Icing the cake were the lunchtime remarks of Bay Area philanthropic and business leader William H. Draper III whose new book, The Startup Game, will illuminate lessons from a lifetime of work in the financial and social sectors.

Take-aways from the day:

• While there is plenty of talk about a new social capital market (SOCAP 2010; Social Investment Exchange; the Office of Social Innovation; Nonprofit Finance Fund), market realities lag behind. VisionSpring, Fair Trade, and Kiva (and of course I was also thinking about REDF’s ambitious 5 year strategy) could accomplish transformative work at significant scale with multi-year capital infusions of $10-$50 million.  The track record is there.  Growth opportunities are tantalizing but unrealized.  All agreed that loans and PRI investments are useful, but grants (equity) are needed to generate outsized social returns.  The market estimated the value of Facebook long before it made any money; but Kiva? Fair Trade? VisionSpring?  Not yet.

• Broader “ecosystems” are required to impact social problems at scale.  Professor Dees’ 2008 SSIR article detailed this idea.  But curiously, though all participants actively engage multiple actors including the private sector, their stories clearly showed that in the absence of their prodding and intermediation, mainstream business is not highly motivated to do business or address basic needs in the huge marketplace that represents low income and poor communities.  It seems counterintuitive – e.g. if there’s a dollar to made someone will be there making it.  But it’s still not the case.

All of this left me thinking differently about the cover story on mental illness in last Thursday’s San Francisco Chronicle.  The article itself was a rare bird.  A substantive piece that reinforced another surprise; a compelling television commercial I recently saw dispelling stereotypes about mental illness created by bring change 2 mind, an initiative of Glenn Close and Fountain House.  Media attention to this subject — still surrounded by stigma — generally only comes from pharmaceutical companies advertising new medicines.

We don’t like to think about it or talk about it, although it touches almost every family.  Despite the fact that an estimated 6% of the population struggles with severe mental illness; and that people with mental illness still face high rates of unemployment — with less than 40% having worked last year, less than half the rate of all other workers.

REDF and its portfolio know that many want to and are fully capable of working.  The financial value to society and taxpayers of putting more people to work is obvious.  Other, more personal elements of the value proposition are hidden but perhaps even more significant.

Last week Marin County’s Buckelew Programs held a community forum showcasing social enterprise and supportive housing, and new service approaches that bring people with mental illness into the workforce and into the mainstream.

Bringing it full circle, for society to value social innovation sufficiently — galvanizing the investment required to scale the most promising solutions; we are going to have to paint bright lines that connect the ‘ecosystem’ dots between local efforts like those Buckelew and REDF promote, the welcome media attention of bringchange2mind, and broader public and private sector economic recovery efforts.  Not easy – but the path is getting clearer.  What do you think?  Possible?

Coming to the White House from Google, Goldman Sachs, and the Department of Treasury, Sonal Shah embodies the mission of the Office she leads: to bring together government, philanthropy, nonprofits and the business community to solve social problems. She exhibited the demeanor required to forge these kinds of complicated relationships — strikingly unpretentious, with perceptive, concrete statements and questions.

Sonal Shah listening and taking notes at a REDF-hosted discussion about the value of social enterprise in job creation.

Acknowledging that the Office’s small staff of four (!) has to focus in order to accomplish anything, she was also clear that they cannot do it alone and will need the creativity and partnership of people at all levels of government, business and the social sector. She repeatedly asked us for ideas about government’s role in creating the right environment, and also how to get out of the way as appropriate.

She listened and pressed for policy ideas about how government can help nonprofit social enterprises create more job opportunities for those unlikely to enter the workforce otherwise. She sought clarification about the costs of data collection, and the frustration inherent in providing data that ends up in agency storage boxes rather than informing practice.

Reflecting on her visit, I’d suggest that one of her most powerful levers is the very existence of the White House Office of Social Innovation. Not just the symbolism, but practically speaking Sonal Shah’s presence created the incentive and opportunity for multi-sector meetings about on-the-ground social sector innovation, partnership, performance, and results. Very unusual gatherings that hold great promise.

On the heels of this visit, the Social Enterprise Alliance’s Bay Area Chapter convened to discuss the future of social enterprise. Graciously hosted by the Kapors at their foundation office, REDF’s Jason Trimiew led a lively conversation with Tessie Guillermo, Debbie Alvarez Rodriguez of San Francisco Goodwill and Robert Wexler. Mitchell Kapor took the opportunity to suggest that social enterprise is when “the thing that makes money is also the thing that does good in the world” – e.g. making more money means doing more good. Freada Kapor Klein urged us to consider social enterprises as employers – and bake in from the start a focus on strong values and diversity.

Then the panelists each offered nuggets of good advice for the White House Office of Social Innovation: use the bully pulpit; push innovation deep into multiple government agencies; create Offices of Social Innovation at the state and local levels; pay attention not only to legislation, but to the critically important crafting of regulations and rules that govern implementation; and nurture the next generation of leaders.

A final thought – it will be up to us to seize the opening offered by Ms. Shah, and make it real. What are your suggestions? How do we do that?

Please join us at REDF’s Benefit and Social Enterprise Expo on October 1 at the Bentley Reserve in SF – another chance to talk this over with people from other arenas with similar interests while having great food, and a good time!

Sonal Shah, head of the White House Office of Social Innovation, and I at a REDF convening discussing the role of nonprofit social enterprise in job creation.

I had the good fortune to participate in a panel at the SOCAP 2009 conference held on consecutive stunningly beautiful days at San Francisco’s waterfront at Ft. Mason – a converted military base (swords into plowshares anyone?).  Many attendees were from the business community, young, high-energy, and interested in finding the intersection of social good and profit, or put another way (as coined by REDF’s original leader Jed Emerson) – blended social, financial and environmental value.  A lot of forward-thinking ideas and practice – especially around the use of social media to advance change, and how to measure results as part of a concerted effort to learn what works, and improve practice (especially a panel hosted by Lucy Bernholz).

I was on the opening panel with Sonal Shah, Andrew Wolk, and Vanessa Kirsch (whose organizing of America Forward was instrumental in creating the White House Office).  Responding to the first question – 10 years from now, what achievements could the Office be most proud of — I used the lens of poverty as the example.  Success would be to unstick and start a progressively downward trend for our national poverty rate which has hovered around 12% for about four decades.

I added that “in 10 years, we have accomplished something if innovation is defined not so much in terms of new ideas and original programs, but more around the less glamorous systemic changes in policies, incentives, and practice that connect pieces of a solution to one another; and innovation is about supporting local success, sustaining and replicating or scaling – to the extent it can be done — what works.  And we should try to be undistracted by the ‘beautiful new kid in town’.  We need sustained support for effective programs that really work…because often it’s not as much about innovative change or even program expansion as we might think – but it is about excellent implementation, connecting the dots, and consistency.  Engaging business, and nonprofits, and philanthropy, and various levels of government in the doing and in paying for what needs to be done.  There will be more willingness to pay when we do the work well.” [1]

After the session, REDF convened exactly that kind of group – philanthropy, nonprofits, government, business – for a lively conversation with Sonal Shah about the role and value of nonprofit social enterprise in job creation for people who face the toughest challenges.

In the policy spirit, REDF has signed on to an outstanding set of recommendations to improve the nation’s Workforce Investment Act.  Developed by a dozen national groups focused on homelessness, these recommendations would make the workforce system more responsive and valuable for many people with high barriers to work, who are not able to navigate or access it now.

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I recently participated in a lunch plenary at the Center for Effective Philanthropy’s (CEP) “Aligning for Impact” conference. My fellow speakers included Matthew Bishop, whose recent book “Philanthrocapitalism” was a largely positive review of business influence on philanthropy, Michael Edwards, who wrote a piece critical of “philanthrocapitalism”, and Gara LaMarche, President of Atlantic Philanthropies.

Sean Stannard-Stockton from Tactical Philanthropy put up a shortened version of my speech from the plenary in his post, Carla Javits on Philanthrocapitalism.

It was months ago when Phil Buchanan, the leader of the CEP invited me to his conference to debate with Michael and Matthew about their opposing views of the value of “philanthrocapitalism” – the phrase Michael coined. While I consulted with colleagues about what to say during the run up to the conference, capitalism of the distinctly non-philanthro kind imploded.

In the aftermath, at this – their first face to face meeting – the putative pugilists were somewhat subdued in battle. Matthew did draw a bright line between his view that business practices could be usefully adapted to philanthropy, and Michael’s opposing and unvarnished critique of that notion. Michael believes it is not only benign, but harmful to the social sector by shifting resources away from creative, long-term advocacy and programs. Gara highlighted the importance of continuing to support social justice movements, while encouraging them to greater effectiveness and achievement. The question was raised – do social capital markets reduce support for the grassroots if they drive investments to the ‘best’ (e.g. proven) organizations.

My basic points? There’s not one ‘silver bullet’ – business or philanthropic methods; capitalists or civil society. Progress requires contributions of business, government, philanthropy, nonprofits, labor, academics, advocates, citizens. No sector is immune to dysfunction. The benefits of working together across sectors include transparency, accountability, challenges to orthodoxy; and the value of the social sector’s insistent focus on the common good and the public interest.

I suggested fewer gatherings of philanthropy or nonprofits only, more with business and government. It really struck me that at this gathering of philanthropic leaders we had so little discussion of philanthropy’s role in leveraging the billions of dollars in the stimulus package, and the new Office of Social Innovation in the White House. I suggested we become ‘multilingual’, tolerate and understand sometimes clashing motives, and be prepared to walk away without burning bridges. I ended with a story from a colleague. As one of the people who had created a local marketplace in Africa said – after the market was destroyed in the wake of local rioting and the people had requested loans and aid to rebuild but were instead receiving a trickle of traditional emergency and food aid – “Just don’t let me be a beggar.” We need to do better.

On day 2, my colleague Jason Trimiew and I had early morning coffee with some of our peers who wanted to talk about leveraging the stimulus package. A lively discussion about the opportunities for scale, and the day to day challenges of working with government ensued with participants from Craigslist Foundation, the James Irvine Foundation, the Case Foundation, and REDF’s board member Julia Lopez who also runs the College Access Foundation.

Then Jim Collins spoke, and reminded us of the premises of his monograph “Good to Great and the Social Sectors.” He restated his view that the social sector should not be more like business, but that it should aspire to greatness. The key ingredients – focus and discipline. He suggested that we make not only a ‘to do’ list, but also a ‘not to do’ list. He told a story about a military officer who had been imprisoned and tortured in Vietnam, and survived by having faith that he would eventually return home – knowing that that moment of peril would be the seminal time of growth and strength in his life, while also acknowledging the bitter truth and reality that he would not escape quickly. A sobering but inspiring lesson for today. Jim ended by urging us, as he had been admonished by his mentor Peter Drucker, to go out and do something useful. And out the door we went to follow this good advice.