood) of moving one step forward and two steps back when it comes to solving social problems. Indeed, its the sort of greenwashing that many in the nonprofit world worry about. You shouldn’t be able to create millions of dollars in environmental harm to be paid off by future generations and then give a fraction of that back to the problems of today, for example, and still be considered a responsible corporate citizen.

Sharon Schneider points out at The Philanthropic Family that this sounds a whole lot like the Medieval church’s practice of selling ‘indulgences’, or credits that allowed you to sin in exchange for donations.

That said, the general thrust of the article is the right one, I think. The authors recognize that the public relations budgets of many corporations are much larger than their corporate philanthropy budgets. In fact, in many corporate hierarchies, CSR initiatives fall within the Marketing/PR offices. And I do think that establishing some sort of give back baseline – 1% or something else – would be a great part of the picture. I’m just not sure its the fundamental baseline.

What do others think?

Join the conversation HERE.

Question of the week: how can nonprofits maximize their use of consultants and skilled volunteers?

In the Spring issue of the Stanford Social Innovation Review, James. W Shepard, Jr. of the Taproot Foundation wrote a great piece called “MBAs Gone Wild: Nonprofits must rein in pro bono MBAs.” He writes:

like the proverbial bull in a china shop, MBAs like me can, without appropriate understanding of nonprofits, actually wreak havoc when let loose in the often alien world of nonprofit strategic planning. Here’s how it usually works:

Step 1: MBAs arrive at the nonprofit with great fanfare (preferably to the musical accompaniment of Celine Dion’s “I’m Your Angel”).

Step 2: We offer advice and recommendations (based largely on forprofit business models that may or may not work in a nonprofit setting).

Step 3: We accept warm thanks for our work (and hear a host of reasons why our proposals won’t fly).

Step 4: We return to our comfortable for-profit worlds not knowing whether our work will have any real impact; still, we feel warm and tingly about having made a contribution to the greater good.

His point is that there is incredible potential for MBAs (and other skilled consultants and volunteers) to add value to and support the work of nonprofit organizations, but there are areas in which external advice might be incorrectly at odds with the nonprofit staff.

Some of his major points:

  • Nonprofits should retain the integrity of their stakeholder engagement. While it may seem ‘inefficient’ to consult staff, beneficiaries, and supporters in the decision-making process, this engagement is integral to the long-term support and success of most organizations.
  • He notes that with little time to build trust between nonprofit staff and external consultants, there is a tendency for the staff to praise the advice and ideas of the consultants, but in the absence of trust, even good recommendations aren’t implemented. Indeed, the value proposition for nonprofits may be to generate future financial support from the consultants.
  • He thinks the best projects for pro bono MBAs and other skilled consultants include: “collecting and analyzing external data, such as issues the nonprofit will confront in the next three years; analyzing options for the organization itself to consider and debate; benchmarking against great nonprofit and for-profit organizations, particularly those willing to share critical best practices; and creating summary reports that enable the nonprofit’s leaders and board to track implementation successes easily and sustainably.”

I like the article because I think it adds a deeper dimension to the sector blending discourse that’s an increasingly important part of creating social benefit. My sense is that we need a broader conversation about where and how nonprofits differ from for-profit entitites. The need for stakeholder engagement in ultimate decision-making that Shepard discusses, for example. When nonprofits are confident about what they do differently, and what they do well, they are much better able to work with external supporters to address other issues.

One organization to check out as you read about this is campusCatalyst, another innovative organization coming out of Northwestern University. cC puts undergrads through a course where they learn about nonprofit consulting, and work in teams to support local nonprofits.

I’m wondering how other people have experienced these questions? For readers out there who are nonprofit leaders, how have you maximized the expertise of skilled volunteers, MBAs, and other professional supporters? For consultants, what seem to be the most succesful interventions?

Join the conversation HERE

Question of the week: Should nonprofit salaries for middle and upper management mirror those in the for-profit sector?

The Chronicle of Philanthropy’s “Give and Take” blog picked up today on a debate about compensation in the nonprofit sector. The Charlotte Observer recently reported that the president of United Way for the Central Carolinas received a $1.2 million salary and compensation package for the 2007 Fiscal year, including $822,000 in retirement benefits.

While the benefits package included recompense for seven years since 2000 in which the president’s retirement package was not at the appropriate level, the high package has stirred questions of what salary levels are appropriate for nonprofit executives.

The debate has been playing out on the Chronicle’s Philanthropy Today, and one of the comments that gets me is this one:

“With examples like this of outlandish and frivolous use of donor funds, it’s no wonder why some people have lost confidence in the ethical oversight and distribution of philanthropic giving in our culture.”

I don’t believe that nonprofit salaries for executives or middle management have to be (or probably even can be) at exact parity with their for profit equivalents. I do think that the social mission, sense of purpose and additional potential quality of life benefits (not to mention the smaller amount of available capital) will always lead to generally smaller financial remuneration.

That said, the danger in this discussion seems to me not to be debates about specific instances of abuse. The problem is the pernicious mindset that it’s a “frivolous” use of donor funds to recruit and retain the most talented, passionate people available, and invest in continuously improving their abilities to do their jobs.

The mindset that a good nonprofit is any nonprofit that spend less than 10% of their donations on overhead seems well intentioned but completely wrong-headed to me. The point is impact. The point is whether or not you achieve your mission. Dollars, as Jim Collins points out in his “Good to Great: Social Sector monograph” are inputs not outputs for most nonprofits, and therefore a dangerous way to rate the quality of an organization.

I don’t think the nonprofit sector needs salaries at exact parity with the for-profit sector, and I do think the public should be wary of potential abuses and excesses, but I think that we need to more robustly develop and support talent for the nonprofit sector and pay increases have to be a part of that equation.

What do you think?

Question of the week: Do colleges and society need to do more to incentivize public service and nonprofit work after college?

Week of June 22th-28: Do colleges and society need to incentivize public service and nonprofit work after college?

A New York Times article published on June 23 asked “Big Paycheck or Service? Students Are Put to Test.”

The article describes how many students take jobs in the financial services or management consulting industries immediately after graduation, citing reasons like salary level, security, competitiveness and notably – availability of information and clear application procedures.

Different schools are responding differently – including a Tufts program which involves loan forgiveness for students who take jobs in the social sector upon graduation.

Having recently been a student and spent the last few years designing global service and social entrepreneurship support programs for undergrads, it seems to me that the choices people make about their post-graduation plans have a lot to do with what seems possible. I think that consulting firms are succesful because they aggressively recruit. In this, Teach for America is their nonprofit doppleganger, investing huge resources to getting students. At Northwestern, its easy to feel like your options when you graduation are Bain and Company, TFA, or applying for a Fulbright scholarship.

What do others think? Do universities need to do more to help students interested in public service and the social sectors find meaningful work? What are your impressions of YOUR campuses?

Leave comments here

Week of June 15th-21: Is a Nonprofit IPO just a gimmick or something else?

Recently, Homeward Bound of Marin County, CA offered supporters the chance to participate in an “Immediate Public Offering…to end homelessness.”

They released fundraising ’shares’ at $32 each and sold them to everyone from celebrities to local residents to a girl scout troop. They didn’t provide any ‘ownership’ of the organization. From the effort, they’ve raised $700,000 so far. Additionally, its helped them secure other grants, including a $1 million grant from the Federal Home Loan Bank of San Francisco.

You can read more here:

http://www.philanthropyjournal.org/news/nonprofit-%E2%80%98ipo%E2%80%99-raises-700000

So the question is:

is this just a gimmick, an innovative new way to engage donors, or something else entirely?

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