Scaling Strategies that Harness Market Forces

During the “Scaling In Action” session on the first afternoon of the Social Impact Exchange Conference, five of the nation’s leading nonprofits presented their growth plans to an audience of philanthropic funders and advisors. While they represent diverse scaling strategies, I would like to highlight two of the organizations, First Book and Calvert Foundation. These organizations distinguish themselves by harnessing market forces acting as intermediaries that help channel the flow of resources to where they are most needed.

First Book, which has already reached 90 million in book donations, is utilizing a platform strategy to scale the distribution of books to children from low-income communities. Through First Book Marketplace it aggregates book demand from schools online, enabling 90 leading publishers to offer books at unprecedented prices.  First Book National Book Bank is the only clearinghouse for publishers’ excess inventory, one that gives them an efficient way to donate large quantities of books.

The Calvert Foundation has been a leading innovator in the field of impact investing. Its growth strategy will build on its success at financial product innovation.  For 15 years, Calvert Foundation has offered an investment product – the community investment note — that allows everyday people to make a difference in a smart, sustainable way. Calvert Foundation manages more than $200 million raised from thousands of caring investors who want to lift people out of poverty while earning a financial return on their investment through professional asset management.

These are just two of the growing number of nonprofits that are affecting the way markets function and changing the way resources flow.  But there are many other examples.  For example, the Clinton Health Access Initiative (CHAI) has expanded access to care and treatment for HIV/AIDS to more than 4 million people in the last decade by improving market dynamics for medicine and diagnostics, and lowering prices for treatment.  Global efforts to promote sustainable fishing have been led by the Marine Stewardship Council, which uses a label to signal to consumers that the fish they buy has been obtained from sustainable sources. Today, as much as 15,000 fish products bear the MSC label.

These organizations are playing a critical market intermediation role enabling access to products, services, and capital that meet unmet needs and help to improve the sustainable management of natural resources. These market-oriented approaches can be a powerful scaling strategy.  As Paul Bloom states in his just-published book Scaling your Social Venture“successful scaling can certainly be accomplished without an organization being very good at stimulating market forces. However, scaling can happen more rapidly and dramatically when market forces are put to work.”

Michele Kahane is Professor of Professional Practice, Milano School of International Affairs, Management and Urban Policy