I Have a Dream...

by Alan Sorkin, SDSVP Partner and SVP International Board President

I have been involved with charity and philanthropy since high school. My work has been extremely rewarding and at times frustrating because there is a problem with the way nonprofits and philanthropy are working today.

Here are some of my thoughts about my frustration. I’m sure you have others:

1. There is no correlation between giving and performance.


2. The social sector is really good at innovation; but not so good at getting to scale. Size is critical to have real impact. 90% of nonprofits have budgets of less than $500,000.


3. Americans have been giving for hundreds of years and since 2007 we consistently give about $300B or 2% of GDP every year but not much has changed. Without a dynamic sector shift it is unlikely that much will change.


4. The current recession has left many people even worse than before and our growing deficit means social programs and dollars will continue to be cut putting more pressure on the nonprofit sector.


5. Washington is grid-locked and little or nothing is going to get solved so it behooves Philanthropy and Social Venture Partners (SVP) to take a more proactive leadership position.

It’s time for our entire sector to step up and SVP can lead the way. Here are my suggestions for how we can lead and connect various strategic partners to move the needle in our sector.

1. We need to move “Donors” from random giving to effective, strategic giving.


2. We need to move them from “feel good giving” to giving based on “rated” performance.


3. We need to move nonprofits from seeking funds for service delivery to more revenue generation.


4. We need to move Everyone from being competitive to being more collaborative.


5. Specifically for SVP, as said by Paul Shoemaker, we need to move from saving the whales (or nonprofits) to saving the oceans (the sector).

At the Social Capital Conference in San Francisco two weeks ago Stacy Caldwell from Dallas SVP, Lance Fors from SV2 and me along with 1200 Social Entrepreneurs declared war on previous philanthropic behavior. We agreed that we must think bigger, act bolder, adapt better and deploy assets more effectively. We committed to creating and measuring impact and moving the needle to change the status quo.

Several people I greatly respect told me that the SVP model is a game changer. I think they are right and I have a dream:

SVP will catalyze a movement that will bring hope to those at the end of the line.

There are many SVP affiliates focusing on early childhood and education so here is just one example of what success could look like if we can learn, connect and lead all the necessary organizations: Imagine a different world; a world with education reformed with no more achievement gap where the poorest child can get a quality education and every youth grows up with a sense of possibility rather than hopelessness.

Our original Venture Philanthropy concept was to build capacity in smaller organizations that if taken to scale would have significant impact in their community. Ten years later we now know how incredibly hard it is to scale nonprofits because there are so few vehicles for growth capital. The nonprofit sector is starved for risk and growth capital and that undermines their ability to grow and become sustainable. Only 144 nonprofits have reached $50 million compared to 46,136 for-profit companies. The private sector connects money to good ideas that can scale quickly; there is no counterpart for nonprofits.

To get growth capital, you need to communicate value to existing stakeholders. Nonprofits are not very good at this. There is a cry for accountability, but few measurement tools and even fewer ways to communicate effectiveness to donors. The Charity Navigator rating system focusing on the percent of overhead forces nonprofits to have almost all their money go to the cause leaving nothing to invest in infrastructure.

There are two types of funders: builders and buyers. Today’s capital structure has a few builders, like SVP who provide the talent and growth capital; most funders are buyers who provide money for services. SVP was the first to champion capacity building and only a few have followed our lead.

It’s fairly easy to get $20,000 but not a million. The average large foundation grant is risk averse and makes $50,000 grants on average as they are wedded to current solutions. Most funders avoid dealing with root causes because it is too hard for them to show results. They fund pilot programs, but what is needed is more money to show proof of concept, and then money to take organizations to scale. We have a burning platform issue: Year by year government funds are decreasing, while needs are increasing. For these reasons, I believe SVP with its emphasis on accountability is uniquely positioned to channel information to potential donors by championing our version of a Mezzanine Fund which will harness the power of our SVP network. SVP provides a vehicle for partners to accomplish much more collectively than we could accomplish individually.

Initially we will look to partners and our alumni partners to fund our Investees who have shown they can deliver the right intervention to the right party to achieve the right result and are capable and interested in going to scale. Once we have proven this concept, we will go to funders like The Edna McConnell Clark Foundation, New Profit and donors everywhere.