What Can the Private Sector Teach Us About Scale?

Scaling, to many in the nonprofit sector, is a concept that originated in the business sector.  As nearly two-thirds of the sector are nonprofits that are small-to-mid-sized, the Plenary session at the Social Impact Exchange Conference titled “Lessons from Private Sector Leaders on Scaling Impact,” was an inside look at the role that business can play in driving large-scaled impact in the social sector.

The session panelists, artfully selected and moderated, represent very different but complementary sections of thought on the issues of businesses and scaling, almost like a perfect Venn Diagram.

IBM – The Targeted and Broad Corporate Volunteerism Program

The first speaker, Jen Crozier, discussed her work as the Director of Corporate Citizenship at IBMCrozieroutlined the technological changes that have caused IBM to shift from laptops to technology systems that “makes sense.”  One way that Crozier discussed the advancement of IBM was in how they think of their work in the context of the communities it serves, as seen more specifically through its Corporate Service Corps.

The Corporate Service Corps is a signature program of IBM, a social responsibility effort launched in 2008 to help provide IBM middle and senior management with leadership development training while delivering high-quality consulting services to organizations in communities that IBM has a significant interest in. The program sends groups of 10 – 15 employees from different countries and with a range of skills on a month-long assignment in a local community. These projects aim to intersect business, technology, and society.  Since its launch, the program has sent over 1,400 participants on over 120 teams to more than 20 countries around the world.

A 2010 extension of the program is called the Smarter Cities Challenge to help dozens of cities over three years to address some of the critical challenges facing those cities. The effort utilized the experts within the IBM staff to work on the ground with city leaders and deliver recommendations on how to make that city smarter and more effective.

Bank of America – The Targeted and Narrow Corporate Giving and Support Program

In 2010, Bank of America announced that it will provide $10 million in grants to Community Development Financial Institutions and other nonprofit microlenders to spur some $100 million in small-business lending. The move marked the first time that Bank of America gave, not loaned, these institutions money for small businesses.  This strategic direction was outlined by Dan LetendreDirector of Community Lending and Investment, during the session.  One of the most interesting aspects of Letendre’s remarks was the three lessons he learned about scaling as a result of Bank of America’s giving program. The lessons are as follows:

  1. The scaling of Community Development Financial Institutions focuses on an impact that is deeper within a community rather than the number of efforts supported.  Scale is about deeper rather than more.
  2. Success is when capital is shared with multiple corporate social responsibility approaches including volunteerism, corporate giving and finance.
  3. Cross-sector collaboration is key, especially when the partnership is between the public sector and small businesses.

Finally, Letendre offered up an equation calculating for impact: if you add together the capital from the private sector with the long-term support from the public sector, the infrastructure support from private philanthropy, and the collaboration of CDFI’s and local organizations, it will equal the short-term and long-term impact need in our communities.

Michael Chu – How to Support Social Enterprise for State Development

Michael Chu is both a Lecturer at Harvard Business School and the co-founder of IGNIA, a venture capital firm based Mexico that supports the founding and expansion of high-growth social enterprises in that country. There were two areas that Chu highlighted that caught the crowd’s eye. The first was his BEST model, and his approach to his work in Mexico.

The BEST Model outlines an approach toward high-impact solutions and a strong business plan that should have these components:

Best alternatives for the low-income community

Economical that achieves the cheapest price for the end user

Solidarity that brings together people and communities

Today is the day that these solutions need to be developed, stressing urgency

The final area that Chu discussed is how to address an issue like poverty in Mexico, thinking specifically about scale.  The following are four criteria that Chu discussed in thinking about scale in Mexico:

  1. Change and impact in Mexico means thinking of 120 million people
  2. The intervention has to be multi-generational
  3. Model has to get better and better over time
  4. Model needs to get cheaper and cheaper over time

Final Thoughts

Michael Chu discussed his model of using touch screens in Mexico to help dispense cash in small “mom-and-pop” stores throughout the country, allowing for individuals to be able to get cash and access to vital public goods and services, like transportation to work. This made me think of the 1.7 million nonprofits in the U.S., a large percentage of them similar in scale to the “mom-and-pops” that Chu referenced in his discussion of businesses in Mexico, and specifically how we can provide the same large scale solutions through the BEST model. I think the answer lies in applying the lessons of all three speakers: we need to employ the deep and broad scope highlighted by Bank of America, as well as the corporate engagement seen by IBM to help propel those nonprofits forward, so that these conversations can reach the masses.  As we look ahead, the Social Impact Exchange appears ready to help answer that question.

John Brothers is a Principal at Quidoo Consulting, a consulting firm servicing nonprofit, philanthropic and government efforts throughout the U.S. and internationally.