"" Tim Coates: February 2012

Tuesday, February 7, 2012

Yale SOM Philanthropy Conference Summary

The theme running through the Yale SOMPhilanthropy conference last week was how nonprofits are diversifying their impact.

The keynote speaker, Jed Emerson, author of a new book on Impact Investing, spoke powerfully about how our traditional bifurcation between for-profit and nonprofit no longer serves us. “If the only tool you use is grants,” he said, “then the world looks like a charity case.”

His work has focused on finding ways to leverage private capital to solve public problems. While much of his talk was aimed at foundations and philanthropists, he beseeched nonprofits to better understand how capital can be used to accomplish their mission.

If we left the keynote convinced of impact investing, a vigorous counter was lodged during the first breakout session. Three of the four members of the panel I attended, Money to Matter: Creating Synergies across For-profit and Nonprofit Sectors, didn’t think the hybridization and convergence underway in the sector was a good thing. “The work of nonprofits and for-profits is so different,” one panelist said, “they don’t go well together.”

Interestingly, a panelist who used to work at Root Capital, one of  impact investing's success stories Emerson mentioned, said it only succeeded because of their ability to provide grants, not loans. This reminded me of how it took Muhammad Yunus and GrameenBank 18 years to decrease their reliance on grants and government largess.

The panel’s focus on cross sector partnerships was fascinating. Namrita Kapur, Director of Strategy for the Environmental Defense Fund, lamented that one challenge of working with private sector organizations is that “making the business case is not enough anymore.” She discussed a whole range of activities that bring positive returns to the corporation but don't automatically prompt action. Often it was only after a radical advocacy group would raise the costs of inaction that corporations would agree work with them.

The example shows what can happen when diverse nonprofit and for-profit players work together, intentionally or not. But not all organizations find a niche to help achieve their mission. Sharon Oster, Yale Professor and moderator of the panel, A Personal Look into Philanthropic Giving, worried about the implications of the “excessive differentiation” currently happening in the sector. 

Many small nonprofits have only a slight difference in how they approach a problem relative to other organizations. Rather than bring their idea to existing organization, the founders launch a new organization. What this means for the future of public problem solving and the nonprofit sector is an open question. I hope we hear more on this at next year’s conference.