Social Startup Business Summary

1. Bedah Buku Bisnis #79
23 Februari 2022
Budiati Prasetiamartati

2. Kathleen Kelly Janus
Kathleen Kelly Janus is a social
entrepreneur, author and lecturer at
Stanford University’s Program on
Social Entrepreneurship.
As an attorney, Kathleen has
spearheaded numerous social justice
initiatives.
Kathleen is a co-founder of Spark – a
network of over 10,000 millennial
donors – which seeks to advance
gender equality by engaging the next
generation in accessible forms of
philanthropy.
http://www.kathleenjanus.com https://www.sparksf.org

3. Background
Despite doing important works, many
nonprofits operate in constant survival mode,
scrambling for the money to make payroll every
month. In 2014, almost 2/3 of reporting public
charities in the U.S. had an annual budget of
less than $500,000 (atau setara Rp 7 miliar).
Kathleen obsessed with understanding how
nonprofits can get off the threadmill and attain
organizational sustainability, which she define
as reliably raising around $2 million (atau setara
Rp 28 miliar) in annual revenue.
Appendix A: Cast of characters, in alphabetical orders, listing
organizations, year founded, issue area, HQ, current budget,
number of staff, impact, website.
Appendix B: Metodology
Two separate survey samples in 2015 and 2016. Respondents
received $25 gift card for successful completion of the survey.
It contacted 727 individuals, with 219 total responses or 30
percent response rate.
Interviews between March 2015 and May 2017 to nearly 100
social enterprenurs, academics, funders and other experts,
asking a simple question: What is the key to
nonprofit success?
Appendix C: Additional resources

4. Social entrepreneurship is a process by which citizens build or transform
institutions to advance solutions to social problems, such as poverty, illness,
illiteracy, environmental destruction, human rights abuses and corruption, in
order to make life better for many.
David Bornstein and Susan Davis
Social Entrepreneurship: What Everyone Needs to Know

5. Five Primary Strategies
Each organization that scaled most successfully employed
many, or all, of the following practices:
Testing ideas through research and development to get proof
of concept before seeking major funding or media coverage.
Measuring impact right from the start, often with inventive
metrics tailored to their specific programs.
Funding experimentation through a combination of selling
products and services that were in strong alignment with
their mission and employing bold strategies to raise
philanthropic capital.
Leading collaboratively in a fashion that allowed them to
optimize the talents of their staff, including building a strong
board of directors.
Telling compelling stories in ways that utilized the most
recent innovations and tapped into others to advocate on
their behalf.
Five primary strategies that tended to come up
in the interviews as critical to scale:
Part 1. Testing Ideas
Part 2. Measuring Impact
Part 3. Funding Experimentation
Part 4. Leading Collaboratively
Part 5. Telling Compelling Stories
At the end of each part, there's a great synopsis
of key questions/takeaways you should be
thinking about.

6. The process of connecting with end-users and
other stakeholders should be ongoing as your
organization grows.
Top-performing social entrepreneurs are
dedicated to continuously improving their
model and the services they’re providing, and
they find ways to stay close to their
beneficiaries.
A strong connection with the needs of your
targeted users will gain you the support and
engagement of those you seek to serve, the
insights to improve your results and, in turn,
the funds you need to take your organization to
the next level.
The discovery phase: STAYING CLOSE TO THE PROBLEM AND THE BENEFICIARIES
http://IDEO.org offers a field guide to human centered
design for free download
1. Conduct in-depth research on the problem with the
intended beneficiaries (aka ‘customers’). It is vital to build
strong connections with the end-users in order to better
understand their needs. Methods: focus grouping, surveys,
going out to target communities. Proximity is also critical to
getting buy-in from the communities you hope to service.
2. Brainstorm a series of solutions for addressing the
problem(s) and select a first candidate for development.
3. Create a rough prototype and get feedback.
4. Refine the prototype and launch a pilot program or product
to test results.
Part 1. Testing Ideas

8. R&D Spending in For-Profits versus Nonprofits
“The problem is that nonprofits are held to a
different standard while in the business world
we call R&D spending ‘infrastructure’ and it
sounds essential, in the nonprofit world we call
it ‘overhead’ and it is highly scrutinized.”
Tipping Point decided making R&D spending a
priority within their own organization.
It invests in research and innovation when
there is potential for large scale impact.
The board covers fundraising and operations,
so that every cent of every dollar donated
supports the most promising poverty-fighting
solutions in the Bay Area (San Fransisco, USA).
https://tippingpoint.org/
Part 1. Testing Ideas

9. Reframing Failure as Learning: THE REASONS FOR FAILURES ARE LESSONS FOR SUCCESS
Failure, and knowing when to admit failure,
are critical to the innovation process. The
freedom to fail is vital to producing more
creative ideas and to landing on ones that will
lead to truly transformative new products and
services.
A willingness to discuss failures openly is only
one component of taking action to shut down
underperforming programs and direct
resources. Good data – about what is working,
what isn’t, and why – is also required, and that
should be both quantitative and qualitative.
This page logs mistakes we've made, ways in which our
organization has failed or currently fails to live up to our
values, and lessons we've learned.
Part 1. Testing Ideas
https://www.givewell.org/

10. Measuring Impact
Funders generally expect as a baseline that nonprofits will provide hard data
about results in addition to the stories they tell about their program. Because
they genuinely cared about whether their work was producing results. They
measured their impact so they could refine their programs and make them more
effective.
The most effective formula for nonprofits is a combination of hard-data metrics,
some of which are commonly used and others that are specifically tailored to the
organization’s work, and qualitative assessments, such as those made through
surveys of beneficiaries.
Part 2. Measuring Impact

11. Crafting a Compelling Theory of Change: YOU NEED A COMPELLING “WHY”
One of the biggest problems nonprofits face in
trying to scale up is showing funders that their
programs are having a powerful positive impact
on their beneficiaries’ lives. And just because
their life changes, it does not mean there is a
causal link between the change and an
organization’s services. In order to assess true
impact, organizations must develop a measure
to track outcomes.
A theory of change is a tool showing the causal
links between an organization’s vision and its
programmatic activities, detailing intermediate
outcomes and assumptions that must occur to
achieve success.
Part 2. Measuring Impact
A Planning Triangle for a supported housing project
https://www.thinknpc.org/wp-content/uploads/2018/07/Cre
ating-your-theory-of-change1.pdf

12. Making Your Data Tell a Story: MAKE LESS INTO MORE
https://www.roomtoread.org/
Private Sector Brain, Nonprofit Heart.
We’re people from around the world, from
diverse industries, who are passionate about
education. Taking best practices from our
diverse disciplines, we live our values by
improving lives.
Part 2. Measuring Impact

13. Funding Experimentation
Earned income such as selling products or services is fertile ground for
experimentation.
Organizations typically start out with mostly philanthropic support, with just 8% of
their budget coming from earned income, as they grow past $2 million in revenue, they
are more likely to report that a higher percentage of their budget is covered by earnings;
on average about 30%.
Earned income typically works better in certain sectors, such as education, health,
global development and youth development. On the flip side, human rights, criminal
justice and environmental organizations are unlikely to find sources of earned income.
For organizations that can’t rely on earned income, revenue testing focuses more on
attracting philanthropic capital through foundations and individual donors.
Part 3. Funding Experimentation

14. Laying the Foundation to Experiment with Earned Income: THE HYBRID IDEAL AND
MISSION DRIFT
The term “hybrid organization” originally
arose to describe social enterprises that
paired a charitable organization, which
could receive tax-deductible donations,
with a for-profit “arm” that could take
investment capital and pay investors a
financial return.
Many social entrepreneurs cautioned
about an inherent tension between
maximizing impact and maximizing
profits.
Part 3. Funding Experimentation
The Hybridization Movement of the Organizations.
Battilana et al. (2012:54)

15. THE HYBRID IDEAL
Hot Bread Kitchen is offered as an
examplar of this “hybrid ideal”.
Create economic opportunity for
immigrant women and women of color
through job skills training, food
entrepreneurship programs, and an
ecosystem of support in New York City.
Teach the beneficiaries to bake bread and
help run the for-profit part of the
organization
Part 3. Funding Experimentation
https://hotbreadkitchen.org/

16. Testing Earned-Income Strategies
● Sell your service expertise
● Combine free and paid
● Offering services on a loan basis
● Retail innovations
● Teaching beneficiaries to fish
● Collaborate with government
agencies
Part 3. Funding Experimentation
https://livinggoods.org/

17. Leading Collaboratively
Three key errors of most founders:
1. Continuing to play too dominant role in the messaging about the
organization and in running it
2. Failing to hire people with the right expertise at the right time
3. Appointing the wrong people in the board
Part 4. Leading Collaboratively

18. Bringing Senior Leadership Early: YOU CAN’T CHANGE THE WORLD ALONE
Jim Collins wrote in “Good to Great” -
CEOs prioritized getting the senior people they
needed in place before they focused on
developing the strategy for taking the
organization to the next level.
Senior positions should be tailored specifically
to each organization and founder, and designed
to complement the founder’s strengths and
weaknesses.
Part 4. Leading Collaboratively
http://www.code2040.org/

19. Building an Active Board
A strong working relationship
between the board chair and executive
director can be a huge catalyst for
growth.
The first step in recruiting strong
board members is to identify your
needs. Start with “Who do we need?”
and ask two questions:
1. What are the three most
important things from our board
to acomplish this year?
2. Do we have the right people on
the board to make that happen?
Part 4. Leading Collaboratively

20. Creating a Compelling Narrative
● Know yourself
● Getting to know your audience
● Connect the story to the popular narrative
● Staying alert for news hook is vital
● Teach all your people to tell the story
● Ask your beneficiaries to tell their stories
● Selecting and preparing your spokepeople
Part 5. Telling Compelling Stories

21. Thank you