Help for Families Facing Medical Crisis: For-Profit or Non-Profit?

March 17, 2011

I’ve spent most of the last week in the hospital with my five-year old son, Charlie. He’s going to be okay, he had a relatively rare complication from Strep throat that moved into a lymph node at the base of his skull, killing it and creating a major infection in the soft tissue. The treatment is 14 days of intensive antibiotics. First that was delivered at the hospital so they could keep an eye on him and make sure he was improving, and now he’s got a PICC line (a long-term IV inserted under his upper arm) to allow me to deliver doses of antibiotics every eight hours at home. I’m writing this at 10:30 at night while I wait for 11pm, when his next 30-minute infusion of antibiotics needs to start.

This caused me to reflect on my own good fortune, and to finally get around to telling you about a resource for folks without the same good fortune.

In short, I feel extremely grateful to have good health insurance. That means that when the ER doc ordered a spinal tap to check for meningitis, an X-ray to check for pneumonia, and then two CT scans–first for the sinuses and then for the neck–I was only thinking of Charlie’s health and not the incredible expense of all these tests. When they checked him in to the hospital for a few days, I was likewise only thinking of what Charlie needed to get better. And now, our family finances will not be ruined by ongoing sky-high medical bills.

The Burden of Medical Bills

According to Harvard researchers, 62% of all bankruptcies were caused by health problems and associated medical bills. The majority of those folks had health insurance, and yet their average costs are over $20,000. According to the researchers quoted in this article, most middle class families–even those with health insurance–are “just one serious illness away from bankruptcy.”

GiveForward Helps Families Facing Medical Crises

There is a relatively young start-up company that has already helped individuals facing medical crises to raise over $3.8 million for medical bills and other causes. This Chicago-based social enterprise, called GiveForward, is not a non-profit. It is a sustainable for-profit business with a social mission baked into every aspect of its operations.

Here’s how it works: individuals set up a fundraising page at GiveForward. Then they start publicizing it to their friends through the integrated social networking tools like Facebook and Twitter. Their friends can donate via credit card to their campaign. When the campaign reaches its pre-determined end date, GiveForward sends them a check, minus the 7% fee (that would be the sustainable part–see below for what the fee covers).

I should be clear here that these “donations” are not tax-deductible to the donors. It’s not a nonprofit collecting donations on behalf of individuals. It’s a for-profit intermediary that has simplified the process for anyone to establish a fundraising page for any cause.

One potential concern is that GiveForward does not actively verify any of the fundraisers using its platform, however “any suspect or questionable projects are asked to provide more information and will be removed and funds returned if an investigation brings us to question the legitimacy of any fundraiser.” So probably best to give only to causes and people you know in real life.

Comparing the For-Profit and Nonprofit Versions of This Idea

I wrote a few years about The Lighthouse Community, a nonprofit that actively verifies the medical issue the beneficiary is facing. TLC similarly sets up web page for all of their “clients” which allow individuals to share their stories and allows supporters to make a donation to help cover the medical costs in question. TLC obviously has a higher standard of due diligence, and it has the advantage that contributions are in fact donations to a non-profit and therefore tax-deductible to the donor.

In 2009 TLC passed through $100,000 in donations and spent about $54,000 on its own administration. It seemed to have an operating deficit of $20,000 (meaning it spent $20,000 more than it raised). Clearly, they are operating on a shoestring and doing an amazing thing with very limited resources. (Note that TLC raises funds separately to cover its operating expenses, so donations for individual beneficiaries are also passed through minus about 7%, per their page on Guidestar.)

But GiveForward has a much lower barrier to entry for individuals and families already facing an avalanche of paperwork. And most donors are not motivated by the tax deduction available for helping a friend or family member with medical bills. So one might argue GiveForward has streamlined and simplified the process while removing as much risk as possible. And while TLC raised $38,000 for its own operations in 2009, GiveForward recently received a $500K investment and is expanding rapidly. It has already facilitated almost $4 million in transactions, which would mean it also earned revenue of $267,000 if it collected 7% of that amount.

If I did need to raise money for medical bills, I think I would set up a page on GiveForward rather than TLC. And GiveForward is poised to expand awareness of its services with this huge investment that will allow them to improve their technology and to reach many more potential fundraisers by advertising and partnering with referral sources including cancer charities, major hospitals and, of course, successful fundraisers who tell their friends.

In all, the for-profit structure has brought great benefits to GiveForward, which has allowed it to ultimately accomplish the social mission–getting money to families who need it to pay for major medical bills.

However, families will have to evaluate the two different organizations and decide for themselves which is right for them. I would welcome the comments of anyone who evaluated both organizations and made a decision one way or the other to help guide other families as to the pros and cons of each. What have I missed? What else you would like to know?

About That Fee

Fee details from GiveForward: “This fee covers all credit card and bank processing fees (usually around 2.6% depending on your credit card) as well as GiveForward fees.  The GiveForward fees cover basic overhead; from maintenance of the site so we have the most up-to-date security software to protect the privacy of our users to the cost of sending out the final payment to the beneficiary.”

What Nonprofits Can Learn from a Girl Scout Manual

March 2, 2011

“A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.” -Lao Tzu

Don’t laugh, but I’m the cookie mom for my daughter’s Daisy troop. There are still boxes of Thin Mints and Samoas in the corner of my living room, along with the yummy-but-not-enough-in-a-box-to-justify-four-bucks “Thank U Berry Much” variety introduced last year.

We have to get rid of those extra boxes, and so I read some of the material provided by the Girl Scouts about site sales. What caught my eye was an admonition for the adults not to take over the activity:

“Adults act as coaches who help girls develop leadership skills by using these three processes:

  • Girl-led: Girls play an active part in figuring out the what, where, when, how, and why of their activities. They lead the planning and decision-making as much as possible.
  • Learning by doing: Girls engage in continuous cycles of action and reflection that result in deeper understanding of concepts and mastery of practical skills.
  • Cooperative learning: Girls work together toward shared goals in an atmosphere of respect and collaboration that encourages the sharing of skills, knowledge and learning.”

It’s a fine line between coaching and doing, especially when we all know “if you want it done right, you have to do it yourself.” Adults certainly organize better, market better, craft better thank you notes. If you left the girls in charge, they might forget to put the cost per box on the sign. They might not pick the best location with adequate foot traffic. They might forget to bring enough change. And they certainly would not sell as many cookies as a group of adults would sell under the same circumstances.

But as the Girl Scouts manual so delicately points out, the larger goal isn’t to sell a bunch of cookies. The larger goal is to teach the girls critical leadership and entrepreneurial skills that they can apply elsewhere. And to accomplish that goal, there is no more important step than putting the girls in charge of cookie sales with adults coaching them.

Among our nonprofit community, I think there is a tendency to forget that the point of our efforts is to accomplish some mission, not perpetuate our organization. In much the same way as well-meaning adults take over cookie sales for their kids, increasing sales when sales aren’t the point, nonprofits have a tendency to cultivate donors as “theirs,” and claim a cause as “theirs,” when owning the cause isn’t the point. Accomplishing the mission is the point.

Instead of cultivating loyal donors to our organization, we should be cultivating passionate advocates for our cause. We don’t own them, we empower them. We are not the end, we are the means.

How many of our strategic plans focus on the infrastructure and financial growth of our organizations, and how many focus on how we’re going to accomplish our mission? How many of our board meetings focus on leadership around our causes and how our efforts are or aren’t getting the results we want, and how many focus on fiscal responsibility and budgets and fundraising?

I have yet to hear about a board that spends too much time focused on the organization’s impact and not enough reviewing its financial report. If your board is interested in becoming more mission-driven (rather than duty-driven), I highly recommend the work of Hildy Gottlieb, whose YouTube videos provide only a glimpse of the passion and wisdom she brings to community benefit organizations.

And next year, my daughter may only sell 5 boxes of Girl Scout Cookies. But she will have personally sold every one of them herself.

A Good Cause is Not the Same as a Good Program

February 22, 2011

Dan Pallotta’s recent column for Harvard Business Review calling on charities to start treating their donors as intelligent adults made me want to stand up and cheer. And in rising up to meet his challenge, I am here to tell you a hard truth. That truth is: most of you are doing a terrible job picking charities to receive your hard-earned money and carry the torch of your ideals.

As a person who makes social change their full-time profession, I am often frustrated that big-hearted individuals hear about the mission of a charity and say “isn’t that a wonderful charity?”

Let me be clear: it is impossible to know whether a charity is good or bad, wasteful or efficient, simply by reading its mission statement. Why do I say this?

First, because I know that a mission statement is a statement of intentions, not a statement of accomplishments. A “good cause” is not the same thing as a “good program.” And we all have good intentions but the inconvenient truth in social change work is that Good Intentions Are Not Enough.

Think of the well-meaning missionaries whose desire to “save” children from post-earthquake Haiti almost resulted in loving parents and their children being permanently separated.

Or the recent effort by World Vision to send 100,000 misprinted Super Bowl champion t-shirts to people in the third world, improving their own overhead ratios by claiming the value of these gifts-in-kind as program expenses, while in reality sending goods that are readily available even to poor people in the target geographies, widely accepted by the aid community as having the effect of undermining local businesses and creating a culture of dependency, and otherwise causing harm to the very communities they purport to help.

Or consider the Battered Mother’s Resource Fund that never actually implemented any programs it was fundraising for and potentially scared women away from seeking help by falsely claiming that many shelters separate mothers from their children. It was also proposing a children’s ranch that experts said would do great psychological harm to kids if it were ever built. Despite the fact that it was ordered to shut down by the Attorney General, this organizations still has a profile on Change.org, with 30 well-intentioned supporters. I bet those supporters read the mission statement and said “that’s a worthy cause.”

You know, they’re right: it IS a worthy cause. But it’s not a worthwhile program. This idea that different women’s shelters  are doing radically different things, some of which might be actually harmful to women, is something we don’t often consider. But the same thing is true for all kinds of charities.

Some jobs programs help people spiff up their resumes and place them in dead end jobs. Others provide holistic training to prepare them for a lifetime of success in a new career. Sadly, some don’t even know what results they’re getting because they are too busy playing with allocation of costs to make their “overhead ratio” as low as possible.

As a person with good intentions, what can you do? You can pick an issue, and learn about it.  In fact, I insist on it. Don’t give to any organization that asks just because it’s a “good cause.” Don’ t give thinking “What’s the harm? What’s the worst that could happen?”  If you know nothing about that cause, that issue, that organization, you can be actually doing harm, as the examples above illustrate. Withholding your donation when you don’t know what you’re doing is as important a moral act as giving when asked.

The father of a childhood friend of mine used to say “Don’t be so open-minded that your brains fall out.”

Happy Generosity Day!

February 14, 2011

Don’t feel bad if you bought a Hallmark card today. You’ve been conditioned your whole life to think of Valentine’s Day as a day to buy things in order to express your affection.

But maybe you’re starting to catch on to the false kind of love that is packaged and commodified by corporations. So let’s “reboot” Valentine’s Day as Generosity Day. I’ll let my friend Sasha Dichter, originator of this idea, explain:

“This Monday, Valentine’s Day, is going to be rebooted as Generosity Day: one day of sharing love with everyone, of being generous to everyone, to see how it feels and to practice saying “Yes.” Let’s make the day about love, action and human connection–because we can do better than smarmy greeting cards, overpriced roses, and stressed-out couples trying to create romantic meals on the fly.”

Sasha’s entire post, including suggestions for how to be generous today, can be found here.

And because love don’t cost a thing, I particularly urge you to be generous with your attention. Notice what’s going on around you, and give someone a genuine complement or words of encouragement. Really listen to the people who want to talk about their day without thinking about what you’re going to say next. If you’re in a conversation where you disagree with the other person, really try to understand where they are coming from and why they believe the things they do.

The sweet irony, of course, is that the more we are generous in giving of ourselves to others, the more we benefit and learn and grow as a human being.

And if you, like Sasha, want to extend this experiment because you like the way it feels, I encourage you to join the 29-Day Giving Challenge, where you will give a gift every day for 29 days. If you’re feeling down about life or love, moving outside of yourself by focusing on all the ways you can help others is guaranteed to lift your spirits.

Job Description for the Next Mayor of Chicago

January 25, 2011

The Chicago Tribune is partnering with the City Club Chicago to sponsor a debate between the four most prominent candidates for mayor in the upcoming election. The online community TribNation put out a call for readers to submit job descriptions–15 winners would be selected to attend the debate.

Drawing on conversations with my social innovation colleagues in Chicago (including Ryan Blackburn, Linda Darragh, Jamie Jones and others), I wrote up a job description for the mayor I want to see, and submitted it to TribNation. Since I apparently passed the security screen with flying colors (I feel so boring…) I’ll be taking my husband to the debate Thursday night. Here’s what I submitted, below.

Let me know what you think. How would you like to see the next mayor work to make Chicago a hub for social innovation? What has worked in other cities?

Position Objective: Turn Chicago into a well-known hub for social innovation, proving that innovators need not head for the coasts to find support for their ideas and that investors need not look any further for worthy investment opportunities.

Major Responsibilities:

  • Develop policies and programs to support social entrepreneurs in Chicago, such as loan forgiveness programs similar to those available to graduates entering public service or mentorship programs that pair existing Chicago business leaders with up and coming social entrepreneurs.
  • Develop incentives for investors to direct more funding toward social benefit organizations, and for businesses of all kinds to use their business assets to solve social problems in Chicago.
  • Attract major social innovation conferences, publications, thinkers and speakers to feature the increasingly vibrant social entrepreneurship community in Chicago.
  • Connect the many players and organizations already working on this area.
  • Solicit ideas and input from a great range of people who live and work in Chicago, a la the Denver “Change Your City” campaign
  • Work with Chicago-based foundations and corporations, large and small, to generate support and funding for initiatives that make Chicago a hub for social innovation.

Measures of success:

  • Increased awareness among opinion leaders and those in the media (first in Chicago and then beyond) of Chicago as a home for social innovation, as measured by press mentions and occasional surveys.
  • Increasing number of national conferences or programs around social innovation hosted in Chicago and featuring Chicago-based projects (e.g., those of the Council on Foundations, Social Capital Markets, Social Venture Partners).
  • Percentage of college grads (and especially business school grads) who choose to stay in Chicago should rise.
  • Identifiable angel and mezzanine funding sources, especially for sustainable, equitable businesses, should increase to levels near those of secondary cities in California, if not San Francisco; more “social impact funds” invest more dollars in Chicago-based social enterprises
  • Several well-regarded social enterprises should emerge that start in Chicago and stay headquartered in Chicago
  • Projects that demonstrate results in education gains, reducing homelessness, increasing employment rates among difficult-to employ populations, etc. from Chicago are studied and picked up by other cities.

Requirements:

  • Must be a true believer—cynics need not apply
  • Must be able to engage in reasonable discourse without demonizing those who disagree, even if they ARE stupid and evil.
  • Must favor practical and applied wisdom over ideological and theoretical knowledge.
  • Must inspire people to want to get engaged; be someone we can look up to more than someone we can relate to.
  • Must be smart, experienced in government, and on good terms with the business community.
  • Must be able to keep his or her private life private.

Also, fix streets, balance the budget, root out corruption and cronyism, keep the trains running on time, yadda yadda yadda.

Tithing Your Time Online

January 12, 2011

I just read a fascinating post suggesting that we need to make purposeful choices about how we live our increasingly online lives, “choices that will determine both the quality of your life online and of your relationships offline.” The author, Alexandra Samuel outlines 6 decisions we often make without ever consciously making them.  But one in particular stuck out to me as an interesting idea.

Essentially, given all the time we waste online, Alexandra suggests that we do something to give back or be helpful to others with some of our online time.

What problems am I choosing to fix with the help of the Internet? The village that needs a new water pump. The prospect of climate change. The aunt who needs a new beau. The creative vacuum left by the implosion of your garage band. Whether it’s a problem for you, your community or the world, the Internet can help you fix it. Tithing 10% of your time online — from micro-volunteering to online activism to writing a heartfelt note to a lonely friend — is a structured way to ensure that the Internet becomes part of the solution instead of part of the problem. This can be the year in which you get serious about the Internet as the single most promising problem-solver in a world that faces many fast-growing problems.

Sounds like a great plan. What can you do with a portion of your online life to make the real world a better place? Ideas and suggestions welcome.

How Do We Ensure Someone’s Watching Our Back in Chicago?

December 30, 2010

We made it back to our home in Chicago this past Monday from a week in Ohio visiting my in-laws for Christmas. Our wonderful neighbor’s kids not only took care of my son’s fish Percy (thanks, Concetta and Chance!), they also collected our mail and newspapers while we were gone, since I wasn’t quite with-it enough to put them on hold before I left.

Coming back to all those newspapers at once was shocking. One week of the Chicago Tribune equals about 8 inches of dead trees, something I hadn’t realized until I saw them all, stacked up at once like that. And although those 8 inches includes some interesting stories, great recipes and entertaining Doonesbury strips, it is overwhelmingly stuff I don’t want or need to have in writing.

See, I get most of my news from NPR, or from  specialized news outlets like the Chronicle of Philanthropy or Philanthropy News Digest. By the time I read the paper, I’ve heard most of the “hard news” stories somewhere else.

Except that, once a month or so, there’s a story that isn’t anywhere else. It’s a piece of investigative journalism by the reporters at the Chicago Tribune. A sample of the past few years:

  • An expose of the “clout list” used by politicians to get well-connected but potentially unqualified students into the state’s premiere university.
  • Ongoing investigation and reporting on the administration of Rod Blagojevich that was interwoven with the federal investigation that led to the governor’s indictment at the end of 2008.
  • A call for greater oversight of nursing homes after uncovering the deaths of 13 children with disabilities in the care of homes who didn’t, in fact, care for them.

Dozens of Chicago Tribune investigations have resulted in public hearings, new oversight, reforms and even new laws. You can see a watchdog update from August on a bunch of Tribune investigations here.

Truth be told, I don’t read the full text of most of those stories. I read the first few paragraphs. I skim the follow-up articles, check out the graphs. But even if I don’t read them all the way through, I’m so glad they’re being written. I’m glad the Tribune is doing these investigations, and I feel like they’ve got the public interest in mind.

So here’s my conundrum: I want to support the important work of the journalists, the civic watchdogs at the Chicago Tribune, but the 8 inches of dead trees (much of it ads for new and used cars, and I’m not in the market for a car of any kind) is unconscionable for me. I honestly would like to cancel my subscription, except for the fact that those journalists need to get paid, and they need subscriptions to their newspaper to get paid.

A Failed Social Enterprise?

(As a side note, newspapers who rely on subscriptions might be one of the oldest and most important social enterprises around. They provide a critical community service and get paid by the members of the community who value that service. Not the most “cutting edge,” but clearly a social-purpose business whose struggles with sustainability have been well-documented in the last few years.)

What’s the Solution?

But I think members of the community still value this service, they just don’t value the paper it’s printed on. So how do we continue to support real, important, serious journalism but stop getting a few phonebooks worth of needlessly murdered trees every week? I certainly don’t want to put my paper carrier Sid out of a job, but I would love to get paperless journalism of the same caliber as the printed paper.

We need to find a way for real journalists (sorry, blogosphere, blogging and opinion is not the same as actual journalism) to be supported.

I’m struck by a few relevant sentiments:

  • In conversation regarding the limits of the markets to solve social problems, my former fellow Chicagoan Nathaniel Whittemore once used public radio as an example of something that should never move from a donation-based revenue model to an earned revenue strategy (such as from corporate ads) because  it would ruin their independence. Are newspapers so different?
  • Marketing guru Seth Godin once pointed out that newspapers act as if they are in the business of selling (dead) trees. But of course they aren’t, or shouldn’t be.

So what’s the solution? A major foundation who supports newspapers through large grants each year? Hardly, in some ways that is no different from a few big corporate sponsors as it potentially compromises newspapers’ journalistic independence. No, communities need to support newspapers because a diversified funding base is what ensures that the journalists don’t become too dependent on any single one of us for support that they can’t risk our anger or withdrawal.

Maybe the answer is an “online only” subscription. Maybe newspapers need to change their marketing message from “bringing you the news, weather and commentary” (which I can get elsewhere) to “the investigators who have your back and will pursue the public interest without regard to partisan politics.” Maybe newspapers should adopot the same donation model as public radio.

I brought this up to Colonel Tribune, the gentlemanly Twitter representative for the Chicago Tribune, who may or may not be the collective brain child of a group of (highly entertaining) lunatics over at the newspaper. His response, in the required 140 character limit imposed by the Tweity*:

“First, follow #TribNation http://bit.ly/gjjpSy and on [Facebook]: http://on.fb.me/aAsMa3. You’re still our people.”

I was touched by the sentiment (I’m proud to be your people! sniff sniff) and I’ll do both. But I wonder what’s the next step?

Is investigative journalism important to you? Do you get the newspaper? Do you get your news online? What would you be willing to support?

*”Twitter deity.” Too forced? Well, it’s almost midnight. Cut me some slack.

A Letter from Sid

December 22, 2010

Every year around the holidays I get a letter tucked into my newspaper from Sid, the guy who delivers the papers. This year’s letter is so full of heartfelt joy, I just had to share it with you, word for word as he typed it.

Enjoy, and Merry Christmas.

Season’s greetings:

Well, another year has passed. I hope it’s been great for you. For me, it’s been absolutely wonderful. I say that because even though I still face what sometimes seem like insurmountable obstacles, I’m a cancer survivor. Every day, every single moment is a gift I’m grateful for. Every day is another opportunity to learn, to laugh, to love, and to live.

Life can be so strange sometimes, so unpredictable. I just recently discovered that the doctor who treated me for my cancer, the man who saved my life, and gave me a second chance, now has inoperable cancer. He has no more than a few months, perhaps a few weeks to live. How ironic.

Cherish every moment you have. Embrace your loved ones as though you’re seeing them for the last time. It might be. Take a Viagra pill (take two if you need to), and make passionate love. Stand on the corner of the busiest street you can find, and laugh out loud. I mean LOUD, UNCONTROLLABLY, till everyone thinks you’re a nut. Lastly, thank God for this wonderful gift of life.

From the bottom of my heart, thanks for being a great customer. So help me, I mean it sincerely. Happy holidays, and best wishes.

Sid

Is Groupon the Most Successful Social Enterprise Ever?

December 15, 2010

My girlfriend Kim in Connecticut was unfamiliar with Groupon, a fact which left me practically speechless. Here in Chicago, Groupon is being hailed as the company that is “transforming the culture of Chicago,” providing the right environment to cultivate a new boom in start-ups by proving to entrepreneurs that you don’t have to leave Chicago to get funding and support, and proving to investors that you can find great ideas right here in Chicago. Think that’s too much hype? Maybe it’s not enough.

What is Groupon?

It’s a daily deal (not a lame “coupon thing,” geez Kim…) at half-price or better for some awesome thing to do in your city (yes I mean your city, whether that is  San Francisco, Seattle, one of three different neighborhoods in Los Angeles or Albuquerque or my hometown of Dayton, OH or dozens of other smaller cities). The deal only goes into effect if enough people buy it. The number of people who have to buy it is presumably set in cooperation with the company offering the deal, but I’ve never seen a deal NOT reach the minimum.

So consumers get something new at a great price, businesses get a shot at a new customer, and Groupon gets 10-50% of the revenue, depending on whether they promote it or just let people find you. If you are not already getting the daily deal via email, sign up here (seriously, do it here, because I get $10 for every person I referred who subsequently buys a Groupon).

And in case you, like Kim, are unfortunate enough to live someplace other than Chicago, I will also tell you now that Groupon apparently turned down a reported $6 billion offer from Google. That’s a pretty big deal, and signals that they think even bigger things are on the horizon. I believe it. Why? Because I not only buy Groupons, I proselytize about Groupon (see above) and I try to get my friends to buy Groupons with me so we can do things together. Sticky, loyal, repeat customers like me translate to huge revenues and an incredibly valuable business.

What Does Groupon Have to Do With Social Enterprise?

Social enterprise, by my definition, is something that harnesses the power of the markets to bring a new solution to a social problem. In other words, a revenue-generating business that makes the world better. You don’t have to be a for-profit business, as many non-profits have revenue-generating enterprises that support their social mission, but you do have to be making money to meet my definition. So how is Groupon a social enterprise? Well, they clearly have harnessed the power of the markets.

Groupon stats on 12.15.10

According to their web site, over 20,000,000 Groupons have been sold already, over $850,000,000 saved. If the amount saved is conservatively estimated to be 50% on each deal, then the amount saved is roughly equal to the amount spent. So if I’m thinking about this correctly that makes Groupon’s  cut in the range of $85-$450,000,000. Roughly speaking, of course.

And what about the social part? To demonstrate the power of Groupon, let me share with you a few of the Groupons I have purchased:

$40 for a year-long membership to a new museum which I otherwise wouldn't have visited



$30 to take the whole family to this amazing holiday event I would have otherwise dismissed as too expensive

And here are a few others I’ve seen go by but haven’t purchased:

That's 18,790 visits, many of which are likely new patrons

almost 3,000 potential new customers

That last deal, for Irv & Shelly’s Fresh Picks, is particularly interesting to me because they were one of three social enterprises selected to present at the first Chicago Social Venture Forum, organized by Foundation Source and the Chicago Booth School of Business. Here’s the description from Groupon:

“Fresh Picks works closely with local crop producers and purchasers, filling each of its delivery boxes with the highest-quality organic produce it can snatch from the harvest’s catwalks.”

Through Groupon, this small but growing social enterprise that supports and promotes organic farming and seeks to provide healthy produce to Chicago’s urban food deserts, had the opportunity to get almost 3,000 people to try their service. If it’s good, those people become long-term customers.

Like any small business, social enterprises selling consumer goods and services can benefit from the foot traffic that Groupon provides.

Innovation in Friendraising

For nonprofits like art museums, planetariums, ballet companies, orchestras and other performers, Groupon may be more appropriately viewed as a “friendraising” vehicle, rather than a direct fundraising mechanism.  Nonprofits have (theoretically…hopefully?) set their ticket prices with some idea of what revenue they need to support their operations. But for many of these organizations, ticket revenue will never cover their costs, and they will always rely on charitable donations to make up the difference. So selling half-price tickets for seats that would otherwise have been empty (because, let’s face it, the ballet in Des Moines might not be sold out for every performance) is a better way to accomplish your mission than letting those full-price seats go empty.

So Groupon can help deliver “butts in seats” to charitable organizations like museums, architecture foundations, ballet companies, orchestras and the like. These kinds of organizations need to reach people, and the more people they reach the better they are generally considered to have fulfilled their mission. And they usually have excess capacity (that is, empty seats at performances they are giving anyway, or fewer people in the museum than would be allowed by the fire marshal). No excess capacity? No need for Groupon.

One of my favorite examples of creative friendraising through Groupon was a recent offer to “support the public school project of your choice with today’s deal, which lets you boost your charitable donation to DonorsChoose.org by 60% through generous funding by the Pershing Square Foundation.” (Kudos to Pershing Square Foundation for underwriting this innovative experiment to attract new donors to a well-regarded nonprofit).

By combining mainstream offers for sushi, fitness clubs, car services and other popular items with these social-benefit organizations like the Joffrey Ballet, Groupon has helped create a culture of folks for whom supporting nonprofits is just another cool thing to do in their town.

In all, Groupon has enormous influence to direct consumer power toward social enterprises, great nonprofits and small businesses of all kinds. Because of this power to amplify the work of so many other social-benefit organizations, I’d argue that Groupon itself is perhaps the largest, most successful social enterprise to date.

For the Haters

Let’s acknowledge early criticism that Groupon deals brought the wrong kind of customers, those that only wanted the deal and weren’t likely to convert. But let’s also acknowledge that Groupon has responded with a whole suite of merchant services that help small businesses structure their deal in a way that is most likely to be successful, handle the resulting traffic and even provide advice about how to convert Groupon users into long-term customers. I bet Oprah doesn’t offer that kind of support to companies she lists as her favorite things.

There is still a great deal of debate on whether Groupon is a good deal for the businesses. For example, Chicago’s Navy Pier is currently pointing fingers at Groupon for the fact that ticket sales for its Winter Wonderfest attraction are up 12% but revenue is down 8%. This shift resulted from a Groupon offering half price tickets ($9 each) which netted Navy Pier only $4.50 per ticket on 7,500 tickets sold through Groupon instead of the door price of $18 each.  In my view, if Navy Pier couldn’t have predicted this outcome based on some simple math (1/4th the revenue per ticket means we have to sell 4x as many tickets to net the same amount of revenue), they have no one but themselves to blame. It suggests that there are some businesses that are better suited to benefit from Groupon than others, and one-time events are not one of them.

In any case, small businesses with consistent, repeatable products to offer seem like a better fit. Get your Groupon discount the first time, but come back for the fantastic new place you just discovered, paying full retail price, of course.

 

Show Me the Money

December 8, 2010

One night last week, my husband read the book One Hen to our kids at bedtime. It’s a children’s book about a very grown-up topic: the power of banking. More specifically, the power of microfinance loans to provide opportunity for the poorest people in the world to build a business and improve their lives.

One Hen tells the story of a child in Ghana named Kojo whose community pools their money to allow each member in turn to buy something to improve their tiny businesses. The people use their purchase to increase their income and pay the funds back so the next person can borrow and the cycle continues. Kojo’s mother gets her turn with the funds, and in turn she lets him use enough to buy a hen.

With this one hen, Kojo sells enough eggs to pay his mother back and then buy more hens. He eventually pays for his own school fees, then builds a large and successful business. When he’s older, he goes to the city and asks for a loan from the bank to buy an entire farm. Of course, the first banker turns him down, because by traditional banking standards he doesn’t look very creditworthy. But when another banker hears how Kojo has grown his business from that first little hen, he decides to take a chance and Kojo gets his farm. Now he’s supplying not just eggs, but jobs and stability to his community. People that he pays in turn buy goods and services from other community members and so begins a virtuous cycle of economic prosperity for them all.

One Hen is the story of microfinance: How loans that are too small to be worth the time of a commercial bank can be the ones that have the greatest impact on increasing the wealth of poor communities. How people that aren’t “credit-worthy” by traditional standards can still be worthy borrowers. It is in many ways the story of Opportunity International, a pioneer in microfinance that has been championing this work for almost forty years, and which is the nonprofit partner of One Hen. (The real-life inspiration for Kojo sat on the board of Opportunity International for many years and continues to be engaged with the work today.)

Grown-ups talk about rates of return, recycling capital and other fancy terms. But kids relate to other kids, and they especially relate to narrative. So what better way to draw them into the power of microfinance than by telling the stories of other kids?

“Show Me the Money”

Now one woman who was inspired by the book One Hen is creating a documentary to do just that. Show Me the Money will follow kids in the United States, themselves budding entrepreneurs, as they earn money through lemonade stands, bake sales or other micro-businesses and lend it to an entrepreneur in another country.

Then the film will follow the borrower—perhaps a woman in China buying a donkey to transport her goods to market, or a seamstress in Peru who buys a sewing machine to be able to make larger and more expensive items for sale—to show the joys and struggles as they try to build their business.

What a fantastic way to show kids the power they have to positively impact someone else’s life! No lectures, no guilt trips, and no powerless recipients of their handouts. Just the excitement of earning their own money and then putting it to good use, helping another human being halfway around the world move beyond poverty to a life rich with possibility.

Behind the Scenes

Producer Kathleen Ermitage is passionately pursuing the vision for Show Me the Money. As her partner in crime, she has recruited Emmy and Grammy nominee John Scheinfeld, best known as the writer, director and producer of The US vs. John Lennon and the critically-acclaimed Who Is Harry Nilsson?

They have imagined an inspiring and engaging film that humanizes the concept of microfinance to empower young people and show them that they can make a huge difference in someone else’s life. Once young people get drawn in by the film, Kathleen and her team will provide educational resources to teach them financial skills so that they can earn, save, spend and give in their own lives.

Kathleen says, “We aim to celebrate the American spirit of entrepreneurialism and the great power of micro-finance. And we’ve got the perfect director for it—to bring just the right tone to the material. What a great ride! We’ve met fascinating young people. And we will respectfully give them room … watch them make decisions that are very important to them. We’ve already witnessed their wheels turning in terms of how they develop financial skills—and true business savvy. It is an education that occurs inside the classroom … and outside, too.”

Although he is best known for documentaries about the lives of well-known individuals, John Scheinfeld says, “Kathleen’s passion for this project was so infectious and the kids’ stories are so inspiring there was no question—I had to be involved in making this movie.”

Show Me the Money will make the festival circuit, followed by a theatrical run and DVD and TV, but Kathleen will also draw on her background in creating educational media to develop web sites, videos, social media outreach and other tools. Kathleen plans to work closely with financial institutions and individual advisors to distribute the educational content so that kids, once inspired, can have outlet and direction for their energy and enthusiasm.

Kathleen says, “We can generate a great deal of content with a wide range of curriculum applications. The great fun and challenge for us will be to take full advantage of all of the media, distribution channels. Content is flourishing—and we will wrestle it to the ground and into the right formats for our end-users. We’ll have curriculum content flowing concurrently with filming in some cases, nearly real-time.”

A portion of the proceeds will be donated to the film’s nonprofit partners, including One Hen, Inc., the nonprofit that converts Kojo’s story into interactive and classroom resources and Opportunity International,  a global microfinance agency that partners with One Hen. Investors will also have the opportunity to go along with the production to visit the entrepreneurs around the world.

Get Involved

If you are interested in getting involved with Show Me the Money, we’ll be sure to share details as they become available. Kathleen is in the process of pulling together the final financing for the film venture, which includes the educational products. If you are interested in this regard, please contact Kathleen directly at kathleen@steppingstonesmediaproductions.com.

In the meantime, this holiday season consider the gift of the book One Hen and a $10 or $25 Opportunity International gift card for a special young person in your life, maybe a niece or nephew or God child. Read them the story about Kojo and show them how they have the power to give the gift of opportunity to others by going online together to find and fund an entrepreneur through OptInNow.org


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