Why we need strategic philanthropy, not just good financial records…

There has been a lot in the news over the past few months about transparency in the charitable sector.  Most of these articles end up honing in on the cost of raising a dollar, overhead expenditures and tax compliance.  While these financial issues are definitely part of the equation, they should not be the basis upon which strategic philanthropy is based. 

Addressing complex social issues is not just about the financials, it is about the effectiveness of solving the social problem.

Thank you to Nadine Riopel, Bob McInnis, Derek Brechtholdt and the others who tweeted out the draft of this brief, and most especially provided valuable feedback.

This brief was developed in response to a call from the House of Commons Finance Committee as they undergo a review process of Canada's charitable sector and the tax laws that govern the sector.  Recommendations range from the creation of a government appointed Ambassador of Philanthropy, creating clearer legislation around "reasonable profit" and social enterprise, and addressing the inconsistencies in the T3010 tax filing that do not address the critical information that donors need in order to make informed charitable decisions.

In the fall, I posted a brief for the House of Commons Finance Committee on social enterprise and social finance policy development.  The final version, along with others that were submitted can be found here.

The Finance Committee is expanding their work and is now looking at charitable tax incentives.  The crowdsourcing of the last brief proved to be quite successful so I would like to try it again.

Attached is a draft of the submission for the Finance Committee. I will be sending in the final version on January 14th. Please share your thoughts and comments on this blog post. If you would like your name added to the reference list of this paper please let me know so that I can ensure that appropirate credit is made.

In a recent presentation to the Banff Community Foundation we discussed how information flows to donors thereby influencing charitable giving and social investing decisions.

Yesterday I was at a meeting with a major bank and there was a discussion around the staff Secret Santa program.  This individual wanted to move away from the $10 - dollar store purchase to make the Secret Santa program more meaningful. I suggested that she purchase a $10 charity gift card that her recipient could designate to a charity of choice.  She had never heard of such a program.  Which leads me to think that there are lots of people who don't know about giving charity as a gift of choice.

My career has been shaped in the charitable sector. It spans two countries, several sub-sectors and a lot of fundraising time. When I decided to launch my own company it was at the begining of the formal social enterprise discussion in the States. I realized early on that what the charities value as their business and revenue models is not what the traditional markets value.  This seems obvious, when charities talk about their business, they talk about the lives that they have saved and how they do it on so few dollars.  When companies talk about their business, they talk about profit and commodities and consumers.  So it was with great interest that I read this past week's issue of the Globe & Mail on renaming the sector from non-profit to Social Profit.

Last month I started a blog post about creating a social enterprise dictionary. A discussion was started with comments coming from a variety of individuals.  Last night, over a glass of wine and some "old-fashioned" social networking with David Ian Gray, more was added to the #socent lexicon.

At this past year’s SoCap, I led an Open Space conversation around the language that we are using in the social business/enterprise/venture space. I have observed over the past few years, as this sector evolves and pushes boundaries, there is much inconsistency in how we communicate what we are doing.  These organizations are generating revenue by tackling some of the world’s biggest problems, yet there seems to be much confusion in the marketplace from those who are building the businesses and those who are investing in them.

Today I have been focusing on the language issues between the social entrepreneur, charity, social investor and fund advisor market... And man is there a disconnect!

In preparing for the SoCap Conference I was thinking about the direction that I want to take my company and the opportunities for social capital growth and investing in Canada. I'm not going to lie, raising capital for a social venture is tough... This is due in large part to the nature of the space I work in.  Social ventures, as a defined type of business is an emerging market.  Therefore part of the task of the entrepreneur is educating the market about what a for-profit social venture is, then it is sourcing out the non-traditional investors who understand the multi-line reporting of how investment success will be measured, then of course you have to sell them on your idea (which in new spaces is always a challenge) this all culminates with quickly taking your concept to market. Phew! That's why they call it the five-year over night success story.