Do You Want to be a Social Capitalist?
I picked up the December/January issue of Fast Company magazine the other day because the cover story is about their annual Social Capitalist Awards. I know that I’m probably a lot more comfortable talking about capitalists and capital than many of my friends and colleagues in the nonprofit world. Fast Company was regular reading for me for the years when I advised and financed entrepreneurial businesses. I’ve been interested in these awards since the magazine started the annual recognition in 2003, partly because I wondered why a business magazine chooses to venture into the task of evaluating nonprofits. I’ve also been puzzled, frankly, by what the criteria are to be recognized as a social capitalist. There isn’t a clear connection such as earned income ratio, profitability – or surplus as we like to call it.
According to the web site, “From its inception, the Social Capitalist Awards have defined strong performance as a combination of both social impact and organizational effectiveness. This performance is represented by five critical components: Social Impact, Aspiration & Growth, Entrepreneurship, Innovation and Sustainability. The underlying theme through all of our components is the organization’s ability to analyze tough social and organizational challenges and to craft solutions that create significant improvements over the status quo.”
This year the awards went to 43 nonprofits who serve a wide range of communities and needs both in the US and globally. These 43 nonprofits have different income sources, operating systems and service areas. What makes these 43 earn the distinction over any number of other solid, well-run nonprofits?
My understanding of the awards became clearer this year as I read all the articles and expanded information on the web site. The addition of a special category of recognition for partnerships between nonprofits and businesses – with benefits for both – helps to answer the question of why a business magazine sponsors this recognition. The piece I’ve been missing, though, for the last three years is the critical role of metrics for Fast Company and its business readers. All of the awardees are able to provide concrete, quantitative measures of impact for their work. I’ve been making the case for a while that nonprofits need to take responsibility for defining their own measures of success – or else someone else with define them for us. These social capitalists have done that. Whether or not you think that these are the right 43 organizations to be recognized or not, I admire the clarity of the information about their mission, activities, and their impact. The 43 organizations are all great nonprofits, but I am disappointed that the same names appear on this list year after year. I think that about 75% of this year’s awardees have been recognized previously, and 10 or more have been on the list all four years. Get your metrics figured out and watch out for the call for nominations next year!
A second point of clarity for me is the distinction between what Fast Company calls “social capitalists” and the questions I hear about starting a social venture – nonprofits starting an earned income venture. Social capitalists may or may not generate much (or any) earned income from sales of goods or services. Bill Drayton at Ashoka that social entrepreneurship is about innovation and impact, not income. Read more about innovation to solve community problems in an article by Gregory Dees at Duke University.