Discussion about Social Impact Bonds is really hot right now.  SIBs have the ability to reward nonprofits for being innovative and for achieving measurable and replicable success.  But will they remove funding that would have been philanthropically given?  And will smaller nonprofits be left out in the cold?

To find out more, I attended last week’s Social Innovation Forum hosted by Root Cause.  The featured speaker was Jeffrey Liebman, Malcolm Wiener Professor of Public Policy at the Harvard Kennedy School of Government.  After Liebman’s opening remarks, a panel of experts discussed SIBs and how they might affect nonprofits.

Liebman provided a very simple graph to illustrate the flow of money in a SIB, which looked something like this:

Here’s how it works in a nutshell:  A nonprofit (or more probably, a collaboration of nonprofits) works with a bond-issuing entity to raise funds to solve a social problem.  Investors are approached by the bond-issuing entity and the investors provide working capital to the bond-issuer.  Investors are guaranteed a rate of return if the project succeeds, and the return on investment is likely gauged to the project’s risk of success.  (If the project fails, investors lose their money).  When the project is completed and has met performance targets, the government pays the bond-issuing entity, which pays back the investors their initial investment plus interest.

It’s a win-win-win.

1. The problems solved are ones the government would have funded anyway (reduced recidivism, for example, or after-school reading programs).  But with SIBs, the government only pays when there is demonstrated success, lessening government waste.
2. Venture philanthropists and foundation leaders have a creative tool for their investment portfolio to both fund programs and reap a return on their philanthropic investments which they can then use to seed another venture.
3. Nonprofits with proven success in their field of expertise have another pool of potential support to draw from.

Jeffrey Liebman calls SIBs a “Pay-For-Success” program, and it’s easy to see why.  As he explained, SIBs improve nonprofit performance and lower cost to the government; they accelerate the adoption of new solutions that are broadly replicable; and there is more rapid learning of what works and what doesn’t.

So what are the problems with a Pay-For-Success program?

Well, there are a lot of nonprofits out there and competition for dollars is already fierce.  According to the National Center for Charitable Statistics, over 1.6 million charities registered with the US IRS in 2011. Granted, about 100,000 are foundations and a little over 500,000 are professional associations, fraternal organizations, chambers of commerce, etc.  Still, that leaves about a million nonprofits vying for philanthropic support and not all of them will be candidates to participate.  Also, SIBs won’t work for every type of nonprofit.

The likely participants will be collaborations of nonprofits working together to creatively solve a specific social problem.  They will provide new solutions with the potential for high net benefits and will be able to provide measurable outcomes.  The populations they serve will be well-defined and there will be a reliable comparison group.

Won’t this mean dollars formerly allocated to philanthropy will be used for SIBs?

Panelist Tracy Palandjian of Social Finance Inc. commented that SIBs wouldn’t cannibalize philanthropic dollars because a foundation could invest in SIBs from the 95% of their investment corpus rather than from their 5% annual distribution.  SIBs become both another investment vehicle and a way to further a foundation’s vision and mission.

One forum participant, a representative of a foundation observed “isn’t it the point to cannibalize money from underperforming nonprofits to fund those that are producing results?”

What is clear is that all nonprofits – those struggling for money merely to survive as well as those that are well-established – will need to start measuring their impact on the communities they serve if they aren’t already.  Today’s donors already expect to see a nonprofit’s results clearly outlined but a social impact bond-holder will require it, and it will be the bond-issuer’s job to track the venture’s success.  Will there be a move within our industry to set standards for the metrics that are tracked?

As a professional in this field, the idea that we researchers will be helping our organizations create the most logical metrics and use that data to improve service delivery is exciting to me.  But as cool as that is, and even though there is already one test-tube SIB in place in the UK, I can’t get too excited yet.

The biggest roadblock?

The biggest problem could be politics.  Most projects that a SIB would cover would likely be funded over one or more election cycles.  What happens if the next person in office decides that they don’t want to honor the previous office-holder’s bond agreement?

In an era where Congress can’t seem to get it together over the simple task of running its daily business, what chance does a new initiative – however fiscally sound, however cost-saving – have?

Governor Deval Patrick of my home state of Massachusetts was the first to formally seek to explore SIBs in May of this year.  We’ll see if he leads us to create the first one in the US.

RootCause wisely videotaped some of the key segments of this fascinating forum.  Have a look to learn more!

Read more here about Social Impact Bonds and Impact Investing (which apparently goes back to the Civil War!) from the Harvard Business Review’s blog article written by Chris Meyer and Julie Kirby.

Blogs and social media are critical communication tools for non-profits. In fact, according to research by the University of Massachusetts, a higher percentage of non-profits have active blogs than any other category. And it makes sense:  blogs are a cost-effective way to tell stories and build a consistent emotional connection with constituents.  But how are they doing? Which are the best in the world?

So I embarked on an ambitious project in partnership with Mark W. Schaefer, a well known blogger at {grow} and author of The Tao of Twitter. Mark really knows social media and blogs — in fact he teaches a course on the subject at Rutgers University.

Together we examined more than 250 blogs from some of the largest and most important charities in the world (and I mean that literally – we didn’t just look at blogs in the US). We looked for the blogs that were engaging an audience, offering superb content and aligning with the organization’s strategies. Last year, when Mark compiled a list of The Best Company Blogs in the World he noted that it was a depressing experience.  He found that most company blogs aren’t that great and I’m sad to say that we struggled similarly to find non-profits communicating and interacting with their constituencies.  In fact, we found a lot of  dreck.

But we did find some truly inspiring blogs out there.  Here, in no particular order, are the best non-profit blogs in the world:

Feeding America

This is simply one of the best blogs you will find anywhere, profit or non-profit.  It has it all:

• Superior content
• Non-intrusive yet effective calls to action
• Good use of multi-media such as photography and video
• Superb use of story-telling to align with objectives
• Attractive and functional design
• Convenient social sharing
• Features that involve key stakeholders

This blog is a role model for any organization.

The Salvation Army

This is a wonderful, interesting blog.  Of course it serves as the place to go in the event of a disaster, but it is also an entertaining read.  As a good example, read this post about the historical role of The Salvation Army in the devastating 1906 San Francisco earthquake.  Another post features a “fashionista” getting her clothes from a Salvation Army Thrift Shop. Not only is this type of post great story-telling, it connects readers with the history and rock-solid foundation of the organization in an entertaining way that cuts through the noise.

While a good-looking and well-organized blog, inexplicably, it seems to stand alone from the primary Salvation Army site. There is no easy way to connect directly to the organization or donate money right from the blog, which is a missed opportunity.

Holland Bloorview Childrens Rehabilitation Hospital

Mark said that this blog brought tears to his eyes.  (He acts all tough on the outside, but I suspect a moosh lies within).  Okay, I admit to some mistiness myself – but in a good way.  I’m guessing that it will probably have the same effect on you.

Bloom is about parenting special needs kids.  It isn’t fancy.  In fact it’s just on Blogger.  But what it lacks in sophistication it more than makes up in courage and heart. Writer Louise Kinross has something unique and personal going on here. She has nurtured an active, loyal community and with good reason … this is blogging at its best.

Operation Blessing

Check out this gutsy, effective blog.  With My Own Eyes is a firsthand, photo-journalism account offering users the opportunity to see some of the most devastated, disaster-ravaged and previously inaccessible places in the world, as well as a look at Operation Blessing’s efforts to help people that live there.

This multimedia site features video footage, photos and the personal diary entries of some of the team leaders from more than 25 countries including China, India, Indonesia, Mexico, Peru and the U.S.  Each blog post provides concrete ideas on how to connect and help.

World Vision

This effort just began in 2011 so we’ll have to check in later to see if they can sustain what is starting out to be an excellent blog.  World Vision works with impoverished children and their families throughout the world and is also effectively using eyewitness accounts to connect to constituents.

Some of the hallmarks of this journal are fantastic, colorful articles that pull you in to the organization and its mission. This blog seems to have jumped out of the starter’s gate quickly — some of its daily posts are already getting more than 1,000 ‘shares’. While the design of the blog is quite busy, check out the beautiful and effective design of the main  website while you’re visiting.

Broad Institute

Simply put, The Broad Institute is creating methods, tools and massive data sets and makes them available to the general scientific community to rapidly accelerate biomedical advancement.

The charming thing about their blog — Broad Minded — is that it frames complicated subjects in accessible terms. I’m partial to science literature any way so this blog was a delight. I mean how can you miss with a blog post titled “Lifestyles of the Fungal and Famous” or another that explains unraveling mysteries of DNA as a Julia Child recipe?

This is a lively, straight-forward blog that is very well-aligned with the mission of the organization.

Refugees International

Refugees International advocates for lifesaving assistance and protection for displaced people and promotes solutions to displacement crises. This blog achieves story-telling excellence through extraordinary writing, compelling videos and dramatic photography. If you want an example, check out this video on how refugees struggle to find an education. The almost daily blog is unafraid of confronting difficult political issues and take a stand as it boldly raises awareness for its cause. A smart, superb blog.

MEMRI

The Middle East Media Research Institute (MEMRI) explores the region’s media (both print and television), websites, religious sermons and school books. This blog stands out in a special way because essentially, the blog IS the organization.

This respected non-profit scans the Middle East for important news and trends and provides timely translations of Arabic, Farsi, Urdu, Pashtu, Dari, Hindi, and Turkish media in separate blogs. Other sections provide original analysis of political, ideological, intellectual, social, cultural, and religious trends in the Middle East. This series of blogs is the centerpiece of this important effort. Pretty cool.

American Red Cross

This blog provides consistently good content mixed with compelling multi-media.  It has several nice features like a list of all local Red Cross Chapter blogs, weekly round-ups of disaster relief efforts around the world, and connections to many disaster-response related resources.  It also has all-around helpful and targeted information to support the needs of its constituents. I don’t know why this blog is detached from the main Red Cross website – again, it’s a missed opportunity. Also, it is strange that the blog gets no comments when it is such a vital community-focused organization. And in the “maybe we’re picky” category — it seems like they could have come up with a better title for their showcase than “Blog.” : )

BONUS CONTENT!

If you’re interested in non-profit best practices, here is a list of some favorite blogs ABOUT charities and fund-raising (again, in no particular order):

Stanford Social Innovation Review Blog

The SSIR is part of the Stanford University Center on Philanthropy and Civil Society (PACS).  Highlighting thought leaders, practitioners and innovative funders and “striking a balance between the pragmatic and the intellectual,” this blog keeps you up-to-date on the issues at the forefront of the third sector.  Contributors include Sean Stannard-Stockton, Amy Sample Ward and Peter Sims.

Chronicle of Philanthropy’s Blogs

The Chronicle of Philanthropy site plays host to a number of blogs including those on prospecting, candid conversations about nonprofit boards, international philanthropy and social media for nonprofits.  Contributors include staff writers as well as experts and thought leaders on their given topic.

Queer Ideas; a bloody good fundraising blog

Sometimes irreverent, usually cutting-edge, always intelligent and interesting, this blog is written by Mark Phillips, founder and CEO of bluefrog, a fundraising consulting firm in the UK.  His observations and links to helpful research and resources make this a good one to expand your mind.

A Fine Blog

Written by the co-author (with Beth Kanter) of The Networked Nonprofit, Allison Fine’s blog is a combination of acute observation and commentary on articles, videos, campaigns and collateral on fundraising, networking and social media.  An extra bonus on her site is links to Allison’s monthly podcast interviews for the Chronicle of Philanthropy.

Beth’s Blog

Written by Allison Fine’s co-author Beth Kanter, Beth’s blog is seen by many (us included) as the go-to blog for nonprofit fitness checks, great ideas, subtle nudges toward excellence and good advice on social media, networking and organizational management you’d do well to take.   Beth’s writing style is accessible and friendly, yet the blog is packed with resources, links to scholarly studies and other references that you need to know about.

Philanthropy 2173; The Business of Giving

Authored by Lucy Bernholz, founder and president of Blueprint Research & Design, Inc., Bernholz is to nonprofits what Rachel Maddow is to liberal politics – intelligent and incisive yet accessible, wonky, and (respectfully) pulling no punches.  The blog approaches nonprofits and their arena as a third business sector, and Bernholz isn’t sitting behind a desk; very often she’s interviewing some game-changing sector leader and sharing their conversations and her insights.

So there you have it! The best non-profit blogs you’ll find anywhere. Of course there are some good ones out there that we missed.  Do you have a favorite? Tell us – we’d love to hear about it!  What blogging ideas did you pick up from this list of great blogs?

…A money back guarantee for a donation if the organization doesn’t deliver.

I recently learned about SOFII, the Showcase of Fundraising Innovation and Inspiration from Pamela Grow, a pretty innovative fundraising consultant herself.

SOFII send out a weekly update and in today’s email I saw a fundraising tactic used by Habitat for Humanity Great Britain in 2006 that I’ve never seen before.  It’s pretty daring and it’s very risky unless, of course, you’re the kind of nonprofit that does what it says it’s going to do and doesn’t mind complete transparency with donors.

They offered a Money Back Guarantee on their acquisition mailing.

Habitat’s fundraisers wrote:

“We already know from helping 125,000 extremely poor families build homes that this is the best way to help them out of poverty.  But we want you to be sure, too.  So when you send your £15 gift we’ll make you a money-back guarantee.

If, after reading more about how we use your gift, you believe it hasn’t done what we’ve said, write to us within six months.  We’ll send it back to you – every penny.”

Wow.  Money-Where-Their-Mouth-Is Fundraising

It’s brilliant on a number of levels…

First and maybe most importantly, they’ve immediately established beyond a doubt to their prospects (and anyone who sees the appeal) that they are 100 percent confident in their ability to deliver.  We are worthy of your trust and we have nothing to hide. Also, we’re really good at this.

Think of the stewardship opportunities.  By creating a compact with the donor, Habitat has set up the expectation of an engaged relationship with an informed donor base.  We’re going to be sending you materials that you’ll need to read if you want to get your money back.

Think of the upgrade opportunities.  You’ve been a donor for six months now…if you think we’re good with £15, look at what we can do for £150!

For those donors who have greater philanthropic potential, this is an opportunity to begin a personal relationship with a discovery call from a fundraiser.  Hey, remember that promise we made when you signed up?  I’m calling to tell you how we’re holding up our end of the bargain. (How do you find out which ones have greater philanthropic potential?  Ask your friendly neighborhood prospect researcher!).

Of course, this percolates a few questions, including:

• Would it change how your nonprofit operates?
• Are you ready for the potential of increased donor engagement?
• Would this change or increase your educational events?
• What kinds of publications would you create if you wanted complete transparency about what you do?  Are they different from what you already produce?  Would your web and social media presence change?
• Could it cause more work for your finance team?

We’ve just been through the worst financial crisis in our lifetimes (or at least I sincerely hope so) and donors want a sensible return on investment from the charitable dollars they spend.  I know I do.

If your favorite charity offered this kind of deal, would you take them up on it?

You may be a relatively new immigrant to the nonprofit section of the Twitter’hood.  Maybe a reluctant one?  A colt trying to figure out your leg-support system?

One of the things I love about getting to know another country is learning to navigate the social behaviors of a foreign culture.  You make some mistakes, there is a lot of smiling and head-nodding (perhaps some eye-rolling from the natives), but eventually you get the hang of communicating.  And if you’re there long enough, you start noticing the underlying social niceties and who is using them well.

The culture of Twitter is a lot like that, especially for nonprofits.  There’s some gangly-leggedness and braying going on out there (tweets like: “HELP US!  We’ve got 15 minutes to raise $15,000!”) but there are native speakers, too.  Stay with me and you’ll see what I mean.

Social media experts like Beth Kanter and Allison Fine write truly helpful blogs and books on creating social media plans for your nonprofit that I consider must-reads. But if you’re just sliding your legs under the table and figuring out which fork to use, I thought I’d share a few observations on customs I’ve noticed to help keep you from making a Twitter faux pas.

Don’t Be Singular – Get Engaged

You’ve entered Twitterland to communicate with potential and current stakeholders. So engage with them!  Make a point to “follow” your board, your top donors, prospects, allies and anyone else you want to notice you.  Many people are glad to “follow” back, so if you suspect that some of your annual fund letters may be decomposing alongside the used coffee grounds, this is a great way to directly connect with people you want to get to know better, and vice versa.

Being truly engaged is an art, but it’s not rocket science. Look at this tweet from Computer Aid in London…

They’ve engaged your imagination:  Can’t you just see Rob-the-Driver tooling around the streets of Oxford in the Computer Aid van?  They are connecting with and mentioning their donor: adding Oxford University’s Twitter handle (@UniofOxford) helps people follow Oxford now, too.  Most importantly, they’ve created a way for other potential donors in and around Oxford to take an immediate action.  Click here. Contact us now. Donate.  Brilliance in 140 characters.

Re-tweet and Thank

Did a follower just re-tweet something you sent out?  Say thank you. Now.

The culture in the Nonprofit Twitterhood isn’t just talking about your .org, it’s also helping others spread their word and giving props to people who help you out.  It’s hard to find different ways to thank people sincerely and succinctly, but the folks at the Foundation Center seem to have that nut cracked.

In addition to being a leading resource for grant-seekers, the Foundation Center’s tweeters are creative and generous.

You can use Twitter to engage and cultivate donors, too.  Did a board member add a grandchild to her family?  Did an alumnus win a prize?  If you are connected to them via Twitter (and even if you’re not) send your congratulations.  Tweets get re-tweeted and re-posted on LinkedIn and Facebook … you never know who’s going to see (and appreciate) them.  And maybe, just maybe, it’ll start a conversation with someone who’s been tossing your appeals in the trash.

Conversations, Not Bullhorns

Sure, there are still people out there blabbing, “I’m at the Starbucks at 12^th and Third,” but Twitter’s emerging custom is real-time conversations.  Consider joining one of these organized Twitter web chats for nonprofit professionals:

• Wednesdays at 3PM (ET) #NPTalk is sponsored by Nicole Harrison (more info here)
• Every other Friday at noon (ET) #smNPchat is hosted by Pamela Grow (more here)

These chats were made for participating and getting fresh ideas from peers.  A growing list of chats curated by Robert Swanwick can be found here or follow @twchat to get up-to-the-minute listings.

Never Twitter-chatted before? It’s much easier than clearing customs, and here’s a 4-minute video tutorial to get you going.

Want More Help?

I can’t help it — I’m a sharing-resources kind of gal.  So while the following sites aren’t about the culture of Twitter, they’re really helpful if you’re still figuring out this whole Twitter ‘thing.’  Some are useful even if you’re an old hand!

If you’re overwhelmed with the fire hose of tweets gushing at you, sign up for HootSuite or TweetDeck to manage the geyser.  You’ll be glad you did.

Social Media Tools 101 from Interactive Insights Group.  For those new to social media who want one-stop shopping to bravely enter this new world.

SocialBrite’s deep library of how-tos and examples of all aspects of social media.  Some of it is crowd-sourced from community members.

What other unique cultural patterns have you noticed in the Twitter’hood? Comment below, or tweet them to me at @AskHelenBrown.  Even if you don’t have anything to report yet, connect with me anyway.  I’d love to be your neighbor in this new land.

John Gillespie over at Social Edge took out the crystal ball for 2011 and provided these trends. I think this is a pretty good list. What do you think?

1. Demonstrate & Differentiate – With more social ventures and nonprofits vying for a slice of the ever-shrinking financial pie, organizations must work harder than ever to distinguish themselves by communicating clearly to potential donors and funders through a variety of tools – from donor packages and newsletters to social media (such as Twitter and Facebook) and websites. We’ve seen an increased emphasis on program results and performance metrics with 61% of nonprofits surveyed listing it as a top priority compared to 46% last year.
2. Cut Through the Red Tape – While government funding has been cut or depleted, there are grants and other sources of revenue that still exist. Mission-oriented organizations should take the time to learn more about the grants that are available as well as the application process—the time will be well spent.
3. Reward your Talent – Nearly 40% of nonprofits surveyed reduced staff and salaries in 2010, which means remaining teams are working harder than ever. Leaders need to recognize the efforts of their employees and spend more time with their stars—66% of those surveyed list retaining and motivating staff as a top priority and 53% plan to focus on improving organizational culture.
4. Assess your Team – Fifty percent of the organizations surveyed had less than 20 employees. With teams this size, there is no margin for error—every employee must possess the skills to execute their role. Taking the time to evaluate your staff will have a major impact on your organization in the long run.
5. Entrepreneurial Growth Strategies – Much of the growth in the mission-oriented sector will stem from innovative, entrepreneurial strategies. Seventy percent of organizations surveyed list new revenue generation as their top priority for 2011—up from 58% in 2010 – and 28% plan to pursue earned income ventures. We’re also seeing organizations start another 501(c)(3) under the parent organization and more social ventures starting B Corps and L3Cs (low-profit limited liability companies)—allowing them to pursue more innovative revenue generation strategies and differentiate from their peers.