2018 field notes & a look ahead.

 

Gains, setbacks, learnings, and questions after our first full year

 
 
Sunrise in Delhi, India, where we spent nine days last June with London-based NGO STiR Education, immersing ourselves into their unique teacher intrinsic motivation model.

Sunrise in Delhi, India, where we spent nine days last June with London-based NGO STiR Education, immersing ourselves into their unique teacher intrinsic motivation model.

 
 

Isn’t it interesting that humans are captivated by a calendar flipping to the new year? Dating back to ancient Egyptians, we’ve always put the most stock into an annual bite of time. So this week – thousands of years later – a globe full of business plans, personal resolutions, and recap blog posts are being formed, based primarily on a full circuit of the Earth around the Sun. Funny.

Quite poignant – if not a bit cheesy – is this contrarian inspiration from German human rights activist Akilnathan Logeswaran:

 
 
On New Year’s Eve the whole world celebrates the fact that a date changes. Let us celebrate the dates on which we change the world.
 

But alas, there’s still great value in looking back in order to move forward. And for those clients, donors, friends, allies, and advisors who have supported Mighty Ally to date – a debt of gratitude and sense of obligation to be transparent in our progress and prognostications.

In thinking about our first calendar year in business, we thankfully gained more than not, took our lumps at times, continued learning heaps, and ponder a great deal heading into an exciting 2019.

 

Grateful gains.

From a look at the numbers, 2018 represented momentous growth for Mighty Ally – especially in earned revenue. Compared to annualized 2017 operations, we increased new client engagements by 57%, resulting in 15 total NGOs and social enterprises across a dozen countries since inception.

Along the way, we calculated that every one dollar donated in our model leads to four dollars of services for these clients. A damn good ROI, thanks in part to our agency allies who enable us to offset costs by up to 50% out of the gate. Not to mention these top-notch allies (like new partners LaunchPad Lab in Chicago, Agency in New York, plus Foxfuel Creative and 111 Web Studio in Nashville) allow us to make our client deliverables world class.

And the outputs were tangible, en route to outcomes and impact:

  • A refreshed visual identity, communications assets, and website for Lwala Community Alliance… where $50 gives a child in western Kenya healthcare for a year.

  • Repositioning Vega Coffee as a direct-to-consumer brand, crafting a badass new outlaw personality, and optimizing sales systems… as they drive more income for coffee communities in Nicaragua and Colombia.

  • Customer definition and a new global marketing strategy for Ubuntu Life, plus partnerships with Austin City Limits and Java House… where every sale drives inch-wide, mile-deep community change in Kenya.

  • Clarity in mission, vision, values, and positioning for STiR Education… which tees up a big year ahead of design, web, and storytelling as they reignite intrinsic motivation in teachers across India and Uganda.

  • Rebranding and messaging with Bicycles Against Poverty… helping smallholder farmers in rural Uganda to thrive, not just survive.

  • Brand architecture and establishing the Entrepreneurial Operating System with Impact Hub Austin… fostering human connection through coworking, events, and programs.

  • Finalizing a robust corporate social responsibility plan with Tivity Health… a Nashville-based, publicly-traded corporation enabling healthy aging across rural America.

  • Early traction on brand strategy and org health with Education Partnerships Group… consulting with governments in Ghana, South Africa, Cote d’Ivoire, and Uganda to ensure every child goes to school and learns.

Outside of client progress, the past 12 months brought big gains internally as well. We became a certified B Corp and finally got our 501c3 approval. We were honored with a Valiente Award at SXSW along with speaking in two podcasts. We taught a session on positioning at Opportunity Collaboration and led two workshops on setting KPIs at Unreasonable East Africa. And 2018 saw the launch of the Changemaker Capacity Index.

Certainly a lot to celebrate. But like most startups, we missed the boat at times, leaving us humble (and fighting) in our grassroots.

 
As part of client discovery and onsite immersion: attending a WASH training for community health workers in rural western Kenya with Lwala Community Alliance.

As part of client discovery and onsite immersion: attending a WASH training for community health workers in rural western Kenya with Lwala Community Alliance.

 
 

Humbling setbacks.


FOUNDATIONS & CAPACITY BUILDING SUPPORT

Last year we wondered in our annual blog post if and when foundations would start to see capacity building as a deserving equal to pure programmatic support. We based our preliminary financial model around the fact that – as a nonprofit hybrid ourselves – we could raise money from foundations for our capacity building work, to supplement (our highly discounted) client fees. 18 months in, we’ve not yet generated any foundation grants despite two funders hiring Mighty Ally directly for their own brands and other investors working with us to strategically engage across their grantee portfolio. In other words, many foundations have said this type of work is critical, they need it and their changemakers want it too, but they haven’t deemed it worthy of direct grant funding. I believe this will change one day. But in the meantime, we sincerely question if most grantmaking organizations view capacity building as critical as we (and our clients) do, even if a nonprofit like ours lives a step outside direct program implementation.

Our own anecdotal evidence of foundation (de)prioritization was backed up by a telling research report in 2018 from the Center for Effective Philanthropy, called Strengthening Grantees: Foundation and Nonprofit Perspectives. One of the top findings after surveying 170 nonprofit CEOs and 187 foundation leaders: most foundations are not as in touch with nonprofits’ needs as they think. The report stated that 95% of foundation leaders believe their foundation cares about strengthening the overall health of their grantees. However, half of nonprofit CEOs report that their foundation funders feel no, or just a little, responsibility for strengthening their organization. Further, when asked which areas of the organization needed the most help, communications came in at #3 for nonprofit CEOs (only behind fundraising and staffing), but didn’t even appear in the top six answers for foundations.

We’ve said it before and we’ll keep beating the drum: money alone from foundations and investors is not enough. In many cases, additional cash can do more harm than good. Most organizations aren’t ready for funding. Those that are ready always need some sort of help – strategy, organizational health, marcom, finance, staffing, M&E, and more. And not just assistance from jack-of-all-trades foundation employees, no offense. But also from experts in these fields.

Sadly, we’ve seen that – due to archaic bylaws, industry norms, and charity rating sites – changemakers mostly can’t spend their investment in these much-needed focus areas (even with unrestricted grants) because they’re bound to put every last dollar possible into their programs. Often, first-time leaders admit they don’t even know where they need the most help. So won’t it ultimately be up to foundations and investors to turn the tides and give changemakers the diagnosis, encouragement, and budgets to address their capacity challenges? Instead of offering an $80,000 grant along with a $1,000 communications stipend, for example, couldn’t a foundation make it an 80/20 split with $65,000 of financial support and $16,000 going to strengthening the organization? Or shouldn’t it be a goal for every grantmaking organization to have on staff plenty of those who have been on the front lines themselves, working within an NGO or social enterprise? These are just two simple solutions to a disheartening problem that cripples changemakers and ecosystem partners alike.


BRANDS & SOCIAL PURPOSE

This time last year, we were on cloud nine after Larry Fink’s allegedly watershed letter to corporate CEOs about brands finding a social purpose. In my 2017 field notes post, we wondered if 2018 would be the year the private sector finally abandoned old-school, top-down philanthropy in favor of creating shared value. Unfortunately, from our perspective 12 months later, little has changed in corporate America.

We went to The Heart Series in February, a conference for conscious companies. And were invigorated to see brands like Ben & Jerry’s, Clif Bar, and Soko sharing stories about their efforts to eradicate serious injustices. Likewise, it was motivating to meet like-minded LA-based nonprofit agency Global Inheritance and learn how they’re working with brands like The North Face and HBO to tackle systemic social issues. But in hindsight, reaching corporations like these is preaching to the converted. For every B Corp in the world (2,655 and counting), there are millions still missing the important first part of ‘conscious capitalism’. Statistically speaking, less than 0.01% (that’s point-zero-one) of businesses operating today have a formal commitment to balance purpose and profit and seek third-party verification of it. Ouch.

In our own theory of change, we made an early bet that more corporate brands would get involved with our nonprofit and social enterprise clients. And in conversations to date, interest and accolades abound from the private sector (can’t count the number of back pats and business cards we got from Fortune 500 brands after our SXSW award). But we’ve seen over and over again: social responsibility is still not a priority in the boardroom (most executives just don’t care), these two sectors simply speak a different language, and brand partnerships take a lot of nuance and time. Not to mention, if changemakers don’t focus on shared value (i.e., driving value back to the brand too), executives fall back to their busy business priorities so most relationships default to philanthropy vs. a mutual strategic engagement.

In short, we continue to believe in this piece of our model (and our changemakers want it), but find ourselves either shouting into the void or maybe a bit ahead of the curve. Whether it’s investor pressure, employee action, or consumer demand that finally pushes the needle past the tipping point, we’ll fight for the day more corporations grow a soul. And in the meantime, we’ll continue celebrating partnerships with those brands that are finding both money and meaning.

 
 
A successful example of brand partnership shared value last year: Kenyan nonprofit Ubuntu Life at Austin City Limits Music Festival (a part of publicly-traded corporate giant Live Nation).

A successful example of brand partnership shared value last year: Kenyan nonprofit Ubuntu Life at Austin City Limits Music Festival (a part of publicly-traded corporate giant Live Nation).

 

INDIVIDUALS & GIVING

And finally, individual donors were also a miss for us and many changemakers alike last year. The headlines have been pervasive recently: America’s Super Wealthy Gave Fewer Big Dollar Donations in 2018, Trump's 2017 Tax Cuts Are Expected to Lower Charitable Donations, America's Decline in Charitable Giving… and to not just pick on the USA, stories elsewhere like Canadians Cutting Back on Charitable Giving.

We had clients ask for our perspective on the down year, after seeing their donor numbers dip. Then we experienced it ourselves at Mighty Ally: regular giving to our nonprofit was nominal throughout 2018 and we were disappointed in our first fundraising attempt along with a client. In our experimental holiday campaign with Bicycles Against Poverty (ending this Friday), we fell far short of our goals, the equivalent of having converted each person in our database into just $4 of donations (on average).

Donor giving is an entire expertise in human behavior in and of itself, and we know there’s always something we can improve. So we started with a long look in the mirror. But we have to admit, it’s hard to see the abundance of wealth in many countries plus the never-ending focus on consumption of meaningless stuff… with changemakers like our clients that are doing some of the world’s most important work – and their beneficiaries – stuck in figurative and literal starvation cycles. The problems of individual giving – like the stubborn 2% giving rate – are likely too deep for any of us to affect. It’s going to take more people, like brands, soul searching and creating a seismic shift in what we prioritize as human beings.

If we had a magic wand, we could easily turn the verbal encouragement and offers for help – for us and our clients alike – into commitments and action. The “thoughts and prayers” meme went widespread last year for a genuine reason. Those on the front lines of social change – whether its gun violence or poverty reduction – need the psychological motivation too. And sure, a Facebook comment or prayer is nice. But it’s ultimately dollars and doing that move mountains. And humanity’s greatest problems need more of both.

 

Learnings & questions for 2019.

While we took our lumps and learned those hard lessons last year, we also generated a number of insights we’re excited to carry into the future.

 

PROXIMITY & LOCALLY LED SOLUTIONS

The greatest evolution in our thinking came in 2018 by seeing the power of proximity (and the dangers of otherness). Proximity was the theme of the opening plenary at Skoll World Forum – the most prestigious annual gathering of social changemakers – where the program claimed:

 
In order to address inequality and injustice, we must more deeply understand the current status quo—and how to disrupt it. There is no other way to do this than to engage with, and be close to the people and communities facing deep and persistent biases of all kinds.
 

We were buzzing after listening to speakers like Jimmy Carter and Bryan Stevenson. Then came home bummed after seeing the power imbalance first hand at the event itself – mostly pale and male funders, founders, and decision makers, despite all the talk. And throughout the year, we were keenly aware that deep immersion with our clients and their beneficiaries (a mandatory for us in any engagement) is still inadequate in the long run. We’re still outsiders – three privileged American co-founders aiming to help change behavior in vulnerable communities around the world. Local leadership, not just proximity, is actually the ultimate solution.

On the global development stage, there seems to be an increased consciousness of this embedded systemic inequality. And we’re happy to see organizations like Segal Family Foundation leading the way in order to champion more local leaders.

We’re also working ourselves on more locally led solutions: a shift of power closer to local voices and ultimate beneficiaries of our grassroots work. We not only seek local leaders within Mighty Ally (looking at you, East African entrepreneurs), but we also dream of products and services that will replicate (and one day, replace?) our expertise out in the field. There’s massive population growth in Sub-Saharan Africa, high unemployment, and changemakers with staffing challenges. A triple whammy. Not to mention the endless training opportunities for the informal sector, along with countless incubators and accelerators for entrepreneurs, with a big gap for intrapreneurs. We think we can help find solutions to this tidal wave. Because we firmly believe:

 
Social change is not a project that one group of people carries out for the benefit of another.
— Principle of Bahá'í teaching
 

That quote came from a book we all geeked out on in 2018 – Winners Take All: The Elite Charade of Changing the World. In it, former New York Times columnist Anand Giridharadas profiles a series of individuals and aspiring change agents who believe they’re making the world a better place but are actually making things worse. He calls this ethos and class of people “market world”, made up by those – maybe a lot like some of us – who want to both do well and do good. The book made quite the splash, with reviews in mainstream publications like this one in Stanford Social Innovation Review admitting the stinging realities.

As much as I’d call this our professional read of the year – for causing a whole lot of introspection – one thing I personally disliked about Giridharadas’ critical approach is that he presents all in market world as mostly all bad. While he fairly criticizes some individuals with questionable motives (those plutocrats who could help the world more by simply stopping their original crimes), he skewers a number of well-intentioned changemakers in the act. And he offers no solutions for how we “outsiders” can and should best get involved in social change.

So we continue to ponder how the best systemic solutions can emerge from both those with a lot of resources to offer (monetary and skills alike), and those who know the problems best (like beneficiaries and local leaders). We don’t have the answer yet, but like most things in life: the sweet spot is likely somewhere in the middle, in the nexus of authentic, humble collaboration. This stuff is too big for any of us to solve alone.

 

CHANGEMAKER HIERARCHY OF NEEDS

There’s no debating that for the clients we serve – social sector organizations fighting for basic human needs, between $1MM and $5MM USD in size – funding is the number one priority. We’re all working within broken systems to fix a backwards world, so a dependence on foundations and investors at an early stage is understandable.

But we got to thinking over the past few months: if we’re aiming to generate more locally led solutions, what are the most important needs for underserved NGOs and social enterprises after funding? Sure, we’ve seen high demand for our consulting and marketing services. But where does this work fit in, what other challenges do changemakers have, and how can we scale our expertise towards these pain points?

For one clue, we spent time last year digging into the insightful report from Ripple Works, The Human Capital Crisis: How Social Enterprises Can Find the Talent to Scale. After surveying 628 social entrepreneurs from 59 countries, the primary finding was alarming: 63% of entrepreneurs said their inability to access the talent they need will have a high or critical impact on their businesses. That number jumps to 75% for funded, early-stage companies – those expecting the greatest growth. Talent is the only challenge that gets harder for entrepreneurs over time – all other challenges get easier.

The research found that sales-related skills are most important for growing social ventures. Like customer acquisition, business development/strategy, and sales management, specifically. Further, those entrepreneurs surveyed said their top choice for adding these skills was to train current staff (rather than hire new people or outsource to a third party) – a no brainer.

 
[Human capital] is miles and miles above everything else. It is, without a doubt, the biggest binding constraint to growth. There’s human capital, and then there’s everything else.
— Paul Breloff, Accion Venture Lab
 
 

These findings further illuminate for us that custom engagements for our clients is just step one for Mighty Ally. So we ponder for the future a step two in our model. The bigger, broader dream – reaching intrapreneurs already on staff and building their capacity to lead brand strategy, org health, and marcom for their own teams. Sure, there are noble skills-based volunteering platforms like Catchafire that allow changemakers to recruit and activate tactical skills, like web design or copywriting. But without the proper strategic brand foundation (since most volunteers are remote), healthy operations, internal buy-in, and knowledge around how to manage a creative process, free labor can become a bigger burden than a support.

We often question the sector’s incessant focus on scale at all costs. But we do now find ourselves wondering how we reach as many organizations as possible with this work. Fifteen clients working in a dozen countries is a decent start, but far short of the demand we’re seeing and where we want to be. So we go into the new year with our heads on a swivel, watching and thinking about what’s next in our model.

 

ORG HEALTH: PAINKILLER OR MULTIVITAMIN

The third and final big takeaway from the year is that entrepreneurs in any sector should aim to create painkillers, not multivitamins. The analogy goes: when you’re feeling alright, you often forget to take your multivitamin. But when you’re suffering, you don’t miss a painkiller dose. So we’ve aimed thus far to develop and offer solutions that relieve real pain, not just help keep changemakers strong.

Organizational health (one of our four main focus areas) on the surface might sound like a vitamin: establishing a strong leadership team, getting the right people in the right seats doing the right things, and establishing the proper structure within the company. And we previously debated ourselves how much changemakers know or care about health. But in 2018, we confirmed that this invaluable service offering is not only in demand more times than not, but also successfully alleviating chronic issues within our client organizations.

Five of our client engagements last year included paid org health work (in one case, as demanded by a funder). In each case, progress had been commendable and their models had high potential, but we diagnosed a litany of challenges that were showstoppers for running and growing any business – negative or inauthentic leadership dynamics, high staff turnover, confused roles, missing accountability, avoidance of conflict, lack of clarity, no data to track success, broken processes and rhythms, inefficient systems, and frustrated investors, just to name a few of the symptoms. And this was just in the companies who were woke enough to hire us for org health help! Sadly, matters were even more dire for a couple of clients that did not know (or admit) they needed it.

In our analysis of changemaker org health last year, we found that only one in 10 organizations is currently healthy. Two of 10 are high risk, along with one in 10 falling in the anomaly we call low potential. But 60% of NGOs and social enterprises are in high-potential territory: good leadership, most of the right people, but simply lacking the right structure to bring it all together. That’s hopeful.

 
 
Sanergy builds healthy, prosperous communities by making hygienic sanitation affordable and accessible throughout Africa's informal settlements. CREDIT: Sanergy
 
 


This brings up some interesting questions about sustainability. There are organizations that are healthy with limited funding. Then those with seemingly endless sources of investment lacking a firm foundation. How rare is it to find an organization that’s both healthy and well-funded? In our experience to date, we haven’t seen it yet. That’s likely because if you’re strong in both areas, you’re probably experiencing catalytic growth and are much larger than our $5MM ideal client.

And the data backs up this finding: as of 2007, more than 200,000 nonprofits had opened in the U.S. since 1970, but only 144 of them had reached $50 million in annual revenue. This is all despite countless good ideas, lots of smart people, plenty of talk about scale, and billions of dollars of investment. In other words, if you’re an organization that’s continually sitting at $5MM or less (while a handful of others skyrocket), there’s likely a problem under the hood. More times than not, it’s organizational health.

So we wonder (and hope) – if more organizations are humble enough to admit they need work on the inside first, can we as a sector reduce the dependence on painkillers and start looking at org health as a source of long-term success?

 

Harnessing the wind.

Those are the big themes on our minds as the earth completes this latest lap around the sun.

Heading into the new year, I take away a few nuggets of encouragement from another favorite book of 2018, The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope (released in 2009… hey, I was late to the game). It’s the improbable true story of 14-year-old William Kamkwamba from Malawi, and his successful attempt to build a make-shift windmill that would bring power to his impoverished family and village.

His resources were limited but his servant’s resolve was immeasurable, similar to the organizations we arm. Much like most of our NGO and social enterprise clients, William was taking an invention from developed areas and localizing it for an underserved population. Not to mention, he fought like hell for others, most days on an empty belly – a proverbial challenge for countless changemakers in this field. And eventually, he overcame crippling adversity and harnessed something so pervasive (like the wind) and turned it into something so catalytic: electricity.

The best part about William’s story is that he was entirely self-taught (library books!) and made this marvel come to life without a bit of external funding – like many we celebrate in the social sector. When asked a few years later from the TED stage how he made the impossible possible, he said in his endearingly broken English: “I try, and I made it!”

Here’s to simply trying, making it, and harnessing the wind together in 2019.

 
 
A favorite moment from 2018: out in the field in northern Uganda conducting customer interviews with smallholder farmers and Bicycles Against Poverty.

A favorite moment from 2018: out in the field in northern Uganda conducting customer interviews with smallholder farmers and Bicycles Against Poverty.