Stanford Social Innovation Review
WHEN GOOD IS NOT GOOD ENOUGH
THE SECRET OF SCALE
THE FUTURE OF HEALTH CARE ACCESS
By Bill Shore, Darell Hammond, & Amy Celep
By Peter Murray
By John A. MacDonald, Anita M. McGahan, & Will Mitchell
Fall 2013 Volume 11, Number 4
When Can Impact Investing Create Real Impact? | When Good Is Not Good Enough | The Secret of Scale | The Future of Health Care Access
WHEN CAN I
IMPACT INVESTING CREATE REAL IMPACT?
Fall 2013 | Vol. 11, No. 4
In this inaugural UP FOR DEBATE article, authors Paul Brest and Kelly Born argue that it’s very difficult for impact investors to achieve both social impact and market rate returns
$12.95 U.S. and Canada
Responding to the article and joining the debate are Sterling K. Speirn, Audrey Choi, Nick O’Donohoe, Alvaro Rodriguez Arregui and Michael Chu, and Nancy E. Pfund
Philanthropy INNOVATION Summit
passion + i mpact Thursday-Friday, September 12-13, 2013 Frances C. Arrillaga Alumni Center Stanford University The Stanford Center on Philanthropy and Civil Society announces its inaugural PHILANTHROPY INNOVATION SUMMIT: Passion + Impact. With a program designed to inform and inspire, this invitation-only event will convene individual and family philanthropists to discuss their giving with peer experts in an intimate, non-solicitation environment. Confirmed speakers include:
Laura Arrillaga-Andreessen | Marc Benioff | Jack Dorsey Marc Glimcher | Ben Horowitz | Laurene Powell Jobs | Alexander Rower Tom Siebel | Cari Tuna with Paul Brest, Jim Canales and Fay Twersky
Paul Brest, Stanford PACS Faculty Co-Director, Professor and Dean Emeritus, Stanford Law School, serves as Faculty Advisor of the Summit, in collaboration with Kim Meredith, Stanford PACS Executive Director. Laura Arrillaga-Andreessen, Stanford PACS Founder and Board Chairman, Founder and Chairman Emeritus of SV2 (Silicon Valley Social Venture Fund), President of the Marc and Laura Andreessen Foundation, Lecturer in Philanthropy at Stanford University, and New York Times bestselling author of Giving 2.0, will chair the Summit.
The Summit is by invitation only:
If you would like more information, please contact Karen Lindblom, Associate Director, at firstname.lastname@example.org.
SSIR PASSION-IMPACT FULLPG.indd 1
7/25/13 6:19 PM
Published by the Stanford Center on Philanthropy and Civil Society
Fall 2013 • Volume 11, Number 4
22 When Can Impact Investing Create Real Impact? U p f o r D e b at e
By Paul Brest & Kelly Born
Although it is possible for impact investors to achieve social impact along with market rate returns, it’s not easy to do and doesn’t happen nearly as often as many boosters would have you believe. With Responses From
Audrey Choi, Sterling K . Speirn, Alvaro Rodriguez Arregui & Michael Chu, Nancy E. Pfund, and Nick O’Donohoe
The Secret of Scale By Peter Murray How powerful civic organizations like the NRA and AARP build membership, make money, and sway public policy.
40 When Good Is Not Good Enough
By Bill Shore, Darell Hammond, & Amy Celep Leaders of two of the most successful nonprofit organizations argue that the sector needs to shift its attention from modest goals that provide short-term relief to bold goals that, while harder to achieve, provide long-term solutions by tackling the root of social problems.
The Future of Health Care Access By John A . MacDonald, Anita M. McGahan, Will Mitchell, & the T-HOPE team Traditional health care is a hands-on, brick-and-mortar affair. But across the developing world, a wave of technology-driven innovation signals the emergence of a compelling new model.
On the cover :
Illustration by Ben Wiseman Fall 2013 • Stanford Social Innovation Review
RE S EARCH
REV I E W S
Sponsoring Hope | Good (and Not-So-Good) Neighbors | Poverty and Achievement, Revisited | Markets Versus Morals
8 Manifest Density
ACT I ON W HAT ’ S NE X T
W HAT W OR K S
59 A Sporting Chance In troubled spots around the world, Right to Play shows how fun and games can be a serious tool for development. By Suzie Boss
Vashaan Chakrabarti’s A Country of Cities Review by Carol Coletta
8 Divided Minds, Divided Cultures Hazel Rose Markus and Alana Conner’s Clash! Review by Joan Miller
61 Bridging the Generations Older people and foster families are forming mutually supportive communities, with help from a group called Generations of Hope. By Greg Beato
10 Designing the Digital City Ethan Zuckerman’s Rewire Review by Lucy Bernholz
63 Bold Steps in Boise The Trey McIntyre Project is choreographing a novel way to manage a leading-edge arts organization. By Chloe Veltman
11 Breakthrough Leadership Aimee Molloy’s However Long the Night Review by Rajasvini Bhansali
F I R S T PER S ON 13
CA S E S T U D Y
66 Across the Digital Divide In many cases, the One Laptop movement has fallen short of its promise. But One Laptop per Child Australia has developed a visionary program to bring digital technology to children in remote areas. By Danielle Logue & Melissa Edwards
The Quest for Scale An effort to improve sanitation in developing countries yields lessons in how to achieve enduring, broad-based social impact. By Louis C. Boorstin
15 Accounting for Justice The US criminal justice system will benefit from a new tool that collects and compares data on a county-by-county basis. By Amy Bach
17 By Youth, for Youth Through the Global Changemakers program, people under the age of 25 are developing solutions to problems that directly affect them. By Gabriela Jaeger
19 Redefining the Hospital’s Role Boston Children’s Hospital is testing new approaches to improving outcomes and reducing health care costs. By M. Laurie Cammisa
Stanford Social Innovation Review • Fall 2013
Donations on Tap | A Fresh Approach to Food Stamps | Crowdsourcing the Past | An Arab Spring for Entrepreneurs?
E D I TOR ’ S NOTE L A S T L OO K
more at SSIR online
Visit SSIR’s website for the best and most recent ideas on social innovation from the likes of John Brothers, Jean Butzen, Curtis Chang, Matthew Forti, Daniel Ben-Horin, Aaron Hurst, Timothy Ogden, Marcia Stepanek, and Rich Tafel.
Visit Social Innovation Conversations to download free recordings of speeches, panel discussions, and interviews with leading social innovators from India, Chile, Saudi Arabia, England, and other countries around the world.
Looking for a new book to read on social innovation? Visit SSIR’s website, where you will find dozens of book reviews along with links to the books at Amazon.com. Use the link to purchase one of these books and Amazon will rebate money to SSIR.
What Kind of Social Change Are You
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B y E r i c Ne e
Fostering Lively Debate
ne of the things Stanford Social Innovation Review prides itself on is running articles that provoke thought and discussion, if not outright debate. Being a part of Stanford University, where discussion and debate is in the institution’s DNA, we view that role as one of our principal responsibilities. Until now, discussions engendered by our articles have taken place largely on our website, in social media, in private emails, or over the proverbial water cooler. With this issue we are launching a new type of article—Up for Debate—that brings those discussions directly into the pages of the magazine. The topic of this inaugural Up for Debate is impact investing, a subject that we have covered extensively in the past. We are tackling it again because Paul Brest and Kelly Born have authored an article—“When Can Impact Investing Create Real Impact?”—that we believe elevates the discussion to a new level. Brest, the former president of the William and Flora Hewlett Foundation and former dean of Stanford Law School, is faculty codirector of the Stanford Center on Philanthropy and Civil Society (publishers of SSIR). Born is a fellow in the president’s office of the Hewlett Foundation and former consultant with Monitor Institute. Brest and Born’s article not only provides one of the clearest overviews of impact investing (something that was desperately needed), it also zeros in on several important issues and offers some controversial conclusions, chief among them that much of what is called impact investing isn’t really so. In the past we would have left Brest and Born’s conclusions for you, the reader, to ponder, and moved on to other subjects. This time, however, we asked 15 thought leaders from the field of impact investing to read and comment on the article. We selected five responses to run in the magazine— immediately following the main article—and are publishing the other 10 responses (along with these five) at SSIR Online. The five respondents agree with some of Brest and Born’s conclusions, but take issue with others. For example, while Brest and Born argue that the criteria for what counts as “impact” should be tightened, many of the respondents are willing to have a looser definition that conforms to the messiness of realworld investing. A number of the respondents also believe that the benefits that investors with a social mission bring to the table (or that they gain from their investments) are broader than Brest and Born realize. The five respondents are Audrey Choi, head of Global Sustainable Finance at investment banker Morgan Stanley; Sterling K. Speirn, president and CEO of the W. K. Kellogg Foundation, which has a $100 million impact investing fund; Alvaro Rodriguez Arregui and Michael Chu, managing partner and managing director, respectively, of the Monterrey, Mexico-based impact investing venture capital firm IGNIA; Nancy E. Pfund, founder and managing partner at the impact investing venture capital firm DBL Investors, which has invested in Tesla Motors and Revolution Foods; and Nick O’Donohoe, CEO of London-based Big Society Capital. n 4
Stanford Social Innovation Review • Fall 2013
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Ideas Research By Jessica Ru vinsk y INDIVIDUAL GIVING
Sponsoring Hope 3 A young couple in Uganda,
IMage couRtesy of coMPassIon InteRnatIonal
when asked if they would like to enter their newborn into a child sponsorship program—a program similar to the one that helped both of them get through school and into good jobs—said no. “Poverty ended with us,” they explained. International child sponsorship programs collectively raise more than $3 billion per year. Those photos of developing world kids that get pasted to so many refrigerator doors in the developed world clearly help large aid organizations to raise funds. But do the kids benefit from the money donated on their behalf? Researchers have now tracked many of these children into adulthood, and the answer—at least for one child sponsorship organization—is yes. “The impacts that we find on secondary school completion and on employment are fairly remarkable,” says Bruce Wydick, a professor of econom-
ics and international studies at the University of San Francisco. “We did the study in six countries, and in all six countries we find positive impacts from sponsorship.” Wydick and colleagues followed more than 10,000 adults in Bolivia, Guatemala, India, Kenya, the Philippines, and Uganda. The adults who had received charitable sponsorship
A study of one child sponorship organization shows that the sponsor model can yield positive long-term results.
as children are one-third more likely to have finished high school, and on average they complete more than a year of additional education. They are
Stanford Social Innovation Review and Stanford Center on Philanthropy and Civil Society thank the following individuals and organizations for their generous leadership and financial support. Darren Bechtel
also 35 percent more likely to have a white-collar job. “It’s probably the impact evaluation that most changed my mind about things,” says David McKenzie, lead economist in the World Bank’s research department. The impact in this case is especially notable, he says, “given the lack of results of many other development interventions that have been darlings of the aid world.” The results of this study don’t necessarily apply to all child sponsorship programs. Wydick and his colleagues contacted many sponsorship organizations, but only one—Compassion International— was willing to participate in the study. Compassion International is a child-focused, church-based organization that follows a pure sponsorship model: Instead of using sponsor donations to build villagelevel public goods like a road or a school, it directs benefits to individual children. Compassion, moreover, attends not only to children’s need for meals, immu-
Retired Venture Capitalist Chair Emeritus, Stanford University Board of Trustees
Carnegie Corporation of New York Draper Richards Foundation Gordon and Betty Moore Foundation The Rockefeller Foundation W. K. Kellogg Foundation The William and Flora Hewlett Foundation
CEO, Encapsule Medical
President, Sand Hill Foundation
Director Emeritus, McKinsey and Company, Inc. Lecturer in Strategic Management and Raccoon Partners Lecturer, Stanford Graduate School of Business
Regina Kulik Scully
Individual Philanthropist Board Member, KIPP Bay Area Schools
Founder and CEO, Rpr Marketing Communications
President, Richard and Rhoda Goldman Fund
President, Good Ventures
Madeline J. Stein Advisory Board Vice Chairman, Stanford Center on Philanthropy and Civil Society Community Volunteer
Principal, Institutional Venture Partners
Susan Ford Dorsey
Bruce Wydick, Paul Glewwe, and Laine Rutledge, “Does International Child Sponsorship Work? A Six-Country Study of Impacts on Adult Life Outcomes,” Journal of Political Economy, 121, 2013.
stanfoRd centeR on PhIlanthRoPy and cIvIl socIety advIsoRy boaRd
Founder and Advisory Board Chairman, Stanford Center on Philanthropy and Civil Society Lecturer in Philanthropy, Stanford Graduate School of Business Founder and Chairman Emerita, Silicon Valley Social Ventures (SV2)
nizations, and tutoring support, but also to their emotional, spiritual, and social development. In that way, the Compassion program instills a sense of hope. And hope, as Wydick has discovered in follow-up studies, may be crucial to the program’s positive outcomes. “If you only gave hope to kids without giving them some basis for hope, that probably wouldn’t work very well,” he says. “But if you only did things like provide school tuition and uniforms for kids, without increasing the level of aspirations, they might not believe that they’re actually capable of greater levels of education and better employment than their parents.” The Compassion program is relatively expensive, but it has a lasting impact—especially on certain groups of people. “If you want to do a really good thing in the world, sponsor a girl in sub-Saharan Africa through an organization that uses a pure sponsorship model,” says Wydick. “And if you want to do something great in the world, sponsor 10 [girls].” n
Oﬃce of the President Center for Social Innovation Stanford Graduate School of Business Haas Center for Public Service Institute for Research in the Social Sciences Stanford Law School fall 2013 • Stanford Social innovation review
Good (and Not-So-Good) Neighbors 3 Apple, Google, Intel, the Gap: Each of these companies has a truly global reach. But they’re also based in the San Francisco Bay Area, and when the Super Bowl comes to that area in 2016, they will bring a hometown attitude to the event. These and other locally headquartered companies have already pledged about $30 million in Super Bowl-related giving, and 25 percent of that amount will go to Bay Area nonprofit groups. That’s a lot of money for charity. But as recent research shows, it’s a common phenomenon. Things that happen in a community make a difference to corporate giving, “even [for] very global organizations, even in this very global age,” says András Tilcsik, assistant professor of strategic management at the University of Toronto Rotman School of Management. “There is an elevation in the willingness to give, and we see that trickling down to the whole local nonprofit sector.” Tilcsik and his co-author, Christopher Marquis, focus their research on events that affect a metropolitan area for good or for ill. With a megaevent such as a Super Bowl, the Olympics, or a national political convention, “we find a strong, and in some cases dramatically strong, positive relationship between the event occurring in the community and the amount of corporate giving that takes place right before, during, and subsequent to the event,” says Tilcsik. Small-scale natural disasters have the same effect on philanthropy. After a flood or a storm, for example, locally
Stanford Social Innovation Review • Fall 2013
based companies typically rally in support of their neighbors. But with respect to an adverse event, scale matters. And it matters in a seemingly counter-intuitive way. “With a really large, devastating, Katrina-scale disaster, we see the opposite” of corporate generosity, Tilcsik says. In that scenario, locally headquartered companies temporarily—and often dramatically—reduce their charitable contributions. Big events can strengthen— or sever—the links that connect organizations. “A mega-event can be a magnet, if you will, that really gathers the corporations around,” says Mary Ann Glynn, professor of management and organization at Boston College. She cites the example of the 1996 Olympics in Atlanta: “Suddenly, companies were in touch with each other that may not have been in touch before.” With peers comes peer pressure, and that can be a good thing. “You want to be around the best,” says Daniel Lurie, a Bay Area nonprofit executive and the chair of the Super Bowl L host committee. “We had some of the best companies in the world signing on. It made our ‘ask’ a little easier.” In the wake of a mega-disaster, meanwhile, the breaking of ties between local corporations and local nonprofits can have far-reaching consequences. “A lot of times, the focus is on recovery, in the sense of physical rebuilding and infrastructure,” says Tilcsik. “But if the local corporate sector cannot or doesn’t help the recovery of the local nonprofit sector, then you might see a much longer lag in the recovery of local civil society.” n András Tilcsik and Christopher Marquis, “Punctuated Generosity: How Megaevents and Natural Disasters Affect Corporate Philanthropy in U.S. Communities,” Administrative Science Quarterly, 58, 2013.
E D U C AT I O N
Poverty and Achievement, Revisited 3
Does classroom poverty lower students’ academic achievement? In other words, does a high incidence of poverty among students in a given class adversely affect their performance? A large body of research suggests that it does, and a lot of education policy follows from that finding. But that research has a significant flaw, according to Douglas Lee Lauen, associate professor of public policy at the University of North Carolina at Chapel Hill. It relies on a limited data set. With a more powerful array of data, he says, “large effects basically disappear.” Kids do, in fact, perform worse in classes where more kids are poor. But it’s hard to tell by looking at data from a single point in time whether that’s because of a classroom effect or because of how poverty affects individual students. The best way to tease out the causes of low achievement would be through an experiment. But as Lauen notes, “you’re not going to design an
A high rate of poverty in a classroom has no direct effect on individual student performance, one researcher argues.
experiment to put a bunch of poor kids in a class deliberately and then see what happens.” Lauen overcame the limitations of earlier research by following a cohort of individual children over time. He started with a group of 100,000 thirdgraders who were enrolled in public schools in North Carolina. Every year until they reached eighth grade, he tracked whether each child entered a poorer or richer classroom, and whether the child’s reading and math test scores went up or down. The design of this research helps clarify the relationship between those factors. If children consistently do worse in years when they are in poorer classrooms, then it would seem safe to say that classroom poverty is what causes the decline. Surprisingly, however, that isn’t what happens: Classroom poverty has no appreciable effect on test scores. “It’s not what I expected to find,” says Lauen. “One explanation for this is that by the time a kid is eight
Photograph by joshua gunter, courtesy of the cleveland Plain dealer/Landov
C O R P O R AT E P H I L A N T H R O P Y
PhotogRaPh by joshua gunteR, couRtesy of the cleveland PlaIn dealeR/landov
years old, the effects of context have already been baked into the test score,” he says. “By third grade, it may be too late.” Another explanation is that the quality of a student’s teacher matters more than the background of his or her classmates. Lauen conducted this research to show that school integration by socio-economic status can boost student achievement—but these results changed his mind. “Poverty mix within a classroom is probably not the most important factor,” he says. “A lot of political energy can be wasted on making assignment decisions to schools based on poverty level. That energy could perhaps more usefully be spent on improving teaching and learning.” Other scholars disagree. More than 50 districts have implemented some form of socio-economic integration, and Lauen’s research doesn’t faze researchers who favor that approach. “What his paper rules out is the idea that just sitting next to a poor kid in your classroom makes your test score go down in that particular year,” says Sean Reardon, professor of education at Stanford University. “But that’s not the only way we think poverty might matter.” The differences between schools may be more important than the differences between classrooms, Reardon argues. It might be harder, for example, to attract good teachers to high-poverty schools. When socio-economic integration occurs, moreover, it takes place between schools—not between classrooms. Lauen “may be missing where all the action is,” says Reardon. n Douglas Lee Lauen and S. Michael Gaddis, “Exposure to Classroom Poverty and Test Score Achievement: Contextual Effects or Selection?” American Journal of Sociology, 118, 2013.
Markets Versus Morals 3 Would you kill a mouse for
money? Many people would. But as it turns out, the likelihood that people would do so increases sharply when they confront that choice in the context of a marketplace. “Markets erode moral behavior,” says Nora Szech, an economist at the University of Bamberg. In an experiment conducted by Szech and her co-author, Armin Falk, student participants first viewed a photo of a mouse. Then they watched a video of a mouse dying in a gas chamber. Next they were asked if they would take 10 euros in exchange for allowing a similar mouse to die. If they said yes, the mouse was gassed. If they said no, it would live out the rest of its natural life in the company of a few other mice in an enriched environment. (In fact, the mice in question were surplus lab animals, and they were slated to be killed. The mice that participants chose to save escaped that fate.) About 46 percent of participants said yes. That figure offers a baseline indicator of the students’ ethical attitudes. The researchers then compared that baseline response to participants’ behavior in a market context. Students bargained over the price of a mouse’s life either with one other person or with several buyers and sellers in “a simple version of a stock market,” says Szech. If they agreed on a price and made a trade, the mouse was killed. If they couldn’t agree on a price or refused to make a trade, the mouse survived. Under market conditions, between 72 percent and 76 percent of participants were willing to kill the mouse for 10 euros or
less—a lot less, in many cases. In the multilateral market, the life of a mouse went for an average of only 5.1 euros. “The markets seduce us to make decisions that are not in line with the moral standards we have as individuals,” Szech explains. It’s a finding that echoes what other researchers have discovered. “In a market-like environment, where you can buy and sell things and everything has a price, you’re kind of in a morality-free zone,” says Samuel Bowles, research professor and director of the Behavioral Sciences Program at the Santa Fe Institute. How, exactly, does market activity lead to morally questionable behavior? The researchers cite several possible explanations. Spreading the responsibility for a decision between a buyer and a seller may lessen
the sense of guilt that each of them feels. Another explanation is that a market-driven focus on prices and profits leads people to neglect the moral implications of a transaction. In any case, the effect is pervasive, according to Szech: Consumers tend to shop for products with the lowest price, not for those with the lowest social cost. Throughout history, disagreements over what is marketable have resulted in social upheaval, Szech notes. The practice of buying and selling human beings became an issue that helped cause the US Civil War—to name one prominent example. “Our study shows that it’s right to question where markets belong and where not, and to have a social debate about that,” she says. n Armin Falk and Nora Szech, “Morals and Markets,” Science, 340, 2013.
New from Stanford University Press What Should Think Tanks Do? A Strategic Guide toPolicy Impact Andrew Selee
“The policy world is filled with voices clamoring to be heard, but few organizations are consistently successful at getting the ear of policymakers and shaping the ideas that become part of public debate. This book shows how organizations that care about influencing policy can take a strategic approach to impact and deliver results.” —Jane Harman, Director, President, and CEO of the Woodrow Wilson Center, former Member of Congress $12.99 paper
Stanford University Press
fall 2013 • Stanford Social innovation review
Ideas Reviews Manifest Density Review by Carol Coletta
In his book A Country of Cities, Vishaan Chakrabarti wastes Vishaan Chakrabarti no time in letting his 252 pages readers know where Metropolis Books, 2013 he stands on the subject of suburbanization. On the first page of the first chapter, he writes: “[O]ur reckless subsidization of suburban sprawl is arguably the leading cause of our most pressing challenges, from foreclosures, to unemployment, to unfunded schools, to spiraling health-care costs, to climate change, to oil wars.” Suburbs are, he contends, a synthetic creation of big government whose time has come and gone. Chakrabarti’s answer to suburbanization? “Hyperdensification.” Ouch! The first time he uses that term, it grates on the ear as surely as the sound of fingernails on a chalkboard. But in the book, which focuses on the United States, he makes a powerful case that cities are the economic engine of the nation. After all, US cities are more productive than the vast majority of states. The $548.6 billion economy of Chicago, for instance, is bigger than that of 42 states, including New Jersey, North Carolina, and Ohio. Evidence is mounting that urbanization results in greater prosperity and innovation. The most successful American cities make up 3 percent of the country’s landmass, yet they generate 85 percent of its gross domestic product. Despite the clear benefits that cities bring, a strain of anti-urbanism runs deep in American culture. From Thomas Jefferson to Henry David Thoreau to the film Miracle on 34th Street (1947), Americans have reliably shown a reverence for rural landscapes. (That movie, Chakrabarti notes, features A Country of Cities: A Manifesto for an Urban America
Carol Coletta is vice president for community and national initiatives at the John S. and James L. Knight Foundation. Previously, she was president and CEO of the organization CEOs for Cities.
Stanford Social innovation review • Fall 2013
“a young heroine pining for a suburban home, a wish that, of course, the Macy’s department store Santa ultimately grants.”) The ideal of a bucolic America—an America of small towns filled with homes surrounded by white picket fences—seems hardwired into the national self-image. It’s hard to understand, therefore, why Chakrabarti chose to label his desired state “hyperdensity.” But perhaps there’s no other term for what, in his view, we truly need. By his definition, that state exists wherever density is great enough to support subways. Building to the point of hyperdensity in already developed areas, Chakrabarti explains, will increase land values, throw off additional tax dollars, and provide the resources that we need to renew our communities. Chakrabarti is clear on one point: Hyperdensity requires a robust infrastructure to support it. He urges Americans to invest in an “Infrastructure of Opportunity”—a term that covers not just transportation, water, sewage, and electricity, but also access to employment, education, recreation, and health. Given strained budgets and popular resistance to increased taxes, where will the money for this kind of investment come from? Hyperdensity, Chakrabarti suggests, makes new infrastructure affordable because it lowers the per capita cost of construction and yields extra tax revenue. Chakrabarti doesn’t go easy on many parties that would appear to be natural allies of hyperdensity. He attacks those who build light rail projects in areas where density is insuﬃcient to support ridership. Not only are such projects ineﬃcient, but they also prompt an outcry against government waste that aids the cause of transit opponents. Nor is Chakrabarti an apologist for property developers. “Private real estate development has much to answer for in terms of its inability to deliver even adequate, much less great, design,” he writes. Just as Chakrabarti wastes no time in attacking the problems caused by suburbanization, he pulls no punches in blaming
those problems on elected oﬃcials. Because of oﬃcial neglect, he notes, a wide variety of urban issues almost never surface in the national discourse. If and when those issues do surface, the author is ready with a list of ambitious policy recommendations: phasing out the federal home mortgage interest deduction, removing oil-industry subsidies, allocating federal transportation dollars by population and distributing those dollars fairly across all transit modes, and pricing fuel to reflect the social costs of pollution and congestion. Chakrabarti also calls for passage of a measure that he labels the American Smart Infrastructure Act. It’s a bold plan that will, he argues, enable Americans to create good jobs, build an innovation-driven economy, rein in health care costs, lower the country’s dependence on nondomestic sources of oil, and lead the planet toward greater sustainability. Enacting that policy and others like it, he writes, will depend on rallying an urban coalition “that binds the need for economic prosperity, environmental stewardship, and social mobility with the onestop shopping of transit-rich hyperdensity.” Other books deliver persuasive arguments for the benefits of urban living. But A Country of Cities stands out among such books in offering a clear call for a city-based solution to the nation’s most pressing challenges and in presenting a comprehensive policy agenda to meet those challenges. n
Divided Minds, Divided Cultures Review by Joan Miller
The assumption that higher-order mental processes are univerHazel Rose Markus and sal—that they develAlana Conner op in fundamentally 320 pages Hudson Street Press, 2013 the same way for everyone—has long dominated the field of psychology. In recent years, though, scholars who write from the perspective of cultural psychology have challenged that premise by providing evidence that those processes Clash! 8 Cultural Conflicts That Make Us Who We Are
emerge within a specific cultural context. This perspective informs the book Clash! Both of its authors, Hazel Rose Markus and Alana Conner, are cultural psychologists, and in the book they use insights and research drawn from cultural psychology to analyze a wide range of social conflicts. Markus and Conner base their analysis on the contrast between individualism and collectivism. They outline two opposing views of self: Independent selves are “individual, unique, influencing others and their environments, free from constraints, and equal (yet great),” they write, whereas interdependent selves are “relational, similar to others, adjusting to their situations, rooted in traditions and obligations, and ranked in pecking orders.” They argue that everyone, in varying degrees, harbors both of these views of self. The clashes that Joan Miller is professor of psychology and director of undergraduate studies at the New School for Social Research.
occur when those views come into conflict, they suggest, lie at the root of many contemporary social problems. The central message of the book is prescriptive. Markus and Conner hold out the promise that social progress and individual selfdevelopment will result from efforts to integrate the two cultural perspectives that they describe. “To build a more prosperous and peaceful world, everyone must be both independent and interdependent,” they contend. “This means that people who tend to be more independent will have to hone their interdependence, while people who tend to be more interdependent will need to polish their independence.” In separate chapters, the authors argue that the tension between independence and interdependence underlies a series of highprofile social conflicts: West versus East, men versus women, business groups versus nonprofit groups, and so on. A final chapter covers the way that individuals experience
that tension in their everyday lives. Markus and Conner provide examples of how, in each of these contexts, the effort to strike a balance between the independent self and the interdependent self can lead to positive social and individual change. Impressively broad in scope, Clash! provides a sophisticated overview of the challenges that arise in addressing major social problems. It’s written in an engaging style that will appeal to a general audience, yet it’s also well documented with empirical evidence. Markus and Conner offer a highly readable overview of recent findings in cultural psychology, and they offer valuable insight into the trade-offs and complexities of social life. They urge readers to consider, for instance, how a cultural practice such as nepotism may form the underside of an interdependent sense of role-related duty. Elsewhere, they explore how the innovative business practices of Silicon Valley technology firms reflect individualistic values; by contrast, they suggest, the strong communal ties that many people associate with the US Midwest reflect an interdependent outlook.
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Ideas Reviews Despite its many strong points, however, the book does not fully address certain key issues. Markus and Conner repeatedly assert that diversity exists within any cultural group, and that both the independent sense of self and the interdependent sense of self can assume various forms. “Japan is not China or Korea or Vietnam or India. The United States is not France or England or Australia,” they write. Yet they show little recognition of the nuances that help to define different cultural outlooks. Nor do they acknowledge the distortions that can result from emphasizing a pan-cultural distinction between independence and interdependence. Markus and Conner also pay limited attention to how people reconcile the different views of self that they hold in different social contexts. Rather, the authors leave the impression that self-integration is merely a matter of arithmetic: They encourage the reader to tally those cases in which he or she holds an independent sense of self and then to subtract that number from the tally of cases in which he or she holds an interdependent sense of self. The resulting score, they suggest, will reflect which sense of self is dominant. Although the authors acknowledge the importance of institutional practices that affect cultural perspectives, they treat those perspectives as viewpoints that individuals choose to adopt in the service of strategic goals. In doing so, they downplay the degree to which cultural outlooks include nonconscious aspects that are not freely chosen— outlooks that entail deep affective commitments that people do not readily relinquish. In Clash!, social activists will find information to make the case for social policies (aﬃrmative action, for example) that have merit precisely because they honor both self dimensions. In the end, though, the model presented here offers a more complete rationale for a Western liberal policy agenda than it does for any competing agenda. For that reason, it provides only limited insight into the enduring appeal—and, in some cases, the growing influence—of political and social movements that reject Western liberal priorities. n Note: Alana Conner, coauthor of Clash!, is a former senior editor of Stanford Social Innovation Review. Earlier in her career, she served as an undergraduate research assistant to reviewer Joan Miller at Yale University.
Stanford Social innovation review • Fall 2013
Designing the Digital City Review by Lucy Bernholz
Not many people who write about the future frame their argument Ethan Zuckerman in the context of rab288 pages binical teachings from W. W. Norton, 2013 the first century AD. But in the closing pages of Rewire, Ethan Zuckerman quotes Rabbi Tarfon: “It’s not incumbent on us to finish the work, but neither are we free to refrain from beginning it.” Zuckerman, director of the Civic Media Lab at MIT and founder of the widely read website Global Voices, clearly recognizes the rhythm of history. In that way, Rewire marks a refreshing shift in tone from most other books in the futurist genre, which tend to read as if time had only just started and as if the issues that we face today had never before confronted humankind. Zuckerman’s argument is simple: Now that we can all connect via low-cost global communications tools, we must use those tools to achieve positive change. That’s what Zuckerman has aimed to do with Global Voices, an online service that provides news and opinion about more than 100 countries around the globe. The site, which offers content produced by incountry volunteers, grew out of his concern about the parochial nature of most print and broadcast news. Since launching Global Voices in 2004, Zuckerman has learned a humbling lesson: Just because we can gather information from every corner of the earth faster and more easily than ever before doesn’t mean that anyone will pay attention to that information. Internet technologies won’t make people care about world events if they aren’t already prone to do so. “I had hoped Global Voices would influence agenda setting. … I believed that by providing coverage of events that other media outlets had missed, we would help challenge the imbalance in attention,” Zuckerman writes. In fact, he notes, journalists today use the site for purposes that don’t always reflect his lofty goal: “It means that Global Voices offers reportRewire: Digital Cosmopolitans in the Age of Connection
ers a way to get quotes from countries experiencing sudden turmoil, rather than using us to find important unreported stories before they break.” Rewire is at its best when it focuses on the dynamic interaction between digital tools and those who use them. Zuckerman observes how the choices that engineers make can facilitate serendipity or ease the process of making new connections. One important contribution that the book makes is to help nontechnical readers truly see the way that sites do (or do not) respect their wisdom and their needs. Zuckerman cites Jane Jacobs’s views on city planning, and his book resembles her work in its focus on helping ordinary residents of the “digital city,” as he calls it, better understand how their surroundings— digital surroundings, in this case—shape their behavior. But in paying homage to Jacobs, Zuckerman doesn’t go far enough. He stops short of directly challenging the wisdom of the new digital-city planners. Jacobs didn’t play nice with Robert Moses, the legendary New York City “master builder” who became her nemesis. She organized take-tothe-street confrontations to stop him. In her books, she didn’t mince words. When she thought that the big shots were wrong, she said so—and offered strong arguments to counter their top-down approaches. Zuckerman, by contrast, seems more intent on persuading Web designers and online managers to do the right thing—to “curate,” “translate,” and “contextualize,” as he puts it. He doesn’t ask the reader to consider the structural impediments, the competing motivations, or the basic power struggles that might stand in the way of individuals’ use of Internet tools to foster greater engagement or activism. Such faith in the goodwill of engineers and designers doesn’t seem adequate. Zuckerman nods to the power of manifestos (including the one that launched Global Voices), but in the end his message is not one of revolution. Instead, he merely calls Lucy Bernholz is a visiting scholar at the Stanford Center on Philanthropy and Civil Society and coleader of the center’s Project on Philanthropy, Policy, and Technology.
for a more deliberate application of the lessons that we’ve learned over the past two decades. That’s a good idea, to be sure: All of us who shop on, get news from, seek a job through, or connect with friends via the Web should have a better understanding of how design choices shape our behavior. Yet we’ll need more than mere understanding if we are going to rewire our own behavior, and not just have it rewired for us. n
Breakthrough Leadership Review by Rajasvini Bhansali
At first glance, given its title and given some of the language on its cover, However Long the Night seems as though it might Aimee Molloy be yet another story 272 pages Harper One, 2013 about a person of privilege who leaves behind her dull life in Middle America and moves to Africa, where she hopes to help impoverished people and However Long the Night: Molly Melching’s Journey to Help Millions of African Women and Girls Triumph
(not incidentally) to begin a journey of selfdiscovery. So it comes as a pleasant surprise to find that the author, Aimee Molloy, has written a story not just about one woman, but about one organization—an organization that has worked diligently over many years to promote lasting social justice. The story of Molly Melching, in short, serves as a lens through which readers can observe the dynamics of community-activated change. In 1991, after contributing to various social change efforts in Africa, Melching founded Tostan, an organization that has become well known for significantly reducing the practice of female genital cutting in Senegal. In the West African language of Wolof, “tostan” means “to hatch out of an egg”; the term evokes that breakthrough moment when a chick emerges from its shell. It’s a R ajasvini Bhansali is executive director of International Development Exchange (IDEX), a nonprofit organization that supports community-led projects in Africa, Asia, and Latin America.
metaphor that conveys Tostan’s approach to community development, which focuses on collective consciousness raising: As ordinary people acquire knowledge in a way that empowers them, they eagerly share that knowledge with others in their community. Change thus happens from the ground up, through mutual respect and shared learning. At the center of Tostan’s method is the Community Empowerment Program, a popular education initiative that covers topics of immediate relevance to people in Senegalese villages—preventing child mortality, for example, or managing local projects. The goal is not only to promote literacy and numeracy skills, but also to empower villagers to run their own development efforts. Tostan’s workers understand that the failure of a development project often involves distrust and disempowerment at a personal level, especially among women. Some 2.1 million people from 2,643 vil-
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Ideas Reviews lages, working together with 108 Tostan employees, have taken part in Tostan-led efforts to improve access to education, health care, and economic opportunity— and, equally important, to improve the conditions of women and young girls. Success of this kind, we learn, is almost never predicated on the charisma of a single leader. For leaders like Melching, humility is essential. “[T]he greater Tostan’s success, the more uncomfortable Molly became with taking the credit herself; she was adamant that the achievements were due only to the efforts of villagers,” Molloy writes. Unlike the self-promoting social entrepreneurs and instant-gratification-oriented saviors who populate much of the literature on American social change efforts in Africa, Melching takes care to build credibility within the communities where she works. Using her position of relative privilege, yet drawing on the guidance of local mentors, she develops support for women’s groups by building trust among religious leaders and village chiefs. One of her rural mentors offers an insight that captures her style of
leadership: “[A] leader is like a Fulani cow herder … [S]ometimes he will lead the herd from the front, sometimes he will remain in the middle and be part of the herd. And sometimes he will remain behind, allowing them to move forward on their own, following their lead.” Another ally of Melching’s, a village chief named Demba Diabara, helped Tostan to develop a method that later came to be known as “organized diffusion.” He would walk from village to village, engaging in dialogue with community members and mobilizing local social networks to support an end to female genital cutting. “[E]ven if you know what the answer is, and you know what is right, you must let people discover it themselves,” Diabara says to Melching. He and other local leaders—people like Oureye Sall, a former traditional “cutter” who now works with Tostan to promote women’s health—know best how to root out the problems faced by their communities. However Long the Night suffers from some of the flaws that often mark books about do-gooders from the developed world
November 14, 2013
who venture into the developing world. Molloy uses clichés (“stifling,” “crowded,” “bustling,” “primitive, “exotic”) to describe Melching’s initial experience of Senegal. “[W]ith no electricity or running water, Molly felt as if she had traveled back in time, arriving in a world without history,” Molloy writes. At one point, in an especially condescending turn of phrase, she describes Senegal as a combination of “refined French culture and third world need.” Such language oversimplifies Melching’s experience and detracts from her story. Fortunately, however, Molloy generally keeps her focus on the work that Melching and Tostan have done in Africa. In their efforts to improve people’s lives at a grassroots level, Melching and her colleagues at Tostan have prevailed amid many obstacles—including discomfort, derision, loss of funding, and even death threats. The painstaking work of true social change requires just that kind of resilience. n MORE AT SSIR ONLINE n An interview with Molly Melching n Another review of However Long the Night
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Ideas First Person The Quest for Scale
An effort to improve sanitation in developing countries yields lessons in how to achieve enduring, broad-based social impact. By Louis C. Boorstin
Illustration by Matthew Hollister
In December 2006, I flew into Aurangabad, a city in the Indian state of Maharashtra. Before the trip, when I mentioned my destination to an Indian friend, she asked, “Are you going to visit the caves?” She was referring to the main attraction in the area— a series of Buddhist shrines carved centuries ago out of the nearby hills. No, I replied. I wasn’t planning to visit the caves. I was planning to visit some toilets. In fact, what I’d typically seen when I visited India was the absence of toilets. More than 600 million Indians practice what is politely called “open defecation.” But in the Jalna district, which is near Aurangabad, officials had made real progress in persuading large numbers of rural households to install and actually use toilets. The key to success in Jalna, I learned, involved a community-based program that spurred demand for toilets and rewarded the desired outcome—villages free of open defecation—instead of simply paying to install toilets that few people used. That trip was part of a quest for durable and scalable ways to improve sanitation. A year and a half earlier, I had joined a small team from the Bill & Melinda Gates Foundation that had a mandate to develop new program areas. My focus was on the field of water, sanitation, and hygiene. For decades, that field had stymied government officials and international development experts. When I joined the Gates Foundation, the situation that we faced was daunting. More than 1 billion people lacked access to drinking water, and more than 2.5 billion people— half the population of the developing world—either relied on unsafe and then just assume that the most promising pilots will be adopted sanitation facilities or had no sanitation facilities at all. The conseat scale. But, as I came to realize, very few pilots are actually scalequences of these problems were profound: Each year, 1.5 million children under the age of five were dying from water-related diseases. ready. Too often, something is missing between the pilot stage and the stage of widespread adoption. What’s needed is a stage in The economic and social costs of days lost from work and schooling were significant, too. In addition, there was the simple indignity faced which worthy programs are tested at scale. “Scale” here means the minimum level (district-wide, for example) at which a government by billions of people who have nowhere “to go.” or another large implementer would operate a program. Such an The Gates Foundation brought to this challenge not only a considerable array of resources, but also a very ambitious goal: to make a approach is consistent with the production of commercial goods: real difference in the lives of the poor on a large scale. Between 2005 No manufacturer would assume that what works in a small job shop would translate readily into production on an assembly line. Instead, and 2012, the foundation funded more than 150 water, sanitation, a company will typically develop and test manufacturing processes and hygiene grants, at a total cost of more than $400 million. From that will allow it to achieve economies of scale. the experience of helping to make and administer many of those Several Gates Foundation grantees tried grants, I gleaned several lessons in how to this test-at-scale approach in different setpursue social innovation in a scalable way. LOUIS BOORSTIN was deputy director of the water, sanitation, and hygiene program at the Bill & Melinda tings. One grantee achieved mixed success Test at scale | Most international donors Gates Foundation from 2005 to 2013. Currently, he is by taking a community-led rural sanitation and implementers embrace a pilot-to-scale advising other organizations on effective approaches to international development and impact investing. model—the model used in Jalna, India, paradigm. They support innovative pilots Fall 201 3 • Stanford Social Innovation Review
that I mentioned earlier—and implementing it at a scale of more too, struggled to sustain services over time. Private-sector providthan 1 million people in each of four locations. Another grantee ers, meanwhile, often faced challenges when it came to extending figured out how to support village-level water services at the district services to the poor or to providing services at an affordable price. level (and did so in two separate countries). And a third grantee These observations led me to define success in terms of three began testing several delivery models at the scale of hundreds of equally important goals: thousands of people for a remarkably user-friendly device that chlo■■ Impact: Does it demonstrably improve the health and sociorinates water drawn from wells and springs. economic well-being of the poor? Change the system | New or improved interventions—providing ■■ Sustainability: Does it have enough resources to keep running vaccines or water purifiers, for example—generate lots of excitefor many years? ment. And clearly, there is a need for technical innovation. (That’s ■■ Scale: Does it have the potential to reach millions of people? why, for example, the Gates Foundation launched its Reinvent the Achieving success concurrently across all three goals isn’t easy. But Toilet Challenge.) Yet such innovations can succeed in the long for social innovators, they are important guideposts on the path to run only if they are embedded in local service delivery systems. making a real, lasting difference. Social innovators who seek scaled impact, therefore, should focus Pair implementers with evaluators | A notable advance in on altering how pivotal institutions set policy, allocate funding, and international development has involved the application of rigordeliver services on the ground. Applying influence at institutional ous evaluation methods to assess impact and to identify which leverage points can generate long-term, wide-scale improvements interventions really work (or don’t). Yet too often such analyses in services for the poor. One grantee in Kenya, for example, changed its strategy from one of delivering sanitation services in schools to one of advoNew or improved interventions generate excitement. cating an increase in government funding to maintain school latrines. The impact of that Yet such innovations can succeed only if they are shift exceeded any outcome that would have embedded in local service delivery systems. come from a direct intervention. Another end up in academic studies that don’t influence how programs grantee understood the power of systems change right from the are implemented on the ground. Most implementers, meanwhile, start. Aiming to improve water and sanitation services for the poor have weak learning systems and often rely on anecdotal evidence in more than 400 municipalities throughout Maharashtra and to guide their practices. From the outset, we paired implementGujarat, another state in India, this grantee developed a common ers—governments, international organizations, NGOs, private performance-assessment system that includes specific indicators ventures—with evaluators. That way, the former could learn more to measure access by the poor. Today, that system is taking effect at effectively, and the latter could achieve greater impact. Some of the municipal and state levels, and the Indian national government these pairings fared better than others, but in each case the learnhas committed $300 million in additional funding to the program. ing on both sides was substantial. Change the debate | Improving water and sanitation means Build a diverse team | The colleagues whom I recruited to our digging wells and installing toilets, right? That’s the common perception, and it leads funders to focus on capital investments in team included a PhD in fecal sludge management, a professional with 30 years of field experience in water and sanitation in Asia and Africa, hardware and to measure success by access to water and sanitaa systems thinker extraordinaire, two social science PhDs with deep tion facilities. But that approach, we learned, is neither the right expertise in measuring impact, a policy and advocacy whiz, and a way to allocate money nor the right way to gauge progress. What former investment banker. They hailed from an equally diverse range really matters is whether the poor are receiving services in a susof countries: Cote d’Ivoire, Italy, the Netherlands, Romania, and the tained, affordable, and convenient way. So we worked to change United States. Given our varied perspectives, conflicts inevitably the debate from “Are we funding that well or toilet?” to “Are we arose—but some of our most productive dialogues emerged from providing sustainable water and sanitation services?” One of our grantees, for instance, developed a new method for correctly esti- those conflicts. In retrospect, I see that assembling this multi-discimating the full, life-cycle cost of water and sanitation services and plinary cast of characters may have been an effort to internalize a “systems view.” In any event, it reflected my recognition that taking then worked closely with governments, NGOs, and other parties a single-discipline approach was unlikely to yield strong results. to implement that approach in several countries. I have one last thought to share about the quest for scalable Define success carefully | During my time at the Gates innovation: The common thread that united our most effective Foundation, I visited water and sanitation programs across Asia grantees was an ability not only to focus on systems, but also to and Africa—programs run by NGOs, by governments, and by listen—to listen very carefully to the poor. In other words, they were private companies. Many NGOs did a good job at the village level, able to observe the choices being made by the poor and to underbut few could figure out how to scale up effectively, and often they stand the motivations behind those choices. That combination struggled with long-term sustainability. Government programs generates approaches that have the potential to achieve large scale typically operated on a large scale, but rarely were they as effective as NGO-led efforts undertaken at the village level. Those programs, and sustainability. n 14
Stanford Social Innovation Review • Fall 2013
Illustration by Matthew Hollister
Ideas First Person
Ideas First Person Accounting for Justice
The US criminal justice system will benefit from a new tool that collects and compares data on a county-by-county basis. By Amy Bach
Illustration by Matthew Hollister
While doing research for a book, I met a woman in Mississippi who had been beaten by her boyfriend. She was in the hospital for days. But her case was never prosecuted. After some digging, I discovered that the local prosecutor hadn’t prosecuted a single domestic violence case in 21 years. “Has it been that long?” the prosecutor asked after I told him what I had found. Yes. That long. Resources were scarce, he explained, so he focused on prosecuting cases that he thought he could win. But in the process, he had let an entire category of cases fall by the wayside. That prosecutor is far from alone. I spent eight years sitting in courts throughout the United States, and I saw how easy it is for well-meaning people to turn a blind eye to systemic problems. The US criminal justice system includes 3,143 counties, each with at least one state criminal trial court. Today, there is no accurate way to compare county-level performance to determine which courts need attention, or to evaluate which court practices work and which don’t. In April 2011, I founded Measures for Justice (MFJ), an organization that aims to create a Justice Index that will measure how criminal justice systems across the country are delivering basic services. For example, we created a measure to show prosecution rates of domestic violence arrests—in Mississippi and elsewhere. Court insiders, criminal justice activists, journalists, and community members will be able to use data from the Justice Index to shed light on a given county’s performance. in the kinds of data that they collect or the way that they report Nearly every public institution or resource in the United States—our schools, our hospitals, our water supply—is account- that information. A county, for example, will typically count the able to a watchdog system that provides comparative performance number of people who enter its system. But its officials generally have no idea where the county ranks in terms of practices data. In education, measures such as student-teacher ratios and that prevent innocent people from being convicted, or practices college admission rates have become standard tools for assessing the levels of opportunity that are available to students in different that help to decrease recidivism. Nor do officials know how their county compares with others in money spent on holding people in communities. In medicine, the Dartmouth Atlas of Health Care brings to light variations in resource allocation and in professional jail. Without comparative data, we lack a crucial lever that would help us improve our system of due process. decision making, and it has become a common source of data for policy makers. Criminal justice lags behind these realms, largely because there county versus county Our goal at MFJ is to create a wide array of measures that gauge are no common measures that would allow one jurisdiction to performance in the areas that victims, defendants, legal profescompare its performance with that of other jurisdictions at each sionals, and community members care stage of the criminal justice process—from Amy Bach is executive director of Measures for Justice most about. We are focusing on three areas arrest to post-conviction. Federal, state, and author of Ordinary Injustice, which won the Robert F. in particular: public safety, equality and and local governments actually collect Kennedy Book Prize. In 2011, Echoing Green named MFJ one of the 15 most innovative social ventures worldwide. fairness, and efficient use of resources. plenty of data. But there is no uniformity Fall 201 3 • Stanford Social Innovation Review
Ideas First Person example, asked to share our preliminary and incomplete data with their county’s governing board. To them, these data were part of a success story: Among counties included in the study, St. Louis had the lowest percentage of defendants (4 percent in 2006) who were rearrested while awaiting trial—a sign that it had identified people with a high risk of reoffending and had taken necessary steps to reduce that risk. King County, Wash., fell on the opposite end of the spectrum. It had the second-highest percentage of felony defendants (34 percent) who were rearrested while awaiting trial. But Dan Satterberg, the King County prosecutor, asked us for permission to share data from our study as well. “This could shame us into action,” he said. Satterberg also highlighted the need for data that would allow counties to learn from one another about the design of effective re-entry programs, among other issues.
better data, better results
With the completion of the Illustrative Measures Study, our organization has moved beyond the proof-of-concept phase. We are now testing the measures to ensure that they are meaningful, accurate, and With support from the US Eventually, the Justice Index will become a system that’s replicable. Bureau of Justice Assistance, we have able to gather data from most, if not all, counties. It will begun our first local pilot in Milwaukee create a picture that no single data point can provide. County, Wis., where we will study the data that state and local officials collect and work to refine the measures. Then we will test those meafive California counties were among those with the highest sures in other counties nationwide. proportion of felony defendants who could not make bail or Eventually, we hope, the Justice Index will become a uniwho were not assigned bail. Many counties in the state still rely versal system that’s able to gather data from most, if not all, on “bail schedules” to help judges process defendants quickly. counties. It will offer a bundle of measures that, taken together, San Bernardino County (whose average bail is $80,958) has a will create a picture of the US justice system that no single data schedule that calls for assigning a bail of $25,000 to a defenpoint can provide. We will use these data to identify best pracdant charged with delivering a check with insufficient funds. tices and to enable county officials to learn from each other. In So a person who writes a bad check and who can’t afford to short, better data will create better systems, which in turn will pay that high bail amount might sit in jail for days or weeks or create better results. months. For years, legal experts have said that one-size-fits-all We can’t predict exactly how this initiative will play out. Take bail schedules are ill advised: They undermine judicial discretion and promote unnecessary detention. What’s more, keeping the example of the gross domestic product (GDP). An economist people in overcrowded jails is costly—both for defendants, who first unveiled the GDP model in 1937, and only after more than two decades of controversy did it become an established official lose valuable work time (and sometimes even lose their jobs), metric. No one foresaw that it would become an established and for taxpayers. measure of national wealth. Our index will take time to develop, Wouldn’t it be beneficial to people in California to learn how too. But its impact is potentially enormous. An estimated 65.7 other large US counties have tackled the challenge of setting bail? million Americans—20 percent of the population—have a crimiIt’s too soon to say exactly which counties have better practices nal record. And the number of Americans who are victims of than others. But of the counties in our study, Fairfax County, Va., stood out by having the lowest proportion of felony defendants in crime is at least as high. Bill Gates recently called for the adoption of a new, outcomecustody who were unable to make bail or who were not assigned based model of philanthropy—one that is based on “setting bail. Here’s one possible explanation for that result: Virginia has clear goals, choosing an approach, measuring results, and then poured resources into a risk assessment tool that determines using those measurements to continually refine our approach.” pre-trial release on the basis of a background investigation that That model, he argued, will “[help] us to deliver tools and serscreens for risk of flight and the risk of rearrest. vices to everybody who will benefit, be they students in the US We shared the results of our Illustrative Measures Study with or mothers in Africa.” officials from counties that ranked either high or low on certain Why not apply that model to the US criminal justice system? measures. Many officials, we discovered, are hungry for this At MFJ, we are developing the tools to do so. n information. Court administrators in St. Louis County, Mo., for 16
Stanford Social Innovation Review • Fall 2013
Illustration by Matthew Hollister
To develop indicators for each area, we worked with a multidisciplinary group of researchers and practitioners to draft a set of 50 measures. We then began to experiment with those measures in a series of pilots. In our first pilot, the Illustrative Measures Study, we selected 12 measures that we could populate with publicly available data. (We drew the data from the US Bureau of Justice Statistics and the FBI’s Uniform Crime Reporting program, among other sources.) For many measures, we were able to find data for about half of the 100 largest US counties. We found enormous differences between counties. Consider the example of average bail amounts. In 2004, Los Angeles County had an average bail of $169,047, whereas Broward County, Fla. (home to Ft. Lauderdale), had an average bail of $4,749. The purpose of bail is to ensure that a defendant will reappear in court. Even taking into account possible differences in patterns of criminal behavior, an average bail that’s 35 times as high as that of another major metropolitan area counts as a big red flag. Advocacy groups in California have long identified use of bail as a pressing issue. In the Illustrative Measures Study,
Ideas First Person By Youth, for Youth
Through the Global Changemakers program, people under the age of 25 are developing solutions to problems that directly affect them. By Gabriela Jaeger
Illustration by Matthew Hollister
Half of the global population is under the age of 25, and the world has begun to pay attention to the needs and aspirations of that group. Since 2011, world news has been dominated by coverage of the Occupiers, the Indignados, and the various manifestations of what came to be known as the Arab Spring. In each of these movements, the central role played by young people was evident. The causes of protest differ, but common among these movements is a high level of disaffection among young people. The 1.3 billion people between the ages of 15 and 24 are, on the whole, a highly educated lot; in many cases, they are the first members of their families to graduate from university. Even so, unemployment among this cohort is high. All across the world, according to the International Labour Organisation (ILO), youth unemployment has increased dramatically over the past five years. The ILO reports that at least 6 million young people have dropped out of the labor force. Globally, nearly 75 million people between the ages of 15 and 24 who would otherwise be in the workforce are unemployed. A sense of frustration and discontent is building, with potential consequences that range from an increase in criminality and drug consumption to a toppling of regimes and a rise of violent extremism. Meanwhile, for the first time in history, new technologies enable people to communicate widely without the need to rely on traditional media. Young people are at the forefront of using these new media—particularly for organizing—and their efforts have already proven effective in many recent protest movements. The new tools at our disposal create an opportunity for young people to be part of the solution to the problems that beset them. Instead of expecting governments and traditional private companies to take sole responsibility for generating employment, young people can become catalysts who initiate new ideas—and new enterprises. That principle underlies Global Changemakers (GCM), a program of the British Council. GCM brings together hundreds of people between the ages of 16 and 25 who have a track record of community work, social activism, or entrepreneurship. The result is a global youth network that draws members from 128 countries worldwide. More than 200,000 young people participate in GCM activities each year, and 3.2 million people have benefited from GCM projects since the program’s inception in 2007.
high ambitions, low budgets In 2009, I helped lead a GCM initiative that awarded grants to young people for
projects that would bring about positive change in their communities. The idea was not only to foster youth engagement, but also to give talented young leaders a chance to learn from the process of designing and implementing their own projects. Ultimately, we funded 250 projects in 86 countries, all of them conceived and run by people in their twenties. These projects address major global issues that young people face today, and many of them have achieved national prominence. Although budgets varied by project, no project received more than $3,000 in funding. What follows is a sample of the projects undertaken by our grant recipients. Education and transparency in the Philippines | For several years, efforts have been under way to make GABRIELA JAEGER was the head of community projects the Philippine education sector more for the British Council’s Global Changemakers program transparent. The national Department of from 2008 to 2013. Today, she is working on a youthoriented project for Transparency International. Education, for example, has developed a Fall 201 3 • Stanford Social Innovation Review
Ideas First Person needs of this rural area. The group also donated energy-saving lamps. In addition, a team of Empower Lanka volunteers installed basic lighting in 15 households and a common electrical outlet that allows people in the village to charge batteries.
building a future
The young people who received grants through the Global Changemakers program are exceptional. But investing in youth groups, and in organizations that give direct grants to young people, should not be an “exception”; it should be a rule. The experience of working with members of the Global Changemakers network taught me a great deal. I learned that direct grantmaking to young people is a workable model for international aid. I learned that we urgently need to restructure education models worldwide. And I learned how important a sense of ownership is to the success of a project. Although investment in youth is not a panacea for all the world’s problems, experience showed that it is a costInstead of expecting governments and traditional private our effective solution that can bring tangible companies to generate employment, young people can benefits to communities in developed and become catalysts who generate new enterprises. developing countries alike. Five years ago, there were very few inidevastation and death circulated throughout the world. Young tiatives that focused on strengthening and fostering youth entrepeople have been particularly vulnerable to such outbreaks of preneurship. Since then, many such projects have emerged. That tribal violence. Following the turmoil of that election year, a is a positive sign. Unfortunately, too few of these initiatives focus young Kenyan named Eddy Gicheru Oketch (he’s now 22 years on supporting youth-directed startups, and too often they run the old) founded a small street theater group whose aim was to risk of seeming to be token efforts. promote understanding between rival tribal groups. Five years Too few educational systems, meanwhile, focus on cultivating later, that theater group has evolved into Peace for Africa and entrepreneurial skills or on developing entrepreneurial talent. As Economic Development (PAD). PAD reaches thousands of young a result, the number of university graduates soars, but so does the Kenyans by offering economic empowerment projects, peace level of unemployment. Therefore we must revise educational workshops and forums, and art programs. curricula to provide students with skills that match the current Economic empowerment in India | For many Indian famijob market—and with skills that increase their self-employability. lies, the production of handicrafts constitutes the main source Engaging young people in project work is not a new phenomof income. But intermediaries control much of the market for enon. Traditionally, however, a “youth project” has been one that such items. As a result, little of the profit from handicraft sales is conceived (and typically implemented) by adults on behalf reaches the producers themselves. Kaushik Tiwari, 18, decided to of young beneficiaries. The Global Changemakers approach— do something about that problem. He created Illuminate Inc., an enabling young people to develop their own strategies for issues enterprise that brings 21st-century online retailing technology to that they care about—has proven to be highly effective. Indeed, in the age-old practice of artisanal production. At the Illuminate Inc. light of the limited resources involved in this initiative, the results website, customers can buy a variety of items—such as apparel, have been extraordinary. jewelry, and furniture—directly from producers. Not only does In early 2012, Ban Ki-Moon announced that a focus on youth this venture improve the livelihood of Indian families, it also would be a new priority for his second term as U.N. Secretary helps preserve traditional forms of Indian art. General. “We must help young people to build the future they Energy provision in Sri Lanka | To supply power, Sri Lankans want. This should be in our hearts and on top of every agenda,” rely primarily on expensive and environmentally destructive fossil he said during a lecture that he called “Empowering People in a fuels. In about 20 percent of the country, moreover, people have Changing World.” The current cohort of young people, he emphano access to electricity. Enter Empower Lanka, an initiative led by sized, is the largest generation that the world has ever known. a 22-year-old Sri Lankan named Sulakshana Senanayake. He and “The priorities of young people should be just as prominent in our his team launched their effort in the remote village of Ratugala, halls as they are on the streets and squares. They should be just as Bibile. People there subsist by farming and hunting, and until present in our meeting space as they are in cyberspace.” recently they either lived in the dark or used costly oil-burning And Ban is not alone. In all parts of the world, people are startlamps. Empower Lanka donated and installed a 300-watt off-grid ing to realize that engaging with the youngest 50 percent of the solar power system that was designed to suit the local climate and population is a vital imperative. n 18
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Illustration by Matthew Hollister
system that collects school enrollment data and makes it accessible to the public through the Internet. The department has also welcomed third-party initiatives to monitor various service delivery programs online—efforts such as Textbook Count (for textbook delivery), Bayanihang Eskwela (for school building construction), and Bantay Eskwela (for furniture delivery). Combining those efforts into a common platform was the next logical step. And that’s exactly what Checkmyschool.org does. Created by Jecel Censoro, 24, and a team of other young people, Checkmyschool.org provides an interactive map that allows people to track the services and facilities that are available in public schools throughout the Philippines. It gives users a tool for evaluating how best to allocate resources within the country’s educational system. Social cohesion in Kenya | Tribal rivalry has ravaged Kenya in recent years. After an election in 2008, for example, images of
Ideas First Person Redefining the Hospital’s Role
Boston Children’s Hospital is testing new approaches to improving health outcomes and reducing health care costs. By M. Laurie Cammisa
Illustration by Matthew Hollister
In the summer 2012 SSIR article “Realigning Health with Care,” Rebecca Onie, Paul Farmer, and Heidi Behforouz state that recent changes in the health care marketplace “create an unprecedented receptiveness to new approaches in care delivery.” They argue that “the inevitable shift away from fee-for-service reimbursement to shared risk between payers and providers” is leading to new approaches that “could significantly improve health outcomes and reduce inefficiencies.” I couldn’t agree more. Hospitals can play and are playing a leadership role in these efforts. Boston Children’s Hospital, where I worked until earlier this year, is one such place. The 2010 Patient Protection and Affordable Care Act, as well as recent guidance from the US Internal Revenue Service, requires that tax-exempt hospitals assess the health needs in their local communities and develop plans of action. Although community-benefit regulations specify the actions that hospitals must take to achieve compliance, they also leave room to explore ways in which hospitals can contribute to a changing health landscape. It is in this space that Boston Children’s has brought innovation to its work—particularly through a collection of community-focused programs called the Portfolio to Achieve Health and Social Impact. In the early 1990s, Boston Children’s set out to formalize and expand its commitment to improve the health of the city. Although already a leader in three areas—research, patient care, and teaching—the hospital asked what it would take to become an innovator and a trusted resource for relieving the social stresses that weigh on urban families. Conversations among hospital and community leaders led Asthma Initiative (CAI) has grown into a comprehensive, commuBoston Children’s to become one of the first academic health cennity-oriented program serving nearly 1,000 families in the Boston ters in the country to make community a fourth part of its mission. area. CAI has demonstrated that participating children experience Since then, the hospital has created an Office of Child Advocacy fewer asthma-related hospitalizations, emergency room visits, and (OCA) to coordinate community benefit efforts throughout the missed school days (and their parents miss fewer days of work). hospital and to manage its Portfolio to Achieve Health and Social Equally important, the program proved to be cost effective. In the Impact. It has also created four programs to bring innovation to March 2012 issue of Pediatrics, CAI reported that for every $1 spent, some of Boston’s most pressing health issues: child development, the health care system realized $1.46 in savings. mental health, asthma, and obesity. The programs include strategic CAI’s data on its impact, combined with advocacy efforts, have partnerships—with Boston Public Schools, the Boston Public led to recognition and opportunities to spread the program’s Health Commission, and the city’s community health centers. model. CAI partnered with the Asthma Regional Council, a coaliThe programs of the Portfolio to Achieve Health and Social tion of federal and state health, environment, education, and Impact demonstrate what hospitals can housing agencies, to develop a business accomplish by using their community case for cost-effective asthma intervenM. Laurie Cammisa was vice president for child advocacy at Boston Children’s Hospital for 14 years. She health initiatives to increase their effectivetions. CAI partnered with another local currently has her own consulting practice and works with ness in the broader health care ecosystem. advocacy coalition that used this busihospitals and other organizations to promote and support their community missions. For example, since 2005 the Community ness case to advocate policy changes for Fall 201 3 • Stanford Social Innovation Review
Ideas First Person enhanced asthma care for children in Massachusetts. The efforts As Boston Children’s builds on these successes, it is entering persuaded the legislature to earmark funding in the MassHealth a new phase of its work: to contribute to health care reform. By (Medicaid) budget to fund and evaluate a demonstration project using its community-based programs as examples of innovative that would provide case management services for children with approaches to care, the hospital will move ahead with that phase. poorly controlled asthma. A pilot program is now ready to be By incorporating its community health programs into its populalaunched. In addition, Alabama and Ohio are seeking Boston tion health and care management initiatives, the hospital will effecChildren’s technical assistance to replicate the model. tively expand the impact of the programs, position the programs to Today, these results are pointing the way toward a reconfigura- reach tens of thousands of children annually, and decrease unnecestion of the hospital’s overall approach. Starting with an organizasary health care costs throughout its network of relationships. In tional restructuring in August 2012, which situated the Portfolio to Achieve Health and Social Impact within the hospital’s Hospitals can be innovators, conveners, partners, and network development strategy, the hospital seeks to expand and build on programs providers. Their ability to play those roles will be essential to improving health outcomes and reducing inefficiencies. like CAI to integrate its community mission into its overall approach. Its goal is to serve the Boston community while developing models for addition, by taking that step, the hospital will be able to leverage reducing health care costs and providing more effective prevenits community needs assessment to prioritize health issues and tive and clinical care. to identify gaps in community services. All of this will enable the hospital to partner with and encourage community providers to beyond community benefits fill certain roles that are ineffectively or incompletely served at the The decision to embed community benefit activities further into hospital provider level. Boston Children’s overall strategy reflects a few important lessons. a new role for hospitals Programs need a common road map that defines the path Boston Children’s is playing a variety of new roles as a result of the toward systemic change. | The OCA found that leaders of its programs had a clear sense of how to carry out their direct service goals, work it started in the 1990s. It has become a funder and practitioner of innovation. It has become a community convener that promotes but using their programs to pursue broader change was far more challenging. The development by the hospital, in collaboration with public health. It also increasingly sees itself as part of a health care ecosystem. Other players, including policy makers, funders, comthe nonprofit consulting firm Root Cause, of a program evolution munity health centers, city and state governments, and nonprofits, framework provided a clear road map, which included a checklist requiring each program to focus on community engagement, evalu- are redefining their roles as well. These groups have the ability and knowledge to work together to succeed in health care reform. ation, and cost effectiveness. Other hospitals are also experimenting with their roles in Performance measurement provides the key to continuous improving health outcomes and reducing health care costs. For improvement and external recognition. | In tandem with the proexample, Connecticut Children’s Medical Center’s Office for gram evolution framework, the hospital worked to develop a performance measurement system that would assess the performance Community Child Health has created an infrastructure to support innovations like the Help Me Grow (HMG) National Center— and health and social impact of each program. Working with Root a program initiated in Connecticut that has been replicated in 17 Cause, OCA also created a dashboard to measure its own effectiveness in supporting the programs as well as promoting the hospital’s states with the support of the W. K. Kellogg Foundation and the Commonwealth Fund. HMG assists states in identifying children overall community mission. (from birth through age eight) at risk for developmental or behavSubstantive, strategic community partnerships are essential. | ioral problems and connects their families to community-based The hospital cannot achieve maximum impact without partnerprograms and services. Eighty percent of children and families ships that reach important communities. Community partners referred to HMG have been successfully connected to programs provide knowledge about health problems and their most effective and services. Based on data from its Orange County (Calif.) prointerventions, create vital links among the hospital and external stakeholders to leverage resources, and ensure that the health inter- gram, it’s estimated that the forgone initial costs of medical specialist consultation and diagnostic testing is more than $2,300 per child. ventions are rooted in community norms. The program estimates that the potential nationwide savings of Hospitals can become drivers of innovation and conveners of early detection and intervention through the HMG National Center community stakeholders to advance public health. | Although the could total more than $54 million per year. Portfolio to Achieve Health and Social Impact builds on existing Examples like that one, along with the example of efforts at best practices at Boston Children’s, the way that it is seeking to Boston Children’s, suggest that hospitals can be innovators, conveachieve broad health and social impact is unique. It demonstrates ners, partners, and providers. Their ability to play all of those roles the role that hospitals can play in driving innovation within comwill be essential if hospitals are to contribute fully to the work of munities. In part, this role centers on providing funding as well as improving health outcomes and reducing inefficiencies. n managing programs through rigorous measurement tools. 20
Stanford Social Innovation Review • Fall 2013
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When Can Impact Investing Create Real Impact? Although it is possible for impact investors to achieve social impact along with market rate returns, it’s not easy to do and doesn’t happen nearly as often as many boosters would have you believe. By Paul Brest & Kelly Born illustration by ben wiseman
here has been an increasing realization that, along with philanthropy and government aid, private enterprise can contribute to solving social and environmental problems. At the same time, a growing number of investors are expressing a desire to “do good while doing well.” These are impact investors, who seek opportunities for financial investments that produce social or environmental benefits. However, the rapid growth of the field of impact investing has been accompanied by questions about how to assess impact, and concerns about potentially unrealistic expectations of simultaneously achieving social impact and market-rate returns. This article is addressed to impact investors who wish to know whether their investments will actually contribute to achieving their social or environmental (hereafter, simply “social”) objectives. We introduce three basic parameters of impact: enterprise impact, investment impact, and nonmonetary impact. Enterprise impact is the social value of the goods, services, or other benefits provided by the investee enterprise. Investment impact is a particular investor’s financial contribution to the social value created by an enterprise. Nonmonetary impact reflects the various contributions, besides dollars, that investors, fund managers, and others may make to the enterprise’s social value. The most novel and intriguing question we consider is whether and when investors can expect both to receive risk-adjusted market-rate 22
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With Responses From
Audrey Choi | 27 Sterling K. Speirn | 28 Alvaro Rodriguez Arregui & Michael Chu | 29 Nancy E. Pfund | 30 Nick O’Donohoe | 31 MORE AT SSIR ONLINE n Responses from 10 other
thought leaders n Authors' comments on responses n Lively discussion with your peers n Longer version of Paul Brest and
Kelly Born’s article
returns on their investments and to have real social impact: that is, can investors both make money and make a difference? That is the claim made by many impact investment funds. One recent study asserts that most of what it estimates to be a $4 billion impact investing market involves investments producing market rate returns.1 We posit that a particular investment has impact only if it increases the quantity or quality of the enterprise’s social outcomes beyond what would otherwise have occurred. Under this definition, it is readily apparent that grants or concessionary investments (investments that sacrifice some financial gain to achieve a social benefit) can have impact: By hypothesis, an ordinary market investor, who seeks market-rate returns, would not provide the capital on as favorable terms, if at all. But if an impact investor is not willing to make a financial sacrifice, what can he contribute that the market wouldn’t do anyway? We believe that in publicly traded large cap markets, the answer is nothing: Even quite large individual investments will not affect the equilibrium of these essentially perfect markets. The frictions or imperfections inherent in some smaller, private markets, however, may offer the possibility of achieving both market returns and social impact. For example, someone with distinctive knowledge about the risk and potential returns of a particular opportunity may make an investment that others would pass up. The question of investment impact is of obvious importance to investors who want to make a difference. Although we do not reject the possibility of earning market-rate financial returns while achieving social impact, we are skeptical about how much of the impact investing market actually fits this description.
Impact Investing Defined An impact investor seeks to produce beneficial social outcomes that would not occur but for his investment in a social enterprise. In international development and carbon markets, this is called
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additionality. With this core concept in mind, we define the practice of impact investing capaciously, as actively placing capital in enterprises that generate social or environmental goods, services, or ancillary benefits such as creating good jobs, with expected financial returns ranging from the highly concessionary to above market.2 The adverb “actively” excludes negative investment screens. This is not a judgment about their value, but rather reflects the general understanding that impact investing encompasses only affirmative investments. Within the field of impact investing, we include concessionary investments, which sacrifice some financial returns to achieve social benefits, and non-concessionary investments, which expect risk-adjusted market returns or better. Like philanthropists, impact investors invariably intend to achieve social goals. They are, by definition, socially motivated. Their goals may be as specific as providing anti-malaria bed nets to residents of a region in Africa or as general as doing environmental good. In contrast, socially neutral investors are indifferent to the social consequences of their investments. Many endowments invest in a socially neutral manner, as do individuals who invest through money managers or funds whose only mandate is to maximize financial returns. Whatever an investor’s intention, the fundamental question is whether an investment actually has social impact. For example, socially neutral investors, motivated only by profit, have contributed to the social impact of telecommunications companies in both the developed and developing world. Yet while social impact can be achieved unintentionally, this does not mean that intention is unimportant. In business, as in philanthropy and all other spheres of life, people are more likely to achieve results that they intentionally seek. Having impact implies causation, and therefore depends on the idea of the counterfactual—on what would have happened if a particular investment or activity had not occurred. The enterprise itself has impact only if it produces social outcomes that would not otherwise have occurred. And for an investment or nonmonetary activity to have impact, it must increase the quantity or quality of the enterprise’s social outcomes beyond what would otherwise have occurred.
Enterprise Impact In this article, we explore the three parameters of impact: the impact of the enterprise, investors’ contribution to the enterprise’s impact, and the contribution of nonmonetary activities to an enterprise’s impact. Without successful outcomes from the social enterprise, no investment can have social impact. Therefore, the social impact of investors and other actors ultimately depends on that of the enterprises they support.
An enterprise can have impact in several ways, two of which are fundamental: product impact is the impact of the goods and services produced by the enterprise (such as providing anti-malaria bed nets or clean water); operational impact is the impact of the enterprise’s management practices on its employees’ health and economic security, its effect on jobs or other aspects of the well-being of the community in which it operates, or the environmental effects of its supply chain and operations. The theoretical framework that underlies the assessment of enterprise impact makes a distinction between outputs and outcomes. An output is the product or service produced by an enterprise; the (ultimate) outcome is the effect of the output in improving people’s lives. So the impact investor must answer two questions: First, to what extent will the intended output occur? Second, to what extent will the output contribute to the intended outcome (where the counterfactual is that the outcome would have occurred in any event)? Consider an investor supporting an organization that manufactures and distributes bed nets with the goal of reducing morbidity and mortality from malaria. The focus of the first question is whether the bed nets were manufactured and distributed. It is answered by looking at the quantity and quality of the organization’s outputs. The second question is concerned with whether the bed nets actually reduced malaria in the target population. For example, even if bed nets are often effective, and even if the ultimate outcome occurred in the target population, can the reduction in malaria be attributed to the enterprise? Perhaps the reduction was due to a simultaneous vaccination or mosquito eradication program. The question of outcomes, or social impact, is typically answered by using the same social science methods used in assessing outcomes in public policy and philanthropy—for example, randomized controlled studies or econometric analysis. The Impact Reporting and Investment Standards (IRIS) and Global Impact Investment Rating System (GIIRS) provide standardized metrics for assessing some common output criteria. But these focus more on an enterprise’s operations than on its products. With rare exceptions—most notably, the field of microfinance—there have been few efforts to evaluate the actual outcomes of marketbased social enterprises. The absence of data and analysis makes it difficult for impact investors to assess the social impact of the enterprises they invest in.
As we noted above, to have investment impact requires that an investment increase the quantity or quality of the enterprise’s social output beyond what would otherwise have occurred. Assuming that, at the time of an investment, the enterprise can productively absorb more capital, then an investment Paul Brest is emeritus professor at Stanford Law School, a lecturer at the Graduate School of has impact if it provides more capital, or capital at lower Business, and a faculty co-director of the Stancost, than the enterprise would otherwise get. ford Center on Philanthropy and Civil Society. He Debra Schwartz, director of program-related investwas previously president of the William and Flora Hewlett Foundation. ments at the MacArthur Foundation, has alliteratively Kelly Born is a fellow in charge of special projsummarized the kinds of capital benefits that impact ects at the William and Flora Hewlett Foundation. investors can provide in terms of five P’s, to which we Before joining the Hewlett Foundation she was a strategy consultant with the Monitor Institute. add a sixth, perspicacity:
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■ ■ ■ ■ ■
Price. Below-market investments Pledge. Loan guarantees Position. Subordinated debt or equity positions Patience. Longer terms before exit Purpose. Flexibility in adapting capital investments to the enterprise’s needs Perspicacity. Discerning opportunities that ordinary investors don’t see
These capital benefits enable the enterprise to experiment, scale up, or pursue social objectives to an extent that it otherwise could not. The first five are particularly relevant to investments that expect below-market returns. The sixth, perspicacity, may hold the key to achieving both market returns and social impact. Socially motivated investors fall into two categories: concessionary investors who are willing to make some financial sacrifice—by taking greater risks or accepting lower returns—to achieve their social goals; and non-concessionary investors who are not willing to make any financial sacrifice to achieve their social goals. Most so-called “double-bottom-line” impact investors are nonconcessionary. In the context of philanthropy, non-concessionary socially motivated investments are often called mission-related investments, and are distinguished from program-related investments, which are generally concessionary. Concessionary Investments | The return sacrificed by a concessionary investment is, in effect, a charitable donation or grant. Assuming that the enterprise can productively deploy additional capital, a concessionary investment has investment impact virtually by definition, because it makes available capital to which an enterprise would not otherwise have access. Consider three general situations in which impact investors have made concessionary investments. Supporting nascent enterprises. The early stages of many social enterprises that aspire to become financially sustainable depend on philanthropy and highly concessionary investments that involve higher risks than ordinary market investors would take. This was true of microfinance and of other social enterprises that serve base-of-pyramid (BOP) populations, which often depend on innovations in technology and marketing and require significant investments before yielding any financial returns. Subsidizing ongoing enterprises. Some mature social enterprises require the ongoing support of investors who are willing to forgo a degree of financial return for social benefits. For example, in 1994 the US Department of the Treasury created Community Development Financial Institutions (CDFIs) to “provide economically depressed communities access to credit, equity, capital, and basic banking products.” Subsequently, the Calvert Foundation began offering below-market Calvert Community Notes, which in turn are invested in CDFI-accredited community organizations that provide below-market loans to nonprofit organizations and small businesses in underserved communities. Simultaneous layering of concessionary and non-concessionary investments, with the former intended to encourage the latter. For example, the New York City Acquisition Fund is designed to promote the development of affordable housing by providing flexible capital for developers. The city was joined by the MacArthur,
Rockefeller, F. B. Heron, Robin Hood, Starr, and Ford foundations in providing subordinate debt and loan guarantees. More or less non-concessionary investors include Bank of America, JP Morgan Chase, and HSBC. These are examples of the beneficial effects of subsidies. But the fact that an investment is concessionary is no guarantee that it will create net positive social impact. Subsidies can also mask an enterprise’s inefficiencies and crowd out healthy competition. Subsidizing microfinance and community development institutions has been both positive and harmful in different circumstances. In any event, the ideal outcome for most enterprises that initially rely on concessionary capital is that they eventually yield market returns and attract socially neutral investors. Here, impact investors have played their part in bringing the enterprise to market, the impact investing story is over, and the enterprise is now supported by customers and ordinary market investors. The modern history of microfinance provides examples of this. The story begins with grants to the Grameen Bank and other microfinance institutions (MFIs) to develop and prove the concept, followed by concessionary loans and equity investments to begin implementing it. Although even today many MFIs depend on subsidized investments, an increasing number now attract market investors. For example, in 2007 the initial public offering of the highly profitable Compartamos Banco was vastly oversubscribed, and some mainstream banks, such as Citigroup, now have a microfinance business. This generally positive story has a dark side, however. As MFIs become more financially attractive, they may adopt practices that compromise their social missions. Non-Concessionary Investments | It’s easy to see how belowmarket investors can provide capital benefits to an enterprise, but it is less clear how and when investors expecting market returns (or better) have investment impact. Yet much of the impact investment space is occupied by funds that promise their investors both socially valuable outputs and at least market returns. For example, Elevar Equity generates “outstanding investment returns by delivering essential services to disconnected communities underserved by global networks.” We don’t question these fund managers’ assertions that their investments have strong financial returns. The immediate question is how their investments might have investment impact. Under our criterion of additionality, the investment must increase the quantity or quality of the social or environmental outcome beyond what would otherwise have occurred. The counterfactual is that ordinary, socially neutral investors would have provided the same capital in any event. Under the additionality criterion, how can an impact investor expect market returns and still provide capital benefits to the enterprise? After all, if it’s a good investment, one would expect socially neutral investors to be in it as well. Most economists agree that it is virtually impossible for a socially motivated investor to increase the beneficial outputs of a publicly traded corporation by purchasing its stock. Especially if—as is generally the case—stock is purchased from existing shareholders, any benefit to the company is highly attenuated if it exists at all. Impact investing typically does not take place in large cap public markets, however, but rather in domains subject to market frictions. While some of these frictions impose barriers Fall 2013 • Stanford Social Innovation Review
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to socially neutral investors, socially motivated impact investors may exploit them to reap both social benefits and market-rate financial returns. These frictions include: ■
Imperfect information. Investors at large may not know about particular opportunities—especially enterprises in developing nations or in low-income areas in developed nations—let alone have reliable information about their risks and expected returns. Skepticism about achieving both financial returns and social impact. Investors at large may be unjustifiably skeptical that enterprises that are promoted as producing social or environmental value are likely to yield market-rate returns. Inflexible institutional practices. Institutional investors may use heuristics that simplify decision making but that exclude potential impact investments, which, for example, may require more flexibility than the fund’s practices permit. Small deal size. The typical impact investment is often smaller than similar private equity or venture capital investments, but the minimum threshold of due diligence and other transaction costs can render the investment financially unattractive regardless of its social merits. Limited exit strategies. In many developing economies, markets are insufficiently developed to provide reliable options for investors to exit their investment in a reasonable time. Governance problems. Developing nations may have inadequate governance and legal regimes, creating uncertainties about property rights, contract enforcement, and bribery. Navigating such regimes may require on-the-ground expertise or personal connections that are not readily available to investors at large.
We believe that non-concessionary impact investors are especially likely to have investment impact in conditions of imperfect information—for example, in social or environmental niche markets where impact investment fund managers or other intermediaries have special expertise or intelligence on the ground. Perfect markets are functionally omniscient, but the impact fund manager says (in the words of David Chen of Equilibrium Capital), “I see something that you don’t see.” Socially motivated investors may be particularly interested in identifying these opportunities and thus may be able to have impact even at nonconcessionary rates. This is the most likely explanation for the asserted double-bottom-line success of firms like Elevar Equity. Even here, one might ask whether investments that seem nonconcessionary on their face incorporate hidden concessions in the form of risk or extra and costly due diligence that ordinary investors would not undertake.
Nonmonetary Impact Beyond just providing capital, fund managers as well as other actors can improve an enterprise’s social outputs by providing a range of nonmonetary benefits: Improving the enabling environment for social enterprises and investors. Governments and foundations can provide funding to improve the social, political, and regulatory environments in which social enterprises and their investors operate. For example, 26
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the Boulder Institute has developed scoring and rating models for MFIs, established benchmarking, introduced an open source management information system, and trained thousands of MFI practitioners. In addition to providing public goods of these sorts, a well-designed set of investments in a sector has the potential to catalyze markets to a greater extent than the sum of random investments in the individual investee enterprises. Finding and promoting impact investment opportunities. Impact investment intermediaries are critically important in discovering investment opportunities and bringing them to the attention of investors, thus helping to overcome the information failures previously noted. For example, Agora Partnerships identifies early-stage impact investment opportunities in Central American communities, focusing on small and growing businesses that are too large for microcredit and too small for traditional financing. Its clients, such as the Draper Richards Kaplan Foundation, engage Agora to pursue impact investment opportunities in the region. Aggregating capital and providing other investment services. Fund managers and other intermediaries reduce transaction costs by creating economies of scale, and they may also provide technical assistance to impact investors. For example, Imprint Capital Advisors helps foundations and family offices identify domestic and global opportunities for impact investment. Imprint guided several foundations to invest in Southern Bancorp, a US development bank that provides banking and nonprofit services aimed at reducing poverty and unemployment in distressed rural communities. Providing technical and governance assistance to enterprises, and helping them build strategic relationships. Fund managers and other third parties provide nonmonetary benefits, ranging from technical assistance for nascent enterprises to helping more mature enterprises develop relationships with customers, suppliers, and other partners. For example, Root Capital’s Financial Advisory Services are designed to strengthen the business processes of social enterprises with high growth potential in Africa and Latin America. Training modules focus on business and administrative management, financial planning, risk management, accounting, and loan applications. Gaining socially neutral investors. One of the unfortunate characteristics of imperfect impact investing markets is their inability to attract the large majority of socially neutral investors who demand market returns. Where such returns seem plausible, a respected institution can signal to other investors that a particular investment or an entire sector that others may have thought dubious is actually worthy of consideration. For example, the David & Lucile Packard Foundation made an initial $1 million equity investment, followed by a low-interest $10 million loan, in EcoTrust, a sustainable forest management firm. The foundation’s general counsel noted: “Our main reason for investing in EcoTrust Forest in this way is to demonstrate that sustainable forest practices can generate a profit so that mainstream investors will become more interested in it.” 3 Securing and protecting the enterprise’s social mission. Over time an enterprise’s management and directors may discover opportunities to increase financial returns at the expense of social impact. For example, the manufacturer of products or services designed for BoP clientele may find it more profitable to market to wealthier
customers. The dangers are especially acute as the enterprise scales up and takes on new, socially neutral investors. There are a number of possible protections against such mission drift, including contractual arrangements; B Corps, and other corporate forms that require, or at least welcome, producing social benefits that may compromise market returns; and the continual influence of socially motivated investors.
Audrey Choi is managing director and head of Global Sustainable Finance at Morgan Stanley. She previously served in a variety of positions in President Bill Clinton’s administration, including chief of staff of the Council of Economic Advisors.
The Demand for Information About Impact Having addressed this article to impact investors who wish to know whether their investments will actually contribute to social or environmental impact, we conclude with a reality check on investors’ making this inquiry and learning from it. A 2010 survey of philanthropists and impact investors suggests that the vast majority are not willing to make any effort to gain information about the actual social or environmental impact of their investments.4 Social impact is notoriously difficult to measure, and it could well be that many investors are satisfied with the good public relations and warm glow of doing a beneficent act. But we are optimistic that there are impact investors with significant resources who actually care whether their investments are making a difference. For those who do care, efforts to assess impact come at a cost— greater or lesser depending on the degree of evaluative rigor. Estimating the expected financial return from an investment is a difficult but familiar exercise. Estimating social return is intrinsically much harder because of the complexities of placing values on social and environmental outcomes and predicting what outcomes an organization is likely to achieve. Estimating the value of nonmonetary contributions that directly benefit an enterprise is a commonplace task that an organization engages in whenever it hires consultants. Estimating the value of nonmonetary contributions to an entire sector is a far more speculative task. In contrast to enterprise and nonmonetary impact, assessing a particular investment’s additionality in order to determine its investment impact is a novel task that, so far as we know, has not previously been undertaken. In this article, we propose the questions that underlie this analysis. An investor who expects market returns must ask whether his non-concessionary investment is likely to have investment impact, and if so, how much. An investor who is prepared to sacrifice market returns should ask how much concession it’s worth making for the social value produced by the organization. Although we have no a priori commitment to any particular depth of analysis, we believe that realizing the promise of impact investing depends on all three measures becoming central to the marketplace. n This article is based on a longer article by Brest and Born, “Unpacking the Impact in Impact Investing,” available at SSIR Online.
Note s 1 http://www.pacificcommunityventures.org/reports-and-publications/marketfor-social-impact-investing-by-private-equity-funds-stands-at-4-billion-in-theunited-states/ 2 Our definition borrows liberally from the definition used in the report Investing for Impact: Case Studies Across Asset Classes, Bridges Ventures, The Parthenon Group, and Global Impact Investing Network, p. 3. 3 Stephanie Strom, “To Advance Their Cause, Foundations Buy Stocks,” The New York Times, Nov. 24, 2011. 4 http://hopeconsulting.us/money-for-good/
aul Brest and Kelly Born’s article provides useful rigor in helping a self-identified “impact investor” answer the question, “How can I be certain that my impact investment is creating an impact that otherwise would not have occurred?” This consideration is particularly relevant for philanthropic individuals or institutions who may be contemplating impact investing as an alternative use for the precious resource of dollars that would otherwise go to grants or concessionary program-related investments. Many of us in the impact investing field, however, find more compelling a different question, “How can we drive positive change to address the world’s problems as broadly, as rapidly, and as effectively as possible?” If that is the outcome we seek, then it matters much less whether a particular investment counts as an “actual” impact investment. It also matters less whether the positive impact created was the central intent or an outcome or by-product of the investment. What matters more is whether change happens and whether it reaches transformational scale. If those positive changes happen to benefit from the tailwinds of market forces, and if the investments were made in the company of non-impact-minded investors who are primarily interested in financial returns, then so be it. If it is good to fuel the growth of a company that creates critically needed jobs, reduces carbon emissions, or improves community resilience, then isn’t it better if we can harness more capital to help that company grow faster and replicate more broadly? Grants, PRIs, and concessionary investments play a critical role in fueling social innovation. The goal of impact investing isn’t to substitute for those vital grants or PRIs but rather to tap into the much larger pools of pensions, endowments, and other fiduciary and commercial capital that can complement and augment the grants and concessionary capital. Our role as field-builders in impact investing, then, should be to create as many broad and inclusive on-ramps as possible for investors with many different appetites in order to attract as much capital as possible for investment in opportunities that drive, support, and accelerate positive change. For the growing number of mainstream investors beginning to contemplate impact investing as an additional tool in their portfolios, the first question should perhaps be “How can my investment dollars be directed in ways that provide positive social impact as well as satisfy my economic requirements?” To be sure, a decision to invest with impact may not have as dramatic a social-impact multiplier effect as a highly intentional, impact-first investment. Fall 2013 • Stanford Social Innovation Review
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But one cannot say that no positive benefits accrue from decisions by mainstream investors to direct their funds away from investments that have negative or neutral social impact and toward ones that have positive impact. Brest and Born suggest that in market-rate opportunities impact investors don’t actually have much impact, because those businesses already have access to more than enough commercial capital. But economically sensible investments do not necessarily get ample funding automatically. If they did, there would be no need for the venture capital industry, which specializes in identifying and funding businesses that it believes have the capability to deliver outsized returns but that have been overlooked by traditional capital. By seeking out and seeding investments that have the ability to achieve both market-rate returns and high social impact, impact investors can introduce those enterprises to conventional capital and thereby broaden the scope of possible impact. As proponents of impact investing, we are best served when investors—impact or otherwise—are clear about their goals, expectations, risk tolerances, return requirements, and desired impact outcomes. In assessing how well a particular investment fits an investor’s needs, “actual impact” as outlined by Brest and Born is an important analytic tool—as is the recognition that appropriate risk-adjusted market-rate returns aren’t necessarily at odds with impact, especially if they help deliver impact more quickly and more broadly. n
Sterling K. Speirn is president and CEO of the W. K. Kellogg Foundation. He was previously president and CEO of Peninsula Community Foundation.
Sterling K. Speirn
aul Brest and Kelly Born’s article brings clear and rigorous analysis to a field that is desperate to have the practice catch up with the rhetoric, and that until now has surrounded a provocative idea with too much wishful and fuzzy thinking. In addition to developing a very helpful taxonomy and terminology, Brest and Born raise a critical question: What is the nature of the impact created by the investment itself, separate from the outputs or outcomes produced by the social enterprise that received the investment? They argue that investment impact—as distinguished from the enterprise impact—exists only if the quantity or quality of the enterprise or investee’s output is increased “beyond what would otherwise have occurred.” From the perspective of an experienced impact investor—the W. K. Kellogg Foundation’s $100 million Mission Driven Investing Portfolio (MDI) now has a five-year track record across multiple asset classes and sectors—I find this framework 28
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illustrative but in need of expansion if we are to fully describe all the returns and impacts that are generated in the relationships between impact investors and their investees. To begin, it’s important to differentiate among investors, as I will argue that there is an investor impact that adds yet another dimension of additionality in any transaction, depending on the unique interests of the investor. Brest and Born define foundations or other investors who start with a philanthropic perspective to promote and stimulate positive social change as socially motivated investors, as distinct from socially neutral investors. And indeed, at the Kellogg Foundation we have found ourselves often in deals side by side with socially neutral investors, realizing or hoping to achieve market-rate returns. The authors are right to be skeptical that much impact investing strictly defined can achieve both market-rate financial returns and social impact returns, but the likelihood of this happening increases if we take into account another potential return: what we at the Kellogg Foundation call the learning return. (There is also a corresponding learning return for socially neutral investors, who by specializing in an industry gain increasing expertise to optimize future financial returns.) For foundations, which for the most part have made only charitable grants, becoming impact investors in commercial enterprises brings new and different information and insights into social problem solving that would not otherwise be available to them through charitable grantmaking alone. Brest and Born appreciate that value is added from the relationship between investor and investee (called nonmonetary impact), but they see this as occurring in only one direction, from the investor to the investee. There is, however, the potential for a “more than money” return from the investee to the investor that can make socially motivated investors smarter and more effective in their core philanthropic endeavors, increasing social impact in both conventional charitable grantmaking and impact investing. Here are some examples from the Kellogg Foundation. With decades of work and experience in food systems and with longterm field-building efforts in farm-to-school, community food, and school food transformations, the foundation saw an opportunity to invest in a young company, Revolution Foods, that was dedicated to selling healthy, affordable, delicious food for schoolchildren. It has brought us wholly new perspectives on issues of public policy, school and community food systems, and family and child behaviors that we can use to inform our grantmaking and institutional efforts on the very same issues. Investing in a bank, Southern Bancorp, that does business in the Mississippi Delta region, one of the foundation’s priority places, creates a partnership and provides a unique perspective on the challenges of economic and workforce development with which our program staff continually grapple. With our investment in Wireless Generation, our intense learning return on how to bring technology and big data to real-time assessments, coupled with customized instruction for K-3 early grade literacy, was matched by our 26 percent return with an early buyout. And today, as more funders seek to promote and invest in prevention and wellness as opposed to disease treatment, our investment in SeeChange Health tells the same story in the health arena. Traditionally, foundations have supported pilot and model programs in the hope that they will be replicated and then funded
more broadly by government. Now we see that when our fieldbuilding efforts are successful, they can create new demands and ultimately new markets for entrepreneurs to take advantage of. In this way, foundations can enlist private sector forces in scaling up what works. Impact investments are not stand-alone transactions, but pivot points on the continuum of grants to commercial investments that enable socially motivated investors to continue learning and to stimulate continued advancement of their missions across sectors. For any given transaction, there might not be investment impact additionality as strictly defined by Brest and Born, but there can be substantial investor impacts that will increase mission efficacy over the long term. n
Alvaro Rodriguez Arregui is managing partner at IGNIA. He is the former chairman and current vicechairman of Compartamos Banco. Michael Chu is managing director of IGNIA and senior lecturer of business administration at Harvard Business School. He was previously president and CEO of ACCION International.
Alvaro Rodriguez Arregui & Michael Chu
he article by Paul Brest and Kelly Born perpetuates the idea that financial returns and social impact are a zero-sum game and that you cannot maximize both. This perspective has done a tremendous disservice to the impact investing field. If the world had adopted it two decades ago, poverty would not have been reduced by 50 percent. Not all human and environmental challenges can be tackled with commercial approaches, and many terms denote the noncommercial initiatives that address these challenges, including philanthropy, nonprofit, public sector, and corporate social responsibility. A new term is justified only if it is not old wine in a new bottle. That is why at IGNIA we believe that impact investing should be reserved for a commercial approach, lest we confuse more than we clarify. The authors ask, When can investors expect both to receive risk-adjusted market-rate returns on their investments and have real social impact? The answer is, When an intervention of high social value is mounted on a sturdy business platform. We proved that this was possible with commercial microfinance. At IGNIA, we seek to extend this approach to affordable housing, digital access for the daily needs of people at the base of the pyramid (BOP), access to health care, high-nutrition products, and other basic needs. If we succeed and achieve extraordinary financial returns, this will attract a flock of market entrants. With their entry we will create
an industry, and only then can we guarantee achieving a lasting and large enough impact to move the needle. In this way financial returns can be the main driver for social impact. Accordingly, there is no question that intentionality is a key element of impact investing and the intention should create an industry. How else can we stand a chance of tackling the enormous challenges we face? Brest and Born’s perspective—that in order to achieve impact you need capital willing to accept concessionary returns—is based on the view that reaching clients depends on a single dimension: price. But the value proposition to a client is much more complex than price. For example, Mexico provides free public health care, but after factoring in travel time, waiting time, multiple visits to the doctor, and quality of care, people at the BOP would consider that the total transaction cost is actually large. Seeking a better value, people at the BOP are often willing to dig deep into their shallow pockets to opt for a commercial health-care alternative. The market economy has taught us this lesson, but in the socialimpact world we refuse to accept it. Brest and Born’s view that “an ordinary market investor, who seeks market-rate returns, would not provide the capital on as favorable terms” perpetuates two false views: first, that investments with impact cannot achieve extraordinary returns, and second, that the impact world sets the bar too low and continues to fund mediocre business plans for which no source other than concessionary funding is possible. If the first view were accurate, few of the great innovations that have improved the quality of life of humankind over the past 100 years would have flourished. The second leads to the view that impact investing is an industry devoted to funding the well-intentioned “walking dead” (to use the venture capital industry’s term). By focusing on financial returns, Brest and Born miss the point that what distinguishes impact investors from traditional investors is that they have a higher tolerance for risk. Brest and Born also call for more attention to measuring outcomes. But we have spent too much time and too many resources discussing impact measurement and trying to measure outcomes. Is an individual who needs eyeglasses better off if she has access to them? If you are wearing a pair while reading this article, you know the answer. There are myriad basic products and services such as eyeglasses to which the majority of the world’s population does not have access and which, if they did, would allow them to live significantly improved lives. So let’s move on and not overburden those initiatives focused on underserved communities with academic questions. They already face plenty of challenges trying to deliver what they promise. There is no question that there is a role for philanthropic capital in impact investing. Philanthropy, as in the biotech and the cleantech industries, can provide the very early stage R&D capital that carries such high risk that it would never attract any return-seeking investor. In this well-worn model, philanthropy, often through universities, helps give birth to new ideas and enables their development into working concepts, at which point the risk level is in the range where venture capital can enter and bet on building an effective business model. Instead of playing this role in impact investing and supporting disruptive business concepts on their hard road to viability (or not), Fall 2013 • Stanford Social Innovation Review
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philanthropy too often funds no risk and therefore no innovation, as when it gives free houses to the homeless or waits in line to provide growth capital to already-proven social enterprises. One last thought. Venture capitalists understand that their industry is based on the portfolio approach to returns. In impact investing we seem to have missed this lesson. With a “concessionary returns” approach, the end result is a portfolio characterized by very low risk/low returns projects that, by definition, are neither transformative nor very innovative. Instead we should adopt the portfolio approach, knowing that most projects that swing for the bleachers will fail but those that succeed will achieve such high impact and financial returns that they will more than compensate for the failures. n
Nancy E. Pfund is founder and managing partner at DBL Investors. She was previously a managing director at J. P. Morgan and managing director in the venture capital department of Hambrecht & Quist.
Nancy E. Pfund
ately, it seems, just about everybody is becoming an impact investor. “All good,” one might say, for who wouldn’t want to rally behind those who strive to make a difference in the world while implementing a compelling investment strategy? The tricky part, as Paul Brest and Kelly Born argue in their thoughtful article, is determining what exactly that impact looks like and whether its existence bears any connection to the investment process attached to it. After almost 10 years of building our practice of double-bottomline venture capital at DBL Investors, we find many aspects of the authors’ conceptual framework resonant, including the notion of perspicacity, the presence or absence of additionality, and the importance of metrics and nonmonetary benefits. By its nature, venture capital as an asset class relies on a certain level of perspicacity, as referenced in the article—discerning opportunities that ordinary investors don’t see. Routinely investing in often unproven entrepreneurs who take on difficult product development challenges in markets that can be hostile does not happen successfully without some sixth sense that the innovation will prevail and that the odds are not as bad as they appear. What impact investing lends to the venture capital model is another level of purpose, one that reaches into a social or environmental domain by splicing itself into the DNA of a young company whose culture is still in the making. For example, in the early days of Tesla Motors (one of our investees), when we were looking for a site to build a manufacturing plant, DBL helped the company explore regions of the San Francisco Bay 30
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Area that might be suitable and where economic development incentives could help to level the playing field compared to other countries and states that had lower costs. This effort stemmed from aspects of our mission at that time, which included reducing the carbon footprint of transportation and creating high-quality jobs in Bay Area neighborhoods that needed them. Through a process that broke apart the conventional wisdom about whether California was an appropriate place to manufacture, the Tesla team’s perspicacity helped it grab a plant (the former NUMMI plant in Fremont) that many thought was out of its reach, creating a strategic win for both the company and the community. Whether this would have happened without a robust and purposeful early collaboration with DBL Investors we will never know. We do know that to infuse impact into decision making, one needs first to get a seat at the decision-making table. While the Tesla example shows how mission can lead to nonmonetary assistance to a company that can create very strategic benefits, the fact that DBL Investors invested alongside traditional venture capital firms makes the question of additionality harder to answer. In other cases, it is much clearer. When evaluating a prospective investment with both a social lens and a financial returns lens, we have found that we can connect the dots a little sooner as to why a particular company idea might work. This is because we are keyed into certain societal trends, problems, and policies that have been hard to solve and may even be getting worse. In these situations, it may well be time to turn to an entrepreneurial company to build on previous research and programmatic development from public and nonprofit organizations and to work to solve the problem at a scale unachievable by grants and social-welfare programs alone. Revolution Foods is the clearest example of this in our portfolio. DBL seeded this company at a time when it was very difficult for the founders to attract investment because the company’s purpose was “off-spec” from traditional venture business models. For us, by contrast, the company represented an exciting opportunity to address the epidemic of obesity and diabetes in our schools, particularly those in lower-income demographics. We also believed that cracking the code on K-12 healthy meal preparation would be of interest and value to existing players in the food service industry, creating potential for significant value creation. Today, Revolution Foods is serving more than 200,000 meals a day to children in K-12 schools and has attracted investment from an array of traditional and impact investors. In this as well as many other cases, the impact investor who sees the potential early and so invests early acts as a catalyst to help the entrepreneur gain access to traditional investors later on. Finally, the appeal by Brest and Born at the end of the article for investors to start measuring and analyzing aspects of their work rings very true to DBL Investors. As the examples I have presented here demonstrate, if you don’t track the efforts, count the jobs, detail the carbon saved, or whatever your social-mission priorities happen to be, it is very hard to show how or whether your investment approach has made a difference. At DBL, twice a year since the inception of both our funds we have been writing quantitative and qualitative impact reports that detail successes, failures, and works in process across a wide range of industries and locales, and through these reports we have been able to help our investors and ourselves assess the nature and scope of our impact.
We believe that some aspects of double-bottom-line venture capital investing, such as working with broader constituencies, paying attention to place, and engaging in policy issues, will become mainstream. In the startup world, using perspicacity with purpose to build businesses and address social problems is a way to refresh the venture capital model to address 21st-century needs and opportunities. n
Nick O’Donohoe is CEO of Big Society Capital. He was previously head of global research at J. P. Morgan.
or practitioners in the world of social-impact investing, a number of questions come up time and again: How do we define a social investment? How do we define social enterprise? and How big is the market and should we define it as an asset class? The question that comes up most of all is Do we believe that making an investment with the intent of creating impact necessarily leads to a risk-adjusted return that is lower than a purely financial investor would expect? Or in other words, Does impact investing require investors to “trade off” social return against financial return, or is it in fact a “free lunch” that allows investors to optimize risk-adjusted returns at the same time as they generate positive social value? The article by Paul Brest and Kelly Born is by some margin the most coherent attempt yet to consider this question. In the January 2013 survey of impact investors by J. P. Morgan and the Global Impact Investing Network, Perspectives on Progress, 65 percent of respondents indicated that they were seeking market-rate returns. If Brest and Born are right in saying that they are “skeptical about how much of the impact investing market actually fits this description,” then at best these investors are going to find it very difficult to find suitable investments, and at worst they are facing disappointing financial returns. So is the authors’ skepticism justified? Broadly speaking, I believe it is. In my view the vast majority of impact investors projecting market-rate returns fall into one of four categories. ■
They are in fact earning a market-rate return but only because there is subsidy in the capital structure. For example, large US banks are increasingly describing their lending to Community Development Financial Institutions (CDFIs) as impact investing. Without wanting in any way to discourage this activity, I would point out that the CDFIs receive significant subsidy through government grants and tax credits, and the banks that lend to them rely on that subsidy to earn their return.
They are confusing absolute return with risk-adjusted return. Projecting a 15 percent return for a microfinance equity fund may seem like a reasonable absolute return, but it is not close to what an appropriate risk-adjusted return would be for early-stage investments in some of the least developed markets in the world. They focus on returns from individual investments rather than returns on the entire portfolio. The extraordinary returns to the original shareholders in Compartamos do not prove that a portfolio of microfinance equity generates commercial risk-adjusted returns. They confuse projected returns with actual returns. Risk and return data are scarce in the impact investing world, and the projected returns of an investment manager rarely match actual returns.
I particularly find Brest and Born’s notion of investment impact helpful. They are correct in suggesting that for impact investment to have impact it has to be “additive,” and although it is easy to argue that concessionary investments are additive, it is much more difficult to do that with non-concessionary investments. Is it ever possible for the impact investor to earn a market return? Are there ways in which being an impact investor gives a competitive advantage over mainstream investors that allow the impact investor to optimize financial and social return? The authors identify a number of frictions that may impose barriers to what they describe as socially neutral investors but may provide some competitive advantage to socially motivated investors. Some of these frictions—such as small deal size, limited exit, and governance issues—are true of any investment portfolio that focuses on smaller companies, particularly in emerging markets. The authors also describe a skepticism and inflexibility that can create an unintended bias among mainstream investors. The following is a gross generalization, but I am going to make it in any case. If you go into any mainstream bank, investment manager, or private equity firm in Europe or the United States you find the same people: hordes of MBAs from the same schools investing with people they know and like, in places they visit and in businesses they can relate to. This homogeneity among investors has unintended consequences. New business models that create social value through the people they employ, the products they produce, or the areas in which they locate tend to find it difficult to attract capital. Because impact investors start from a different point of view, they go places, meet people, and see opportunities that the mainstream investment community misses. It may be possible, as David Chen notes, for them to “see something that you don’t see.” I share the conclusion that it is critical for impact investors who are providing concessionary capital to provide clear measurable metrics that demonstrate and support the impact they are creating. Those, however, who seek to provide non-concessionary capital also need to demonstrate evidence of impact, but they must in addition be able to articulate their investment impact, and that means a clear articulation of why normal commercial investors are missing the opportunities that they are pursuing. n Fall 2013 • Stanford Social Innovation Review
Scale How powerful civic organizations like the NRA and AARP build membership, make money, and sway public policy By Peter Murray illustration by george bates
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e Stanford Social Innovation Review
ccidental death and dismemberment insurance” just might be the most grisly consumer product name in history—the name suggests that if you think you need this insurance, what you might actually need is a dramatic change in your lifestyle or occupation. Two years ago, when I embarked on a research study to understand why some civic organizations grow to be large and influential while others don’t, little did I know that accidental death and dismemberment insurance would provide the answer. But there I was, perusing the member benefits of the National Rifle Association of America (NRA), when I was surprised to discover that one of the reasons people join is that the NRA will automatically insure you (and your limbs) in case of a firearms accident. This morbid, but surprisingly attractive, member benefit turned out to be the key that unlocked for me the secret of scale: the core model for growth that every large-scale civic organization shares. What I found is that the largest civic organizations have all scaled up using the same basic approach—a model I call “functional organizing.” All of these organizations provide benefits and services to cater to the everyday needs of their members—such as insurance, childcare, support groups, and discount cards—giving people a practical reason to join and remain active while providing the organization with a steady revenue stream. With more than four million members and a robust $250 million budget, the NRA and its package of member benefits perfectly illustrate the secret of scale. The QuesT for scale
I began searching for the secret of scale after seven years of running the Center for Progressive Leadership, a national training institute for leaders of civic organizations. Over that time, our institute trained and coached leaders at more than 1,000 civic organizations, ranging from local community centers to state-level advocacy groups to national issue organizations. Although civic organizations work on an array of issues, they share a focus on engaging citizens in creating systemic change, spurring fundamental shifts in culture, policy, and politics. Civic organizations see citizens not only as recipients of services but also Peter Mur r ay is president of Accelerate Change, a project of the Public Interest Network. He was previously president of the Center for Progressive Leadership.
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as social-change agents themselves. The social-change efforts can be as simple as neighborhood residents coming together to create a community garden or as ambitious as advancing a national policy agenda for education reform. Many are traditional membership organizations, such as the NRA, AARP, and AAA. But others, such as Planned Parenthood, local immigrant organizations, and lesbian, gay, bisexual, and transgender (LGBT) community centers, provide services for millions of community members who are not officially “members.” Civic organizations include unions and worker organizations, neighborhood associations, community service clubs, PTAs, business and professional associations, and co-ops. Civic organizations also include churches, which often endorse a range of social transformation goals in addition to their mission of personal transformation. Whatever the form or goal of these civic organizations, they share the core underlying idea that citizens have the power to reshape our society. Civic organizations across the United States struggle with a common fundamental problem: they simply aren’t growing to the scale needed to create systemic change. For me, “growing to scale” happens when a civic organization both builds deep relationships with a significant portion of the people in its community (measured by frequency of interactions and ability to influence members) and develops a robust, sustainable financial base (measured by percentage of revenue that is self-generated). Most civic organizations struggle to reach beyond the same core group of activists to more deeply engage members who are often little more than names on mailing lists. Instead of developing a broad donor and revenue base, many civic organizations have become overly-dependent on big grants from foundations, large donors, and government—grants that are shrinking in the wake of the financial crisis and government cuts. I knew there must be a better model. So with the support of a fellowship from the Tides Foundation, I launched a research project. I first looked at every large-scale civic organization I could find, ranging from US institutions such as the NRA, AARP, megachurches, unions, and trade associations to international organizations such as the Canadian Federation of Students, the Mondragon workers cooperative in Spain, and consumer cooperatives in England. I also looked at local US organizations that have achieved significant scale within their regions, such as CASA de Maryland and Make the Road New York. In the end, I focused my research on the organizing, membership, and business models of more than 50 large-scale membership civic organizations. I dug into these organizations’ finances, studied their membership models, assessed their policy and organizing strategies, and gained an understanding of what drives their growth and power. It was through this process that I discovered the NRA’s member benefits package, including its accidental death and dismemberment insurance. how The nra scaleD up
With convincing victories in gun control battles in Congress and state legislatures across the country, the NRA has proven yet again that it is one of the most powerful civic organizations in the country. How exactly has the NRA grown to a scale that permits it to dominate the political landscape on gun control issues?
Many assume that gun owners join the NRA for the same reasons people join pro-choice organizations or environmental organizations: to show their support for a cause they believe in. In reality, most people join the NRA because the member benefits fit their lifestyle. They join to get access to their local hunting clubs, shooting and safety classes, kid and family programs, gun insurance, free subscriptions to the NRA’s magazines, discounts at thousands of gun, sports, and outfitter shops, and, yes, accidental death and dismemberment insurance. The NRA’s American Rifleman is one of the 50 most widely read magazines in the country, and American Hunter is in the top 100. Moreover, between the NRA’s discounts and free insurance, the $35 a year membership quickly pays for itself for active gun owners. The NRA’s services and programs have made the organization a trusted brand with its members. Building on these relationships, the NRA activates its members for advocacy and civic engagement. Through its local clubs and “Activist Centers” (often hosted by gun shops), the NRA carefully shepherds members into deeper and deeper engagement as volunteers and activists for the organization. This active member base, coupled with heavy political spending, places the NRA among the most powerful lobbying forces in the United States. The NRA’s member services and benefits are also the backbone of the organization’s financial success. In addition to the more than $100 million a year that members pay in dues, the NRA brings in more than $30 million from businesses that pay to be part of the NRA’s discount network, advertise in its magazines, and receive product endorsements. Altogether, the NRA generates two-thirds of its total income from dues and earned revenue. The NRA’s benefits and services make the organization relevant to the daily lives of its members. This is the true secret of scale: offering benefits and services that build deep and lasting relationships with members, and then activating those members for long-term, systemic change goals. This is the key to effective functional organizing. The Power of Functional Organizing
Functional organizing enables the NRA to build a deeply engaged membership and robust financial foundation to advance gun rights. The NRA capitalizes on its local gun clubs, political action centers, and popular magazines to draw members into fights against gun control legislation—fights that the NRA has won over and over again. The NRA is hardly alone in using functional organizing to attract members and build a financial base through benefits and services. In fact, every large-scale US membership organization is fueled by functional organizing. ■■
Almost 40 million seniors receive discounts, insurance, travel advice, and financial services from AARP. AARP The Magazine is the largest circulation magazine in the United States, giving the organization a powerful voice for influencing seniors and protecting their interests on issues such as Medicare and Social Security. Approximately 15 million US workers belong to unions that negotiate better wages, benefits, and working conditions for their members. Unions then build on these workplace relationships to activate members for policy and political campaigns relevant to working families.
Each year, through nearly 800 health centers across the country, Planned Parenthood provides reproductive health services and education to 5 million women. These functional health services fuel Planned Parenthood’s $1 billion annual budget and have enabled the organization to attract more than 6 million members and supporters. With a strong financial base and deep connection with women across the country, Planned Parenthood is a powerful lobbying force for reproductive rights and women’s health. About 150 million Americans attend church regularly, not only to connect to spiritual communities, but also to access services ranging from childcare and summer camps to business classes and financial planning support. Churches have used their deep member relationships to spearhead social movements ranging from civil rights and anti-war campaigns to the early temperance movement and the modern conservative social movement. More than 50 million Americans belong to AAA in order to access emergency road service and discounts. AAA is one of the most active lobbyists for automobile and transportation spending and regulations at both state and national levels. The top 10 professional associations, such as the American Bar Association and the National Association of Realtors, average more than 300,000 dues-paying members who gain access to accreditation, training, news, conferences, and professional networks. These professional associations regularly activate their members on advocacy campaigns for policy priorities affecting their sectors.
Large-scale membership organizations have all developed a set of benefits and services that are relevant to the daily lives of their members. These benefits and services attract new members, keep old members engaged, and most important, build member relationships that the organization can activate for social and policy change initiatives. The beauty of this model is that through services and benefits, functional organizations also create robust revenue models. Successful functional organizations develop their member services and benefits into high-growth businesses, which, in turn, finance these organizations’ operations and growth. The Trap of Issue Organizing
When I began this research, I assumed that many of the most recognizable issue advocacy organizations—like the American Civil Liberties Union, Greenpeace, NARAL Pro-Choice America, Amnesty International, and the National Right to Life Committee—would rank among the largest civic organizations in the country. But no issue organization comes close to matching the scale of the largest functional organizations. Although issue organizations often play an important role in advancing focused policy agendas, they are inherently limited in scope and scale. They do not offer the kinds of services and benefits that functional organizations do. Rather, issue organizations start with the assumption that caring about an issue is enough to motivate someone to become a member or make a donation. But most Americans don’t view themselves primarily as activists. Fall 2013 • Stanford Social Innovation Review
As a result, issue organizations rarely grow to engage more than a few hundred thousand members. They struggle to build independent donor and revenue bases, instead becoming highly dependent on foundations and large 45M donors. The top five issue groups combined Lutheran 4M have fewer members than the NRA alone. 300K NAACP Common Cause 400K They are an even smaller fraction of the 40M Methodist 7M 500K Family Research Council membership of AARP or the largest churches. 37M 500K NOW (See “Comparing Functional and Issue 35M 500K Organizations” on right.) ACLU Pentecostal 8M Despite the limitations of the issue or700K Heritage Foundation ganization model, it has, since the 1960s, 1M NARAL become the dominant model for civic organizations. There are a slew of groups Black Baptist 8M Human Rights Campaign 1M organizing around every issue imaginable, from poverty and hunger to animal rights and the environment to reproductive rights 17M Evangelical 18M 2M SEIU and abortion to education reform and child Baptist 3M NEA development. Although limited in scale, many smaller 12M AFL-CIO issue groups have been able to create outsized policy and political impact, using 5M 4.9M strategic deployment of activists and smart 4M 3M media strategies. And conversely, although scale creates opportunities for impact, the largest functional organizations often fall short of creating lasting social change. Nonetheless, scaled membership and finances do create a powerful platform for advancing systemic change. The NRA and *Church membership based on number of people attending church at least monthly. AARP have been at the center of two of the biggest policy fights in recent years: gun control and national health care. With vital services and benefits that and financial literacy classes, and a stunning array of support groups are highly relevant to their members’ everyday lives, functional or- for everything from single parenting and married life to hiking and ganizations have the tools to develop deep and lasting relationships fitness to music and arts. with millions of Americans. These deep member relationships are The deep member connections that megachurches, the NRA, and the crux of functional organizations’ power to advance cultural, other functional organizations develop are critical for their success. policy, and political change. Engaging members in fundraising, volunteering, events, programs, and issue campaigns is predicated on having trusted bonds. engaging members The organizations use three core strategies for building deep One might think that having millions of members would make it relationships with members: 1) They provide tangible benefits and difficult for organizations to sustain deep relationships. It turns services, 2) they foster in-person member communities, and 3) they out, however, that members of functional organizations often ac- create engaging media platforms. Some functional organizations, cess benefits, services, and information weekly or monthly. In con- such as the NRA, employ all three of these strategies to engage memtrast, members of many issue organizations rarely interact with the bers, but most use only one or two. (See “Building Deep Member organization more than two or three times a year. Relationships" on p. 37.) This significant disparity reflects starkly divergent approaches Provide Tangible Benefits and Services | Benefits are often the to member engagement. Issue organizations constantly ask, “How initial impetus for members to join civic organizations, whether can we get this member more engaged in our issues?” whereas func- those benefits are AARP’s discounts, the financial services of credit tional organizations constantly ask, “How can we get more engaged unions, the YMCA’s gym membership, or AAA’s road service. Not in this member’s daily life?” all benefits, however, are created equal when it comes to building Megachurches provide a good example of the member-focused deep member relationships. Monetary benefits and transactional approach. The fastest-growing megachurches have moved far beyond services are helpful for members and generate needed income for Sunday services. They now provide after-school programs, business the organization, but they are rarely enough to develop and sustain 36
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nth ood Cha mb ers of C om me rce Ma jor Issu eO rga niza tion s
t Pr ote sta nt
Number of US Members
COMPARING FUNCTIONAL AND ISSUE ORGANIZATIONS
a trusted relationship. Building trust requires more intimate and consistent engagement with members. Member services that involve a direct personal relationship between the organization and its members—such as business classes at megachurches, health services at Planned Parenthood, or legal services provided by unions—have greater potential for building trusted relationships than purely transactional benefits do. These relational services create space for sharing information about important issues and for encouraging members to take action in the organization’s initiatives. Some of the most striking examples of institutions with deep member relationships are LGBT community and health centers across the country. These organizations have had to take a functional organizing approach to help their members overcome the discrimination and legal barriers that LGBT people face. The San Francisco LGBT Community Center (the Center) is one of the largest LGBT-serving organizations in the country, and it is a good reminder that organizations can grow to large scale in a single community. More than 9,000 people visit the Center every month for a wide array of services, including career counseling, small business lending circles, youth programs, childcare, and first-time homebuyer programs. The Center combines these services with vibrant cultural programs and events ranging from art gallery shows to cabaret performances to Queer Youth Prom. With this combination of high-touch personal services and open cultural programs and events, the Center and similar organizations in dozens of cities across the country have become vital organizing hubs for LGBT issues. These centers build on their service relationships to educate members about issues affecting the LGBT community and connect members to issue advocacy and civic engagement campaigns. Foster In-Person Member Communities | Maintaining strong relationships among members, leaders, and staff requires creating opportunities to connect regularly in person, whether that’s through hunting clubs, union halls, church support groups, local business networking events, or professional association conferences. One of the most impressive member communities I studied is the Sixth & I Historic Synagogue in Washington, D.C. Over the past eight years, Sixth & I has turned the synagogue model on its head by transforming a defunct synagogue into a multicultural center with concerts, art exhibits, book signings, lectures, and comedy shows. During the week that I visited Sixth & I, the synagogue hosted a concert with The Magnetic Fields, a book signing with Bob Woodward, a photography festival focused on India, and “Havdallah and Hoops” after the regular Shabbat services on Saturday. In addition to this cultural fare, Sixth & I engages members in political events, ranging from speeches by Al Gore and Nancy Pelosi to presentations on ethical eating to rallies in support of Israel. It may be unorthodox (literally and figuratively), but this eclectic, open-space approach led Newsweek to name Sixth & I one of the “25 Most Vibrant Congregations” in the country. For some organizations, in-person community building is an Achilles’ heel. For example, although AARP has local chapters, only a small percentage of members are deeply engaged
in face-to-face member communites. AARP members join for the discounts, insurance, and magazine, but rarely connect with other members just because they are a part of AARP. This lack of face-toface contact limits AARP’s ability to develop trusted member communities and to activate its members for advocacy efforts. In the case of AARP, however, its sheer size allows it to turn out large numbers of people on important issues, as it did to support Obamacare. Create Engaging Media Platforms | From the NRA’s popular hunting magazines to Focus on the Family’s podcasts and website to megachurches’ global televangelism broadcasts, media platforms can be a powerful tool for capturing the hearts and minds of members. The most striking example of a media platform strategy comes from AARP, whose magazine’s circulation is three times larger than the next largest US publication’s. A lifestyle magazine with multiple versions targeted at various senior demographics, including a Spanish version, AARP The Magazine is a potent mechanism for AARP to influence its members on cultural and policy issues. The magazine is seen as a highly valuable member benefit: I was amazed by the number of AARP members who told me that AARP The Magazine, with its stories about senior health and wellness, over-50 celebrities, and world travel tips, was the primary reason they renewed their membership year after year. Although media platforms are powerful advocacy tools, the most successful media platforms owned by civic organizations are primarily lifestyle-oriented rather than issue-oriented. With article titles like “Buck Fever,” “A Rifleman’s Paradise,” and “The Six Guys You Meet at Deer Camp,” the NRA’s American Hunter magazine is chock full of hunting stories, articles about the best hunting trips in the world, and tips for every aspect of hunting and marksmanship. Parents are drawn to Focus on the Family’s website and podcasts to find help on discipline issues, teen sexuality, and raising kids in a
BUILDING DEEP MEMBER RELATIONSHIPS ● Benefits & Services ● Media Platform ● Member Community Planned Parenthood, Credit Unions
Unions, Evangelical Churches
NRA, Mega Churches Mainline Churches
Focus on Family
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digital age. Lakewood Church’s broadcasts of Joel Osteen’s sermons are popular because of his modern and practical self-help messages about everything from family to fitness to finances. Once these organizations have built popular lifestyle media platforms, they can deeply influence members on cultural and policy issues through stories and calls to action. Focus on the Family includes voter registration links and calls to “put your values in office” next to articles about Christian parenting challenges. And ten times a year, AARP moves beyond lifestyle issues to push more serious news, advocacy, and political information for seniors through the AARP Bulletin. For the major membership organizations built in the 20th century, magazines, television, and radio have been the primary media platforms for connecting with members. For the next wave of membership organizations, the Internet, and particularly social media, will be critical for attracting members with news and information. Unlike the one-directional media of television, radio, and print, social media has the unique potential not only to deliver content and information to members, but also to foster connections between members (online and in person). We have seen inklings of social media’s potential for community building in the rapid growth of Tea Party groups on MeetUp.com and the extraordinary growth of Occupy pages on Facebook during the heyday of the Occupy Wall Street protests. These social network platforms not only provide ways for these groups to disseminate information to members, but also give each group a tool for self-organizing, sharing, and connecting.
unattainable for most civic organizations, versions of this basic business model are used by groups of all sizes: aggregate a group of consumers, negotiate better deals for these consumers, and then receive a referral fee from the companies providing the deals. Historically, insurance benefits and financial services are the most common consumer aggregation services used by associations. Providing insurance and loans at lower cost and with better terms has long driven the development of membership associations for farmers, small businesses, professionals, and consumers. Most large associations provide some form of insurance referrals and benefits. One of the fastest growing functional organizations launched in the 21st century, the Freelancers Union, has primarily focused on helping independent contractors obtain access to more-affordable health insurance options. With this core benefit, the Freelancers Union has grown to almost 200,000 members since launching in 2003. Insurance and financial products are just the beginning of consumer aggregation strategies that membership organizations can employ. For example, for Union Plus (the package of discounts and services for AFL-CIO union members), the most popular benefits include 15 percent off AT&T cell phone plans and up to 25 percent off car rentals. In addition to providing valuable benefits for members, Union Plus has generated tens of millions of dollars in royalty revenue to help sustain the operations of the labor unions. Even at the local level, community organizations are tapping into
The BIG BUSINeSS of aarP
The ImporTance of moneTIzIng membershIp
The most robust revenue engines for civic organizations are natural outgrowths of the benefits and services that drive their membership. Although the dues that members pay to gain access to the benefits and services generate significant revenue, most scaled-up civic organizations go beyond member dues by monetizing benefits and services so as to generate income every time services are used. It turns out that some kinds of benefits and services are easier to monetize than others, and no organization has perfected the art of monetization better than AARP. AARP generates billions of dollars of revenue by endorsing insurance and travel products, providing discounts, and running ads in its popular senior living magazine. (See “The Big Business of AARP” on right.) Although the scale of AARP’s brand licensing program may seem 38
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ith 40 million members and an annual budget of more than $1 billion, AARP is the undisputed king of membership organizations. AARP has perfected the benefits and services model of functional organizing. Like all scaled-up membership organizations, AARP’s revenue base is derived from its suite of member benefits and services. AARP also owns a huge for-profit company (with more than $6 billion per year in revenue) that manages royalties and deals with insurers, banks, and travel companies. This for-profit arm licenses AARP’s brand to insurers, financial services providers, and travel companies. In 2011, AARP’s for-profit arm generated more than $700 million in net income, which was used to cover more than half of AARP’s nonprofit operating budget. The discounts, insurance, financial services, and travel deals that keep seniors renewing their AARP membership finance the lion’s share of AARP’s operating budget. AARP promotes these deals through its magazine (which also generates more than $100 million in ad revenue each year) and direct mail. The companies partnering with AARP each tout AARP’s endorsement in their own ads and promotions. This practice makes AARP’s brand ubiquitous in the senior market and further increases the revenue potential for the organization from endorsements and deals. With a robust, independent revenue base, AARP is able to make large investments in advocacy and issue organizing. In 2009, AARP spent about $100 million on lobbying and made passage of the Affordable Care Act (aka Obamacare) its top priority. With these funds, AARP was one of the largest advocates for passing the bill: more than 1.5 million members took part in town hall meetings and conference calls; more than 1 million members signed petitions supporting the bill; AARP ran a barrage of television and print ads; and AARP created positive stories about health care in the nation’s largest circulation magazine (which it just happens to own). Although AARP has faced criticism for being too business oriented and for being heavily tied to its insurance profits, the organization remains a trusted brand with seniors and one of the largest advocacy forces in the country. —By Peter Murray
this revenue stream. Local organizations raise thousands of dollars a year through referrals of customers to banks and credit unions; local business associations garner fees from a range of vendors who present and market their services at association events and conferences; and local immigrant organizations receive referral fees for recommending members to trusted legal services. Keys to Functional Organizing
Although every community is unique in its needs and opportunities, there is a core set of components that leads to successful functional organizing. Launching a functional organizing initiative, however, takes a serious and sustained commitment to shift an organization to a functional model. Many groups just aren’t ready to make this leap. For organizations whose boards, executive leadership, and donors embrace a long-term strategy for becoming an indispensable part of their members’ daily lives, there are five critical components to launching a successful functional organizing initiative: Understand Your Members’ Challenges | Companies spend billions of dollars every year trying to understand their customers. For leaders of civic organizations, the two most important questions to ask about your targeted members are: “What are their challenges in life?” and “What would make these challenges just a little bit easier?” Maybe you are working with parents trying to figure out pickup and after-school care; maybe you are working with families struggling to find reliable caregivers for their aging parents; maybe you are working with immigrants with only limited legal status straining to build credit. Whoever your constituents are, you must deeply understand their daily needs and figure out whether your organization can provide a helpful tool or resource. Focus on What You’re Good at and Known For | Reputation is everything when it comes to scaling up membership. Build member benefits and services based on what your institution is already good at doing and what your community trusts you to do. If you’re known for housing issues, think about referrals for home insurance, mortgages, and contractors. If you’re known for ethical food issues, think about referrals to organic food restaurants, farm shares, and health food stores. If you’re known for health issues, think about prescription cards, vision discounts, and gym membership discounts. If you’re known for parenting and children’s issues, think about babysitting co-ops, discounts to local museums, and referrals to financial advisors for college saving. Create Products and Services to Generate Profits | Profit is often considered a bad word in the social sector. But finding ways to monetize services and benefits in a self-sustainable way is crucial for scaling up membership. In some cases, direct service provision models—like classes, support groups, networking events, and health or legal services—can be made profitable. Consumer aggregation, however, is the more common path to developing profitable benefits. To succeed at consumer aggregation, focus on high-margin products and services (financial and insurance products instead of retailers and supermarkets, for instance) and fill a trusted referral gap for consumers by identifying high-quality providers (don’t provide the service yourself). Join with Other Organizations to Negotiate Deals | Negotiating discounts requires organizations to have a large base of active members. Obtaining this kind of negotiating power often requires
joining together with other organizations in your region or nationally. Build coalitions with other organizations in your sector to amplify your negotiating power and share the costs of setting up member benefit programs. Find Funders Willing to Act Like Venture Philanthropists | Launching functional organizing ventures takes steady support from funders who are willing to shift into the role of venture philanthropists. Usually, funders make grants year after year to the same groups to achieve the same outcomes. But as venture philanthropists, funders make time-limited investments in high-risk functional organizing initiatives. The functional organizing projects that succeed should be fully self-sustainable within 5 to 8 years (and will achieve proof of revenue potential within just 2 to 3 years). Only a small fraction of functional organizing initiatives will succeed, so funders need to be willing to invest in a range of projects, carefully assess which are working, and let fail those that aren’t. Creating a Virtuous Cycle
Immigrant organizations provide some of the most compelling examples of how functional organizing can build scale and impact at the local level. CASA de Maryland’s Multi-Cultural Center is located in the heart of the Langley Park neighborhood (an unincorporated area of Maryland), where almost two-thirds of residents are immigrants. The Multi-Cultural Center is the largest of CASA’s five immigrant “Welcome Centers” where CASA offers members a broad array of services. In addition to providing direct services, CASA has also been in the forefront of policy fights for national immigration reform. In June 2012, President Obama announced that the US Department of Homeland Security would not deport “DREAMers,” young immigrants who came to the United States before they were 16, have graduated from high school, and have kept a clean record. CASA sprang into action to help young immigrants throughout Maryland obtain the documentation and support they needed to qualify for this program. In a few short months, through individual outreach and legal clinics, CASA helped nearly 2,000 DREAMers apply for the program and become dues-paying CASA members. CASA then immediately engaged these young immigrants in efforts to pass a state-based DREAM act in Maryland—a 2012 ballot initiative providing DREAMers with in-state tuition eligibility at Maryland’s public universities. During the election, CASA deployed the DREAMers and thousands more of its members as volunteers and canvassers to support the initiative. The initiative passed last November by a sixteen-point margin. “Our goal is to develop life-long members,” says George Escobar, who directs CASA’s social services. “This [the DREAMers engagement] is a great model of organizing and services working together.” CASA de Maryland shows that organizations can tap into the symbiotic relationship between member services and social change organizing. The most successful functional organizing models create a virtuous cycle of support, engagement, revenue generation, and impact. Functional organizing models that focus on building deep relationships with members have the potential to reinvigorate civic institutions across the country and engage millions of Americans in reshaping the fabric of society. n Fall 2013 • Stanford Social Innovation Review
When Good Is Not Good Enough By Bill Shore, Darell Hammond, & Amy Celep illustration by otto steininger
Stanford Social Innovation Review • Fall 2013
Leaders of two of the most successful nonprofit organizations argue that the sector needs to shift its attention from modest goals that provide short-term relief to bold goals that, while harder to achieve, provide long-term solutions by tackling the root of social problems.
any of the fastest-growing nonprofit organizations begin with well-intentioned interventions and relatively naive ideas about the magnitude and complexity of the problems they aim to solve. Share Our Strength and KaBOOM! are no exception. By some measures our organizations were successful US nonprofits—growing rapidly, engaging numerous partners, and improving the lives of tens of millions of children. Yet all the while, the problems we were tackling—hunger and the lack of opportunities to play—were getting worse and even accelerating in recent years as the economy took a downturn. More than 16 million kids in America now live
Fall 2013 â€˘ Stanford Social Innovation Review
in poverty, up from 11.6 million in 2000. For Share Our Strength, we knew the grants we were providing to feed hungry people were benefiting the recipients, but we confronted the hard truth that one in five American children struggles with hunger. Similarly, for KaBOOM!, we witnessed how children who played on our playgrounds benefited physically, cognitively, socially, and emotionally, but we faced the fact that one in three children is obese or overweight, and one in five suffers from a mental illness, with rates of depression higher than ever before. The list goes on.1 Share Our Strength and KaBOOM! realized that to make significant progress we had to move beyond simple solutions to complex problems, and we had to answer anew, in a much bolder way, the most critical question of all: “What does success look like?” Our stories are all too familiar. The foundation on which many nonprofits are built is flawed and simplistic, focused on a symptom rather than the underlying set of problems, developed in isolation rather than as part of an integrated system, and organized to administer a narrowly tailored program or benefit rather than generate sustained, significant change for a person or community. As a result, change is incremental, not big or bold enough to make a lasting and transformative impact. A variety of factors combine to make this dynamic so pronounced. Some are external and macro, such as the challenges inherent in solving problems that affect people who are politically voiceless and the value our culture places on the immediate over the long term. Some are internal, like the failure of imagination or the fear of failure that leads us to the easier, less expensive solution rather than the solution that addresses the underlying problems. Some are both, like public pressure to keep nonprofit salaries and overhead low, and internal acquiescence that can constrain necessary and catalytic investments in people, technology, and systems. The result is often like filling a glass of water one drop at a time. Impact dissipates and evaporates, and the glass seems never to be more than half full. To solve big problems we need strategies sufficient to fill the whole glass. Collective impact is one approach for solving problems, but one can use it to tackle a problem at a large or a small scale. If solving social problems is what we aspire to achieve, we need to set long-term, bold goals that acknowledge the magnitude of an issue. Defining a bold goal changes the game, leading to different decisions that set us on a new trajectory, which ultimately leads to greater impact, faster. We recognize the pathology we describe because we once practiced it, making many of the same mistakes we now bring to the fore. We unintentionally shortchanged ourselves and those we meant to Bill Shore is founder and CEO of Share Our Strength and chairman of Community Wealth Partners. From 1978 to 1987, Shore served on the senatorial and presidential campaign staffs of former US senator Gary Hart, and from 1988 to 1991, he served as chief of staff for former US senator Robert Kerrey. Da rell H a m mond is founder and CEO of KaBOOM!. Among his numerous honors, Hammond has been named an Ashoka Fellow and Schwab Social Entrepreneur, and has been awarded the American Express NGen Leadership Award by Independent Sector and the Satter Social Entrepreneur of the Year Award by New York University’s Stern School of Business. A m y Celep is president and CEO of Community Wealth Partners, a Share Our Strength organization dedicated to working with leaders, organizations, and communities to solve problems at the magnitude they exist. Previously she worked in the nonprofit sector as a fundraiser and marketer and in the for-profit sector as a news producer for a CBS affiliate.
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serve until time, experience, and perhaps some wisdom taught us to use a more strategic—and potentially effective—approach. Now we have embarked on a new course, one that focuses less on the transactions involved in the delivery of direct services and more on exerting the influence necessary to solve problems at the magnitude they exist. By ensuring lasting and significant change for all those affected by an issue, we are aiming for transformational change. Share Our Strength and KaBOOM! aren’t the only organizations focused on transformational change. In 1996, Campaign for Tobacco-Free Kids embarked on a mission to reduce tobacco use among kids. The smoking rate among US youth dropped from 36.4 percent in 1997 to 18.1 percent in 2011.2 Malaria No More adopted the ambitious goal to end deaths from malaria in Africa by 2015. Since its work began, malaria deaths have decreased 33 percent in Africa.3 And from 1988 through the early 1990s, the Harvard Alcohol Project sought to introduce a new social norm in the United States: the “designated driver.” By 1991, 52 percent of Americans younger than 30 had served as a designated driver. In the three years prior to the start of the campaign there had been no change in the annual number of alcohol-related traffic fatalities; from 1988 to 1992 the nation saw a four-year decline of 24 percent, from 23,626 to 17,858.4 Though it may seem counterintuitive for a sector already struggling to support, sustain, and scale up its impact—our approach calls for nonprofits to embrace a much heavier lift. We must look beyond short-term achievements that please funders, staff, and stakeholders but yield only incremental change, and instead hold ourselves accountable for the harder-to-achieve long-term outcomes that will ultimately solve social problems.
Babes in the Woods
Share Our Strength had its genesis in 1984 when I (Bill Shore), then 29 years old, read a tragic story on the front page of The Washington Post about the hundreds of thousands of Ethiopians expected to die soon from famine. Though experienced in politics and government, I had no experience in the nonprofit sector. So I began with an idea that was clear, simple, and wrong: we would end hunger by raising money and granting it out to food banks and other emergency food assistance programs. It should have been obvious then, as it is now, that hunger is a symptom of the deeper, more complex problem of poverty. In addition to being young and idealistic, we were untrained, uninformed, and unsophisticated. So we made grants to thousands of organizations around the United States, all of which were doing an impressive job of feeding hungry people, but few of which were focused on ending hunger. Since its founding, Share Our Strength has raised and invested more than $376 million and has won the support of national leaders in business, government, health, education, sports, and entertainment. But much of the focus, internally and externally, was on the entrepreneurial ways it generated funds (through innovations in cause-related marketing) rather than on how it used the funds to advance its mission. The origins and founding principles of KaBOOM! were similar. The spark for KaBOOM! came in 1995, when I (Darell Hammond), then 24 years old, read a story, also in The Washington Post, about two children who suffocated while playing in a car because they didn’t
have anywhere else to play. I’d grown up with seven brothers and sisters in a group home outside of Chicago and could identify with that kind of deprivation. Our assessment of the problem at the time was that children lacked sufficient opportunities for play. So we focused on building, improving, and opening playgrounds by mobilizing communities and engaging the corporate sector to fund and volunteer to support the work. Over the past 18 years, we’ve helped build more than 15,000 playgrounds, engaged more than 1 million volunteers, and served more than 6 million children. We’ve also been recognized for how well we bring together communities and new partners, particularly businesses, to work toward a common goal of building a great place to play. We’ve used a fee-for-service model and have had steady double-digit growth, attracting high-profile Fortune 100 companies as funders.
The End of Innocence
Share Our Strength and KaBOOM! grew rapidly, got great press, and enjoyed the admiration of family, friends, and peers in the nonprofit sector. But the novelty and satisfaction of one’s own organizational growth, and the accolades that come with it, wear off over time. One needn’t do the work for very long to realize that our efforts were reaching only a fraction of those in need and the problem was much more complex than we had imagined. Leaders in both of our organizations found that compared to effectively solving the task that still remained, growth alone began to feel hollow. To the leadership of Share Our Strength something didn’t make sense. Despite the many good private efforts, including Feeding America, Bread for the World, and ours, as well as many established and well-funded public programs, such as Supplemental Nutrition Assistance Program (food stamps), school lunch, and school breakfast, the problem of hunger seemed to be increasing, not decreasing. It was also unsatisfying that we could not quantify our impact. Was the funding we provided equal to 1 percent of what was needed, or was it 50 percent? When was our job done? Without a specific measure of success it was impossible to know. To define our goal, we thought about the writer Jonathan Kozol’s advice to pick battles big enough to matter, but small enough to win. This struck the right balance between inspiring and remaining within reach. In 2005, extensive research led us to refocus our broad-based anti-hunger efforts on a specific subset: chronically hungry US children. We realized that it was possible to do more than just feed kids and that we could actually end childhood hunger in America by 2015. We pivoted from being the grantmaking intermediary that we had been for two decades to designing and leading a national campaign— No Kid Hungry—with a primary strategy of winning the childhood hunger battle state by state through cross-sector collaborations. The premise of the campaign is that kids are not hungry because of a lack of food or effective programs (like school breakfasts, summer meals, and food stamps), but because they lack access to or face the stigma associated with participating in these programs. Our focus became coordinating and resourcing the community organizing needed to knock down barriers preventing kids from participating in these programs. The implications of this change were significant. We needed new
staff, skills, experience, partners, data, funding, and ways of working. That meant that some of our existing staff, partners, and funders would need to make room for others, change the way they worked, train and prepare for new roles, and in some cases even transition out of the organization. We also made the tough but deliberate choice to make No Kid Hungry our primary consumer-facing brand after nurturing the Share Our Strength brand for more than 20 years. The result has been catalytic and profound. Holding ourselves accountable to a specific outcome that was bold but believable inspired our stakeholders and gave them confidence that we merited their investment. Our revenues increased from $16 million in 2007 to $42 million in 2012. We added more than 70 staff and made longoverdue investments in financial acumen, branding, and public policy development. As a result of our investments, we’ve added hundreds of thousands of children who weren’t receiving food aid to public nutrition programs. Since summer 2011, we’ve helped connect children across the country to more than 28 million additional school breakfasts and 6 million additional summer meals. In addition, more than 330,000 people have taken the No Kid Hungry pledge and Congress has received more than 100,000 letters championing the No Kid Hungry goal. At KaBOOM!, the story was similar. We’d built playground after playground and helped inspire others to do the same. The KaBOOM! “builds” had gotten a great deal of media coverage, but much of it was predictable—“XYZ Corporation and local community organization partner with KaBOOM! to build a playground in a day with 200 volunteers”—and didn’t get at the importance of play in kids’ lives or necessarily move the needle on ensuring that kids get the play they need to become healthy and successful adults. In 2012, we had our best financial year ever. The board was pleased and would have been content for us to continue on a linear path. But the board and senior staff also believed that recent success afforded us the opportunity to think and act more boldly. Despite our growth, we weren’t solving the problem at the magnitude it existed. It wasn’t just about building more places for kids to play; there was a more complex social problem around how society thinks about, values, and engages in play. We couldn’t continue to ignore that many playgrounds are empty most of the time, active play is disappearing in America, kids are spending more than eight hours a day in front of a screen, and that almost half of all kids living in poverty attend schools that don’t offer recess. The choice was stark: continue our almost exclusive focus on building playgrounds—providing tangible benefits to communities with incremental impact—or take a risk and chart a new course that, while maintaining what had made KaBOOM! successful, would also address the broad scale and complexity of the issue with the hope of creating transformational change. We chose the latter. Our new goal: All children, particularly the 16 million children living in poverty in the United States, get the play they need to become successful and healthy adults. Thinking at this level changed everything for KaBOOM!. We are adding new strategies—inspiring, empowering, and leading play advocates and informing while elevating the societal conversation about the importance of play in kids’ lives—that leverage our core Fall 2013 • Stanford Social Innovation Review
strength of creating and catalyzing great places to play. For example, we are launching a new initiative that will reward individuals taking action to make their communities more playful or who have great ideas that inspire or enable active play in their communities, whether the individual is a mom who takes the lead on improving a playground in her neighborhood or the head of the local PTA who mobilizes supporters to reinstate recess in school. Our new goal has also forced us to rethink how we partner with other nonprofits, and not just the handful of national nonprofits that focus on play. To be sure, we want organizations such as Playworks, which transforms schools by providing more and better play opportunities at recess and throughout the school day, to thrive. But we also realize that, by themselves, the small inner circle of play-focused national nonprofits do not have the resources or reach to achieve anything but incremental growth in the services they provide. Since we are in the initial stages of this strategic extension of our work, we cannot yet tell whether it will be successful. We may find that we lack the ability to execute new initiatives that require different skill sets. Or we may lose major funders who are wary of supporting new initiatives or who are uncomfortable with the longterm horizon required to change behavior and societal norms. But we know that at least we are aiming for the right target.
These strategic shifts presented leadership challenges for both Share Our Strength and KaBOOM! from which we learned important lessons. Our experiences align closely with insights developed by Community Wealth Partners, which has researched a number of historical and present-day change agents also tackling problems at the magnitude they exist—such as the anti-malaria movement, the designated driver campaign, the reduction in crime in New York City in the 1990s, and the anti-tobacco movement. 5 Drawing on our research and experience, we have identified four lessons most critical to achieving transformational change, starting with the most important: setting a long-term, bold goal. This becomes the North Star by which an organization makes decisions and allocates resources and the bottom line against which the organization measures its progress. Everything else flows from it. Focus: Set a Bold Goal | Solving a social problem at the magnitude it exists requires an organization to shift from focusing on short-term incremental progress to focusing on long-term transformational change. The latter is risky, hard to measure, and even harder to achieve, but it provides the inspiration that generates motivation, resources, and a new sense of what is possible. This means developing a goal so bold that achieving it means a social ill has been eradicated. Malaria No More, for example, adopted the goal in 2006 to end all deaths from malaria in Africa by 2015. This bold goal—considered “crazy” by many inside and outside the malaria field—eventually inspired other organizations to join Malaria No More in achieving it. Since 2006, malaria deaths have fallen by one-third in Africa. Similarly, in December 2004 the CEO of the Institute for Healthcare Improvement, Donald Berwick, declared a bold goal and issued a challenge to hospital administrators: “Here is what I think we should do. I think we should save 100,000 lives. And I think we should do 44
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that by June 14, 2006—18 months from today. Some is not a number; soon is not a time. Here’s the number: 100,000. Here’s the time: June 14, 2006—9 a.m.” Hospitals that participated in the challenge saved an estimated 122,300 more lives than were projected during this time frame.6 It is also important to create a sense of urgency and a reason to believe that the long-term bold goal can be accomplished. This can be achieved by setting shorter-term milestones and developing small-scale proof points. The Campaign for Tobacco-Free Kids and its partners had a long-term goal to reduce tobacco use and its deadly toll. They also set a shorter-term goal of establishing FDA jurisdiction over tobacco, which they achieved in 2009, giving stakeholders faith that even bigger change was possible.7 The challenge with a bold goal is that, by definition, it aims at a target that is large, complex, and poorly understood. For many stakeholders at Share Our Strength and KaBOOM!, this was not what they’d signed up for. This shift has presented challenges for both organizations in their relationships with internal and external stakeholders. At Share Our Strength, we recognized that the most important audience for this strategic shift was the person sitting next to us. If we couldn’t persuade, inspire, or explain our new goal to our co-worker, what chance was there of winning over others? So we spent weeks making sure that everyone at Share Our Strength was on the same page. We also recognized that we needed to integrate new staff with very different work styles and expertise into our existing team. We brought on former political campaign operatives accustomed to working with urgency in an environment of complexity and uncertainty. But we needed them to work with existing staff used to operating in a more planned and deliberate manner. At times, there were clashes. In reviewing our partnerships in light of our new strategy, we identified a case of misalignment and made the hard decision to let a million-dollar corporate relationship expire. And some of our nonprofit partners had reservations about being held accountable for ending childhood hunger by 2015. But we accepted these as the costs of doing business in a new way. At KaBOOM!, we now are in the process of convincing partners to adapt with us. Some partners are embracing the shift because they share the belief that active play—whether on the playground or not—leads to better outcomes for children and that playgrounds alone won’t solve the problem. Others are not interested in empowering play advocates because the primary value they derive from partnering with us is a high-end employee volunteer engagement experience with a tangible product (playgrounds) to tout. Still others have expressed concern that focusing on play may dilute the citizen engagement and social capital that comes from building a playground in partnership with a community. Stakeholders: Open Up Your Circle | Transformational change requires an organization to look outside of its core group of true believers and put greater emphasis on mobilizing those less engaged. Every leader trying to solve a problem at the magnitude it exists must ask the simple question: Who has a role to play in solving this problem? The answer often includes cross-sector stakeholders, and those making transformational change are particularly adept at moving beyond their core champions and engaging seemingly unlikely
partners. They excel at converting the “maybes”—by far the largest stakeholder group for any social goal—into “yeses.” Jay Winsten of the Harvard School for Public Health, one of the architects behind the designated driver movement, demonstrated the value of opening one’s circle by successfully engaging the Hollywood community in an effort to make the designated driver concept a social norm. Many Hollywood elites adopted the cause as their own, writing it into scripts of shows such as Cheers. The designated driver campaign played a significant role in the 24 percent decline in alcohol-related traffic fatalities between 1988 and 1992. The concept has since been passed down from one generation to the next. Similarly, Malaria No More recruited as champions of the cause powerful influencers of public opinion, such as American Idol, one of the most popular television shows in the United States, and the FC Barcelona soccer team, one of the most celebrated brands across the globe, including in Africa, where 90 percent of malaria deaths occur. Malaria No More also identified Exxon Mobil Corp. as an ally, recognizing that malaria infection is the leading cause of worker absenteeism in key African oil-producing countries such as Angola, Chad, and Nigeria. Share Our Strength started to subcontract with hundreds of small community nonprofits that could advance our campaign in schools and summer meals sites, and work with state legislatures, local school superintendents, and other community organizations. In some states No Kid Hungry campaigns are staffed by our own employees, giving us tighter control over their work and performance. In other states we provide the funds to embed campaign managers in existing community organizations. As a result, they sometimes face conflicting interests and have conflicting loyalties to agendas that are similar but not necessarily the same as ours. This requires compromise, acknowledging that our community partners have their own agenda as well as sharing ours. At KaBOOM!, we’re just now navigating the challenge of opening our circle, which will require us to embrace more decentralized activity. It’s not always easy to do this when one’s model has been built on a very centralized and controlled approach. Without standardization, we could not deliver a best-in-class volunteer experience or produce a safe, high-quality playground. But changing behavior and societal norms presents a very different challenge. It requires grassroots mobilization to empower individuals to create a new, more playful future for their communities in ways that are best for them, not directed by us. For example, earlier this year KaBOOM! recognized more than 200 US cities, including Atlanta, as Playful City USA communities for their commitment to play-friendly policies. Facing declining revenues, Atlanta’s proposed 2014 budget included a $3 million cut to parks and recreation. Cynthia Gentry, the founding director of Atlanta Taskforce on Play and a longtime friend of KaBOOM!, immediately rallied play advocates in Atlanta to make the case for full
funding, without any prompting from KaBOOM!. Our challenge with this type of mobilization is to overcome our well-intentioned instinct to engage with and help every single person who takes self-directed action. Our limited capacity and resources can go only so far, and we need others to take up the cause as their own if we ever hope to increase public sector support, catalyze comprehensive communitywide action, and create transformational change. Communication: Change the Conversation | Solving problems at scale requires an organization to do more than open up the circle of champions. At times, it requires leaders not just to join a conversation but to actually change the conversation. Changing the conversation can broaden the base of support for an idea by making
olving problems at scale requires
leaders not just to join a conversation, but sometimes to actually change the conversation. it accessible to more people and interests or helping others better understand its connection to them. For example, in the late 1990s, the state of Florida’s “truth” campaign shifted anti-tobacco messaging to teenagers from the standard health-based frame of instructing teenagers on proper health behaviors to providing them with information to identify and assess false or manipulative tobacco advertising targeting them. The campaign equipped teens to fight back against “the bad guys.” One year after the campaign’s launch, smoking among Florida middle-school and high-school students had declined by 19.4 and 8 percent, respectively. The Centers for Disease Control and Prevention indicated that this was “the largest annual reported decline observed in the nation since 1980.” 8 Leaders also need to be willing to change the conversation by asking for more money or new types of funding that may be needed to achieve bold goals. In the late 1990s, the Rheedlen Centers for Children and Families founded the Harlem Children’s Zone, transitioning from providing various services to meet the needs of the local community to building and executing on a plan to end the cycle of generational poverty and send every child who lives in a 97-block area of Harlem to college. To accomplish this bold goal the organization needed to drastically increase its financial resources: from $8.1 million in 1999 to $25.9 million in 2000.9 Instead of seeking funding program by program, Harlem Children’s Zone president Geoffrey Canada presented the organization’s bold goal along with a business plan that demonstrated how it would accomplish this goal. Canada explains, “We honestly would not take money that was not multiyear and it had to be unrestricted. You had to fund the plan, not a specific program.” This new conversation enabled Canada to win the attention of large national funders. And once he had secured Fall 2013 • Stanford Social Innovation Review
funding from the first major new funder—the Soros Foundation— he used the accompanying credibility to open doors with others. Share Our Strength made a concerted effort to change the conversation from one focused solely on hunger to one focused on the connection between hunger and health-care costs, educational achievement, and economic competitiveness. Our No Kid Hungry campaign collaborated with Deloitte Touche Tohmatsu Ltd. on a project to identify and quantify the potential long-term impacts associated with children participating in the federal school breakfast program. The findings indicated that, on average, students who eat school breakfast achieve 17.5 percent higher scores on standardized math tests.10 Linking hunger and school performance has increased interest among policy-makers and funders committed to education. The Deloitte project, as important as it was in terms of changing the conversation, also exposed us to new scrutiny. We knew that social science projections can never be made with certainty and that people might challenge our findings. So there were extensive negotiations with and within Deloitte over what numbers could be used. Many corporations partner with KaBOOM! because playgrounds are not controversial, but some of our partners are not necessarily passionate about the cause of play. When KaBOOM! started talking about giving kids the childhood they deserve, however, people often had a visceral reaction—based on personal experience (my kids are growing up too fast) or tragic news events (Sandy Hook). This new approach puts play at the center of the solution. At the same time, this change in the conversation has its challenges. We have a stronger point of view now on social issues and the role of play in solving them. For example, we believe that kids need balance but are spending too much time in front of a screen. With a stronger point of view, we risk alienating some corporate partners who might favor the use of technology by kids. Approach: Disrupt the Norms | As Thomas Edison famously quipped in response to a new employee’s inquiry about laboratory rules, “There ain’t no rules around here. We’re trying to accomplish something!” To create transformational change, organizations must be willing to act as skeptics, questioning—and often disrupting— the norms among those affected by and those who affect a social problem. Norms are standards or patterns of social behavior that are typical or expected of a group. Ultimately, the reason to disrupt norms is to motivate a critical number of people to change their behavior, leading to a new norm, and then to advocate for standards or policies that will enforce the new norm. For decades, the status quo of policing dictated that officers ignore petty crimes. Given limited resources, police in the mid-20th century were generally taught to ignore minor “quality-of-life” offenses like graffiti, panhandling, and broken windows and instead focus on serious or violent crimes and rapid response to 911 calls. In the 1980s, sociologists and political scientists began to advance the “Broken Windows” theory, which questioned traditional policing standards.
The new approach held that disorderly behavior is contagious and can accelerate community decay. The antidote is a “zero-tolerance” approach in which officers proactively stymie small offenses, an approach that former New York City Police Commissioner Bill Bratton embraced as he aimed to reduce crime in the city by 40 percent in three years. Under Bratton’s watch (1994-1996), murders fell by 47 percent, felonies by 39 percent, and theft by 35 percent. Public confidence in the New York City Police Department over that period rose from 37 to 73 percent.11 At Share Our Strength, the norm for school breakfast had always been to offer it before the bell and in the cafeteria, which presented transportation and stigma barriers for many of the kids who needed it most. Experiences from forward-thinking schools across the country had demonstrated that alternative approaches to serving breakfast, including serving it after the bell and in the classroom, could increase breakfast participation. Share Our Strength funded many schools and districts to scale up these efforts through our No Kid
o create transformational change
organizations must be willing to act as skeptics, questioning—and often disrupting—the norms.
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Hungry campaign. We then collaborated with Deloitte to analyze the results in Maryland, which showed that in the schools where breakfast in the classroom was implemented, there was as much as a 7.2 percent decrease in chronic absenteeism. This data equipped us to speak to school leaders and policy makers about the educational benefits of alternative approaches to breakfast. We have made a concerted effort to influence elected officials to pass legislation requiring high-need schools to adopt alternative models of providing breakfast. During the 2013 legislative session, three No Kid Hungry states successfully undertook three different policy efforts to expand school breakfast participation. In Colorado, for example, the new law will require more than 360 schools to offer breakfast after the bell, giving more than 80,000 additional children access to a daily breakfast. But in some places the educators we expected to be allies initially were opponents. According to our 2012 survey of public school teachers, nine out of 10 teachers say that breakfast is very important for academic achievement. Teachers credit breakfast with increased concentration (95 percent), better academic performance (89 percent), and better behavior in the classroom (73 percent). Yet in schools where we introduced in-classroom breakfast, those same teachers initially opposed the program, citing perceived barriers such as increases in messes and pests, and decreases in instructional time. These changes can be disruptive when first implemented, but experience from schools across the country indicates that as students, teachers,
food service staff, and custodians become accustomed to these new processes, the benefits become evident and the opposition turns to support. But it requires the fortitude to stick it out. In pursuing its goal to ensure that children get the active play they need, KaBOOM! understands that building standard post-andplatform playgrounds is not adequate by itself to create widespread behavior change. Change of this magnitude requires that society place more value on active play and reinforce the expectation that children play in an active way every day. KaBOOM! views innovation in play-space design as a key lever for elevating the importance of active play and inspiring children to play more. To accomplish this, KaBOOM! now attempts to drive the development and introduction of new play-space concepts in a playground industry whose innovation is stifled by safety regulations and the risk of litigation. Imagination Playground is a mobile play system made up of intentionally odd-shaped big blue blocks designed by renowned architect David Rockwell that taps into a child’s natural curiosity and creativity. The blocks—designed to get children to play longer and come back more frequently—are a notable example of play-space disruption. KaBOOM! helped create a market for Rockwell’s innovative design by partnering with foundations and corporations to grant Imagination Playground sets to centers, elementary schools, before- and after-school programs, children’s museums, and other nonprofit organizations that serve low-income children, thus offering loose parts play as a lower-cost, high-value complement to the typical playground. This type of design and distribution innovation, which is more accessible to low-income communities because it is significantly less expensive and does not require permanent installation, is inspiring behavior change and disrupting the norm of inactivity in underserved communities. Though we believe this type of disruptive innovation is critical, the challenge is to continue doing this while maintaining effective partnerships with leaders in the playground industry who help us to provide more and better play opportunities to children in lowincome communities across the country. We are doing this by positioning these new programs as a way to create a bigger market, not to compete with the existing playground market. Yet, we sense and recognize that challenging norms can be threatening to those who are well-established industry players.
Everything Is Impossible until It Isn’t
When Share Our Strength and KaBOOM! began, we provided children with meals and places to play. But this has gotten us only so far, and we have seen the prospects for children, particularly those living in poverty, worsen. Now we have shifted course. In our own ways, we are seeking to give all kids the childhood they deserve. We understand that this is fraught with challenges and runs a high risk of failure. A large part of the current leadership challenge for us is to resist temptations to slide off strategy when the going gets tough, which it inevitably does after the early and relatively easy successes, or to chase funding that appears to be more readily available for popular but nonstrategic initiatives. The purpose of this article is not to suggest that there is a formula for solving social problems or that every organization should follow
our path. But we—as individuals, a sector, and society—cannot be satisfied with business as usual. Whether a change agent inside a community-based, national, or global organization, or in the public or private sector, we must commit to finding our unique place in creating transformational change. We must find the courage to aim for the harder-to-achieve long-term outcomes that will solve social problems. Good is not good enough when people are suffering. And, history has shown us—whether dramatically reducing tobacco use, alcohol-related traffic fatalities, or deaths from malaria—that everything is impossible until it isn’t. n Note s 1 Sophia Addy, William Engelhardt, and Curtis Skinner, “Basic Facts about Low-Income Children: Children under 18 Years, 2011,” Fact Sheet, Center for Children in Poverty, Columbia University, Jan. 2013. “Childhood Obesity Facts,” Adolescent and School Health, Centers for Disease Control and Prevention, Feb. 19, 2013. Office of the Surgeon General, Center for Mental Health Services, and National Institute of Mental Health, “Mental Health: A Report of the Surgeon General,” National Institute of Mental Health, 1999. Cynthia L. Ogden et al., “Prevalence of Obesity and Trends in Body Mass Index among US Children and Adolescents, 1999-2010,” Journal of the American Medical Association 307, no. 5, 2012. “The State of America’s Children,” Children’s Defense Fund, 2011. Thomas Delate et al., “Trends in the Use of Antidepressants in a National Sample of Commercially Insured Pediatric Patients, 1998 to 2002,” Psychiatric Services 55, no. 4, 2004. “Whole Child: Developing Mind, Body and Spirit through Outdoor Play,” Be Out There, National Wildlife Federation, 2010. 2 “Trends in the Prevalence of Tobacco Use—National Youth Risk Behavior Survey (YRBS): 1991-2011,” National Center for HIV/AIDS, Viral Hepatitis, STD, and TB Prevention, Division of Adolescent and School Health, Centers for Disease Control and Prevention. 3 Martin Edlund, “World Malaria Day Is Thank You Day,” Malaria No More, News, April 25, 2013. 4 “Current Trends Update: Alcohol-Related Traffic Fatalities—United States, 19821993,” Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Report, vol. 43, no. 47, Dec. 2, 1994. NCSA Data Resource Website, “Data Query,” Fatality Analysis Reporting System Encyclopedia, National Highway Traffic Safety Administration. “Harvard Alcohol Project,” Center for Health Communication, Harvard School of Public Health. 5 Many of the qualitative details relating to the social change initiatives are derived from interviews with leaders of the respective initiatives. These interviews were conducted by Amy Celep and other Community Wealth Partners staff in August and September 2011. Interviewees included Suprotik Basu, managing director of the Office of the UN Secretary General’s Special Envoy for Malaria; Bill Bratton, 38th commissioner of the New York Police Department; Geoffrey Canada, president and CEO of Harlem Children’s Zone; Scott Case, vice chairman and founding member of Malaria No More; Matthew Myers, president of the Campaign for Tobacco-Free Kids; and Jay Winsten, founding director of the Harvard School of Public Health’s Center for Health Communication and manager of the Harvard Alcohol Project. 6 Chip Heath and Dan Heath, Switch: How to Change Things When Change Is Hard, 1st ed., Broadway Books, 2010. D. M. Berwick et al., “The 100,000 Lives Campaign: Setting a Goal and a Deadline for Improving Health Care Quality,” Journal of the American Medical Association 295, no. 3, Jan. 2006. Jennifer Chi, “The 100,000 Lives Campaign,” New Hampshire Infection Control and Epidemiology Professionals Meeting, Mar. 13, 2007. A. D. Hackbarth et al., “The Hard Count: Calculating Lives Saved in the 100,000 Lives Campaign,” American College of Physicians Guide for Hospitalists, April 2006. 7 “FDA Authority over Tobacco,” Campaign for Tobacco-Free Kids. 8 Catherine Schum and Robert J. Gould, “The Birth of ‘truth’ (and What It Tells Us about the Importance of Horizontal Influence),” Cases in Public Health Communication and Marketing, School of Public Health and Health Services, George Washington University, June 2007. 9 “Harlem Children’s Zone (HCZ): Transforming the Organization While Scaling Up in a Tightly Defined Local Service Area,” Bridgespan Group, Oct. 2004. 10 Robin Augustine-Thottungal et al., “Ending Childhood Hunger: A Social Impact Analysis,” Deloitte and the No Kid Hungry Center for Best Practices, 2013. 11 Andrea R. Nagy and Joel Podolny, “William Bratton and the NYPD: Crime Control through Middle Management Reform,” Yale Cases, Yale School of Management, Feb. 12, 2008. Gil Press, “Bill Bratton on Data and Analytics, Homeland Security and Hometown Security,” Forbes-Tech, April 27, 2013. W. Chan Kim and Renee Mauborgne, “Tipping Point Leadership,” Harvard Business Review, April 2003. Fall 2013 • Stanford Social Innovation Review
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At a clinic located in a slum in Delhi, India, a nontraditional health
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worker uses a fingerprint scanner to register a new tuberculosis
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patient. The clinic, run by an organization called Operation ASHA,
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deploys a biometric patient-record system to support treatment
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regimens for people who could not otherwise gain access to care.
0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 0 1 0 0 0 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 0 1 1 0 1 1 1 1 0 0 0 1 1 0 1 1 0 1 1 0 0 0 1 0 1 1 1 0 0 1 0 0 0 1 1 0 1 0 1 1 0 0 0 1 0 0 1 0 1 1 1 0 0 1 0 0 1 0 1 0 0 1 0 1 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 1 1 0 0 0 1 1 0 1 0 0 1 1 0 0 0 1 0 1 0 1 0 0 1 0 0 0 1 1 0 1 0 1 1 0 0 0 1 0 1 1 0 1 1 1 0 0 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 0 0 0 0 1 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 1 0 1 1 0 1 1 0 0 0 1 0 1 1 1 0 0 1 0 0 0 1 1
Stanford Social innovation review â€˘ Fall 2013
0 1 0 1 1 0 0 0 1 0 0 1 0 1 1
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0 0 1 0 1 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1
0 1 0 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0
1 1 0 0 1 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1
0 1 0 1 0 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0
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The Future of Health Care Access
0 0 0 0 1 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0
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0 0 1 1 0 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0
1 1 1 0 1 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0
1 1 0 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1
1 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1
0 1 0 1 0 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1
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0 1 1 0 0 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1
0 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1
0 1 0 1 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0
Traditional health care is a
0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0
0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0
Photograph by Andrew Aitchison/In Pictures/Corbis/APImages
1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1
affair. But across the
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developing world, a wave of
1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1
1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1
signals the emergence of
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a compelling new model.
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by john a. m ac donald, anita m. m c gahan, 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0will 1 1 1 0 1mitchell, 1 0 0 1 0 0 0 1 1 0& 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1the 1 0 0 0t-hope 1 0 1 0 1 0 1 team 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1
1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 Fall 2013 â€˘ Stanford Social Innovation Review 49 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1
or generations, the model of how people in the developed world access health care services has involved faceto-face encounters between doctors and patients in brick-and-mortar medical facilities. The contours of that model are well known: A
patient arrives in a clinic, registers her insurance at the front desk, and waits. Then a nurse or an aide ushers her into a sterile room, takes her vital signs, and hands her a paper gown. Some minutes later, a doctor in a white coat enters the room, asks her questions for 10 minutes or so, and conducts a brief physical examination. The doctor issues a diagnosis, writes a prescription, and sends the patient off to make a copayment. Afterward, the patient will drive to a local pharmacy to purchase medication. She is one of 40 patients whom the doctor will see that day.
In developing countries, that model of access is structurally untenable. According to the World Health Organization, there is a global shortage of 4 million health care providers; in 57 countries, by the WHO’s reckoning, that shortage amounts to a “crisis.” 1,2 The WHO also estimates that 30 percent of the world’s population lacks access to essential medicines.3 Rural clinics in the developing world are scarce and ill supplied, and using better-equipped urban medical facilities often requires patients to make a two-day journey. Even within cities, travel to and from a clinic through jammed streets can take several hours. Urban clinics, moreover, are typically overwhelmed by patient demand. Alternative providers such as local pharmacists are well meaning, but they tend to have limited training. In place of insurance, people must rely on family savings to cover health care expenses. Medications are often counterfeit, serving as placebos at best and causing considerable harm at worst. Across large swaths of the globe, a lack of supporting infrastructure and appropriately trained personnel undermines any hope of replicating the Western model of health care. But a new breed of innovators who work in startup companies, multinational corporations, NGOs, and government agencies are responding to this challenge by using information and communication technology (ICT) to reinvent health care access. Consider: In a remote area of a developing country, a patient walks not into a medical clinic, but into the home of a local woman. Trained as a health worker, the woman asks a few questions in the patient’s native dialect, takes the patient’s temperature and blood pressure, and then picks up a mobile phone. Within seconds, a paramedic is on the line. Using one of 70 algorithms in a clinical decisionmaking software package, the paramedic works through another, John A . M acDonald, a Canadian physician who recently completed a residency in family medicine at the University of Toronto, is enrolled in the MBA program at the MIT Sloan School of Management. A nita M. McG a h a n is a professor of strategic management at the Rotman School of Management, University of Toronto. Will Mitchell is a professor of international management at the Fuqua School of Business, Duke University, and a visiting professor of strategic management at the Rotman School of Management, University of Toronto. MacDonald, McGahan, and Mitchell are members of the University of Toronto Health Organization Performance Evaluation (T-HOPE) team. They coauthored this article with these fellow members of the T-HOPE team: Onil Bhattacharyya, John Ginther, Leigh Hayden, Kathryn Mossman, Himanshu Parikh, Ilan Shahin, and Raman Sohal.
Stanford Social Innovation Review • Fall 2013
more targeted series of questions. The local health worker then holds the line as the paramedic, via the Internet, sends a brief summary of the case to a physician for review. The summary includes a diagnosis and a proposed treatment plan. The physician agrees with the diagnosis but suggests a longer course of antibiotics, and signs off. The paramedic comes back on the line to explain the diagnosis and the treatment plan, and the local health worker offers to provide medications directly to the patient. Meanwhile, the physician turns his attention to the next case summary that appears on his screen—one of 400 that he will review that day. That’s not a theoretical scenario. That’s the reality for patients enrolled in eSwasthya, a program offered by the Health Management and Research Institute, a nonprofit organization based in India. ICT has the potential to topple or at least lower the geographic, financial, and cultural barriers to access that dominate the health care landscape in low-resource environments. Spurred by a rapid diffusion of mobile telephony and by a sharp increase in Internet penetration, many organizations in the developing world are building health programs that hinge on the use of mobile phones, Internetenabled computers, and other ICT devices. In some cases, these programs complement existing hands-on health care services. In other instances, they present ambitious and innovative alternatives to traditional care. The new frontier of health care access has many striking features: a radical reinterpretation of what it means to see a health care professional; a redefinition of skill on the front line of care; an amplification of each professional’s productivity; and a vast extension of geographic reach. Yet by far the most significant feature is an intensive focus on the needs of the patient. Programs such as eSwasthya make significant use of ICT, but their primary focus is on providing members of their target population with access to needed care. The Center for Health Market Innovations (CHMI), based in Washington, has amassed data on 1,200 for-profit and nonprofit health programs.4 The Results for Development Institute launched CHMI in 2010 with funding from the Bill & Melinda Gates Foundation, the Rockefeller Foundation, and UKaid. Since then, the CHMI database has emerged as the world’s leading repository of information on global health innovation. We are all members of the Toronto Health Organization Performance Evaluation (T-HOPE) team, and
in that capacity we scoured the CHMI database for programs in the developing world that prominently feature the use of ICT. We focused our attention on programs for which detailed information on organizational strategy and operational results is publicly available. Ultimately, we identified 40 programs that meet those criteria. They cover a wide range of applications—from public outreach on sexual and reproductive health to the use of biometric identification cards in microinsurance plans. But all of them aim to extend and improve health care access.
will enable decision-makers to evaluate various innovations. ICT is changing what it means to be a user within a system of health care access, and it’s changing the range of potential uses as well. Categorizing and comparing programs from around the world helps us identify where and how that transformation is unfolding globally. A Survey of the Field
The framework has utility for investors, donors, policy makers, and program managers. For investors and donors, it offers a tool for comparing organizations that apply for funds with peer organizations A Framework of Innovation that target a similar set of users and uses. Similarly, policy makers To make sense of the many ICT-enabled health programs that have can deploy the users-and-uses framework to assess public health emerged in recent years—and to identify worthwhile candidates for programming, to allocate scarce resources, and to encourage priinvestment or emulation—funders, government officials, and pro- vate investment in a given area. (Many of the examples in the CHMI gram managers need to have a clear analytical framework. In this database represent public-private partnerships, and many others article, we introduce a simple yet compelling classification scheme. began as private projects that government health departments then We believe that the best way to look at innovations in health care took over.) Program managers can categorize their own efforts by access is through the lens of demand: Who will benefit from imple- referencing the framework. Doing so will help them with strategic menting such programs, and what form will that benefit take? In planning, and it will also help them to avoid the pitfalls that other that spirit, we focus first on the potential users of health technol- organizations have encountered in serving particular user groups ogy and then on the uses to which that technology might be put. or in implementing particular uses. Now, with this framework in place, we can survey the rich When it comes to ICT-based health access, there are two groups of core users: patients and providers. The first group includes not variety of ICT-enabled health programs that populate the CHMI only patients and their families, but also members of the general database. (Several of these programs operate in multiple areas population who have an interest in disease prevention and wellness. of the framework; they serve multiple users and uses. But we catThe second group encompasses a wide variety of health care pro- egorize them here according to the domain where their impact is fessionals. This category includes, for example, rural physicians in especially salient.) Educating Patients | Two programs in the database offer exIndia who access continuing medical education through Narayana Hrudayalaya, a large hospital chain that delivers training via satel- amples of using ICT to provide accessible health education to the lite and fiber-optic technology. But it also includes local entrepre- general population. neurs—many of them former tuberculosis patients—who run mini mDhil, a venture-backed startup based in Bangalore, India, leverTB clinics under the auspices of Operation ASHA, a program that ages mobile telephony and the Internet to reach its target audience— uses a biometric patient-record system. (Operation ASHA began in urban young adults in New Delhi and Mumbai—at a fraction of the India but now and 0 1operates 0 1 0 1 0 1 0in 0 0Cambodia 011011110 0 0 1Vietnam 0 1 1 1 0 1 1as 0 0well.) 1 0 0 0 1 1 0 0 1 0 1 0 1cost 1 0 1 of 0 1traditional 1 0 0 0 1 1 0 1 0education 1 1 1 0 0 0 1 0initiatives. 1 0 1 0 1 0 0 0In 0 1its 1 0 first 1 1 1 1year 0 0 in operation, The uses of care 1 0 0into 1 0 1 two 0 1 1 0broad 1 0 1 1 categories: 0 0 0 1 1 0 1 0 1edu1 1 0 0 0 1mDhil 0 1 0 1 0attracted 1 0 0 0 0 1 1 150,000 0 1 1 1 1 0 0paid 0 1 0 1subscribers 1 1 0 1 1 0 0 1 0to 0 1ICT 0 1 1 in 1 0 health 110010 0 0 1fall 0 0its 1 1SMS 0 0 1 0health messagcating people 1about service 0 medical 1 1 1 0 0 0 1practice, 0 1 0 1 0 1 and 0 0 0 empowering 0 1 1 0 1 1 1 1 0 0 0 1ing 0 1 1service. 1 0 1 1 0 0The 1000 0 1 1 0healthy 1 0 1 1 0 0living 0 1 1 0 1or 1 1 0 0 1 costs 0 1 0 1 150cents 1 0 1 1 0per 0 0 1health 1 0 1 0 1tip 1 1 0or 60 cents per people to access 0 0 1 1 0 1 1 1 1The 0 0 0 first 1 0 1 1use 1 0 1category 1 0 0 1 0 0 0 covers 1 1 0 0 1 0 1 0month 1 1 0 1 0 by 1 1 0subscription. 0 0 1 1 0 1 0 1 1 1 0Since 0 0 1 0 its 1 0 1founding 0 1 0 0 0 0 1 in 1 0 2009, 1 1 1 1 0 mDhil has ag0 0 1 0or 1 0deliver 1 0 1 0 0 treatment. initiatives that website 1 0 those 1 0 1 1 0who 0 0 1 dispense 1 0 1 0 1 1 1 0 0 0gressively 1 0 1 0 1 0 1 0expanded 0 0 0 1 1 0 1 1its 1 1Internet 0 0 0 1 0 1 1presence. 1 0 1 1 0 0 1 0Its 0 0full-featured 11001 0 0aim 1 0 1 to 1 1 increase 0 1 1 0 0 1 0the 0 0 1knowledge 1 0 0 1 0 1 0 1 of or receive health from It also pub1 0 1 0range 10000 1 1 0 1issu1 1 1 0 0 0covers 1 0 1 1 1health 1 0 1 0 1from 1 0 1 0weight 1 1 0 0 0 loss 1 1 0 to 1 0 cancer. 111 0 1 0 1services. 1 0 1 0 1 1 0It0 includes 0 1 1 0 1 0 1activities 1 1 0 0 0 1 0 that 0 1 1 0 0issues 1 0 0 0 1that 1 0 0 range ing SMS bulletins about safe sex to producing online modules that lishes a series of video clips on YouTube that has attracted more than 0001010101000011011110001011101100100011001010110101100011010111000101010100001101111 teach new techniques to primary care providers. The second use 10 million views. The videos feature recurring personalities who 0001011101100100011001010110101100011010111000101010100001101111000101110110010001100 category involves applications that directly or indirectly affect pa- answer questions about various topics; the most popular clips are 1010110101100011010110001011101100100011001010110101100011010111000101010100001101111 tient care. It includes (among other uses) telemedicine kiosks, clini- those that address sexual health concerns. The ability of mDhil to 0001011101100100011001010110101100011010111000101010100001101111000101110110010001100 cal decision-making software, and supply-chain management tools conduct an Internet-based marketing strategy on a large scale distin1010110101100011010111000101010100001101111000101110110010001100101011010110001101011 guishes it from most other programs that improve access to medication. 1000101010100001101111000101110110010001100101011010110001101011100010101010000110111 A dual focus on users and uses that aim to broaden health care access. 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0is 1 1 1changing 00010101010000110111100010111011001000110 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 technology yields a two-by-two framework that Marie Stopes International (MSI), 0101011010110001101011100010101010000110111100010111011001000110010101101011000110101 encompasses four broad categobased in London, targets men and 0 0 0 1 0 1 1 1 0it 1 1 0means 0 1 0 0 0 1 1 0 0 to 10101 1 0 1a 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 what 0 1 1user 000110101110001010101000011011 be women in need of sexual health serries of ICT-based health care in1100010111011001000110010101101011000110101110001010101000011011110001011101100100011 novation. (See “ICT in Health Care vices. MSI has been in operation for 1 0 0 0 1 0 1 0 1 0 1a 0 0health 0 0 1 1 0 1 1 1 1 0 care 0 0 1 0 1 1 1 0system. 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 within 1100100011001010110101100011010 Access: A Survey of Innovation” on more than 30 years, and it currently 1110001010101000011011110001011101100100011001010110101100011010111000101010100001101 p. 53.) This framework brings order has centers in 40 countries. Its pro0 1 0 1 0 1changing 1 0 1 0 1 1 0 0 0 1 1 0 1 0 the 1 1 1 0 0 0range 1 0 1 0 1 0 1 0 0 of 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 It's 001101111000101110110010001 to the seemingly chaotic landscape gram in Bolivia, a country with limited 0 1 0 1 1 0 1 0 1 1 0 0 infrastructure, 01101 1 0 0sector. 1 0 1 0 1It 10 1 0 1 1 0as 0 0a1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1communication of this growing serves offers 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0finances health 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 1 1 0 1 0 1 1 0 0 0 1 1 0 potential uses as well. map to a fast-changing terrain that mobile clinic services, 1111000101110110010001100101011010110001101011100010101010000110111100010111011001000 Review 1 1 0• Stanford 1 0 1 1 0 Social 0 0 1 1Innovation 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1Fall0 2013 1011100010101010000110111100010111011001000110010101101011000110101110001010101000011 0111100010111011001000110010101101011000110101110001010101000011011110001011101100100 0110010101101011000110101110001010101000011011110001011101100100011001010110101100011 0101110001010101000011011110001011101100100011001010110101100011010111000101010100001
care for low-income families, distributes contraceptives, and provides public education on sexual health issues. To promote reproductive health education, MSI Bolivia established a confidential phone line through which adolescents and young adults can ask questions that they find too embarrassing to bring up in a public setting. Trained university students field questions on the line six days a week. If necessary, they refer callers to an MSI clinic for medical care. The cost of each call is about 21 cents, and MSI Bolivia and the caller share the cost equally. MSI plans to expand its service by creating a Web portal for patients and providers, and by enabling patients to book clinic appointments through its confidential hotline. Educating Providers | The database features two programs that expand access to care by using ICT to improve the training of local health care workers. Health[e] Foundation, based in Amsterdam, has a simple mission: to deliver state-of-the-art medical information to resource-limited regions of the world. Founded in 2003 by the Dutch physician Fransje van der Waals, Health[e] Foundation offers a blended curriculum that combines brief, periodic on-site training sessions with three-monthlong e-learning modules that participants can take online or offline (via USB memory stick). The modules address a broad range of topics, including HIV and AIDS, tuberculosis, and mental health. At the end of each module, participants receive a certificate, along with access to course updates and continuing-education materials. Medical experts from around the world help to create and curate this educational content. Health[e] Foundation operates on every continent except North America and Antarctica, and it presents its course material in multiple languages. Each year, about 1,000 physicians, nurses, and other health workers receive training through the foundation. Narayana Hrudayalaya, based in Bangalore, India, supplements its core health care services by operating a highly advanced provider education platform. The Narayana facility in Bangalore is one of the world’s premier cardiac surgery centers. It has 5,000 patient beds, and it’s best known for offering a low-cost ($2,000) coronary artery bypass procedure. Recently, Narayana began a less publicized venture into continuing medical education and telemedicine. It joined the PAN African e-Network, a multiorganizational initiative that uses satellite and fiber-optic technology to bring Indian expertise in education and health care to sub-Saharan Africa. Initially, the network focused on providing remote consultations and ECG readings to in-country health care workers. But Narayana, which is leading the health care aspect of the project, quickly recognized the potential of the network to deliver educational content to African physicians. Today, Narayana offers remote educational services in 16 African nations. Empowering Patients | Several ICT-enabled programs in the database augment the ability of low-income patients to access standard health care services. Rashtriya Swasthya Bima Yojana (“National Health Insurance Program”), based in India, uses portable biometric data collection and other ICT methods to support a nationwide insurance plan. The program has helped establish affordable access to care for about 34 million poor Indian families. It’s a public-private partnership in which the Indian government serves as the payer, third-party insurers provide risk coverage, and contracted administrators manage enrollment and claims. The federal government covers 75 percent 52
Stanford Social Innovation Review • Fall 2013
of the cost of premiums, and state governments cover the remaining 25 percent. Each participating family pays a one-time fee of 30 rupees (about 70 cents) at the time of enrollment. The head of each family and four other family members have their fingerprints and picture taken at a terminal that immediately adds them to a central database and generates a chip-enabled smart card. At that point, family members may use the card to access about $600 worth of hospital services. Several features of the plan help patients to avoid delays in care. The authentication, claims, and authorization processes are tied to a patient’s smart card, and they are completely paperless. The plan also offers preapproval and fixed pricing for 750 procedures and claims. To participate in the service, hospitals must have a reliable Internet connection, and they must install fingerprint and smartcard readers. The service closely monitors hospitals for possible fraud and quickly removes offending institutions from the program. Changamka Microhealth, a Nairobi, Kenya-based insurer that began operation in 2008, also issues smart cards. The organization targets people who have some income but are unable to open a savings account at a traditional financial institution. With a Changamka card, users can visit a doctor or buy medicine at more than 30 accredited establishments in Nairobi, Kikuyu, Mombasa, and Naivasha. Changamka has negotiated discount rates with each of those providers. Patients can use the cards for outpatient treatment, maternity care, third-party payment, or in-house services that their employers provide. The cards are available at supermarkets and other retailers, patients can add money to the cards at a cellular-connected terminal or through a mobile phone, and the cards do not expire. Changamka has partnered with GA Insurance, a Kenya-based company that acts as both underwriter and fund manager for the organization. Empowering Providers | Finally, several programs in the database deploy ICT systems to enhance provider-side efficiency. World Health Partners (WHP), based in New Delhi, offers an example of ICT-enabled remote primary care. WHP, a nonprofit partnership, began as an 18-month pilot in the Indian state of Uttar Pradesh, and more recently it has expanded to Bihar, one of India’s poorest states. WHP recruits pharmacists, local health workers, and other informal care providers and sets them up in franchised “clinics” under the WHP brand. The clinics mainly handle primary care complaints, but patients can visit them for preventive medicine, for tuberculosis treatment—or for anything in between. As with eSwasthya, patients first consult a local WHP franchisee and then connect via telephone or videoconference to a remote physician. After the consultation, the physician can send a prescription to the clinic via SMS. WHP maintains laboratories for blood work, X-rays, and ultrasound tests, and it runs WHP-branded pharmacies as well. Patients pay less than $1 per visit, of which 60 percent goes to the franchisee and 40 percent goes to WHP. There are 250 telemedicine centers in the WHP network, and thus far WHP providers have served about 750,000 people. Today, WHP franchisees operate in 4,000 villages in Bihar. But the partnership is adding villages to its network at a pace of 400 per month, and its goal is to serve 20,000 villages by 2015. SMS for Life, a system for improving supply-chain management, shows that provider-side ICT implementation can go well beyond enabling telemedicine. The project began as a pilot program in
Tanzania, a country with endemic malaria. About 93 percent of the population is at risk of malarial infection, and there are an estimated 60,000 deaths annually from this preventable illness. To prevent stock-outs of antimalaria medication (among other crucial supplies), the Tanzanian Ministry of Health and Social Welfare partnered with Novartis, IBM, and several multinational organizations to develop a system for monitoring supply levels across the country. Each Thursday, health facility workers receive an automated text message that asks them to report on their stock levels. If they don’t reply within 24 hours, they receive a reminder message. The next Monday morning, a district officer receives a summary report of supply levels throughout a given region. The officer can then order additional supplies or redistribute supplies from one facility to another. Within six months of the start of the pilot, the stock-out rate in Tanzania declined from 79 percent to 26 percent.
areas where there are notable opportunities for further innovation. A large number of these projects, for example, focus on empowering either patients or providers. They target populations that traditional services have been unable to reach, and they do so by overcoming limitations related to geography, transportation, and the high cost of delivering on-site services. These examples provide other organizations with models for bringing together traditional and nontraditional providers to enable services that do not require brick-and-mortar facilities or face-to-face interaction. There are also multiple entries in the CHMI database that fall within the patient education domain. These services, which often rely on cell phone and SMS technology, take advantage of the explosion in mobile telephony that is occurring in even the poorest communities around the world. These services have one other advantage: The organizational infrastructure needed to initiate them is relatively simple. Assessing the Data By contrast, we found notably few examples of ICT-based innoSorting the ICT projects in the CHMI database in accordance with vation in the provider education domain. The reason for that gap is the users-and-uses framework helps shed light on areas of health twofold, we believe. First, training providers is a highly technical care where the application of ICT has been fairly robust—and on undertaking—considerably more so than, say, launching a mass SMS campaign to teach the general public about condom use. It requires both medical and educational expertise, along with Educating Patients Empowering Patients a deep understanding of local Individuals use ICT to learn how to maintain health. Individuals use ICT to access health care services. provider practices. Second, alExamples Examples though many Western medi• Using a mobile SMS platform to share information • Using biometric smart cards to identify and register cal schools are working with on preventing sexually transmitted diseases families for health insurance schools and governments in • Distributing preventive health information via cultur• Integrating mobile point-of-sale devices with microthe developing world to imally appropriate YouTube videos insurance and health-savings plans prove provider training, the Programs Programs standard approach continues • mDhil (India) • Rashtriya Swasthya Bima Yojana (India) to focus on delivering such as• Marie Stopes International (40 countries) • Changamka Microhealth (Kenya) sistance on-site and in person. Implications Implications These barriers are surPatients gain access to affordable health insurance Patients learn how to manage health issues proacmountable. We expect to see and to efficiently delivered health care services. tively for themselves and their families. Public health Health care workers reliably receive payment for services can roll out education programs quickly and slow but significant growth their services. cost-effectively, even in the face of pandemic disease. in ICT-enabled provider education, especially as ICT infrastructure becomes more Educating Providers Empowering Providers prevalent in the developing Health care professionals use ICT to improve their Health care professionals use ICT to improve access world and as educational inmedical knowledge. to their services. stitutions there become more Examples Examples sophisticated. Established • Instruction of health workers via online and offline • Remote ECG analysis schools such as Stanford Unitraining modules • Telemedicine services in which patients and proversity and startup ventures • Provision of continuing medical education services viders engage remotely with skilled professionals via satellite or fiber-optic connection via telephone or advanced tele-diagnostic software such as the Khan Academy (a nonprofit video-based educaPrograms Programs • Health[e] Foundation (Africa, Asia, Latin America) • World Health Partners (India) tion service) are already dem• Narayana Hrudayalaya (India , Africa) • SMS for Life (Tanzania) onstrating that educators can conduct large-scale knowledge Implications Implications Remote providers can access specialized assistance Remote providers receive up-to-date protocols and transfers—even entire univerinstantly. Health professionals can remotely serve a offer evidence-based care. Providers learn to think in sity courses—via the Intervast number of patients from a single location. Patients terms not just of what providers can offer, but of what net. It’s only a matter of time no longer need to travel long distances to receive care. patients need. before similar approaches to
ICT in Health Care Access: A Survey of Innovation
Fall 2013 • Stanford Social Innovation Review
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The next challenge will be potential to extend across national 0111100010111011001000110 0 1 0 1 0 1 1patients 0 1 0 1 1 0 0 0 1 1 0 1 and 0111000 1010101000011011110001011101100100 both providers. to evaluate the long-term viability borders as well. 0 1 1 0 0of 1 0such 1 0 1 1programs, 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1The 0 1 1innovative 0 1 0 1 1 0 0 0 1programs 1 and the outcomes in the 1 0 1 1 1 0looking 0 0 1 0 1 0beyond 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1CHMI 1 0 0 0 1 0database 1 0 1 0 1 0 0reflect 001 and that will0require a disruptive 1 0 such 1 1 1 1 as 0 0 the 0 1 0 number 1 1 1 0 1 1 0of 0 1people 0 0 0 1 1who 0 0 1 0have 1 0 1 1been 0 1 0 1treated 1 0 0 0 1 1 0 1model 0 1 1 1 0of 0 0care 1 0 1 0that 1 0 1 has 0 0 0 not 0 1 1 yet 0 1 1spread 1 1 0 0 0 1from 0 1 1 1developing 0 1 1 0 0 1 0 countries to simple metrics 0 0 1 1 0 0 1 0 1 0 1 1 0 1 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1 1 0 1 1 1 1 0 0 0 1 0 1 1 1 0 1 1 0 0 1 0 0 0 1 1 0 0 1 0 1 0 1 1 0 1 1 1advanced 0001 or trained. A working group that includes CHMI, T-HOPE, and the more resource-rich settings. The broad use0of telemedi1 0 Investing 1 0 1 1 1 0 0 0Network 1 0 1 0 1 0 1 is 0 0developing 0 0 1 1 0 1 1 1 1a0set 0 0 1of 0 1metrics 1 1 0 1 1 0for 0 1 0 0 0cine 1 1 0 0and 1 0 1clever 0 1 1 0 1 smart-card-enabled 0 1 1 0 0 0 1 1 0 1 0 1 1 1 0 0 0insurance 1 0 1 0 1 0 1 0 0schemes 00 Global Impact are rare 0 1 1 1 1 0to 0 0use 1 0 1 in 1 1assessing 0 1 1 0 0 1 0 0new 0110 0 1 0 1 0care 1 1 0 1projects. 0 1 1 0 0 0 1 1 0or 1 0nonexistent 1 1 1 0 0 0 1 0 1 0in 1 0much 1 0 0 0 0of 1 1the 0 1 1developed 1 1 0 0 0 1 0 1 world. 1 1 0 1 1 0Yet 0 1 the potential investors and1 1funders health But that effort of, say, an 0 0will 0 1 1take 0 0 1a 0 significant 1 0 1 1 0 1 0 1 1amount 0 0 0 1 1 0of 1 0time 1 1 1 0to 0 0unfold. 1 0 1 0 1 Mean0 1 0 0 0 0 1 1benefits 0 1 1 1 1 0 that 0 0 1 0those 1 1 1 0 1services 1 0 0 1 0 0 could 0 1 1 0 0 bring 1 0 1 0 1to 1 0the 1 0 1operation 1000 while, tools such as0 the 0 0 1 1 0 1 1 1 1help 0 0 0 to 1 0 illuminate 1 1 1 0 1 1 0 0 1 0 0American 0 1 1 0 0 1 0 1HMO 0 1 1 0 1(health 1101 1 1 1 users-and-uses 0 0 0 1 0 1 0 1 0 1 0 0framework 0 1 1 0 0 0maintenance 1 1 0 1 0 1 1 1 0 0 organization) 0 1 0 1 0 1 0 1 0 0 0 or a Canadian the variety and of1 activity apparent. 0 0this 1 0 0emerging 0 1 1 0 0 1 0 1field. 0 1 1 0 1 0 1 1 0 0 0 1 1LHIN 0 1 0 1 1(local 1 0 0 0 health 1 0 1 0 1 0integration 1 0 0 0 0 1 1 0 1network) 0 1 1the 0 1 1depth 11000 0 1 1 1 0 1 1in 1 1 1 0 0 0 1are 0 1 1immediately 101100 Indeed, given their relative freedom from technical obstacles and Assessing the Future their high literacy rates, developed countries present an environNumerous limitations continue to affect the implementation of ICT- ment in which ICT-driven health care clearly might flourish. One based health care solutions. Internet connectivity is still nascent in place to start would be in the use of long-established mobile techmuch of the developing world. The instability of electrical supply nologies—an area where “advanced” countries have lagged behind in developing countries presents a massive challenge as well. And their less-developed counterparts. SMS-based payment and health although mobile-phone service is becoming ubiquitous, high rates education applications have become commonplace in many develof illiteracy limit the usability of SMS-based programs in many oping countries, for example, even as people in the developed world parts of the globe. In a recent post at SSIR Online, Ken Banks noted focus on creating medical smartphone apps that have struggled to that organizations continue to push technology—mobile technol- find broad utility. In all parts of the world, the largest barrier to implementing ICTogy, in particular—into low-resource settings without fully taking into account local needs.5 The use of ICT in health care is still in its based health care is not a lack of technology or a lack of medical skill. infancy, and we shouldn’t let its novelty distract us from the need Instead, it is the belief—prevalent in both the developing world and to assess its relevance to target communities. Health care technol- the developed world—that high-quality health care services require hands-on, person-to-person engagement within a traditional brickogy, in short, cannot surmount all barriers to health care access. Despite those obstacles, there are substantial opportunities to and-mortar medical facility. As that mindset changes and as orgaexpand ICT-enabled health care services. Most developing countries nizational and logistical capabilities continue to improve, we are now have the telecommunications infrastructure to support at least likely to see rapid growth in demand-focused, ICT-enabled services basic ICT services, and those services can readily improve access to that address the needs of both patients and providers. Technology health care treatment and education through the deployment of voice that can improve access to health care now exists, and it’s becomand SMS applications. More sophisticated services, meanwhile, are ing ever more widely available. We simply need the motivation and emerging in countries that have both a strong technical infrastruc- the courage to use it. n ture and a sophisticated organizational infrastructure. Fortunately, We wish to thank Ameya Bopardikar, Jieun Cha, Earl D’Almeida, David Leung, Leigh Pharand, and Jason Sukhram for providing research support for this article. We are also more and more countries do have that combination of resources. for the financial support provided by the Center for Health Market Innovation, What’s more, the potential scalability of ICT-based services offers grateful the Results for Development Institute, and the Canadian Social Sciences and Humanities an opportunity for organizations to extend their programs beyond Research Council. individual countries. After all, many developing countries suffer from similar gaps in health care access and face similar infrastructure Note s limitations. At least five of the 40 programs that we identified in our 1 Lincoln Chen, Timothy Evans, Sudhir Anand, et al., “Human Resources for Health: Overcoming the Crisis,” The Lancet, 364, 2004. survey are transnational in scope. We have already discussed four 2 World Health Organization, The World Health Report 2006: Working Together for such programs: Operation ASHA, which sponsors TB clinics in mulHealth, Geneva: WHO, 2006. tiple Asian countries; Health[e] Foundation, whose provider educa- 3 World Health Organization, “Equitable Access to Essential Medicines: A Framework for Collective Action,” in WHO Policy Perspectives on Medicines, Geneva: WHO, 2004. tion platform reaches physicians in Asia, Africa, and South America; 4 The Center for Health Market Innovations, http://healthmarketinnovations.org. Marie Stopes International, which offers sexual and reproductive 5 Ken Banks, “The Truth About Disruptive Development,” Stanford Social Innovation health services in 40 different countries; and Narayana, an Indian Review Online, January 16, 2013, http://www.ssireview.org/blog/entry/the_truth_ organization that participates in the PAN African e-Network. In about_ disruptive_development. 54
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Action What’s Next
What Works P. 59 Case Study P. 66
By Suzie Boss
Donations on Tap 3When it’s time to settle the
bill at Cause DC, a bar and restaurant in Washington’s popular U Street nightclub district, patrons get to make one last menu choice: Which of four featured nonprofits do they want to benefit from their entertainment experience? Cause DC opened in late 2012, creating a buzz with its unusual business model: It gives away a
portion of its profits to worthy organizations. Other “philanthropubs” have opened in Houston and Portland, Ore.; another is rumored to be in the works in Melbourne. Cause DC cofounder Nick Vilelle doesn’t mind the competition. “If someone steals the idea, that’s fantastic,” he says. “The more, the better.” Even comedian Stephen Colbert has chimed in, giving a “wag of the finger” to what he described as a new trend of “drunk donating.” Although all of these establishments aim to do good, their 56
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business models vary widely. The Oregon Public House, located in a gentrifying neighborhood of Portland, operates as a nonprofit. The two-story, brick-walled space, built as an Oddfellows Hall in 1909, was painstakingly rehabbed by volunteers. A pub operates on the ground floor, and an upstairs ballroom is rented out for special events. Sweat equity and a longterm lease allowed the Oregon Public House to open debt-free. During opening weekend in May, the place was packed with diners who were tucking into
Diners at Cause DC, a bar and restaurant in Washington, get a side of philanthropy with their order.
cheeseburgers and other pub grub. Proceeds from just the first two weeks of operation enabled the pub to give away $2,000 to eight nonprofits. Cause DC has somewhat more upscale ambitions. Vilelle and his cofounder, Raj Ratwani, recruited an experienced business manager and a veteran chef to design a menu that would
appeal to twenty-somethings out for a night on the town. “We don’t want people to say, ‘Oh, it’s a nonprofit bar, but the food’s not any good.’ Our staff is very good at what they do,” Vilelle says. (Yelp reviews back up his claim.) The chef sources most food locally, and specialties like African chicken groundnut stew make for “an adventurous menu,” Vilelle notes. Unlike the Oregon Public House, Cause DC is a for-profit venture. Actually, it’s a pair of ventures. One LLC owns the property; another operates the bar and restaurant, leasing the space at a subsidized rate. The founders recruited impact investors to buy into the idea. “They’re making a real estate play that allows us to make an impact,” says Vilelle, who began to develop the business after returning from a Peace Corps stint in Togo. Like a set of rotating taps, the array of nonprofit organizations that benefit from these establishments’ generosity changes frequently. At Cause DC, wouldbe beneficiaries use a streamlined online application process, and an advisory board chooses a slate of recipients each quarter. The board favors organizations that are “innovative and working at root causes,” Vilelle explains. Recent beneficiaries have included international NGOs like One Acre Fund and local nonprofits with a focus on arts or youth mentoring. Cause DC predicts that its annual donations will reach $100,000 once it recoups its startup costs. Oregon Public House expects to generate $120,000 annually for charities, and it plans to cut checks for
them every month. “The whole point is to raise money for charities, not to be just another nice pub,” says Ryan Saari, founder of the Portland bar “We want to get the money out to them fast.” Both organizations plan to publish reports on their donations online. These socially minded barkeeps eagerly share what they’re learning with anyone who asks for advice. Vilelle estimates that he has fielded at least 20 calls from interested entrepreneurs around the world. Perhaps the most valuable benefit of the philanthropub model is the way that it matches good causes with potential supporters. “Younger people aren’t your big-check philanthropists,” Vilelle says. “Here’s an opportunity for them to get involved in the things they want to support just by doing what they already do.” Cause DC customers who write an email address on their receipt will get an update on what the beneficiary organization has accomplished with its donation. “That’s positive reinforcement,” Vilelle adds. n Food
A Fresh Approach to Food Stamps 3Every Friday afternoon
throughout the growing season, families stop by Zenger Farm on the outskirts of Portland, Ore., to pick up their weekly share of fresh-picked organic produce. Depending on what’s ripe, their baskets might include fava beans or fennel, tomatoes or turnips—10 items or more in all.
Photograph by edward perry, courtesy of cause dc
S o c i a l ly R e s p o n s i b l e B u s i n e ss
Photograph by edward perry, courtesy of cause dc
Traditionally, communitysupported agriculture (CSA) programs like this one have required customers to shell out hundreds of dollars at the start of a season. That up-front commitment helps small farmers make ends meet, but it’s a deal breaker for less affluent customers. Yet more than half of the customers at Zenger Farm are low-income. Instead of paying in advance for all 23 weeks of the season, they pay $25 each Friday by swiping their SNAP benefit card. SNAP stands for Supplemental Nutrition Assistance Program; it’s known, more colloquially, as the food stamp program. Across the country, efforts to unite CSA and SNAP are sprouting up at farms that sell direct to customers. “We get calls every week from farmers who want to be able to do this,” says Bryan Allen, assistant farm manager at Zenger Farm. “It’s definitely on their radar.” A commitment to food justice helps to explain that interest, but simple economics plays a big role, too. One in seven Americans receives SNAP benefits. These consumers are developing a taste for fresh produce, with a push from the US Department of Agriculture (USDA) to expand SNAP recipients’ access to farmer’s markets. From 2007 to 2011, SNAP purchases at farmer’s markets grew from $1.6 million to more than $11 million. SNAP recipients can spend that money on CSA programs only at farms that register to accept SNAP payments. (According to a USDA spokesperson, the agency doesn’t have a count of authorized CSAs.) Zenger Farm, a nonprofit farm and education center, began piloting a SNAP program in 2011. To share lessons with other farms, it has published an online guide to best practices. In
February, it held a webinar that drew nearly 100 attendees from across the country. One lesson that people at Zenger Farm have learned is that they need to educate consumers about the CSA model. “The first year we tried this, we didn’t have an up-front conversation with [SNAP] customers,” Allen says. As a result, 35 percent of participants dropped out during the growing season. That’s a big hit for a small farm. The following year, Zenger Farm took more time to explain its model and also began requiring SNAP users to put down a $50 (two-week) deposit. Customers get the full deposit back if they collect at least 21 of their 23 weekly shares. After the deposit was introduced, the dropout rate fell to 15 percent. Before farmers can accept SNAP payments, they have to meet certain eligibility criteria. They also have to be ready to live with a slower cash flow. According to current federal rules, SNAP funds can’t be used to pay for food in advance. USDA guidelines explain the reasoning behind this pay-as-you-go rule: “Because SNAP clients have limited means and resources, they can neither afford nor risk payment for an entire growing season at the season’s start.” That’s debatable, Allen argues. “Low-income people are certainly capable of budgeting their own money,” he says. In any event, low-income consumers seem to enjoy the chance to try the novel items that show up in their CSA baskets. Recipe swapping is a common practice among CSA customers, who often welcome help in figuring out what to do with a rutabaga or a celeriac. “There’s a lot of communitybuilding at the farm around preparing fresh food,” Allen notes. n
Crowdsourcing the Past 3 In a 1918 letter home from
the front lines of World War I, a US Army soldier told his family, “Some day some one will tell the story as it should be told.” Nearly a century later, his eyewitness-to-history account has been transcribed for posterity through the efforts of a 21st-century army of citizen archivists. The Citizen Archivist Dashboard is a crowdsourcing project of the National Archives and Records Administration (NARA). Using a Web 2.0 toolkit, volunteers are helping NARA with the painstaking process of turning 10 billion pages of historical documents—many of them written in longhand—into searchable, digitized data that users can access online. “It’s all about providing the greatest possible access to the records,” says Pamela Wright, chief innovation officer for NARA. “When people are looking for that needle in the 10-billion-straw haystack, we want to make sure they can find it.” The dashboard went live at the end of 2011, and right away the public started using it with an enthusiasm that took NARA by surprise. “We started with 300 documents that needed to be transcribed, including 1,000 handwritten pages. Within two weeks, we ran out of documents,” Wright says. “Not only was everything transcribed, but the documents in languages other than English were translated. And the quality was good. We were stunned.” Since then, citizen archivists have gone online to tag historic photographs, transcribe ship’s logs and old weather reports, and edit Wikipedia articles that cite National Archives sources. NARA
continues to upload new “missions,” as the agency calls them, to keep volunteers engaged. “This is all hugely important,” says Jackie Dooley, president of the Society of American Archivists. “No archive has enough staff to work at such a level of detail.” Professional archivists tend to work on collections “at more of an aggregate level,” she explains. “Being able to provide keyword searching of transcribed content greatly increases the level at which people can find relevant materials.” Citizen archivists aren’t in it for the glory. For the most part, Wright says, “we don’t even know who they are.” From anecdotal information, she knows that their ranks include genealogists and military history buffs, as well as professional scholars. “There are a lot of buffs out there,” Dooley says. “They have a personal passion for this material.” One of the best illustrations of the citizen archivist trend, she says, is the tremendous outpouring of volunteer time that has gone into Trove, a digital newspaper project that’s run by the National Library of Australia. Since that project launched in 2009, some 30,000 volunteers have corrected 40 million lines of scanned and digitized text. Creators of the Citizen Archivist Dashboard selected its tools with an eye toward ease of use by nonprofessionals. The dashboard incorporates existing Web 2.0 tools, such as Flickr for photo sharing, along with tools designed just for this project. The transcription tool was developed in-house. When you click on an object to transcribe, two windows open. The top one displays the original document. On the bottom window, users enter their response to a straightforward question: “What do you see?” In a demonstration Fall 2013 • Stanford Social Innovation Review
of the “wisdom of crowds” idea, users can improve quality by editing each other’s work. “We wanted it to be simple enough for a high school student to use,” Wright explains. In fact, she hopes to find a way for students to earn service-learning credits for their contributions. NARA, for its part, has earned not only an expanded social media following—its Tumblr site, called Today’s Document, has 100,000 followers—but also formal recognition. In 2012, the Citizen Archivist Initiative received the Walter Gellhorn Innovation Award from the Administration Conference of the United States. Wright, the agency’s first innovation officer, plans to keep looking for opportunities to engage with the public. Those opportunities won’t all take place online. One idea in the pipeline is to create real-world innovation hubs where students with fluency in digital tools can work with older volunteers on archiving projects. Older volunteers, in return, might offer tips on a quickly vanishing skill: the ability to read cursive handwriting. n Eco n o m i c D e v e lo pm e n t
An Arab Spring for Entrepreneurs? 3 In what may be a first for the
Arab world, an eco-friendly laundry is setting up shop in Tunisia. In the mountainous Khroumiri region, artisans are reviving the craft of Berber carpet making, and they’re using an improved loom design and a fair-trade marketing plan to do it. Meanwhile, a technology innovator is helping hospitals throughout Tunisia to digitize patient records. In the wake of the Arab Spring, a new spirit of entrepreneurship is taking hold in this
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North African country. Through a project called Souk At-tanmia (Arabic for “marketplace for development”), 71 budding businesspeople are accessing startup funding and technical help to turn raw ideas into commercial reality. Investing in small and medium-sized enterprises is new territory for the African Development Bank (AfDB), which is spearheading the project. But fresh ideas were in order after the Arab Spring. “Right after acquiring freedom in 2011, people’s biggest priority was how to create more jobs,” says Emanuele Santi, AfDB’s country economist for Tunisia and founder of Souk At-tanmia. “They were protagonists of their own destiny during the revolution. Now they want to be protagonists in building a new Tunisia.” Entrepreneurs don’t succeed on the basis of optimism alone, of course, especially in a country like Tunisia—where, Santi says, “creativity has been repressed for decades.” That’s why Souk At-tanmia has created what he describes as “an entire value chain of partners.” Among the 20 partners that AfDB has recruited are Microsoft and other multinationals, the Millennium Development Goals Achievement Fund, and various NGOs.
An employee stands ready to help patrons at EcoLav, a laundry enterprise that opened early this year in a suburb of Tunis.
“Souk At-tanmia has managed to unite a multitude of actors from public, private, and civil society to support entrepreneurs across the country,” says Carrie Beaumont, program manager for Mercy Corps Tunisia, a humanitarian organization that provides coaching and support for early-stage entrepreneurs. Most young entrepreneurs, for example, are inexperienced at making a pitch. “Banks complain that they do not receive good applicants,” Beaumont notes. Without external support, “many projects may not succeed,” she says. With Souk At-tanmia, anyone with an idea was able to apply for the first round of funding, which occurred in 2012. The call for proposals spread widely through a large SMS campaign; Tunisiana, a local telecom provider, sent 5 million messages to promote the initiative. “It was revolutionary,” Santi says. “Still, we weren’t sure anyone would come forward.” He needn’t have worried. Entrepreneurs, using an electronic submission process, uploaded some 2,000 proposals. A screen-
ing process then narrowed the pool to 300. Evaluators gave priority to projects that would boost employment, especially for young people and women. “Innovation was important, but not the main goal,” Santi says. “Our focus was primarily on projects with high potential to generate jobs.” The British Council, another Souk At-tanmia partner, coached applicants in the pool of 300 on business planning and helped them prep for the next stage of evaluation. In January, a panel of 28 experts picked 71 finalists. Each finalist received a grant of 15,000 euros (about $20,000) and was paired with an appropriate mentor. The first entrepreneurs to emerge from Souk At-tanmia are a diverse bunch: About a third of them are women, more than half are young people, and 62 percent hail from regions known to have low levels of economic opportunity. For many grant recipients, this experience was their first encounter with traditional banking. Yet 60 percent of these ventures were able to raise additional capital after becoming finalists. “Banks were confident about giving the green light, because they saw the support structure,” Santi says. “They weren’t financing just anyone. They could see that these entrepreneurs have the assistance they need to succeed.” People in other African countries have approached AfDB with requests to start similar programs for their fledgling entrepreneurs. So Santi’s next challenge is to help those countries apply the lessons that are still emerging in Tunisia. n
Photograph courtesy of the african development bank
Action What’s Next
Action What Works A Sporting Chance In troubled spots around the world, Right to Play shows how fun and games can be a serious tool for development. By S uz i e B oss
PHOTOGRAPH courtesy of right to play
Children in a village in Uganda run, dodge, and squeal with delight as they play a game of tag. There’s more afoot here than an ordinary childhood game. Two kids who are “it” buzz like mosquitoes. Other children, when they get tagged by one of that pair, pretend to suffer from the aches and fever of malaria. It doesn’t take long before the “mosquitoes” win. Then an adult on the sidelines introduces a new rule: When a mosquito approaches, children can put up their hands to mime the act of holding up a bed net. With a net in place, they can’t get tagged. This version of the game ends without any children getting “infected.” The leader now has a perfect opening to reinforce the message that, in real life, sleeping under a bed net provides an excellent defense against malaria. Malaria tag may seem like a simple game, but it is achieving profound Johann Koss, Olympic results. Johann Koss, founder and CEO athlete turned social of an international organization called innovator, shares a Right to Play, says that children carry the playful moment with children in Uganda. message of the game to their families. “When they go home, they’re captains of the malaria nets. They become very responsible, making sure their siblings and parents sleep under the nets,” he explains. Hard data back him up. In regions of Uganda where Right to Play programming has been introduced, 84 percent of children use malaria nets; nationwide, only 10 percent of them do so. Through play, Koss says, “children become change agents.” Right to Play is tackling a wide array of global challenges through the medium of sport and play. Its carefully designed programming helps kids and young people recover from the devastating effects of war, extreme poverty, and tribal conflict. Each week, 1 million children in more than 20 countries take part in Right to Play activities that emphasize play and sport as essential ingredients of a healthy childhood. Suzie Boss is a Portland, Ore.-based journalist who writes about social change and education. Along with writing frequently for Stanford Social Innovation Review, she contributes to Edutopia and is the author of Bringing Innovation to School.
The organization has honed a model that informs every move in its organizational playbook. “The core methodology is to create behavior change,” Koss explains. Facilitators can choose from 50 games and sports activities, and each activity addresses a specific challenge—from helping schoolchildren concentrate on their lessons to helping street youths avoid HIV and AIDS. “There’s no better way to learn,” Koss insists. “The motivation comes from the fun of the game itself.” Josephine Mukakalisa, a Right to Play country manager for Tanzania, notes how children react whenever they spot the red soccer ball that has come to symbolize Right to Play. “When children see that it is time to play, they get very excited. After playing, they come together and discuss their lives and what they have learned in the games,” she says. Previously, Mukakalisa worked with Right to Play in Rwanda, her native country. She credits the organization with “helping to rebuild community cohesion” after the horrors of genocide. Researchers in fields that range from neuroscience to psychology confirm that a play-centered approach holds real, enduring value. “The data are so clear,” says Stuart Brown, founder of the National Institute for Play and an early supporter of Koss’s efforts. Fall 201 3 • Stanford Social Innovation Review
Action What Works
play is the thing The story of Right to Play and the story of its founder are inseparable. Back in 1993, Johann Koss—already an Olympic medalist in speed skating—was training for the Winter Games that his home country, Norway, would host in Lillehammer in 1994. But he took a short break from his training to participate in a goodwill trip to Eritrea as an ambassador for an initiative called Olympic Aid. In Eritrea, Koss spotted a cluster of boys kicking around what looked like a ball. In fact, it was a long-sleeved shirt that they had tied into a bundle. “They just wanted to play,” he recalls. Seeing how that ragtag game lifted the children’s spirits, Koss appreciated not only his own ready access to equipment and coaches, but also the profound benefits that sport and play can deliver. Koss returned to Lillehammer, where he earned three gold medals. He then pledged his Olympic bonus money to Olympic Aid. “All of a sudden, I had a broader purpose,” he explains. “It doesn’t matter if I win or not. If I can inspire children to participate in sport, particularly in the worst places in the world, then I will make a significant change.” In 1994, Koss made a return trip to Eritrea, and with him came 13 tons of sporting equipment donated by the children of Norway. One journalist criticized Koss for bringing soccer balls to starving children. Any second thoughts that Koss might have had evaporated when he presented his gift to Eritrean President Isaias Afewerki. “He thanked me and said, ‘We have the same dreams for our children as any parent. Our people need more than to be kept alive,’” Koss recalls. Through the 1990s, Koss continued to work with the international aid community. Then, in 2000, he founded Right to Play. The organization is a successor to Olympic Aid, but it focuses more sharply on promoting the sport-for-development model. Today, Koss is approaching this work with the same discipline that helped him shatter records on the speed-skating oval. To achieve scale, Right to Play uses a train-the-trainer model. “It’s massive leverage,” Koss says, and it enables each trainer to “activate” from 10 to 30 more people. In all, the organization has trained about 13,500 volunteer coaches to implement Right to Play programming. It also trains children as young as eight to take on the role of junior leader. In-country partners, meanwhile, provide direct services in a way that allows Right to Play to stay lean. In Rwanda, primary school teachers learn Right to Play methods—an approach that has a huge multiplier effect. In Tanzania, the British Council uses Right to Play programs to help street youths reconnect with their families. In Pakistan, girls are taking part in sports for the first time through school-based Right to Play programs that give them the self-confidence that they need to stay in school. In every country where it operates, Right to Play tracks results 60
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to make sure that it is continuously improving its programs. “We use rigorous evaluation to constantly ask, Can we do better?” Koss says. That way of thinking comes naturally to him after a lifetime in athletics. “This is a great skill you get from sport,” he says, “and it’s transferable.” The Right to Play model is also highly transferable. The organization, which is based in Toronto, recently brought its programming to the United States. A pilot program in the Bronx is helping preschoolers get a jump on academics—through games, of course.
athletes as envoys Summer Sanders, an Olympic swimmer, first traveled to Rwanda in the mid-1990s. It was not long after the genocide that ravaged the country in 1994. “I was hoping to make an impact,” she says, “but I didn’t know the extent of the impact those kids would make on me.” She’s one of roughly 300 top athletes who have joined Right to Play’s corps of athlete ambassadors. They include professional sports stars as well as Olympians, and they represent 50 sports and 48 countries. Sanders remembers the eager face of one girl in a Rwandan refugee camp—an amputee who was getting set to take part in a relay race. “She had these huge, awesome, curious eyes,” Sanders says. “Her prosthetic was just a wooden stick that she used to balance herself. When she took the baton, she was just hauling! That moment was so beautiful. Her spirit was exactly what I wanted to be part of.” Just by showing up on a dusty field in a remote corner of the world, Sanders says, athletes can send a powerful message: “We care.” Their star power also raises visibility for the sport-for-development movement globally. Eli Wolff, a Paralympian turned scholar (he competed in the 1996 and 2004 Paralympic Games), directs the Sport and Development Project at Brown University. The leaders of this emerging field are pushing to define sport “as having value that goes beyond entertainment,” he explains. “It’s about the intersection with human rights and development— sport and play as basic human rights.” And Right to Play has become a prominent player on that front. “They’ve been able to put boots on the ground all over the world to launch this movement in a tangible way,” Wolff says. “They have managed to elevate the conversation and engage stakeholders who haven’t worked together before.” Wolff, for example, cites the role that Koss and his organization played in lobbying to establish the United Nations Office on Sports for Development and Peace. Recently, in fact, U.N. Secretary General Ban Ki-Moon called sport and play “outstanding tools to support peace and development.” Despite their hard-won accomplishments, Koss and his colleagues at Right to Play aren’t ready to take a victory lap. Money spent on sport for development represents a tiny fraction of global aid, and it pales in comparison with the billions of dollars spent on professional athletics. The pace of progress is too slow for those, like Koss, who are determined to change the game. “We have millions of children still to reach,” he says, and he’s eager to reach them before they outgrow their chance at a healthy, playful childhood. n
PHOTOGRAPH courtesy of bridge meadows
“Our capacity to form social groups is built on a foundation of healthy play behavior.” Koss and his organization are taking a lead in the emerging field of sport for development. “Play is sometimes seen as frivolous, but we know that it is critical for child development,” Koss says. “Our work is as serious as you can get.”
Action What Works Bridging the Generations
PHOTOGRAPH courtesy of bridge meadows
Older people and foster families are forming mutually supportive communities, with help from a group called Generations of Hope. By Gr eg B eato
“My back door is open almost all the time,” says Jackie Lynn, a 59-year-old resident of Bridge Meadows. “There are kids coming in and out, adults coming in and out. When I talk to people who are thinking about moving here, I tell them, ‘You’re not renting a home. You’re not renting an apartment. You’re renting a community.’ ” And not just any community. Bridge Meadows is what its creators call an “intentional intergenerational community.” Built on a two-acre site in a residential section of North Portland, Ore., Bridge Meadows combines housing for the adoptive families of foster children with housing for adults aged 55 or older. The “intention” behind this intentional community is to maximize social connectedness and to create an environment that will enhance childhood development. It follows a model that was pioneered by Brenda Eheart, executive director of a nonprofit group called Generations of Hope Development Corporation (GHDC). “Ordinary people can make a really significant difference in the way we address social problems,” Eheart argues. For Jackie Lynn, community—intentional, intergenerational, or otherwise—was not a significant part of her life until just a few Greg Beato is a contributing editor and columnist for Reason magazine. His work has appeared in The New York Times, The Washington Post, The Week, and more than 100 other publications worldwide.
years ago. Previously, she lived alone with her dogs on a five-acre spread at the base of Mt. Rainier, in Washington state. Then she learned that a family in Oregon that she is related to was going through a crisis. The parents in the family were heroin addicts, and their children were under the supervision of a social services agency. Lynn applied for a job transfer, moved to Oregon, and adopted the children (two young boys and a girl). “I had no support,” says Lynn. “I was working full time as a single parent. It was a really stressful time.” To residents like Lynn and her family, Bridge Meadows offers a variety of benefits. Its built environment consists of 9 houses for families, 27 apartment units for community “elders,” and an array of shared resources that includes a community center. In return for reduced rents, each elder spends 100 hours per quarter performing At Bridge Meadows, a volunteer activities that range from supercommunity elder helps vising children at play to leading story sesa young neighbor plant sions in the site’s library. Bridge Meadows seeds in the facility’s communal garden. also employs four on-site staff members who assist in day-to-day operations, coordinate activities, and otherwise help residents strengthen ties with one another. Every week, the facility hosts support group meetings, classes, and presentations by outside visitors. “In the summer, there’s always a Slip ’N Slide on the lawn,” says Derenda Schubert, executive director. “We have a community garden, where the kids get to help grow things like Swiss chard, blueberries, strawberries, zucchini. Every Wednesday at 4 o’clock, we have Happiness Hour, where all three generations of the community come together and build new relationships.” The result, in effect, is an innovative form of peer-based social services. An intergenerational community like Bridge Meadows applies an untapped resource (older adults who seek purpose in their lives) to an unmet need (support for foster children and their families). But it doesn’t just substitute volunteers for paid professionals. It erases the distinction between who is a “service provider” and who is a “client.” An elder doesn’t just mentor children in the community, but also receives help with daily tasks. A Fall 201 3 • Stanford Social Innovation Review
Action What Works
a place for families The vision that informs Bridge Meadows originated in the early 1990s. Brenda Eheart, then a sociology professor at the University of Illinois, was exploring ways that the state could better support families who adopted children out of its foster care system. A permanent housing facility devoted to such families, she theorized, would add stability to their lives. Concentrating a number of families in the same place would also make it easier to deliver services to them. Most important, locating families with similar challenges in close proximity to one another would allow them to share resources—and to share experiences. Initially, Eheart envisioned a facility that would accommodate a dozen or so families. But the Pentagon forced her to think bigger. The US Department of Defense owned a decommissioned Air Force base in the rural town of Rantoul, Ill., and Pentagon officials told Eheart that she could pursue her vision at that site—but only if she agreed to take 84 houses. It was more than Eheart had bargained for. A site that gathered 84 families with foster children in one place would aggregate too many shared challenges. Around that time, Eheart attended a presentation by Maggie Kuhn, founder of the Gray Panthers, who was promoting the concept of enabling seniors to share their homes with young people in exchange for light caregiving services. Eheart recognized that an inversion of Kuhn’s model would solve her dilemma: She could rent some of the houses in the Air Force development to older adults at reduced rates, and in return these seniors would provide support to foster families. “It creates a new kind of organizational capacity,” Eheart says of the model that she developed. Hope Meadows, as the community in Rantoul is known, welcomed its first residents in 1994. In 2006, Eheart left her operational role there and formed GHDC, a vehicle for promoting and replicating the Hope Meadows model. “Creating these communities from scratch—finding the money for the bricks, the mortar, and the land—it stumps most of these nonprofits, because they’ve never done it,” Eheart says. Eheart and her team help nonprofit organizations develop fundraising strategies, connect them with architects and builders, and assist them in recruiting administrators to oversee newly created communities. Several groups are working to implement the GHDC concept, and two GHDC-sponsored communities are now in operation. The first, Treehouse at Easthampton Meadow in Easthampton, Mass., opened in 2006. The other is Bridge Meadows, which opened in 2011. Unlike the original GHDC community in Illinois, Bridge Meadows is in an urban setting. And instead of relying on existing infrastructure, it was built from the ground up to be a place that would support an intergenerational community. Early in the design process, for example, there was talk of creating a clear distinction between areas where families would live and areas where older adults would live. “But while we agreed there were times when our seniors needed to be able to retreat and have some privacy, we 62
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didn’t want to make that too easy,” says Brian Carleton, the architect who designed Bridge Meadows. So he and other site planners abandoned that idea. In the final design, they interspersed triplexes that house seniors with family-oriented duplexes. Despite its urban location, Bridge Meadows incorporates elements that evoke the feel of a suburb or even a small town. “Every family home has a garage,” Carleton says. “We also splurged on square footage a bit and made a room that was uniquely the master bedroom, so that there’s a strong sense that there are parents here. Because these kids have been bounced around all their lives, it was very important to give them that sense of a traditional family home.”
a leap—and a hope The social connectedness that Bridge Meadows helps to promote has already had a big impact on the children who live there. “After only two years, they’re getting awards at school for their citizenship,” says Schubert. “They were all behind academically when they came to us, and now they’re all at [grade] level or beyond.” Jackie Lynn echoes that assessment. “Three years ago, when everything happened, it was hardest on my daughter. She was already 12 years old then. Now she’s thriving. [The Bridge Meadows staff] helped me get her into a private high school. She talks about going to college, and everyone encourages it,” Lynn says. “Two of the families here have women who are her [biological] mother’s age, so she’s really bonded with them. She’s making phenomenal leaps and bounds, and it’s because of the support structure.” Can the intergenerational approach that Eheart has pioneered expand by “leaps and bounds” as well? Can it evolve from a limited set of pilot projects into a widespread model for social service delivery? Eheart believes there are no limits on the kinds of vulnerable populations that these communities can serve. She envisions developments in which older residents live side by side with wounded veterans, mothers who have left incarceration, and homeless LGBT youths, among other groups. And the model has already proved to be flexible enough to work in different settings. Ultimately, however, Eheart and her colleagues are trying to create organic communities, and organic communities aren’t something that planners can easily deploy on a grand scale or in a fixed amount of time. Recent experience shows that it takes a while to get a place like Bridge Meadows up and running. (Its creators began their development efforts in 2004.) Intentional communities are also, by their very nature, limited in size. “For a community to really function, you can have between 100 and 150 residents, at most,” Eheart says. Eheart recognizes the challenges inherent in developing the Generations of Hope model on a large scale, and she emphasizes the need to break conceptual ground as well as physical ground. That starts, she believes, with changing how people think about the role and shape of programmatic social services. “These aren’t things that can be done quickly,” she says, referring to communities like the one at Bridge Meadows. “If we can get four or five places where we are demonstrating the philosophical principles behind this—the good results that happen when you develop a culture of care—then I think the concept will be out there. It will spread by itself.” n
PHOTOGRAPH BY vic roberts, courtesy of the trey mcintyre project
child doesn’t just use support services, but also becomes an active community member who can assist others. Professionalized service thus gives way to neighborhood care.
Action What Works Bold Steps in Boise The Trey McIntyre Project, an Idaho-based dance troupe, is choreographing a novel way to manage a leading-edge arts organization. By C hloe V eltm an
PHOTOGRAPH BY vic roberts, courtesy of the trey mcintyre project
In the dance world, celebrities are rare . But it’s not unusual for people to accost a dancer from the Trey McIntyre Project (TMP) as he or she does errands around town. “I was recently tapped on the shoulder in a grocery store by a woman who asked, ‘Are you a dancer with the Trey McIntyre Project?’” says Chanel DaSilva, who has performed with TMP ever since the company established its permanent home base—in Boise, Idaho. “That speaks to how much this city appreciates us.” Running a dance company today is a risky proposition. According to a study by Dance/USA, a national organization that serves the dance profession, US dance companies lost nearly 10 percent of their audience between 2007 and 2011. But TMP has seen its audience numbers grow over the past half decade. Indeed, to accommodate interest among Boise residents, the organization recently added an extra matinee performance to its schedule. A close connection has formed between TMP and its offthe-beaten-path hometown. That link to Boise has proved to be a vital asset for the company. It’s one reason why funders, presenters, and nonprofit thought leaders believe that TMP is reinventing what it means to be an arts organization in the 21st century. “The Trey McIntyre Project has been very successful in cultivating audiences across the country through effective social media strategies and a strong, consistent image,” says Amy Fitterer, executive director of Dance/USA. “They have trustees located across the US to diversify their leadership and fundraising reach. As an audience member, you feel you can connect with the dancers.” TMP maintains a rigorous touring schedule that lasts up to 30 weeks per year. In 2012, the company toured China, South Korea, the Philippines, and Vietnam as part of a cultural exchange program sponsored by the US State Department. It also enjoys highChloe Veltman is a broadcaster and journalist who writes widely about the arts. She heads up the culture desk for Colorado Public Radio and is the host and producer of VoiceBox, a weekly radio and podcast series.
profile relationships with presenter groups such as the Brooklyn Academy of Music in New York City and Cal Performances in Berkeley, Calif. Even so, the company has firmly cemented its ties to the Boise area by mounting two full-scale dance productions in the area each year and by conducting a variety of community engagement initiatives in collaboration with schools, businesses, hospitals, and other local institutions.
making a home Trey McIntyre is one of the most sought-after choreographers on the national and international dance scene. He has created more
than 90 works for such institutions as American Ballet Theatre, Stuttgart Ballet, and New York City Ballet. In 2008, he decided to turn what had been a summer touring organization into a full-time troupe. He could have set up shop in any number of cities. “The assumption was that we would move to a place with an established dance audience like San Francisco or New York,” McIntyre says. “But I had a hard time justifying that, because these communities are overserved for dance. The idea of going to an area that hadn’t maxed out its dance capacity—where we could be a part of a developing arts community—seemed like a very American, pioneering idea.”
Caty Solace, of the Trey McIntyre Project, draws attention to a “SpUrban” dance event in downtown Boise, Idaho.
Fall 201 3 • Stanford Social Innovation Review
Action What Works What drew McIntyre and his fellow pioneers to Boise were the beauty of the surrounding landscape, the low cost of living, and the positive reactions that they had received during previous touring engagements in the city. From the start, McIntyre and his entourage made their presence felt in their new community. They playfully announced their arrival by offering a series of spontaneous urban dance performances, or “SpUrbans”: Wearing street clothes and sneakers, TMP dancers descended on public spaces around town—a sidewalk in Boise, a parking lot at Boise State University—and offered brief, lively displays of their work. Both at home in Boise and on the road, TMP focuses on balancing high-quality public dance performances with community engagement efforts. The company’s Make a Ballet program, for example, provides audiences with an intimate view of the rehearsal process. That program began as an exclusive perk for big donors, but it has morphed into an offering that’s available to wider audiences. To demystify the dance process, TMP dancers also work with school groups, they shoot rehearsal videos that they publish on social media channels, and they encourage passersby to join them in SpUrban events that they initiate in the cities they visit. “They have a commitment to what happens beyond the stage,” says Matias Tarnopolsky, director of Cal Performances. In 2010, McIntyre was commissioned to create a ballet for the Jaialdi International Basque Cultural Festival, an event held in Boise every five years. (Idaho boasts the largest Basque community in the United States today.) To help him create the ballet, which he called Arrantza, McIntyre invited local Basque dancers into his studio to enrich his company’s understanding of Basque folk dance. For the soundtrack to the ballet, he recorded traditional Basque instrumental music and oral histories by people of Basque heritage. Once the new ballet was complete, TMP partnered with Boise’s Basque Museum and Cultural Center to produce a preview event that featured Basque food, live performance excerpts from Arrantza, and a Q&A session with TMP dancers. The organization also incorporated the new ballet into its ongoing engagement activities with local schools, tying the work in with the students’ academic study of Basque culture. “It’s wonderful that the Trey McIntyre Project has researched what makes their adopted city unique and has incorporated it into their dance program,” says Barbara Oldenburg, a teacher at the Lake Hazel Middle School in Boise. The company’s engagement with the Boise community has inspired deep and broad local support. According to Caty Solace, chief strategy officer at TMP, donations from people in Idaho account for 40 percent of the funding that the organization receives from individuals. That high level of support from community members in turn attracts the support of institutional funders. “What I look for is a company that makes excellent work and continues to be relevant to the local community,” says Jim McDonald, senior program officer for arts and culture at the Paul G. Allen Foundation, which has provided funding to TMP since 2010. “The company has made it clear that it genuinely wants to be part of the community.” Even people from competing institutions are impressed by 64
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what TMP has achieved. “They’ve had a positive impact on the dance landscape here by bringing more attention to dance in Boise,” says Paul Kaine, executive director of Ballet Idaho. “Their presence has helped us all raise our game.”
building a business TMP’s approach to audience engagement is integral to its way of doing business. In some ways—with its spirit of experimentation, its adoption of new technologies, and its focus on branding—the organization more closely resembles a Silicon Valley startup than it does a traditional dance company. Consider the company’s High 5 campaign, which aims to strengthen TMP’s base of support by reaching out to fans at a grassroots level. McIntyre, who has a passion for making dance films, created a short, lighthearted documentary to launch the effort. People throughout the company are using Facebook and other social media tools to spread the word about High 5. And the TMP website advertises the initiative with a visually striking image that shows two dancers in jeans, sneakers, and TMPbranded T-shirts. In the image, the dancers are leaping in the air and high-fiving each other against an azure sky. So far, the campaign has helped TMP raise more than $6,000 in small donations. But High 5 isn’t just about raising funds. “We’re looking for more than monetary support. We’re looking for ambassadors,” says Brian Aune, chief operating officer and general counsel at TMP. A strong sense of brand flows through all of TMP’s activities— from its irreverent and muscular choreography, to the design of its T-shirts, to the way that its people interact with audiences. “The Trey McIntyre Project strives to be known for innovation, honesty, and community outreach, as well as high-quality dance,” says Blair Kutrow, chairman of the TMP board. Jane Naillon, the organization’s senior engagement manager for brand, recently held a brand workshop for dancers and staff members. “We spent a good deal of time defining our brand promises,” she says. “To gain trust, it is important that we have a promise and are able to deliver on that promise without fail.” Since 2008, TMP has seen its annual revenues increase from more than $1.6 million to close to $2.5 million. It raises one-third of its funding from individual contributions, one-third from government and corporate grants, and one-third from earned income. One source of earned income, for example, comes from running corporate workshops—a branch of the business that TMP leaders hope to expand. TMP also recently received a $50,000 grant from the Paul G. Allen Foundation to develop its capacity to market and license McIntyre’s choreographic work to other dance institutions. Among the companies that have expressed an interest in staging McIntyre’s work are Washington Ballet, Pennsylvania Ballet, and Queensland Ballet. Today, McIntyre and his troupe are pushing to achieve ever more ambitious goals. Dance may play a marginal role in today’s culture, but that reality isn’t stopping McIntyre from working to increase its relevance. “It’s difficult to create the same large community need for dance as there is for football in Boise because there is no social context for dance in this country,” he says. “I want us to become as meaningful to Boise as football.” n
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Action Case Study Across the Digital Divide
Rangan Srikhanta was a 21-year-old student at the University of Technology Sydney (UTS), in Australia, when he first learned about the One Laptop per Child (OLPC) initiative. It was late 2005, and Nicholas Negroponte, then the director of the Media Lab at MIT, and U.N. Secretary General Kofi Annan had just announced the launch of the program. OLPC, as they described it, was a partnership among private companies, NGOs, and governments to produce the world’s least expensive laptop and to distribute that device to children all around the world. Srikhanta was intrigued by OLPC’s vision of bringing those sectors together to solve social problems. He was equally impressed by the low-cost laptop that OLPC proposed to create. The device, which came to be called the XO, would cost just $100 apiece to manufacture. “I was fascinated by the technology—the software, the low power usage, the sunlight-readable screen, being able to drop the machine [without breaking it],” he says. After reading about OLPC, Srikhanta couldn’t sleep. Keen to learn more about the initiative, he decided to call the OLPC office in the United States. “When you’re in Australia and up late at night, it’s a really good time to call Boston,” he says. Srikhanta and his family arrived in the Sydney area in 1984, when he was just two months old, after fleeing war-torn Sri Lanka. He grew up west of the city, and he excelled at school. “My parents were busy putting food on the table and providing a stable family environment,” he recalls. But they also encouraged him to read newspapers, to think globally, and to give back to his community. After attending UTS, where he earned a combined degree in business and information technology, Srikhanta took a job as an auditor at a global accounting firm. But even as he launched a professional career, he found time to serve as volunteer treasurer of the UN Association in Australia. He never forgot a question that his parents had urged him to keep in mind: “What do you Danielle Logue is a lecturer in innovation, strategy, and organization at the University of Technology Sydney Business School. Previously, she held positions at the Saïd Business School, University of Oxford; the World Bank; IDP Education; and the Australian Department of Industry. Melissa Edwards is a senior lecturer in management and a core member of the Cosmopolitan Civil Societies Research Centre at the University of Technology Sydney Business School. She has worked on a variety of collaborative projects with local governments and community-based nonprofit organizations.
Stanford Social Innovation Review • Fall 2013
want to be remembered for?” That phone call to Boston in 2005 was the first step in what became a long journey for Srikhanta. Grabbing the chance to join his interest in business and technology with his interest in social change, he began to work on various OLPC-sponsored projects. In January 2008, he and others founded OLPC Australia (OLPCA). Later that year, he left his job at the accounting firm. “If you ever want to find your passion, become an auditor,” he jokes. Since then, OLPCA has come a long way. It now operates with the equivalent of 13 fulltime staff members, and thus far it has distributed more than 7,000 XOs in more than 130 remote communities across Australia. In 2012, the organization received an $11.7 million grant from the Australian federal government to distribute 50,000 laptops by June 2014. (Unless otherwise indicated, all currency figures refer to Australian dollars.) The contract is part of a nationwide effort to close the socalled digital divide within Australia. Although Australia is an advanced industrial nation, that divide—the one that separates people who can access digital technology from people who cannot—runs deep in certain regions of the country. Today, according to the Australian Bureau of Statistics, about 4.5 million Australians do not have home Internet access. The situation is worse among particular social groups. According to one study, indigenous households in central Australia are 76 percent less likely to have Internet access than nonindigenous metropolitan households.1 To address that problem, the Australian government has begun to roll out the National Broadband Network (NBN), a multi-billion-dollar infrastructure program to improve access to
Photograph courtesy of One laptop per child australia
In many cases, the One Laptop movement has fallen short of its promise. But One Laptop per Child Australia has developed a visionary program to bring digital technology to children in remote areas. By Da n i e l l e Lo g u e & Me l i ssa Edwards
Photograph courtesy of One laptop per child australia
the Internet, particularly in rural communities. Yet, while the NBN may expand Internet access, many children in those communities still lack the ability to engage with the Internet in meaningful ways. OLPCA estimates that 40 percent of the 2.4 million children in Australia are at risk of falling into that category. In their push to reach those children, Srikhanta and his team have built upon the OLPC vision that captured his imagination back in 2005. Yet OLPCA has also broken away from the standard approach of its parent organization. The One Laptop per Child model—as its name implies—aims to place a computing device in the hands of every child who wouldn’t otherwise have one. In short, it’s a saturation model, and its focus is on the free distribution of XO machines. And in several high-profile cases, it has met with failure. In May 2012, Srikhanta and his colleagues launched a new model that embeds XO technology into a school-based ecosystem. Signaling an awareness of the limits of the “one laptop” idea, they call this model One Education.
falling short Success marked some of OLPC’s earliest efforts. Negroponte, the founding visionary of the One Laptop per Child movement,
served as a high-profile evangelist who worked tirelessly to convince government officials that he could save the poor children of their countries by using XO technology to transform education. With access to XO devices, he argued, children would be able to educate themselves and one another. The first XOs rolled off a production line in 2007. In November of that year, OLPC established its Give One Get One campaign, in which US and Canadian consumers could buy an XO machine for $399 and OLPC would send another machine on their behalf to a child in a developing country. More than 83,000 people participated in the first Give One Get One campaign. “OLPC’s challenge in getting the XO into production was huge,” Srikhanta says. “We have to thank Negroponte for his brashness and his focus on bringing down the cost of the devices—for showing that there was a market for low-cost devices. That was a monumental task.” But the task of putting XO laptops into the hands of poor kids, and then into productive use, was considerably more challenging. One of the earliest and largest OLPC deployments took place in Peru, where officials and volunteers distributed about 290,000
At Doomadgee State School in Queensland, Australia, a teacher gives students a hands-on tour of an XO laptop.
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XO laptops between 2007 and 2009. According to the Interpeople in the country, and Elcho Island is more than 300 miles American Development Bank, a series of difficulties beset from Darwin, the territorial capital. “We caught a flight to Darwin, the program—including a lack of electricity, a lack of Internet then a plane to Elcho Island,” Srikhanta recalls. “The school was access, and a limited supply of technical and pedagogical support. very well resourced. But once you stepped out of that school, life What’s more, the use of XO devices in Peruvian schools failed to got a lot tougher.” The challenges that OLPCA faced in a remote result in significant improvements in national test scores.2 Five community like Elcho Island were significant: On average, teachyears after the start of the deployment, the Peruvian education ers in such areas last nine months; principals last two years. official who now runs the program admitted that its approach Children in these communities rarely attend school more than had been seriously flawed. “In essence, what we did was deliver three days a week. Aboriginal children, moreover, are 50 percent the computers without preparing the teachers,” he said.3 less likely than other Australian children to stay in school to the Another closely followed program occurred in Birmingham, highest completion level. In many of these communities, English Ala., a high-poverty community that became the site of the largis rarely spoken, and often it’s spoken only at school. est deployment of XO laptops in the United States. From 2008 Srikhanta and his team saturated Elcho Island with 250 XOs to 2010, the Birmingham school district distributed 15,000 XO during two visits in mid-2009. Although they provided basic computers to students in grades 1 through 5. A review of that training to help teachers understand how to use the devices in the program indicated that it suffered from the same kinds of probclassroom, they didn’t take into account another problem. “Even lems that have afflicted OLPC programs in Peru and elsewhere. during this short period of a few months, teachers had moved, or Teachers received only two hours of training, they were unable they simply didn’t have enough time to comprehend how the to connect the XO devices to printers or projectors (which meant technology could enhance their practice,” Srikhanta recalls. that they could not share students’ work), and neither they nor “When we went back in July, a lot of those teachers weren’t there. their students had the ability to repair the machines. As a result, It was a bit of a shock for us. It was like [the movie] Groundhog many of the XOs lay broken and unused.4 Day. I began to wonder: Are we going to do this every year?” In recent years, Negroponte has admitted that the original The lesson, as he saw it, was clear: The practice of flying to scope and ambition of the OLPC project were too far-reaching in remote villages and towns was not sustainable. It was expensive some respects. “A great deal of OLPC was, especially at the begin- (the average cost of distributing a laptop rose to $695) and ning, naive and unrealistic,” he wrote in an online comment in extremely time consuming. It was also not very effective. late 2012. All the same, the poor track record of XO deployment has not undermined Negroponte’s commitment to the Late adopters and non-adopters constitute a weakness original OLPC ideal. His comment continued: “I look back at those [early stumbles] in the OLPC model, since they don’t have an intrinsic motivation to use the technology in a meaningful way. as features not bugs. 2.5 million laptops later we did learn some things, in parallel with many of those kids (not all) benefitting. One of those things Srikhanta and his colleagues realized that the “saturation in one was the degree of self-learning and child-to-child teaching, when day” model lacked the kind of “stickiness” that would encourage allowed to happen.”5 Srikhanta, over in Australia, would derive a meaningful engagement with the XO devices. “When you force different set of lessons from the early history of OLPC. the adoption of technology, when the technology is so easy to disseminate, you can forget about the human aspect. We forgot learning from mistakes about the teacher turnover aspect,” Srikhanta says. Compounding In setting up OLPCA, Srikhanta drew on the support of influential that problem were technical challenges that he and his team figures within the OLPC movement. Charles Kane, then the CEO couldn’t overcome at that point. “That’s when the program died,” of OLPC, became a supportive member of the OLPCA board. he says. “That forced us to innovate and pushed us to expand the Barry Vercoe, one of the founders of the MIT Media Lab (and, reach of the program to engage more stakeholders.” incidentally, a native of New Zealand), came out to Australia to serve as codirector of OLPCA. With help from Vercoe and others, recruiting “champions” After the second visit to Elcho Island, Srikhanta asked the school Srikhanta was able to convince the parent organization that principal there to tell him what OLPCA should do differently. Australia was worth including in the OLPC initiative. After all, the main goal of OLPC was to assist developing countries. “Barry “You should charge people for what you do,” the principal said. really became our broker in putting a case forward for seeding the That reply surprised Srikhanta, yet it also triggered an idea that fundamentally challenged the OLPC distribution model. “That’s project in Australia,” says Srikhanta. when we started changing our approach,” Srikhanta says. For their initial deployment of XO laptops, Srikhanta and From 2009 to 2012, through a process of trial and error, Vercoe selected target areas that would closely replicate Third OLPCA developed a new model that focuses on scarcity rather World locations. One such area was Elcho Island, a remote town than saturation. Srikhanta began to think in terms of creating a in the Northern Territory (NT). The NT, located in north-central “pull” model that would differ from the OLPC movement’s existAustralia, is home to one of the largest populations of Aboriginal 68
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Photograph courtesy of One laptop per child australia
Action Case Study
Photograph courtesy of One laptop per child australia
Barrie, who heads a school located in the remote town of Doomadgee, is an exemplary champion of the OLPCA cause. “The XO is taking away digital barriers. It’s leveling the playing field,” he says. Srikhanta met Barrie in 2010 at a gathering for educators in Brisbane, the capital of Queensland. Barrie connected with Srikhanta right away. (“He has a good heart, he has a bloody good brain, and he has a good motivation for supporting kids in Australia and all over the world,” Barrie says of Srikhanta.) He also connected with the OLPCA model. As an educator who labors in the harsh Australian outback, he applauds the goal of “righting disadvantage and providing opportunities for kids to engage with the global economy,” he explains. Since that meeting with Srikhanta, Barrie has become chief learning officer of OLPCA, and his primarylevel school (where he continues to serve as principal) has become an official One Education Lab—a place where the organization can test ideas and get rapid feedback on how well they work. ing “push” model. He and his team decided that they had to introduce barriers to access—to create reasons for educators to invest time and money in XO technology. Instead of freely distributing XOs to schools identified as being at high risk, why not charge a small fee for each device? Taking that step would help identify settings where the devices would be welcome. In a related move, Srikhanta decided to shift the focus of distribution from the school to the classroom. OLPCA could more easily distribute XOs on a large scale, he theorized, if it gave up trying to secure adoption within an entire school and instead targeted individual teachers who were already receptive to the technology. Today, rather than pushing the technology into the hands of uninterested teachers and students, OLPCA works to build a support system around early adopters. At the center of that system is One Education, a comprehensive training and reward program for educators and students. Under the program, teachers must become XO-certified before OLPCA will distribute XO laptops to their classrooms. Srikhanta and his team have come to realize that engaged teachers—teachers who have made an investment in learning XO technology—are crucial to the success of OLPCA. Late adopters and non-adopters constitute a weakness in the OLPC model, since they don’t have an intrinsic motivation to use the technology in a meaningful way. “Some teachers are reluctant at first, because they are scared of it,” says Richard Barrie, a principal at a school in the Australian state of Queensland. “The older you get, the more you are afraid. It is the fear of failure: They don’t want to be seen as failing against this little machine.” By reaching out to teachers who embrace the XO device without fear, the OLPCA team aims to build a network of XO “champions.”
Rangan Srikhanta used a wheelbarrow to deliver XO machines during the early “saturation” phase of OLPCA.
providing an education
Since 2012, OLPCA has moved from merely supplying XO laptops to embedding XO technology in the daily life of local schools. “What we have is a robust school professional development program in which every kid also gets a device,” Srikhanta explains. “And schools are getting this for as little as $100.” The XO certification course is a 15-hour-long online program that teachers can take at a pace that suits them. Some teachers complete the course in two weeks; others need up to three months to finish it. Over time, the average completion period for the course has dropped; today, teachers generally take less than 30 days to finish it. OLPCA certification requires a considerable amount of coursework, especially in comparison with the standard OLPC program (which has no formal training component). Yet many teachers speak highly of the experience. One teacher, Lisa Foster from Dirranbandi State School, stated in an online comment: “I loved the course. 20hrs seemed like forever before we started—but time flew as we had fun exploring and learning!” One Education training not only enables teachers to learn how the device functions, but also provides them with ideas on how to integrate the technology into classroom learning. “Empowered teachers are more inclined to take full advantage of the XOs,” Srikhanta notes. To maintain their professional qualifications, Australian teachers must take a certain number of hours of compulsory development training each year, and the XO course has become an attractive option for completing that requirement. The Fall 2013 • Stanford Social Innovation Review
In remote areas like Doomadgee, the OLPCA ecosystem Queensland Department of Education, for example, has worked extends beyond the individual classroom. Barrie tells the story with OLPCA to build XO training into the curriculum for its of a teacher who was trained as an XO expert in Doomadgee and Certificate in Information Communication Technology. later moved to South West Cairns. But through the Internet, Once teachers complete certification, they receive the full and the use of XO machines, she still provides support to kids One Education package, which includes an XO, a charging rack, in Doomadgee. In addition, those kids can now interact and a repair kit, and access to an array of online programs. The cost exchange ideas with their counterparts in South West Cairns. of the program is $400 per device. Schools that fall into a lower “We are proposing a new kind of school, an expanded school that category under the Index of Community Socio-Educational grows beyond the walls of the classroom, encompassing varying Advantage (a national school benchmark classification) receive generations, languages, and cultures,” Srikhanta says. This comthe program at a subsidized rate of $100 per child. munity-based approach involves teachers, community elders, Another aspect of the OLPCA model is the certification of students as XO Champions and XO Mechanics. An XO Mechanic certificate indicates that a student can change batterFor users in remote communities, the training and ies, run hardware tests, reinstall a laptop’s support service that OLPCA provides and the do-itoperating system, and replace a keyboard or a screen. But kids who go through certi- yourself nature of the XO machines are crucial benefits. fication training gain more than just a set and others who contribute to the remote learning experience, of technical skills. Trish Noy, a teacher, noted on an OLPCA feedback form: “We are very excited about how our students have pro- and it enables OLPCA to engage Aboriginal communities in the gressed through this course, and how confident they have become. NT and in Queensland. In the Northern Territory, the use of XO technology has The leadership qualities that have emerged has been very pleasing spread organically through libraries and local community centers. and all ‘experts’ will be helping to run our help desk next term Jennifer McFarland runs CAYLUS (Central Australian Youth Link during lunch.” Up Service), a program that serves the Papanya community of NT. For educators who work in remote communities, the XO She and her colleagues have observed that people in Papanya Mechanics program is an especially attractive feature of the often lack reliable access to the Internet in their homes. To fill OLPCA model. “If you buy another machine, you have no backup that gap, CAYLUS set up two computer rooms at its facility (one service. For us, being so remote, downtime is a real problem. You have to send the machine back to Cairns and then wait for it to be for women and girls only, and one for both sexes) and stocked the rooms with a variety of devices, including XOs. McFarland notes fixed and returned. That can take a while,” Barrie says. (The disthat use of the XO machines has been especially high among tance from Cairns to his school in Doomadgee is more than 600 younger primary-school children who come to the facility with miles.) “With the XOs, there is little downtime for us. If they their mothers. “Many of the children have two or three indigebreak down, they can be fixed on the spot by the kids.” nous languages, with English as their third or fourth language,” building an ecosystem McFarland says. “They pick up the XO, and they learn to recogAt multiple levels, OLPCA has integrated itself into the Australian nize English words, because those words are connected to outeducation system. It is working within and through communities comes [on the device]. That increases their English literacy.” to understand how XO technology can support improved educa“lighting fires” tional outcomes. “We’re providing professional development for teachers, we’re turning students into repair technicians, and we’re OLPCA is a registered charity with Deductible Gift Recipient status in Australia. (In other words, donors can claim a tax working with and inside departments of education,” Srikhanta deduction for gifts to the organization.) In its early years, the says. The connections that OLPCA has created between educaorganization was able to obtain ample funding from high-profile tion officials, principals, teachers, and students have enabled corporations such as Commonwealth Bank of Australia and the XO to become the preferred classroom technology in many Telstra Corporation. Today, though, Srikhanta views OLPCA parts of Australia. as a social enterprise, and his aim is to generate blended income Consider the results of an early study of XO deployment streams. As a business proposition, the One Education model that covered nine schools where teachers regularly used XOs in would seem to suffer from a critical weakness: OLPCA is essenclassroom learning activities. According to the study, which was tially saying, “Before you can purchase our product, you must conducted in 2012, teachers in five of those schools reported complete our training.” That barrier to purchase, however, having access to iPads as well—yet, unlike the XOs, none of ensures that buyers are self-selected, knowledgeable about the those iPads were dedicated classroom equipment. In that study, product, and highly motivated to use it in a way that embeds the researchers also found that more than half of the 20 teachers in their sample used classroom-based XOs more than once per day, product in their local education program. In effect, OLPCA has redefined the entry requirements for and that students independently used the devices one to four established technology vendors that want to participate in the times per week.6 70
Stanford Social Innovation Review • Fall 2013
Photograph courtesy of One laptop per child australia
Action Case Study
primary-school market. It can compete against for-profit providers such as Apple and Dell on several important dimensions: the price of the hardware, the speed of distribution, the provision of user training and professional development, and the cost of repairs and after-purchase support. For users in remote communities, the training and support service that OLPCA provides and the do-ityourself nature of the XO machines are crucial benefits. “We have trumped our potential competitors,” says Srikhanta. “Apple and other providers may have strong procurement networks in the state education departments. But schools aren’t just buying devices from us; they’re buying the training, and the device then comes with it.” Meanwhile, the success of the OLPCA model is starting to gain global attention, and people in other countries have expressed an interest in replicating it. “We have just started ‘lighting fires’ in Thailand and New Zealand,” says Srikhanta. “But at the moment, we are focused on bedding down our systems and processes to ensure the smooth diffusion of the model globally. The idea is that people can go to our website, pay a price, and begin to roll out the program locally.” As part of that effort, Srikhanta is building a global platform where teachers can share materials and resources across state and national borders. Wherever it operates, OLPCA pursues a strategy that integrates several elements: XO distribution, teacher training, curriculum development, XO technician training, and the recruitment of student and teacher champions. It’s a grassroots strategy that enables users to incorporate the technology into the learning process. And that approach shapes how the organization is working to distribute 50,000 XOs under the government grant that it
Photograph courtesy of One laptop per child australia
OLPCA’s One Education program helps students in communities such as Doomadgee to engage fully with XO technology.
received in 2012. (As large as that project is for OLPCA, Srikhanta considers it to be only a pilot program. “Those 50,000 laptops are reaching only 5 percent of the children who are eligible for support from the government,” he says.) The guiding principles of OLPCA are no different from those of the parent OLPC organization. Like Negroponte and others, Srikhanta supports a vision in which access to 21st-century educational technology becomes ubiquitous. Yet for Srikhanta, the best way to reach that goal is by creating a supportive ecosystem from the bottom up. It can’t be done from the top down by policy makers who decide which schools and which classrooms will get new laptops. “Technology take-up by children, teachers, principals, and the community needs to be organic and nonlinear to be successful,” he says. “This is an education project, not a laptop project.” n Note s 1 E. Rennie, A. Crouch, A. Wright, and J. Thomas, “Home Internet for Remote Indigenous Communities,” Australian Communications Consumer Action Network, 2011. 2 Jennelle Thompson and Santiago Cueto, eds., “Experimental Assessment of the Program ‘One Laptop per Child’ in Peru,” Inter-American Development Bank, 2010. 3 Associated Press, “Kids’ Global Laptop Scheme Gets Mixed Grades After Its Rollout in Peru,” The Australian (online), July 4, 2012, http://www.theaustralian.com.au/ australian-it/kids-global-laptop-scheme-gets-mixed-grades-after-its-massiverollout-in-peru/story-e6frgakx-1226416897708. (The Peruvian education official is Sandro Marcone.) 4 M. Warschauer, S. Cotton, and M. G. Ames, “One Laptop per Child Birmingham: Case Study of a Radical Experiment,” International Journal of Learning and Media, 3, 2011. 5 Nicholas Negroponte, “EmTech Preview: A Different Way to Think About Learning,” MIT Technology Review (online), September 13, 2012, http://www.technologyreview. com/view/429206/emtech-preview-another-way-to-think-about-learning. (The quotation by Negroponte appears in the comments section attached to this article.) 6 S. Howard and E. Rennie, “One Laptop per Child Australia: Interim Evaluation, September 2012,” One Laptop per Child Australia, 2012. (The study was prepared for OLPCA at the request of the Commonwealth Department of Education, Employment and Workplace Training.) Fall 2013 • Stanford Social Innovation Review
i l e G re n a d a ! For more than 20 years the NYU College of Dentistry has provided dental education and care to disadvantaged communities around the world. One of the countries it works in is the Caribbean nation of Grenada, where the NYUCD/Henry Schein Cares Global Student Outreach Program partnered with the Grenadian Ministries of Health and Education to undertake a national oral health survey and implement a preventive dental care program aimed at schoolchildren. In this photograph, an NYUCD dental student has the rapt attention of a class of Grenadian students as she demonstrates the proper way to brush one’s teeth. The program, known as “Smile Grenada!,” was
Stanford Social Innovation Review • Fall 2013
initiated in 2011 and aims to cut the prevalence of tooth decay in half by 2013 and to build capacity within the local public health infrastructure to continue the program indefinitely. Since the program’s commencement, more than 80,000 toothbrushes and tubes of fluoridated toothpaste have been distributed to all of the nation’s schools, more than 26,000 children (nearly one-quarter of Grenada’s total population of 110,000) received fluoride varnish three times per year, and 83,000 sealants have been placed thanks to product support from Colgate-Palmolive and GC America. The Grenadian government will execute the program independently in the coming year.—Eric Nee
Photograph by Rachel Ceretto
Im a ge s th a t i n s p i r e
The most prestigious universities* in the world use Stanford Social Innovation Review in their classrooms. Shouldn’t you? It’s easy to do, just go to www.copyright.com to purchase permission to use print or digital articles in your classroom. *Carnegie Mellon, Duke, Georgetown, Harvard, INSEAD, Indian School of Business, London Business School, MIT, Northwestern, Notre Dame, Rice, Stanford, UC Berkeley, UCLA, University of Michigan, USC, Washington University, Yale, and many more. MUHAMMAD YUNUS
By William Landes Foster, Peter Kim, & Barbara Christiansen
For-proﬁt executives use business models—such as “low-cost provider” or “the razor and the razor blade”— as a shorthand way to describe and understand the way companies are built and sustained. Nonproﬁt executives, to their detriment, are not as explicit about their funding models and have not had an equivalent lexicon—until now.
oney is a constant topic of conversation among nonprofit leaders: How much do we need? Where can we find it? Why isn’t there more of it? In tough economic times, these types of questions become more frequent and pressing. Unfortunately, the answers are not readily available. That’s because nonproﬁt leaders are much more sophisticated about creating programs than they are about funding their organizations, and philanthropists often struggle to understand the impact (and limitations) of their donations. There are consequences to this ﬁnancial fuzziness. When nonprofits and funding sources are not well matched, money doesn’t ﬂow to the areas where it will do the greatest good. Too often, the result is that promising programs are cut, curtailed, or never launched.
| Illustration by Doug Ross And when dollars become tight, a chaotic fundraising scramble is all the more likely to ensue.1 In the for-proﬁt world, by contrast, there is a much higher degree of clarity on ﬁnancial issues. This is particularly true when it comes to understanding how diﬀerent businesses operate, which can be encapsulated in a set of principles known as business models. Although there is no deﬁnitive list of corporate business models,2 there is enough agreement about what they mean that investors and executives alike can engage in sophisticated conversations about any given company’s strategy. When a person says that a company is a “low-cost provider” or a “fast follower,” the main outlines of how that company operates are pretty clear. Similarly, stating that a company is using “the razor and the razor blade” model describes a type of ongoing customer relationship that applies far beyond shaving products. The value of such shorthand is that it allows business leaders to articulate quickly and clearly how they will succeed in the marketplace, and it allows investors to quiz executives more easily about how they intend to make money. This back-and-forth increases the odds that businesses will succeed, investors will make money, and everyone will learn more from their experiences. The nonproﬁt world rarely engages in equally clear and succinct conversations about an organization’s long-term funding strategy. That is because the diﬀerent
b y R O G E R L . M A RT I N & S A L LY O S B E R G
So cial en tre pre neur ship: •
the case for
def • i • ni • tion
In an area outside Hyderabad, India, between the suburbs and the countryside, a young
ocial entrepreneurship is attracting growing
But along with its increasing popularity has come less certainty about what exactly a social entrepreneur is and does. As a result, all sorts of activities are now being called social entrepreneurship. Some say that a more inclusive term is all for the good, but the authors argue that it’s time for a more rigorous definition.
s p r i n g 2 0 0 7 / S TA N F O R D S O C I A L I N N O VAT I O N R E V I E W
woman—we’ll call her Shanti—fetches water daily from the always-open local borehole that is about 300 feet from her home. She uses a 3-gallon plastic container that she can easily carry on her head. Shanti and her husband rely on the free water for their drinking and washing, and though they’ve heard that it’s not as safe as water from the Naandi Foundation-run community treatment plant, they still use it. Shanti’s family has been drinking the local water for generations, and although it periodically makes her and her family sick, she has no plans to stop using it. Shanti has many reasons not to use the water from the Naandi treatment center, but they’re not the reasons one might think. The center is within easy walking distance of her home—roughly a third of a mile. It is also well known and aﬀordable (roughly 10 rupees, or 20 cents, for 5 gallons). Being able to pay the small fee has even become a status symbol for some villagers. Habit isn’t a factor, either. Shanti is forgoing the safer water because of a series of ﬂaws in the overall design of the system. Although Shanti can walk to the facility, she can’t carry the 5-gallon jerrican that the facility requires her to use. When filled with water, the plastic rectangular container is simply too heavy. The container isn’t designed to be held on the hip or the head, where she likes to carry heavy objects. Shanti’s husband can’t help carry it, either. He works in the city and DESIGNERS HAVE TRADIdoesn’t return home until after TIONALLY FOCUSED ON the water treatment center is ENHANCING THE LOOK closed. The treatment center also requires them to buy a AND FUNCTIONALITY OF monthly punch card for 5 galPRODUCTS. RECENTLY, THEY lons a day, far more than they HAVE BEGUN USING DESIGN need. “Why would I buy more than I need and waste money?” TOOLS TO TACKLE MORE asks Shanti, adding she’d be COMPLEX PROBLEMS, SUCH more likely to purchase the AS FINDING WAYS TO Naandi water if the center alBy Tim Brown lowed her to buy less. PROVIDE LOW-COST HEALTH & Jocelyn Wyatt The community treatment CARE THROUGHOUT THE Illustration by center was designed to proJohn Hersey duce clean and potable water, WORLD. BUSINESSES WERE and it succeeded very well at FIRST TO EMBRACE THIS doing just that. In fact, it works NEW APPROACH—CALLED well for many people living in the community, particuDESIGN THINKING—NOW larly families with husbands NONPROFITS ARE BEGINor older sons who own bikes NING TO ADOPT IT TOO. and can visit the treatment
amounts of talent, money, and attention.
PHOTOGRAPHS COURTESY OF (TOP LEFT AND RIGHT) FRIENDS OF GRAMEEN; (BOTTOM) THE SKOLL FOUNDATION
10 Ten Nonproﬁt Funding Models
Access to small loans has helped millions of people around the globe dramatically improve their lives and the economic health of their communities. The man behind this capitalist revolution is Muhammad Yunus, founder of Grameen Bank and father of microcredit.
THINKING FOR SOCIAL INNOVATION
STANFORD SOCIAL INNOVATION REVIEW • Spring 2009 Winter 2010 • STANFORD SOCIAL INNOVATION REVIEW
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Volume 11, Number 4