Thoughts of a rookie social entrepreneur

Customer Relationship Management software matters

“Can’t see the forest for the trees”…I wonder who originally came up with that saying. I have a gut feeling that person started a business at some point in their lives. When you start a business, you communicate with a lot of people. This means tons of emails, phone calls, networking events, lunches, drinks after work, conferences, meetups, etc. You know its is to much to keep in your head so you gotta think of a system (on a side note, you try to keep too much in your head anyway). For me, I kept notes in notebooks.

When I was taking notes, I focused on speaking with as many people as I could and filled notebook after notebook with detailed information from every inch of the nonprofit world. This system gave me two huge problems as I accrued more and more data.

1. Finding specific nuggets of information
2. Finding themes

I had valuable information all over the place - in my inbox, in blogs I read, in my notebooks - and I tried to create an Excel file to organize it all. A big problem with that is it would take up way to much of my time inputting data and I had to keep adding rows and columns because I would realize I forgot something or something would change. Another problem I had was using all this data. For example, I had great conversations with education focused foundations and nonprofits focused on primary and secondary education. I would fill up my notebooks with valuable Q&A exchanges and then the notes would just sit in a pile on my desk. I had problems remembering which conversation was in which notebook. Also, I felt like I did not have the time or energy to review notebooks and look for patterns or trends.

This system also led to subpar following up. I would have a conversation with someone and forget to circle back with them in a week - even though it was written in my notebook. I would forget to email a document to a nonprofit even in my inbox I told them I would send them the file the next day. These little mistakes would happen every now and then, but they did happen. And if they happened to me, I know they happened to members of the Rethink Impact team. I wonder what we missed out on because of poor relationship management.

In starting Rethink Impact, I was obsessed with speaking with everyone because we were going to revolutionize the grant process and I needed everyone on board now! Unfortunately, I’m positive that my slow phone call returns or email responses halted others from having the same urgency as I did.

Having one place for the team to put information, and more importantly, retrieve information on a person is important. It also frees up your mind from worrying - which matters. You only have an infinite amount of mental capacity and the less you use on parts of the business you can easily control, the better it is for you, the team, and the business. I did not purchase a CRM because I thought I could build something in Excel and be just fine. That was a mistake. Having a CRM can be the first domino in a string that produces positive benefit after positive benefit.

A non-techie software development observation, part 1

About a year ago I set out to revolutionize the way the philanthropic grant process worked. I had a great idea for a tech company that significantly increase efficiency and save all nonprofits a lot of time and money. The only problem was…I’m not a tech guy. This problem of mine was kind of a big deal. So I read many different tech blogs to try to figure out what to do. Below is a high level over view of what I learned.

Disclaimer: The subject of this blog is about software development written from perspective of a non-developer entrepreneur.

To give a little background, traditionally, developers used a waterfall methodology to develop software. This methodology was taught in computer science classes all over the world and it originates from manufacturing (as the son of a General Motors assembly line worker, it instantly made sense to me). It’s when you have a step-by-step plan to build a product and to start one step you must have completed the previous step. For example, 

This method works well if you know exactly what you are building, like for example, a car or calendar pop-up reminder software. This method dose not work well if you and your team are trying to introduce a disruptive technology into a stagnant industry. The reason it does not work is because the steps are based off of an hypothesis and assumptions of what customers will want and leaves no wiggle room. Anyone who has tried to order lunch for a group of people can tell you how having a hypothesis and making assumptions of what people want to eat usually yields bad results. The same happens with software development. Instead of using a process that is set in stone, you need agility. Scrum development is an agile process that follows an iterative methodology.

[Scum is not as easy to visualize as Waterfall but its much more effective way to build a software product]. What Scrum has that Waterfall does not have is wiggle room. Scrum development is a series of iterations with there being a deliverable of a usable product in each iteration. Because there is back and forth communication between the development team and the customer, the development team is implementing customer approved value adding changes to the product. This is huge! (Wait…Why?) Think of your birthday and you receive a crappy gift from someone who didn’t ask what you wanted. That is what usually happens with Waterfall software development - you receive the end product and thats it. Now imagine someone asked you what you wanted for your birthday, and then would follow up with questions about color, size, etc. until they knew exactly what you wanted and how you would use the gift. Thats Scrum software development.

Why is a non-techie writing about software development? I am writing about it because Rethink Impact switched from Waterfall development to Scrum-light development (we can not fully implement Scrum due to lack of resources) and I see a positive difference. I think the biggest benefit for us is communication. In Scrum, the team is forced to have quick 5-10minute conversations that are a review of what was developed and obstacles faced, as well as conversations about whats next on the “short-term to do list”. As a virtual team, it helps everyone know what every other team member is doing and helps manage expectations. I am a fan of Scrum development and I look forward to the opportunity to be a apart of a team that cam implement the Scrum methodology a full 100%.

Door #1 or Door #2 - part two

I spend a lot of time speaking with leaders of nonprofits and the topic of our conversations focuses on money. I think its funny when they speak about program officers at grantmakers because sometimes, they make the job sound so easy. I can understand how having a bunch of money and deciding who to give it to can be easy, but believe me, its not. In addition to challenges of deciding where a grantmaker should invest, the grant process creates unnecessary hurdles. Honestly, if we examined how grants are awarded now compared to how they were awarded in 1911, would there be any differences?

The current grant process for grantmakers can be difficult. Grantmakers’ problems are completely opposite for two different types of grantmakers, the ones you know about and the ones you don’t know about. We’ll examine the latter first. Grantmakers are required to give away 5% of their net assets from the previous year and they want to give to the best nonprofits – in whatever way they determine what “best” is. Grant applications are long and take a lot of time to read and consider, and most grantmakers simply do not have the manpower to do it. According to Foundation Center, 76% of US grantmakers have a staff of 4 people or fewer, and that does not include the 17% that are only volunteer run. These are the smaller grantmakers and because of their small staff size they resort to giving money to the same organizations, having a ridiculously long response time to applicants, or hire consultants to help with the load. For the grantmakers you know about, they are flooded with nonprofits asking for money. Their grant process usually occurs in stages, with a nonprofit providing a summary and then being invited to submit a full application later. These grantmakers have full-time staff who separate relevant nonprofits from irrelevant nonprofits based on grantmakers mission and the different grant criteria. The biggest downside that grantmakers face when having staff or hiring staff to evaluate nonprofits is that cost eats away at the money available for grants. Project Streamline estimates that 13% of grants are wasted due to these administrative expenses.

Two solve waste in the grant process, I think all grantmakers need to have an online presence. This does not necessarily mean they need their own website, but they needed to be listed in some profile directory that provides the public information about the grantmaker, at least. I also think there needs to be a recommendation engine that suggest to both sides, organizations that would be of interest. In addition, I think paper and text should be just one way to evaluate a nonprofit and solutions like video, and showing the actual work should be implemented into the solution. These solutions would cut down on time spent searching for funding and potential grantees, writing and reading unnecessary grant applications, and bring transparency to philanthropy. Most importantly, they will allow grantmakers and grantseekers to focus on their social missions.

Door #1 or Door #2 - part one

Over a year ago, an important challenge I noticed in Philanthropy was twofold:

1. The grantmakers challenge of distributing money
   
2. The grantseekers challenge of raising money    
   

For individuals and institutions that have money, it is difficult to focus one’s mission on a certain cause and then determine how to figure how to create the most impact towards that cause. Also, for individuals and organizations looking to acquire funding, there are many questions to ask and obstacles to overcome when determining how much money is needed and what it will be used for. I am not referring to the high level strategic problems but rather the important challenge of execution. For both sides of the philanthropic grant fundraising process there is a tremendous amount of waist that occurs in the process.

Lets examine the current grant process for grantseekers. Nonprofits essentially have to choose between the lesser of two evils when they decide to pursue a grant. Choice A, is they take away a staff person from serving the mission to go research and write a grant. According to Project Streamline, on average it takes about 29 hours to complete one grant application. Before the staff person even writes the grant, they have to research and determine who to write the grant to which can take days or even weeks. This research is prolonged because only about one third of US grantmakers have websites. Choice B is to hire a grantwriter. To hire an experienced, successful grantwriter can easily cost over $100 per an hour. In addition to these choices, nonprofits have the burden of trying to create relationships with the different grantmakers, because, as Foundation Center president Brad Smith emphasized, 60% of grantmakers do not accept unsolicited applications. So if a nonprofit is not specifically invited to apply for a grant, the chances of them being awarded that money are pretty slim. What this means is that applying for a grant is a real investment for nonprofits with significant opportunity cost. The current process creates a lot of wasted time and wasted money for nonprofits.

I would love to read suggestions of how people and institutions are addressing this challenge.

Bottom Line - Corporate Giving Matters

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My dad, like most dads, loves to give advice. He will be turning 63 in November and has a lot of experience from which he draws on to give nuggets of wisdom. Whenever I have to make a decision among several choices I usually make a list of pros and cons for each choice and go over it with family and friends. After a couple minutes into my exhaustive list, my dad would say, “you know what Johnny, you got to bottom line it” and then he would ask me a question that is so on point that my response would determine what option is best for me. He has that ability to cut through bulls**t to the heart of it.

When it comes to corporate giving, there are so many arguments to why giving helps society and improves goodwill with the community, but lets bottom line it. Companies have a fiduciary duty to increase shareholder value so, in my best dad voice, “How does corporate giving help a company make money?

Well, in 2009 the answer to this question was provided by three researchers. Brauch Lev and Christine Petrovits at New York University and Suresh Radhakrishnan at the University of Texas did a study that found charitable donations increased the revenue of the companies that gave! The researchers collected a ton of public company charitable contribution data from 1989-2000. For those interested, they applied a Granger causality methodology, which distinguishes causation from association. This revelation was found only in industries highly sensitive to customer perception - read B2C businesses. The researches discovered, that on average, for every $5 a company donated to charity, their revenue increased by $8.

This is huge. Now, whenever anyone from philanthropy is speaking with a corporation about partnership or donations, they ave academic research to support the benefits charitable giving provide to a companies bottom line. Unfortunately, the researches could not detect a relationship between charitable giving and revenue growth in non-consumer businesses.

I envision companies that are consumer oriented (big guys like SC Johnson or small mom and pop stores) will gravitate toward tools that help them donate and broadcast their donation efforts easily. There is opportunities for social entrepreneurs to create tools, both online and offline, that make it easier for companies to execute their philanthropic agenda. Soon, every company will have one.

Review of Inaugural L3C Conference

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Last month was the inaugural L3C Conference in Evanston, Il. Congratulations to the founder of the L3C, Robert Lang, for having his first conference. Bob Lang is an innovator and I am truly impressed with his persistence to push through legislation to get the low-profit limited liability company as a legal tax status. As you would expect with any inaugural conference, most of the attendees were either panelist or professionals who were very interested in the L3C and wanted to learn more about it.

Several L3C organization spoke about their companies but two of them stood out to me. SEEDR and UnaBellaVista were two companies with young, thoughtful leaders that did an excellent job of explaining their market ad the value proposition their service and products offer to that market. SEEDR, is an R&D organization for global development, delivering research and solutions to address present and future contingent challenges in health, infrastructure, and economic development. They work like a consultation firm but in addition to analyzing the problem and coming up with a solution, they execute the solution game plan and see a project from start to finish. UnaBellaVista sells vitamins and for every bottle that is bought, they give away a bottle to children in need in developing nations.

Currently, L3C’s are in their infancy but I look forward to attending the conference in several years once an L3C organization has several years of operating history and has established itself as a quality, high-growth company.