At the national level, the connection between the public and government seems broken. Trust in government has been declining for decades, and in the most recent Edelman Trust Barometer survey, only 43 percent of Americans say they trust their government “to do what is right,” 10 percentage points lower than it was only five years ago. More than 60 percent of US voters think the country is on “the wrong track,” even at a moment of near full employment. 

The story reflected in polls is bleak at the national level, but in our cities and towns, we find different story: a rich vein of experimentation with more collaborative forms of public engagement, aimed at allowing people outside and inside of government to work together in designing policy. This is collaborative governance—also known as “co-governance”—and it seeks to disrupt the rigid dichotomy between those “in power” and those “outside of power.” A new name for something that has been emerging in practice over several decades, collaborative governance shifts power and builds trust by enabling government officials and advocates to see each other as collaborators with unique capacities and perspectives that support the other’s interests and positions. 

Examples range from participatory budgeting—such as the recently approved ballot initiative in Boston which will help distribute budgetary power and give residents a greater say in their city’s spending—to the creation of a permanent Citizens' Assembly in Paris, allowing Parisians to “truly participate in the public policies of the capital city.” These, alongside other experiments, were recently profiled in a recent report by New America’s Political Reform Program and in a special issue of The Forge. But although co-governance is a multifaceted and wide-ranging concept, the idea at its core is simple: to move public participation up Sherry Arnstein’s “Ladder of Citizen Participation,” raising the public through increasing levels of sustainable engagement. This sets co-governance apart from other forms of more temporary or issue-specific forms of democratic decision-making: ideally, co-governance creates lasting structures and more flexible relationships, ultimately helping create a positive feedback loop generating trust between residents and decision makers. This does not mean, of course, that decision-making is free of contestation or that immediate wins are always achieved, but rather that there are more nimble forms of power shifting and channels for deepening communication that develop for residents over time.

Here are three key principles that are integral to co-governance:

1. Co-governance grants people an authentic seat at the table and imbues the public with actual decision-making power.

Co-governance seeks to create mechanisms by which public input leads to actual changes. However, this requires moving beyond simply passive community “listening sessions” or town halls in which public officials hear the public’s input without any associated or dedicated commitment to implement any of the public’s recommendations. Those in power cannot view community engagement as simply a box they must check; instead of window dressing public participation, they must work on mechanisms for genuine participatory control by residents.

An illustrative example of deep and ongoing engagement can be seen in the efforts to reform public safety in Milwaukee Public Schools (MPS), led by Leaders Igniting Transformation (LIT), founded and run by young Black and Brown people directly impacted by policies that harm their communities. In order to deeply engage with school board candidates in the lead-up to the 2019 MPS school board election, LIT hosted town halls, conducted private interviews with candidates, and published questionnaire responses, following up by engaging all of the school board members through regular meetings and consistent attendance at public meetings and forums. Before the outreach, LIT only had support from one board member, but through creating authentic and ongoing channels for engagement and decision making, LIT ultimately received unanimous support for their vision of school safety from all of the newly elected board members. These school board members aligned with LIT’s vision and ultimately voted to increase resources for mental health, voted against metal detectors, and voted to end suspensions in fifth grade and below. Even when there was pushback, youth leaders effectively communicated their experiences and helped educate board members about the realities of how police in schools harm students, particularly youth of color, demonstrating the power of persistence and having people with lived experience were at the heart of advocating for change.

2. Co-governance not only grants the public decision-making power but follows through on allocating resources. 

An authentic reallocation of power often means reallocating resources toward the community. Participatory budgeting is an excellent example, in which citizens are given both decision-making power and budgetary power to put financial resources toward the projects they deem worthy of investment. In New York City’s participatory budgeting (PBNYC), for example, residents have had real decision-making power over $35 million in annual capital funding to put towards physical infrastructure projects that benefit the public. The process includes five stages: Idea Collection and Volunteer Recruitment, Proposal Development, GOTV and Vote Week, and Evaluation and Planning. Throughout the process, residents propose and vote on ideas, including improvements to local schools, parks, libraries, public spaces, public housing, streets, and other projects that would benefit their local community. 

Participatory budgeting increases civic engagement for those who are often left out of decision-making; Harvard’s Ash Center selected NYC for a “Innovations in American Government” award, noting that, of those who participated in PBNYC, 23 percent had a barrier to voting in regular elections, over a quarter were born outside of the US, nearly half earned under $50,000 a year, and the majority of participants identified as people of color. Last year, New York City’s Civic Engagement Unit launched a youth participatory budgeting project. By using the online platform Decidem, young people aged 9 through 24 were able to propose and vote on projects, and collectively decide how to allocate $100,000 across the city. The five winning projects included mentoring programs, a training program for young musicians, a high school roof garden, and a recycling program across Brooklyn, Queens, and The Bronx.

Another instructive case of reallocation occurred in historically Black neighborhoods in Gainesville, Florida. In soliciting community feedback for the city’s comprehensive plan, Commissioner Johnson decided to allocate a budget for “community cultivators.” And instead of hiring an external consulting firm to gauge residents’ needs in development decisions, they hired local residents and trusted community members themselves to collect information on community needs and perspectives to feed into the comprehensive plan. According to Johnson, they “reallocated resources from the consulting companies and then put that money directly back into the hands of the communities, while at the same time being able to get the information we needed to inform our policy decisions.” Johnson correctly emphasizes that those who are closest to the problem are often best placed to help design solutions.

3. Co-governance promotes a long-term vision, building momentum and relationships that outlast one-time policy wins.

By building relationships that can outlast a specific issue, co-governance represents an ongoing democratic process rather than a one-off initiative. It can also highlight the value of “losing forward” in service of a longer-term vision. For example, when voters in Colorado passed a ballot measure to create statewide paid family and medical leave in November 2020, it was the result of years of collaborative organizing and work across many different groups of democratic actors. But this only happened after years of the bill failing to pass in the legislature. Advocates turned to a ballot initiative, ultimately getting Proposition 118 passed through a combination of re-strategization, outreach to the public, and effective coordination between legislators and advocates. And even though legislative efforts on paid leave repeatedly stalled, each time the coalition grew, garnering more media attention and further fine-tuning details of the policy for their next advocacy effort. This process resulted in a better policy and set the stage to build a movement that would outlast a one-time policy win. 

In brief, co-governance creates positive feedback loops, which encourage and foster genuine respect and a shared understanding of power between government and civil society. Even in cases where policy wins aren’t immediate, the relationships established can be impactful in the long run. In Colorado, the boundaries between those inside and outside government shifted, with organizers and activists running for elected office. Colorado Senator Faith Winter, for example, was an organizer and activist before seeking elected office, and her transition has created opportunities for deepening relationships between those inside and outside the halls of government. She also notes how, through collaborative governance, the relationships built among allies on paid leave outlasted that specific initiative and many of the coalition partners that worked together on paid leave subsequently worked together on initiatives to update workplace harassment standards, create equal pay standards, and expand access to affordable housing. For instance, when Senator Winter ran the Power Act to protect workers’ rights in 2021, she was joined in the effort by many of the advocates she had worked with on paid leave. According to Senator Winter, “when you build power and when you build a movement, it's not about a singular issue. It was fantastic that we won on paid family medical leave. And now we have relationships. Now we have a coalition. Now we have an ecosystem of creating change.”

Tools for the Future

Co-governance is only one of many tools towards building a more inclusive form of government which creates feedback loops for civic power building. But at a time when our political institutions are facing a crisis of trust, co-governance that invests decision-making power in the public can take us a step forward towards a more equitable, inclusive, multiracial, and multiethnic democracy in the 21st century. Ultimately, the goal is not simply better policies but creating the conditions for long-term capacity building for communities and public servants to work together. This will not only build a more lasting and deepened democracy, but it will instill the kind of trust we’re so sorely lacking: one where residents have the agency and dignity to engage in policy decisions on a more daily basis, not just during elections or crises.

At the intersection of power and social change are questions about using power responsibly, holding individuals and institutions accountable, and addressing power structures that reinforce systems of inequity. Understanding these dynamics will inform the day-to-day work of social sector leaders and help them shape the future of social innovation.

The 2022 Frontiers of Social Innovation conference, “Power at Play in Social Change,” is being convened online March 22-24 and will use power as a lens to examine the strategies and practices commonly used, and still emerging, in the field of social innovation today.

This reading list explores topics related to each session of the conference, including shifts in power, place-based social change, citizen/government collaboration, changes in philanthropy, and public interest technology. If you’re joining the conference, these articles may serve as a foundation for the discussions to come. If you’re unable to attend, we hope they are a valuable resource for conversations happening across the field.

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Power for All: Harnessing Power for Positive Impact

Harvard Professor and co-author of the book Power for All Julie Battilana and SSIR Academic Editor Johanna Mair will discuss the fundamentals of power, debunk the common myths surrounding it, and discuss how to harness power for positive impact in our lives and in the world.

• Problems of Power by Hahrie Han
• Wielding Power With Community: Creating Pathways for Change and Transformation by Linda S. Campbell
• Workplace Power by Andrea Dehlendorf & Michelle Miller

Redefining Power: The Emerging Field That Puts the Public Interest in Front of Technology

Jenny Toomey of the Ford Foundation, Charlton McIlwain of NYU, and Hana Schank of New America, will explore ways in which public interest technology is making critical contributions to designing systems that are more equitable than those commonly used today and help expose the power dynamics at play in the current tech field.

• Web3 and the Trap of ‘For Good’ by Scott Smith & Lina Srivastava
• Improving Diversity in Tech With Smarter Investments in Higher Education by Dwana Franklin-Davis & Kinnis Gosha
• Social-Tech Entrepreneurs: Building Blocks of a New Social Economy by Mario Calderini, Veronica Chiodo, Francesco Gerli & Giulio Pasi
• Investing in AI for Good by Ben Brockman, Skye Hersh, Brigitte Hoyer Gosselink, Florian Maganza & Micah Berman

The Good Lobbying Movement: Reclaiming Lobbying as a Social Innovation Practice

Alberto Alemanno, Jean Monnet Professor of Law & Public Policy at HEC Paris, will discuss today’s negative conception of lobbying in an attempt at unleashing its social change potential.

• Learn to Love Lobbying by Dwana Franklin-Davis & Kinnis Gosha 
• Getting Political Is Good for Everyone by Bill Shore
• A Crack Opens in the False Narrative on Gun Violence by Kevin T. Kirkpatrick

Trust Between Government and Citizens: The Key to Responsiveness?

Jasmina Haynes of Integrity Action, Arman Azizyan of the Armavir Development Center, and Aidan Eyakuze of Twaweza East Africa will explore how we can scale up citizen/government collaborations from problem-solving within communities to tackling some of the biggest challenges facing societies, such as COVID-19 and climate change—moving from a transactional social contract to a collaborative “social compact.”

• Co-Creation in Government by Francis Gouillart & Tina Hallett (Available to SSIR print and digital subscribers only. Subscribe here for access.)
• A Strategic Plan to Rebalance Power in Fresno for Inclusive and Equitable Growth by Chantel Rush, Joseph Schilling & Gretchen Moore 
• Codesigning Better Futures With Citizens by Philippe Coullomb (Available to SSIR print and digital subscribers only. Subscribe here for access.)

Tackling Income and Wealth Inequality: In Conversation With La June Montgomery Tabron

La June Montgomery Tabron, president and CEO of the W.K. Kellogg Foundation, and Eric Nee, editor in chief of SSIR, will discuss income and wealth inequality, what interventions are working and what are not, what the Kellogg Foundation is doing to address this problem, and what it has learned that other organizations might benefit from.

• Podcast: Crisis and Change: Conversations With Leaders—Economic Opportunity in America (featuring La June Montgomery and Larry Kramer)
• Expanding Opportunity in the Capital Markets Through Racial Equity by La June Montgomery Tabron
• Building an American Ownership Society by Elwood M. Hopkins  (Available to SSIR print and digital subscribers only. Subscribe here for access.)
• Democratize the Economy by Felicia Wong, K. Sabeel Rahman & Dorian Warren 

Register for 2022 Frontiers of Social Innovation

Race to Power: Dismantling Global White Privilege

Chandran Nair, founder and CEO of Global Institute For Tomorrow, will lead this session inspired by his most recent book: Dismantling Global White Privilege: Equity for a Post-Western World. Nair, who resides in Hong Kong and Kuala Lumpur, will discuss white privilege’s pervasive global reach and aims to create a new space for discourse on worldwide racial equality.

• Excerpt from Dismantling Global White Privilege by Chandran Nair
• In-Depth Series: This Is What Racism Looks Like

Funding BIPOC Communities Through Intermediaries—The Good, the Bad and the Ugly

This session, moderated by Aaron Dorfman of the National Committee for Responsive Philanthropy, will explore the forces driving the trend to fund communities through intermediaries and dig into the benefits—and the potential disadvantages. Panelists include: Crystal Hayling of The Libra Foundation and Democracy Frontlines Fund, Michael Roberts of the First Nations Development Institute, and Gloria Walton of The Solutions Project.

• Overcoming the Racial Bias in Philanthropic Funding by Cheryl Dorsey, Peter Kim, Cora Daniels, Lyell Sakaue & Britt Savage
• Roles Foundations Play in Shaping Impact Investing by David Wood
• Effective Change Requires Proximate Leaders by Angela Jackson, John Kania & Tulaine Montgomery

Shifting Power Through Place-Based, Community-Governed Investments

In this session, presenters Andrea Armeni of Transform Finance, Aditi Vaidya of the Robert Wood Johnson Foundation, and Aaron Tanaka of Center for Economic Democracy will showcase community-engaged approaches—ranging from direct democratic voting over investments to having community representatives on boards—and their potential to create social change.

• Participatory Grantmaking Is Your Future by Nikki Brown-Booker 
• Shifting Power to Communities in Grant Funding by Rodney Foxworth & Marcus Haymon
• Shifting Philanthropic Power by Alyssa Haywoode (Available to SSIR print and digital subscribers only. Subscribe here for access.)

Envisioning an Equitable Future—Sustainable Funding for BIPOC-Led Social Change

In this session, Darren Isom of The Bridgespan Group, Lyell Sakaue of The Bridgespan Group, and Tarik Ward of the ELMA Philanthropies Services will facilitate a group reflection on a future in which BIPOC-led efforts to build racially equitable systems are abundantly resourced and deliver impact for all of us.

• Endow Black-Led Nonprofits by William Foster & Darren Isom
• Making Big Bets for Social Change by William Foster, Gail Perreault, Alison Powell, & Chris Addy 
• Transformative Philanthropy for Racial Justice by Crystal Hayling 

How Restorative Economics Can Lead Us Towards a Just Transition

Nwamaka Agbo, CEO of the Kataly Foundation and managing director of the Restorative Economies Fund, will share her restorative economics framework and its origin story as a tool she created to guide her own movement building work.

• Scaling Community Finance to Fill a Growing Market Gap by Beth Bafford & Patrick Davis 
• The Vision of a Well-Being Economy by Anna Chrysopoulou 

Trust-Based Philanthropy in Practice: In Conversation With Rohini Nilekani

In conversation with Stanford PACS executive director Priya Shanker, Rohini Nilekani, a noted activist, writer, and philanthropist whose foundation, Nilekani Philanthropies, is located in Bangalore, will share her thinking on the role of trust-based philanthropy in building effective and ethical solutions to social and environmental challenges.

• Building a Trust-Based Philanthropy to Shift Power Back to Communities by Nate Wong & Andrea McGrath 
• How Funders of Collective Impact Initiatives Can Build Trust by Victor Tavarez, John Harper & Fay Hanleybrown 
• A Call-In to Grow Indigenous Power by Michael Johnson & Angie Chen 
• Q&A With Rohini Nilekani

Register for 2022 Frontiers of Social Innovation

From Hunger to Health: Democratizing Development With Data

Drawing on data-driven innovations in global health and hunger as a lens for examining broader issues of power and social change across the philanthropic sector, Action Against Hunger Canada CEO Onome Ako will lead this session featuring speakers Hajir Maalim, regional director for the Horn and Eastern Africa; Heather Stobaugh, senior research and learning specialist; and América R. Arias Antón, country director for Peru, Bolivia, and Paraguay.

• A Digital Lifeline in a Public Health Crisis by Alex Robinson & Rakib Avi 
• Community-Defined Evidence as a Framework for Equitable Implementation by Linda M. Callejas, Gilberto Perez Jr. & Francisco J. Limon 
• Finding the ‘True Value’ of Food Can Drive Innovation Across Sectors by Alexander Müller & Ruth Richardson 

To Unlock the Power of Data, First Build Trust

Data holds the power to tackle society’s greatest challenges and improve lives across the globe. Ginger Zielinskie of data.org, Rachele Hendricks-Sturrup of the National Alliance Against Disparities in Patient Health, and Rey Faustino of Alluma will share the findings of RECoDE, the Rising Equitable Community Data Ecosystems project. The panelists will discuss the impetus for the project, which reached nearly 500 people through a series of surveys, interviews, and convenings; the thought behind the novel methodology; and the potential impact of their real-world application.

• Creating a Data Culture by Kathleen Kelly Janus
• Decolonize Data by Nithya Ramanathan, Jim Fruchterman, Amy Fowler & Gabriele Carotti-Sha (Available to print and digital subscribers only. Subscribe here for access.)
• How Philanthropy Can Help Lead on Data Justice by Louise Lief 

Bolstering Fragile Neighborhoods: How ‘Going Local’ Helps Disadvantaged Americans

Seth Kaplan, professorial lecturer in the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University, will moderate this session featuring Geoffrey Canada, president of Harlem Children’s Zone; Othello Meadows, managing director, Portfolio Strategy & Initiatives at the Blue Meridian Partners; and Shirley Franklin, the 58th mayor of the City of Atlanta. They will explore the idea that a “prevention society”—a strong society that supports and advances all its members—is only possible when philanthropists, policymakers, and local leaders collaborate across sectors to catalyze lasting change.

• Place-Based Strategies for Reviving America by Seth D. Kaplan
• The Importance of Place by Jennifer Blatz & Geoffrey Canada 
• Reflecting on Collective Impact for Place-Based Social Change by Melody Barnes, Jennifer Blatz, Geoffrey Canada, Rosanne Haggerty & Erik Stegman

Workplace Democracy Doesn’t Happen by Accident: Collective Bargaining as a Powerful Tool

Sarita Gupta of the Ford Foundation and Erica Smiley of Jobs With Justice will explore case studies and theories around collective bargaining in the workforce, focusing heavily on dismantling white supremacy and gender discrimination culture in the labor force and in approaches to building worker power.

• The Power of Collective Bargaining by Tim Keary(Available to SSIR print and digital subscribers only. Subscribe here for access.)
• Reversing Income Inequality by Jane McAlevey 

Over the last decade, many innovative organizations have changed their approach to human resources, moving away from treating employees like risks to be managed and toward viewing talent as an organization’s greatest asset. This shift comprises the heart of “people operations,” a way of thinking about talent that the tech industry has embraced in recent years. People operations puts talent at the center of business strategy and uses data-driven insights to invest in each stage of the employee lifecycle, including recruitment, retention, performance management, and alumni engagement.

In the nonprofit sector, wise investments in people operations can propel organizational success—especially during exponential growth. As the number of wealthy philanthropists has increased, so have forms of collaborative philanthropy and individual donors providing “airdrops” of unrestricted funding for promising programs. The scale of these funds often numbers in the tens or hundreds of millions. And while unrestricted financial support can increase the impact potential of small nonprofits, this fast path to growth presents major challenges to talent management.

IDinsight, a data-driven research and advisory organization that helps global development leaders improve their social impact, was founded 10 years ago and has quadrupled in size and revenue over the last five years. We—as well as clients and peers we advise—have faced myriad talent challenges during periods of rapid growth. These include maintaining hiring and performance standards as the number of open positions balloons, moving from informal to formal management structures, retaining tenured employees’ engagement and ownership over the organization, and evolving team composition to better represent the communities with whom we work.

Although most of our own expansion took place before we received significant unrestricted funding, our data-centric approach has guided our internal operations all along. Investing in “people systems” early on protected our team’s culture and caliber, as well as employee satisfaction, and we have continued to improve our talent systems since receiving a $12 million unrestricted grant last year.

Our experience shows that the right talent investments can conserve precious resources, protect organizational values, and maintain performance. They also lay the foundation for building representative teams and inclusive workplaces—an imperative for social sector organizations whose operating practices must evolve to better live up to their values, regardless of scale and budget. Investing in four talent systems—algorithmic hiring rubrics, rubric-driven performance management, pulse checks, and compensation and benefits reviews—can help nonprofits make more efficient, unbiased, data-driven, and high-quality talent decisions at scale.

1. Finding Diverse Talent Fast: Algorithmic Hiring Rubrics

I’ve talked to several leaders of fast-growing nonprofits who still use manual resume screening to process applicants. But having individual hiring managers read through resumes before voting “yes” or “no” on candidates introduces bias, as people tend to favor candidates who resemble them. It is also very time-consuming, and when you have dozens of open roles and thousands of candidates, spending many hours of human time on manual screening is just no longer realistic.

Early on at IDinsight, we invested in an applicant tracking system that processes thousands of applications using a weighted screening algorithm we created. This reduced screening time by tenfold. The system tracks the characteristics and competencies we value most in candidates, including important, historically underrepresented characteristics. A candidate’s in-depth understanding of certain local contexts or ability to speak minority languages, for example, can help us provide context-appropriate advisory services to clients in low- and middle-income countries. As part of our process, we set a cut-off point based on our capacity to interview. This ensures that only the top-ranked candidates in the areas we need to prioritize make it into the interview pool. Having data on candidate characteristics also allows us to study which variables may contribute to high employee performance and retention over time.

After screening, it’s important that hiring teams align on interview and exercise rubrics to reduce bias in the recruitment process. Pre-set interview rubrics allow teams to clarify the criteria for assessing candidates and define what types of interview responses will constitute a good score. For example, a full-score response to the question, “Why do you want to work at IDinsight?” would demonstrate nuanced knowledge of what IDinsight does, mention our values, and indicate commitment and passion for data-driven social impact work. Doing this work in advance helps mitigate the possibility that interviewers will give higher scores to candidates who “look the part” or who come from the same educational, professional, or cultural background as them.

In addition, using a mock work assignment allows candidates to “show” their skills, not just “tell.” As with interviews, assignments should have pre-defined scoring rubrics and should resemble on-the-job work as closely as possible.

Finally, hiring teams should provide candidates with an interview guide. This evens the playing field, as all candidates have the same information to prepare, regardless of background and resources. After all, the process is about finding the best worker—someone who can learn quickly with adequate preparation—not the person who is best at selling themselves on the fly.

2. Identifying Top Talent Amid Growth: Rubric-Driven Performance Management

The work and leadership opportunities of each team member grows with scale; nonprofits need to identify and elevate their best people and support them to excel. There’s no quicker way to drain the talent pool than to use an opaque performance management process that’s dependent on internal politics or luck of the draw.

When revamping a performance management system, nonprofit leaders must balance thoroughness and efficiency. The first consideration is format. While a 360 approach—where supervisors, direct reports, and peers submit thorough, scored performance feedback—is generally considered best-practice, it can be a heavy lift for a small organization. One modification we use at IDinsight is for team members to share scores and in-depth feedback only with the people they work with directly, while allowing other staff to provide shorter, written feedback. Another consideration is frequency—whether to do no reviews, annual or biannual reviews, or lighter-touch but more frequent reviews. After much experimentation, we now use an annual review system with an opt-in cycle midway through the year. The mid-year cycle is helpful to those who may need extra feedback to improve their work or who should be considered for a promotion.

Other tactical system-design decisions can increase the candor and objectivity of performance feedback. Rubrics that not only assign scores but also thoroughly describe each competency help ensure that organizations apply the same yardstick to all candidates. For example, IDinsight measures team members according to six categories—analytical ability, communications, client relations, project management, professional development, and values alignment—on a scale of 1 to 3, and offers descriptions of what each score means for each category. It’s also helpful to include reminders at the top of the feedback form to avoid intrinsic biases that commonly plague performance feedback. These include “recency bias,” where the reviewer bases evaluation on the most recent interactions instead of the entire review period, and the “halo effect,” where reviewers more easily recall positive performance characteristics of an individual who is already seen as high performing. The form may also include a special section for confidential comments that only the person preparing the final report sees. The preparer can also group comments into themes to retain some level of anonymity. These design choices can encourage candor and combat tricky power dynamics.

It is also important to set up a good process for determining promotions. In many organizations, supervisors have virtually unilateral power to decide who gets promoted. But individual managers see only a limited range of performance data from their small group of direct reports, and their opinions may also suffer from bias. Instead, approving promotions by a committee (which can include senior team leads, other performance review writers, supervisors, and human resources) can reduce bias, and ensure that organizations can compare performance data across the entire pool of people up for promotion.

3. Supporting Team Health, Well-Being, and Work-Life Balance: Pulse Checks

Increasing your team size without doing pulse checks on employee satisfaction is like navigating the open sea with no compass. Rapid growth means tracking whole teams of new people, and leaders often have very little insight into what is happening in each corner of the organization until a problem occurs (at which point it is too late).

With this in mind, IDinsight created a simple, five-question internal health check that gives each team member a chance to rate overall job satisfaction, professional growth, work-life balance, motivation, and inclusivity on a scale of one to five. We compile this data to determine the overall health of each team, and then work with team leaders to help course-correct groups that score on the lower end. Knowing which teams need special attention allows leaders to allocate their precious time and resources to timely interventions such as extra check-ins, additional headcount, budget re-allocations, or a change in staffing.

4. Staying Competitive: Compensation and Benefits Reviews

As nonprofits grow and become more complex, they often need to recruit team members in regions and industries where they haven’t previously competed for talent. Yet it’s difficult to get accurate data on peer organizations or market research to help understand the hiring context and what it takes to be competitive. Like compensation, benefit norms can vary widely across geographies; for example, African nonprofits usually cover dependent health insurance, but American nonprofits virtually never do. And without good benchmarking, nonprofits that receive a large gift risk creating compensation and benefit structures that are unsustainable over time.

The following three steps can help organizations create an inclusive, data-driven, and transparent compensation and benefits framework:

1. Define a compensation philosophy that aligns with your organizational values. For example, a peer NGO whose mission is to empower local communities implemented a progressive salary structure, compensating field staff at a higher level than peer benchmarks, but using lower target benchmarks for senior and headquarters staff. Another example is IDinsight’s commitment to equally compensating employees of different nationalities in the same role within the same geography—a surprisingly uncommon practice in the global development sector.
2. Invest in purchasing comprehensive data sources for salary and benefits benchmarking where possible, particularly those aligned with the local markets where you work. Birches Group reports are a useful resource for international markets. Within the United States, nonprofit 990s are useful but only cover the highest-paid staff. Glassdoor and Payscale also offer free pay-range and benefits data for many nonprofit roles.
3. Create a salary-setting tool that makes compensation decisions more algorithmic. Negotiation at the onset of employment frequently defines salaries but is a bias-prone process that disfavors women. Indeed, salary errors can easily occur in the flurry of growth and are painful to unwind. Organizations can mitigate these risks by mapping salary ranges to responsibility level, and then calculating individual salaries within those ranges according to a weighted tool that considers factors such as work experience, qualifications, diverse representation, and performance on interviews or in performance reviews.

Leaders might hesitate to build out the systems above for a few reasons. They may think these investments cost too much or take too long, or that the organization is already successful and shouldn’t bother. But it’s worth noting that IDinsight started building these systems with just a few people on our operations team—and long before we received larger amounts of unrestricted funding. We also found that these systems saved way more time and money than they cost. Failing to hire and retain the right talent, undoing costly errors in compensation or policies from a lack of systematization, reinventing the wheel, and screening thousands of applications manually—all of this takes many more hours to adjudicate than it takes to build solid, data-driven systems upfront. And while organizations may be getting along well enough before these investments, ad hoc approaches tend to break down as soon as growth begins. Finally, nonprofits put their reputations and future resources at risk if they fail to adequately invest in unbiased talent systems, track real progress on increasing historical underrepresentation, and build an inclusive workplace.

Data-driven people operations systems represent important investments for any nonprofit, and they’re even more essential during periods of high growth. They help remove biases, respond to team health issues, increase efficiency, motivate high performance, and improve diversity and inclusivity among teams. Growth remains a daunting prospect even for successful nonprofits; developing great talent systems can help leaders build amazing places to work, while achieving even greater social impact.

On February 2, 2022, World Wildlife Federation-UK set social media on fire by announcing “Tokens for Nature,” a fundraising campaign that would sell non-fungible tokens (NFTs) to ​support efforts to protect thirteen of the world’s most endangered species. WWF-UK planned to run the campaign on a so-called layer 2 blockchain network called Polygon that they claimed was an “environmentally friendly” version of Ethereum. Only Polygon is no such thing: buying crypto-tokens to exchange for Polygon’s own currency means relying on the energy hungry infrastructure that surrounds and supports it. The backlash was so fierce that WWF-UK’s program went extinct in just 48 hours.

Tokens for Nature is just one of a rapidly growing group of “for good” projects or campaigns seeking to capitalize on the momentum of “Web3, an umbrella term for a panoply of decentralized models, protocols, and technologies—blockchains, DeFi (decentralized finance), NFTs, crypto coins, and more—that has attracted both innovators and scam artists. The mere mention of Web3 is enough to send a stock price up (or down, lately), so everyone from celebrities to central bankers is scrambling for a strategy. Its development is happening so fast that it can be difficult to take it all in; on any given day (and depending on the initiative du jour), it’s hard to decipher if Web3 is flourishing, scaling, or metastasizing. People are building, using, and exploiting its models, often without a clear understanding of the potentials and pitfalls, and certainly without a set of standards or models of accountability and governance.

The application of a “for good” framework to Web3 brings its own complications. “X for Good” projects within the tech and social impact sectors are essentially built on the theory that the right tool applied to the right problem will result in large-scale social benefits. The “X” in these projects has historically involved tools such as artificial intelligence, data, virtual reality, or games, or social media and communications platforms, among others. At its best, the “X for Good” framework allows for community-led development of appropriate tools that help create positive social impact in areas such as poverty alleviation or social justice movements. Too often, however, it results in tech solutionism and the imposition of tools on a community, neither designed with nor by communities. As Mark Latonero says, “​​The deeper issue is that no massive social problem can be reduced to the solution offered by the smartest corporate technologists partnering with the most venerable international organizations.”

The social sector is still grappling with “for good” efforts in the context of established technology tools and platforms, with few settled answers. So why should the social sector bother with Web3 now when it may just be another fad, or has gotten off to such a questionable start? This is a good question.

If the history of the Web over the past 30 years is any guide, the actuality of Web3 is not an “if.” Developers have been working with blockchain concepts since the pseudonymous Satoshi Nakamoto introduced the world to Bitcoin in 2008, and the idea goes back even further. Even the NFT concept, which feels as if it erupted only last year, was first realized in 2014. Billions of dollars have been invested in the development of this proposed next wave of digital infrastructure. It’s entwined not just around so-called creator economies, but macroeconomies and the rails they run on as well, through the work of global banks, software companies, media empires, and hundreds of thousands of developers. So, it’s reasonable to stipulate: Web3 is here to stay.

However, any new frontier of innovation can and does include messy failures. The range of applications of Web3’s building blocks ranges from the state-backed to the spontaneous bedroom project, and motivations and quality of governance behind these projects are likewise diverse. Some of these technologies and platforms making up a Web3 world will indeed fail, or fail to live up to the massive promises offered.

Like social media and the “connection” tools of Web 2.0 before it, Web3 is being represented as a means of wresting control away from corrupt or malign political interests held by the techno-dominant. But there is nothing inherently magical about Web3. Merely aiming it towards at-risk economies through the application of a “for good” frame is tantamount to what media activist Olivier Jutel calls “blockchain imperialism.” The problems that plague the real world, the original Internet and Web 2.0 also inhabit Web3, and these problems can travel at the velocity of cryptocurrency trading, creating (and recording) damaging power asymmetries as they do.

So the question we are interested in is this: How do we build a Web3 world where “X for good” isn’t a separate effort, but a foundational ethos of everything built, distributed, and used? While we’re at a point in Web3’s development where exploitation and inequality might become hardwired and sclerotic, we believe that we still have a chance to usefully shape it for shared prosperity and justice. The best way to approach that is to slow down, take a proverbial minute for an examination, then intentionally and proactively build protection, privacy, and equity systems as part of the scaffolding.

Three Challenges

There are three linked challenges baked into Web3 that any proponent of positive social impact must solve.

1. Decentralized tech doesn’t equal distributed power. Web3 has become synonymous with the decentralized web, and one of the selling points of Web3 technologies is decentralization or shared ownership of web infrastructure. But in reality, ownership is too often centralized by and for those with resources already, the wealthy (even if only coin-wealthy) and corporations.

As the example of NFT marketplace OpenSea demonstrates, risks are too easily distributed onto the users, even as the gains remain very much centralized for platform owners and a small minority of participants. Even Ethereum co-creator Vitalik Buterin has issued warnings about power concentration in Web3 token-based economies, saying crypto “whales” can have too much power in these economies. Systems become inherently extractive unless ownership is shared and distributed by a majority, particularly by those who are traditionally most vulnerable to exploitation.

For this reason, equitable power structures must be proactively designed in Web3 systems.

2. A significant percentage of existing power holders are already building their Web3 business models on exploitation and extraction. At present, these business models mine energy and other resources to the detriment of our climate and environment and of energy-poor communities, in some cases actively resuscitating wasteful or harmful power projects. They do so without addressing these concerns in their core business model (or even by creating offsets, a less desirable alternative but still better than nothing).

These models are meant to avoid accountability to platform users or vulnerable communities in either economic or environmental terms. But they nevertheless ask for our trust?

3. Building community trust takes more than decentralization. Those who are building over distributed technologies often claim it as a solution to a trust deficit, that “trust” is inherent to the systems. Except that it isn't.

Building trust requires, among other actions, deep listening and honest engagement. As Molly White writes:

How will this technology be used to harass and abuse people?’ is [a question] that too often goes unasked, particularly given that the demographics of people who are most at risk for abuse and harassment tend to be underrepresented in the industry.”

Or as Sydette Harry puts it:

Opportunistic tech creators, never missing a chance to make the same mistake multiple times, have built tools… which scrape and curate Twitter lists and accounts of those outside users’ traditional milieu. With articles and products like these, one can ‘diversify’ and collect ‘new experiences’ rather than hire Black writers or cover Black experiences in context. The message becomes: ‘You need to be aware of what Black people are doing but you don’t have to talk to them.’”

Exploitation—especially of those who have historically been marginalized—has taken place in many forms on existing web platforms, examples of which include: surveillance; unchecked hate speech, harassment, and calls for violence; failure to protect vulnerable users; attempted silencing of critics of the tech industry; extraction and manipulation of data without informed consent and for profit; appropriation of work product and processes without compensation or attribution; among others. Why should we automatically trust those who have historically profited off processes, products, and pain of communities, especially when the exploiters of Web3 look so much like the exploiters of Web2, or in some cases are the same people?

Too many of those who are building Web3 haven’t addressed this question. There are no accountability systems or means of remedy (whether peer-to-peer or institutional) for those who could be exploited on Web3 platforms. Remediation of the effects of platform and process design flaws is often attempted by processes developed after the fact, and those seeking redress are heavily reliant on using media headlines, or fear of them, to create pressure. All of this is in addition to the fact that distributed systems have allowed billions to be shifted to hate groups without transparency or accountability.

What can communities—especially those which are the subjects of “for good” initiatives—do when Web3 initiatives endanger them, backfire, or betray their trust? Very little, except to point to a transaction ledger and hope for some form of repair. Technologies that recreate the power asymmetries of previous technologies are not systems with trust baked in. Having a decentralized ledger of these issues doesn’t magically do that.

No Space to ‘Fail Fast’

If there is one thing we should have learned from the toxic Web 2.0 spillover we are struggling to mop up today, it’s that “X for good” is often, ironically, a bad strategy for the planet and the living beings on it. Social media companies’ hasty cleanup in Russia, for example, has been just the latest in dangerously hindsight-driven self-regulation. In Web 2.0, “doing social good” was used as cover to do “whatever”: Whatever made the most money, whatever drove the fastest growth, whatever qualified as too-big-to-regulate.

At the moment, Web3 is in danger of following the same path. We are already seeing vague social impact initiatives, ranging from NFT galleries that share proceeds with charities to social fund auditing on the blockchain to a social good coin (cleverly named SocialGood) that purports to share some of your spending with charities. Whether attempting to provide transparency in financial flows or protecting IP or just automating altruism, there seems to be a rush to prove Web3 has a public good side, and isn’t just about the accumulation of new forms of wealth in newly digitized ways.

However, this mission to do social good—along the way to expanding the crypto-frontier—reads like an opportunistic afterthought, using social impact or social good (however foggily defined) as a reason or cover to jump into Web3, often with little or no prior experience, while unguided, poorly informed, and lacking in common sense, ethics, and empathy. Beyond WWF-UK’s misstep into energy consuming technologies, take for example charity water’s offer to turn your crypto donation immediately into fiat currency… and then use that to fund clean water projects, without any mention of the energy required that erodes the environment and… well, you understand where we’re going.

From cringe-inducing PR stunts to the same tone-deafness of the infamous “Homeless Hotspots” of 2012’s SXSW Interactive, too many of these early initiatives crudely appropriate the pain of others as “content” and end up as nothing less than poverty porn on a distributed ledger.

Take for example Floydies, an NFT project that purported to be about expressing solidarity with the Black Lives Matter movement. It was, however, nothing short of racist exploitation of George Floyd’s image for the creators’ own profit and aggrandizement. The NFTs were eventually delisted from OpenSea.

Another example is SaveTigray.net, a series of NFTs of images of the ongoing conflict and massacre in Ethiopia. The group behind this effort originally planned to create NFTs of fair trade art produced by women artisans in Tigray, but war conditions hindered those plans and they converted to selling NFTs of images of people in distress from the conflict. Whether any funds have been raised through these sales for the community at risk is difficult to determine. Regardless, the underlying image and the NFTs based on it are paternalistic and disempowering to the local population.

In another more recent example, the AP placed an iconic image of a rubber boat carrying migrants across the Mediterranean Sea in their NFT marketplace, to raise funds for their own non-profit newsroom. The Mediterranean is essentially a mass grave for migrants from East and North Africa, the Middle East, and beyond. The AP’s announcement on the same day as Russia’s 2022 attack on Ukraine—an invasion that predictably has caused the displacement of millions of refugees—was met with criticism of profiteering and exploitation. The AP took down the ad.

The world doesn’t have time for these kinds of projects. We don’t have time for a bifurcated web: that is, tech for bad/neutral vs tech for good. This is especially true as we stand at the precipice of intersecting societal collapses brought on by climate emergency, displacement, inequality, authoritarianism, and the erosion of democracy. Social good is not a “nice-to-have” bolt-on to current and future technology systems.

Imagining a New Web

So how do we finally fulfil the promises of Web1 and Web 2.0 in a way that social, cultural, and economic norms of Web3 are set by artists, activists, creators, and workers who have been historically left out or exploited? How do we get to “think first, then make things” instead of “move fast and break things”?

If Web3 presents a chance to fix our collapses, it needs a value system that is integral, not optional. This means that social good must be integral not only to the ethos but also to the architecture and rule-sets of any new Web or technological paradigm. This is especially critical and necessary when we think about the application of digital technologies to social good, or, more importantly, in a world where Web3 technologies are a part of life, how we transform our present into a future that is equitable, just, joyful, and generative.

There are already some good inquiries and projects that point forward towards progress. For example, WITNESS, an organization with decades of experience at the intersection of human rights and technology, has partnered with the Filecoin Foundation for the Decentralized Web to uncover ways for activists and laypeople to use decentralized ledgers to safely and authentically document human rights abuses in places where the centralized web has put them at risk. In another realm, culture shapers such as Ingrid Lafleur, Founder of the Afrofuture Strategies Institute, has been applying a lens of distributed technologies to questions of inclusion, ownership, and platform control by communities in lower-resourced regions. Similarly, the DisCO Project has set forth its DisCO Manifesto to support the worldwide development of distributed cooperatives and “prototype new and radical forms of ownership, governance, entrepreneurship, and value accounting meant to counteract pervasive economic inequality.” And there are signs that the Web3 community just might react to injustices faster than its Web 2.0 predecessors: The recent surfacing that the most vocal delegate of the .eth ENS address system is an openly staunch bigot was met with swift calls from Dame.eth, a leading figure in the Ethereum community, and others to address this toxic leadership through community stewardship.

Based on our own decades of experience (in technology development, foresight, and social change, rights, and global development), we see the necessity for four basic tenets to be the building blocks of any Web3 initiative, most importantly for those who have any ambition of directly or indirectly improving the condition of humans and the planet:

• Intentionality
• Accountability
• Mutually affirmed norms
• An ethics framework

These tenets might be perceived as idealistic when literally trillions of dollars in value are up for grabs, and the opportunity to resituate power in many industries and sectors beckons. And objections without counter-proposals can too easily be swept away in the false binary of “optimism/pessimism.” But we’re not interested in counter-proposals. We’re proposing a completely new paradigm, a new social contract that acknowledges that those trillions of dollars in value mean nothing in the face of what is happening to the planet and the people on it. Let’s remember, we all live here too, and the least powerful for too long have had the smallest voice in determining how such a paradigm shift plays out.

This has to change. The discussion—no, the demand—for something different has to start here.

In the interest of convenience, we’re setting out our recommendations and calls to action in the form of “dos and don'ts” for those contemplating, or even already rolling out, a Web3 initiative for social impact.

Don’t:

• Don’t ignore or try to sidestep Web3’s inherent energy consumption problem. The downstream impacts of Web3 hit vulnerable populations the hardest now and in the future. Until this critical issue is fundamentally and concretely addressed, Web3 will continue to export environmental damage into the future and push not just ourselves, but next generations as well dramatically closer to irreversible climate catastrophe.
• Don’t create human offsets as a way of absolving negative externalities your work creates. Social impact isn’t an indulgence framework to be used to counterbalance other negative impacts Web3 projects create.
• Don’t create new financial risks for already at-risk populations. Pushing the poor, precarious, underbanked, or otherwise economically vulnerable groups into greater uncertainty by introducing volatile, speculative financial instruments into their economies may do far more harm than good. People who live in precarity don’t have the privilege of HODLing for promised gains.
• Don’t impose new technologies on populations who already suffer from historical tech debt. Technology colonialism is rife with examples of friendly airdrops of new innovations into communities that can’t afford to maintain them long-term. Security vulnerabilities emerge rapidly even in the most advanced user groups.
• Don’t use technology to reduce or eliminate the exposure of “donors” to the reality of the causes they are supporting. While this might be the intent of your initiative, this is highly likely to be an unintended outcome unless the donor is also informed about the need or crisis they hope to contribute to improving. 
• Don’t support poverty porn, even if it’s packaged in an NFT. This is particularly critical when images of suffering or vulnerability are appropriated without the explicit and informed consent of the creator or the portrayed. 

Do:

• Leverage current social impact frameworks and networks that have been designed by activists and advocates with lived experience of the harms they are addressing.
• Demand the transparency promised by the technology and its enthusiasts: Audit, audit, audit. Verify, verify, verify.
• Demand the privacy and security for—and informed and affirmative consent of—community members who the technology is meant to support.
• Examine whether immutability and “smart” are desirable features in the context of the communities you’re trying to help.
• Call out harmful or “social-washed” projects, in meetings, conferences, panels, and on your platforms.
• Support human rights activists around the world who are exploring how to leverage the benefits of distributed ledgers for privacy, protections, and verification/attribution
• Listen to and design for and with—or step aside for—those who are historically marginalized and calling for change.
• Invest in “laboratories of worldmaking,” a concept defined by Olivier Jutel in his conversation with Evgeny Morozov of The Crypto-Syllabus. The entirety of our global societal issues require us to think about what it’s going to take to transform towards shared prosperity, justice, and equity. We don’t have the solutions, processes, or communities of practice built yet. As Jutel says in that same interview, “We have to embrace experimentation as an acknowledgment of our lack of answers at the moment.” Set up, support, or participate in this larger inquiry.
• Keep learning, exploring, and asking questions: We’re at a point where we can no longer afford to ignore the very basic mechanics of distributed ledger technologies/the blockchain space. These have to be taught and learned if we’re going to have a chance to stem the wave of the major Web 2.0 entities taking advantage.

Cut these guidelines out, and stick them by your nearest crypto-mining rig. If you bear them in mind as you consider your strategy, you may find yourself truly making a positive impact, rather than ending up as yet more digital roadkill on the way to the Web3 watering hole. 

We believe it’s possible to get from “for good” sideshows to wiring positive social impact into the fabric of Web3: economic liberation, yes, but also racial and gender justice, equality, inclusion, participation. It’s a huge ask, and one that goes against much of how we’ve learned too many technologies operate in the real world. All the more reason why it’s an ask worth making explicit.

The figures on environmental, social, and governance (ESG) investment we’ve been seeing over the last few years are substantial. According to the US SIF Foundation, $12 trillion in assets under management using ESG strategies at the beginning of 2018 grew to $17.1 trillion by the beginning of 2020, an increase of 42 percent. Bloomberg Intelligence reports ESG assets at $35 trillion in 2020, up from $30.6 trillion in 2018 and $22.8 trillion in 2016, accounting for one-third of total global assets under management. The same study holds that by 2025 ESG assets are on track to exceed $50 trillion.

These are big numbers, and they are already bearing dividends: many businesses are starting to get environmental action right—the “E” of ESG—and through paying attention to executive compensation and getting more diversity on boards, many companies are also starting to get governance right, the “G” of ESG. Environmental impact is relatively easy to measure: carbon emissions, deforestation, waste management, and water usage are all tangible factors lending themselves to quantitative assessment. Governance matters too can be held to account by quantifying executive pay, representation of non-white, non-male board members, political contributions, and large-scale lawsuits, all of which can be reduced to numbers.

But what about the “S,” or the social component? By comparison, the social component consists of much more qualitative factors, things like employee gender and diversity, data security, customer satisfaction, human rights, and fair labor practices at home and abroad. Because these more amorphous factors are a lot harder to measure in numbers, the “S” factor is always prone to falling out of ESG considerations. For this reason, it is all the more important to emphasize social factors that are measurable, such as public health. While Public Health might be implicit in Social, it is not explicit. Therefore, by attaching an “H” for “Health” and broadening the mandate to ESHG, we’ll come closer to a more inclusive form of capitalism, one that places equal emphasis on causing human capital to flourish as it does on financial capital.

Why Health? And Why Now?

The pandemic has not only exposed health inequalities that run from school to community to the workplace. Health should be of immediate importance to business: Public Health is analogous to climate in that a business’s activities will have health impacts, positive or negative, across three broad areas: employees, customers/consumers, and the communities in which it operates. The right actions can reduce absenteeism due to sickness while increasing productivity and enabling better management of risks of regulatory, taxation, and litigation risks.

Even before the pandemic—as Sir Michael Marmot’s groundbreaking 2010 study Fair Society, Healthy Lives (and his 2021 follow-up, Build Back Fairer demonstrate—health not only stopped improving over the last decade, but health inequalities increased, and life expectancies for the poorest people went down. Marmot has identified six areas that are essential to meeting the health inequality and life expectancy challenge head on: giving every child the best start in life; education and lifelong learning; employment and working conditions; ensuring that everyone has at least the minimum income necessary for a healthy life; healthy and sustainable places in which to live and work, including housing; and taking a social determinants (data-based) approach to prevention.

The UK is in a bit of a bubble with health initiatives, compared with the United States—we have the NHS, which is a public health system, whereas, as pointed out in Michael Lewis’s searing book on the pandemic, The Premonition, the United States. does not. But various surveys show that roughly two-thirds of the American population is stressed over the cost of health insurance and health care in general. An equivalent to Marmot as a US spokesperson might be Harvard professor David Sinclair, an expert on longevity, who believes that as population growth begins to slow, saving lives and making people more productive by helping them to live healthier longer is a massive economic benefit for society. He also points out that currently, the rich are investing in these new longevity therapies, and they are the ones who benefit. But he hopes to democratize his findings to include a broader swath of society.

Can we come up with compelling alternatives that might reduce the strain on the system? We certainly must try new ideas, because hitherto, the old ideas are only working for the select few. Most of these areas can be addressed by deep, long-term investment. But as Professor Marmot and many others have pointed out, government funding alone isn’t going to get things done. Business must step in. Companies can play a role in broadly improving public health by such means as rethinking their products, investing in health tech projects, developing programs and policies that promote health both within their companies and externally. By setting frameworks around hot-button industries and influencing ESHG outcomes, asset managers will pre-empt both stakeholder and regulatory pressure. 

What Can Businesses Do to Make a Difference?

It’s an idea as old as Adam Smith that it’s in the self-interest of an insurance company for people to live out their lives healthier and longer. And while we’re waiting for Dr. Sinclair’s longevity practices to find a wider audience, companies can start putting the trillions of dollars they are sitting on, earning nominal interest, to work. It is nothing if not enlightened self-interest for businesses to help improve the health of many more people—not only their own employees but those in the community that both need and support a company or consume its goods and services. But getting to a more virtuous cycle with public health is going to take action and vision, not to mention putting the necessary investment on the line, to do it.

In my role as part of a council of businesses working with the U.K. Prime Minister on Building Back Better, and even prior to that, my company has taken on several health-first projects, including making direct investments in health science and tech research, community and elder health, and supporting a global challenge that elicited tech-driven solutions to the next pandemic. These initiatives have a few principles in common, which are worth mentioning here, as the goal is to get many more businesses and investors, along with government, thinking this way—in the United States, too:

1. Invest in health versus remediation. An ounce of prevention is worth a pound of cure—and that also goes for investing in health. The Center for Disease Control (CDC) emphasizes preventive health measures such as vaccinations, altering risky behaviors, and banning substances known to be associated with a disease or health condition. Businesses can invest and become involved in these measures and others that will have broad benefits, such as building wellness and mental health in the workplace. Initiatives could take the form of healthier cafeteria food, gym memberships, well-being services and incentives, and better working conditions. There are greater gains to be made through early intervention and prevention of physical and mental health issues, than when a situation requires controlling absenteeism or limiting healthcare costs. Recent research suggests that CEOs are starting to pay attention and make the necessary investments.

2. Keep it local. Any health-related investment comes down to people, to individuals, and to a community. While health is certainly a global issue, governments and businesses alike must start investing far more meaningfully in it at the local level. By partnering with a local university or identifying a specific community need for, say, a health technology or healthier housing, businesses can become involved in a clear and tangible way, which is why we’re working with university research facilities in Edinburgh, Newcastle, and other local venues on initiatives to develop new models for delivering elder care, especially to facilitate “aging in place” rather than in institutions. This is a multi-disciplinary approach across medicine, engineering, data science and architecture.

3. Build a model that has measurable impact. Outcomes should not only be felt by the recipients of health investments but observable to the investors. To achieve this, any successful health initiative needs to be based on a model that is observable and fact-based. One example is the way business and research so speedily mobilized to get billions of vaccinations made and distributed for the pandemic. But while the pandemic was a relative snapshot, over two years, the challenge is greater when results are delivered over decades. This may partly explain low investment in dementia and Alzheimer’s, relative to the proportion of the population at risk. There are many models to emulate, but to be successful from a business standpoint, they need trackable metrics.

4. Harness the COVID-19 disruption to think deeply about workplace changes. Required vaccination, changes in building management with testing for COVID-19 and other safety measures, and remote working have touched all businesses as well as everyone connected to them. Many people are missing the support systems and wellness components found in many workplaces as they continue to work remotely. Businesses should educate employees about health, make products and packaging healthier, and make health available. And as Professor Marmot points out in Fair Society, Healthy Lives, “the social gradient on health inequalities is reflected in the social gradient on educational attainment, employment, income, quality of neighborhood.” Employees need to make a living wage. There is a close correlation between social/income inequality and health inequality. While it’s understood that around 20 percent of an individual’s health outcomes are genetic, the other 80 percent is environmental and predicated by economic success: the poorest decile have significantly lower healthy life expectancy, some twenty years less, than the wealthiest decile.

5. Gig workers need a framework that includes healthcare and retirement. This is extremely important, as the number of workers who don’t have employers or regular workplaces keeps rising—currently more than a third (36 percent) of US workers are part of the gig economy, and by 2027 more than half will be. With no health benefits and often little in the way of retirement plan, these workers represent a special challenge for health investing. Marmot’s studies show that poverty breeds ill health; you can have happier, healthier employees by paying them better.

6. Hold companies and investees accountable. Impact investing on the ESHG level is about investing in companies. A strong condition for including companies in the ESG roster is their stance to providing access to proper healthcare or healthcare insurance to their workers. ESHG-minded Investors can leverage their financial power by divesting from companies that aren’t doing healthy business. Companies need to understand that good health is good business.

This begins with a recognition that many products and outputs negatively influence health, and so need to be redesigned to improve health outcomes. Think about health as we do about climate—the health of any organization’s workforce could be viewed similarly to its direct greenhouse gas emissions.

Health costs from negative corporate activity are often borne by the consumers or taxpayers. So conversely, companies can proactively engage to improve public health by self-regulating before regulators impose product bans or punitive taxation. For example, rethink sourcing of materials or change ingredients to promote rather than impair customers’ health. Bottom line, companies can look up and down their value chains and identify points where a positive health outcome could replace a negative one.   

7. Corporate taxes low? Reinvest. How can businesses be made responsible for a wider swath of society that goes beyond their employees? Some portion of taxes are allocated to public health, but the corporate tax rate is the lowest it’s ever been (21 percent) and many of the wealthiest individuals have devised ways of legally minimizing their tax burden. With all of these funds stashed away at low interest rate returns or negative gains, wouldn’t it be better to put this money to work in high return investments that promote public health?   

While none of these ideas will get us there alone, the aggregate will move the needle. All positive, innovative change can be said to be an outcome of much thought and action that came before it. We live in a moment that calls for deep change in the way we invest in and care for our communities and our environment. Asset managers who have done so much to bring ESG to the fore can add this new mandate. Let’s not waste this opportunity.

As we move bumpily toward a post-pandemic new normal, one thing is clear: Many future meetings and events will involve both in-person and remote participants. A recent international survey of knowledge workers found that 62 percent already are working both in the office and remotely, and 98 percent believe that all future meetings will include remote participants. As in-person contact becomes safer, nonprofit leaders are working to craft a new vision for board and staff operations knowing that expectations and realities differ greatly from 2019. And while hybrid meetings have their advantages, they also come with unique challenges few organizations have mastered.

The need for well-run hybrid meetings is particularly acute in the social sector for several reasons:

1. Connection. Organizations must engage board members and other volunteers through interaction and linkage to mission. Paid employees can’t avoid suffering through poorly managed hybrid meetings, but many volunteers will not—or will do so just once or twice before disengaging.
2. Dispersion. During the pandemic, many nonprofits benefited by recruiting geographically dispersed staff and board members. As in-person meetings return, they’ll need to find ways to include everyone, but many lack the funding to reimburse travel for far-flung staff or trustees.
3. Diversity. The board members who are hardest to recruit, including people of color and those representing target constituencies, are the most likely to benefit from a hybrid meeting option. Additionally, Daryl Messenger, past chair of the Union for Reform Judaism, pointed out that “Nonprofit boards…recruiting younger members with children at home should avoid expecting in-person attendance requiring long commutes.”

Given this, it’s important not only to remain open to hybrid meetings, but also to do them better. Pre-COVID, remote attendees often felt unseen and detached. The forced virtual environment that accompanied the pandemic eliminated that problem and raised expectations about remote participation. As meetings go hybrid, many people will see the neglect of remote participants as a missed opportunity that disproportionately disadvantages those who bring the greatest diversity.

So how can nonprofit leaders ensure that remote participants feel fully engaged? How can they make hybrid meetings effective, efficient, and inclusive? Rather than lamenting the inability to gather everyone physically, how can they create hybrid experiences that are better than either in-person or remote meetings?

Hybrid Meeting Pros and Cons

The nonprofit leaders I surveyed largely agreed on the need for hybrid meetings but expressed a wide range of opinions about them. They want to return to some level of in-person meetings but know that hybrid meetings draw more people; even if a few remote participants would come in person if that were the only option, many more would not attend at all. After two years of remote meetings, it will be harder to get board members to show up in person as frequently as they previously did—but hybrid also stands to open new doors. Erica Wolf, chief of staff at Lincoln Center for the Performing Arts, told me, “We’ve seen overall attendance increase with the added flexibility, and it allows us to think more broadly about who and where our board members are … I don’t see a future where this hybrid format and remote participation isn’t an option.”

Others have experienced downsides and take a less-optimistic view. Board Advisor Jon Huggett noted, “Hybrid meetings create a sense of inequality: There are those in the room and those out, those who happen to be sitting in the right place and those who cannot hear properly.” And Spring Impact Founder Dan Berelowitz said, “It's almost impossible to make everyone feel included with any regularity.”

Better Hybrid Meetings

Concerns about the efficacy of hybrid meetings are valid, but we need to ask: Are the problems inherent in the model, or can leaders overcome them through experience? Just as attitudes toward virtual gatherings improved during the pandemic as we gained skills and upgraded our technology, our opinion of hybrid meetings likely will improve along with our proficiency.

It’s important to start with a clear sense of goals. Priorities often include attendance, broad participation and inclusion, a similarity of experience between on-site and remote attendees, and productivity. Achieving some or all these goals in a hybrid meeting at an acceptable cost (in terms of money, time, and training) requires thoughtful consideration of three elements: technology, design, and facilitation. Here’s a closer look at each:

1. Technology

There are two general approaches to hybrid meeting technology, which we’ll call “group” and “individual.” The simplest group approach uses a single laptop camera and mic at one end of the room to capture on-site attendees, and a standard projector to display images of remote participants onto a screen. However, in all but the smallest meetings, the resulting bowling-alley view of on-site participants is too small for remote attendees to see other people well. Adding one or more tripods or wall cameras, placing screens on several walls, and using speakerphone capability can do a lot to improve visual and audio quality. In addition, ensuring that in-room screens display speaker view rather than gallery view makes it easier to see remote speakers.

A more-sophisticated system uses video technology that tracks the active presenter. For example, the Meeting Owl is a cylindrical device that combines a camera, mic, and speaker. It sits in the middle of a meeting room and zooms in on whoever is talking. (Remote participants still appear on screens.) This can be especially effective for smaller gatherings. Most board chairs I interviewed who had experience with the Owl reported that it improved their hybrid meetings, though those who tried linking several together for larger meetings struggled with setup and operation.

A limitation of any group approach is that in-room and virtual attendees don’t appear in the same way. On-site participants show up together (or in a few squares, if the room has multiple cameras) while remote participants appear within individual squares on the screen(s). Those in the room are therefore smaller and don’t have their names superimposed, making it difficult to equalize the experience for everyone. Similarly, the two types of participants have different access to chat and poll functions. In the end, nonprofits that succeed with group approaches tend to have more-sophisticated audiovisual capabilities, with either significant internal or contracted support. For example, Lincoln Center, whose board meetings have an average of about 40 in-person participants and 25-30 participants on Zoom, hires an external firm for technical support and hybrid hardware and software rental.

In the individual approach, every participant uses a separate screen, typically a computer or tablet. Participants in the same room mute their microphones and turn off their speakers. For small meetings, audio may flow through the host’s computer, but it will usually move through a centrally placed speakerphone (often with extension mics), table microphones, or built-in room teleconference mics and speakers. More-sophisticated arrangements involve extra cameras for focusing on speakers, whiteboards, and/or projected presentation materials. A major advantage to the individual approach is that all participants look the same on the screen. Each attendee shows up in their own personal (and labeled) square, greatly enhancing the equality of experience and the ability to identify speakers. This is also usually the least expensive approach.

Though this requires that everyone have their own screen, organizations can purchase inexpensive tablets to make available in the office. And while some experts worry that in-person attendees will resist having screens in front of them, many who have tried this approach have found that participants prefer it to group approaches. The Zetema Project, a nonprofit focused on improving health care that I chair, recently used the individual approach for a meeting, and evaluations showed that 86 percent of respondents found the approach effective, 82 percent felt fully able to participate in discussions, and 86 percent were able to hear well. Most important, more than two-thirds said they preferred that we conduct future meetings the same way, rather than requiring people to attend in person.

With either technology approach, it’s crucial to plan carefully and invest in the necessary skills, software, and equipment and to ensure that whoever is managing the technology is sufficiently free to focus on it. Fortunately for nonprofits, there are cost-effective options that work.

2. Program Design

Effective hybrid meetings require careful design. Jim Heeger, who currently serves on multiple nonprofit boards, pointed out, “A Zoom meeting is not a Zoom call.” Unlike one-to-one calls, organizations must think through meetings with multiple participants in advance. Berelowitz recommends arranging the agenda so that presenters include both on- and off-site participants. This underscores the importance of remote attendees. If important presenters are primarily on-site, pre-assign virtual attendees to respond to the speakers. In fact, to increase total participation, some board chairs invite board members they know won’t be in the office (and might otherwise not participate at all) to speak or prepare brief responses.

For hybrid meetings that use the individual approach, it’s a good idea to enhance engagement through heavy use of the chat box at specific points during the meeting. This can include feeding pre-determined questions to the group during presentations and discussions. Content-related Zoom polls are another efficient way to engage participants. Before a controversial session, leaders might poll attendees anonymously about the issue at hand. For example, a leader of a homeless shelter might ask, “Do you think we should advocate for needle-exchange programs?” Or, prior to an expert’s talk on technology uptake among disadvantaged youth, the board chair of a tutoring program could poll participants on a related question (for example, “How soon will the majority of our target population have broadband access?”) and ask the speaker to refer to the responses. While chat and polls can still be useful in meetings that use the group approach, keep in mind that the experience will differ for on-site and remote participants, since attendees in the room can’t directly participate without employing more complicated app-based programs.

There’s no question that it’s more challenging to build relationships with people who aren’t in the office. So with hybrid meetings, it’s often worth building in time for social connection even at the expense of board business, since better relationships tend to increase effectiveness. One hybrid board meeting I recently attended at the Zetema Project used the individual approach. All participants introduced themselves, mentioned a top professional priority, and identified an area where they could use help; members responded in the chat box. In addition, graduating fellows made remarks about the experience they were completing and asked panel members for career advice. Panelists then volunteered comments both orally and via chat.

3. Facilitation

In addition to using best practices for virtual meetings, facilitators should strive to harmonize the different experiences of the two sets of attendees by:

• Inviting comments from as many participants as possible, including proactively calling on people who haven’t volunteered
• Alternating between calling on on-site and remote participants, favoring the latter
• Ensuring that on-site participants look into the cameras and speak clearly into mics so that everyone can hear them
• Eliminating in-room banter, which makes remote participants feel left out
• Starting all sessions on time so that remote attendees aren’t left waiting
• Establishing and enforcing etiquette for asking questions—raised hands, for example—to ensure that on-site participants don’t dominate and bark out questions

Some hybrid meetings use a whiteboard or flipchart in the in-person meeting room and a shared Google Doc for remote attendees. Staff or volunteers can help link the two. Meanwhile, the meeting facilitator should have no other responsibilities. A technology expert or others should be assigned to monitor and feed questions into the chat box, clear the waiting room if needed, and handle on-site tasks. Managing a hybrid meeting should be a team effort, and smart leaders see it as an opportunity to engage multiple participants.

Looking Forward

Many boards that previously met in person and subsequently went remote are realizing that their members don’t want to return fully to in-person meetings. Some plan to alternate remote and on-site sessions, while others expect to hold more-frequent but shorter remote meetings with an annual on-site retreat. But most are aware that even their in-person meetings will need to use a hybrid model to maximize participation.

Fortunately, hybrid meetings can be effective and inclusive when organizations carefully plan and execute technology, programming, and facilitation. Indeed, a well-run hybrid meeting can attract more attendees than in-person-only meetings, while making it easier for on-site participants to connect with others than in virtual-only meetings. The trend toward hybrid meetings has the potential to benefit most nonprofit organizations, but only if leaders execute them effectively. Poorly designed meetings stand to turn off volunteers and sap energy; well-orchestrated ones can generate record levels of engagement and inclusion. Leaders aiming to get the best from their boards and teams should invest in becoming proficient at hybrid meetings now.

2021 proved to be a bumper year for global M&A, which according to Refinitiv Data, surpassed $5.8 trillion last year. The drivers, of course, differ by each deal. But one can assume, in the cases of for-profit businesses, the acquisitions are mostly strategic in nature and either create a better competitive alternative or help navigate obstacles standing in the way of future growth.

Similarly, many charitable organizations face their own competitive pressures, particularly as the number of nonprofits continues to grow and as donors increasingly demand accountability. Yet, within philanthropic circles, M&A is still generally considered an option of last resort. Mergers aren’t necessarily a foreign concept among nonprofits; there are even organizations, such as SeaChange Capital, the Bridgespan Group, and others, who can play an intermediary role to help NGOs and philanthropic organizations scale their impact (not unlike a traditional investment bank or business broker). However, the financial incentives that motivate corporate sellers don’t exist. In fact, nonprofit executives are well aware their jobs may be made redundant. Funders, similarly, often perceive that their board seats and influence could be put in jeopardy. These fears, which aren’t unfounded, help explain why the default among philanthropies of a certain size is to view dealmaking as a tool for survival rather than growth.

As a result, M&A among nonprofits, when it does occur, tends to be countercyclical. It rises as the economy decelerates and fundraising dries up, and slows during periods of sustained economic growth, when funding may seem more accessible. It’s during these “periods of plenty,” when it becomes easy to overlook M&A, and instead focus on fundraising initiatives or deploying newfound resources. But it’s also during these upcycles that M&A can be most effective—not as a lifeline—but as a strategic tool to engender a more pronounced and sustainable impact.

Borrowing From History’s Playbook

Consolidation among nonprofits wasn’t always uncommon or confined to the unfunded. At the turn of the 20th century, when the Rockefeller Foundation first sought a national charter, the effort was premised on merging the family’s many charitable endeavors under one umbrella, according to the book Beyond Charity. The Rockefellers were effectively trying to create the Standard Oil of the philanthropic world, observed one reporter at the time.

Other captains of industry in this era were just as innovative, in part, because they applied the same business lens to their philanthropic pursuits. Take Julius Rosenwald, the architect behind the growth and success of Sears Roebuck. While he was best known for his work to help fund over 5,300 “Rosenwald Schools” across the Jim Crow South, his efforts to disrupt and reimagine philanthropy tend to be overlooked. He was an early proponent of challenge grants to incentivize other stakeholders and promote a sense of “ownership” among those he aimed to help. He also espoused a “give while you live” philosophy—a movement gaining renewed momentum today. And while less celebrated, he saw M&A as an invaluable tool to eliminate overlap and enhance the scope and capacity of like-minded organizations addressing the same or similar causes.

For instance, Rosenwald spearheaded the consolidation of Chicago’s leading Jewish charities to create the Jewish Federation (FKA: The Associated Jewish Charities). According to his biographer Hasia Diner, he also sought to broker a merger between the Urban League and the NAACP to fight the disenfranchisement of African Americans on a national level. (That proposed marriage, however, never did come to pass.) The point wasn’t to merge for the sake of merging but to eliminate waste and better direct resources toward an acute issue during the post-Reconstruction era.

More recently, however, M&A in the nonprofit space—if it’s not already viewed as a distraction—tends to require more time and resources than many leaders believe they have at their disposal. This is a point that Christie George and Taren Stinebrickner-Kauffman highlighted in an SSIR article last year. The impact is that when deals do occur, they often become a last-ditch endeavor marked by “hasty and suboptimal decisions.” And these deals of necessity, orchestrated at the eleventh hour, tend to produce outcomes that reinforce the negative perceptions around nonprofit M&A.     

Collective Impact: M&A Lite or Collective Chaos?

It would be disingenuous to imply that nonprofits today don’t appreciate the value of collaboration. And it’s quite common for organizations pursuing the same cause to identify where their objectives may intersect and determine how they can best align their resources to pursue some truly ambitious initiatives. Indeed, the movement toward collective action or impact has yielded notable results.

A survey from BoardSource, for instance, found a distinct correlation between “high impact” nonprofit boards and an openness among directors to consider strategic alliances. And who can argue with high impact initiatives, ranging from rapid COVID-19 response efforts to coordinated relief that delivers aid in the immediate aftermath of natural disasters. The same BoardSource survey, however, revealed that fewer than one out of every 10 respondents had participated in a formal merger or acquisition over the previous five years.

What many fail to consider is that M&A has the power to pick up where alliances leave off. For instance, in Israel, hundreds of charitable organizations have been established to help Ethiopian Jews, a racial minority in the country who often suffer from higher rates of poverty and unemployment. While each charity is virtuous in its respective mission, the fragmentation creates challenges across the larger philanthropic ecosystem. Prospective donors confront a paradox of choice in determining which organizations may be most deserving of their gifts, while similar challenges among potential ally charities leave many unsure of who might represent the best partner.

But the bigger challenge, one that’s rarely seen on the surface, is that the fragmentation can also create collective chaos. It’s akin to a houseplant that receives too much water from too many people. The recipients, themselves, are often unsure of where to commit themselves with so many organizations seeking to intervene. The result is often a patchwork of aid that lacks the follow-through or accountability required to promote end-to-end outcomes.

Perhaps the most glaring challenge, at least among prospective donors, is the extent to which fragmentation translates into waste. Money, to a certain extent, will gravitate to the most efficient, well-run organizations. Still, the administrative overlap should be obvious. Through an investment lens, most private equity professionals looking at the problem and the jumble of would-be solutions would likely discern that it’s an area ripe for a rollup.

Overcoming Obstacles

The caveat is that if M&A in philanthropy was easy, it would certainly be more common. The scarcity of formal combinations, beyond the deals of necessity, speaks to the heavy lift required to gain internal consensus. M&A can be intimidating for any organization, but especially for potential targets who didn’t initiate the proposed combination. In the business world, the prospect of a financial reward at least provides a starting point for discussions; for nonprofits, the strategic benefits have to be glaring and unmistakable. Even in these cases, navigating a merger is less rocket science than it is behavioral psychology, as the biggest roadblocks are generally political in nature.

Funders, especially at the board level of charitable organizations, are often motivated by the opportunity to be actively involved in a cause and eager to play a hands-on role to effect positive change. Increasingly, the desire to start a foundation in the first place is viewed as an opportunity to leave a legacy and help impart an altruistic disposition to future generations. Any deal that threatens to put funders on the sideline, however strategic or impactful, won’t necessarily align with the “soft” objectives often at the heart of charitable giving. Executives, of course, also recognize that consolidation can leave them on the outside looking in, and without a golden parachute so common in for-profit deals. For these reasons, just initiating deal discussions can be fraught with tension.

Assuming everyone is aligned around a common mission, these sensitivities can indeed be addressed and managed when navigated with thought and care.

The Darca Schools Case Study

Strong business sense and a knack for identifying opportunity in the combination of two organizations can go a long way. In the case of my organization, Darca Schools, for instance, the idea of a formal combination was first articulated by the Youth Renewal Fund’s (YRF) board, private equity leaders well-versed in recognizing when a merger stands to optimize results.

For context, YRF was founded in 1989 in New York City as a grassroots effort to implement supplemental education programs in secondary institutions across Israel’s periphery communities. Darca Schools, meanwhile, was established in 2010 by the Rashi Foundation in partnership with KIAH-Alliance Foundation and the Adelis Foundation. Similar to charter school programs in the U.S., Darca operates a network of schools in the underserved periphery communities across Israel, with an emphasis on school leadership and innovation to improve outcomes.

The premise behind the deal was multifold. For instance, at the highest level, the merger was initially motivated by YRF’s challenges to sustain their supplemental programs over an extended period of time, across disparate school districts, amid teacher and administrator turnover, and as administrative priorities within each district shift from year to year. Darca’s centralized management structure could provide a platform upon which YRF’s programs would mature and take root, while also expanding YRF’s reach as the broader network of schools, itself, expanded.

From the perspective of Darca’s leadership, YRF’s turnkey programs for professional development and its documented success improving high school matriculation rates offered a playbook approach that could be replicated across different schools and communities. This would allow the combined organization to accelerate and amplify the cultural change necessary to advance Darca’s core mission to close the education and achievement gaps that exist between Israel’s wealthier areas and the state’s peripheral communities.

The deal was also motivated by awareness on each side that a formal combination could eliminate redundancies and overhead costs, while savings could be redeployed toward new educational initiatives or to expand Darca’s network of schools.

While this made for a convincing case on paper, even the earliest discussions about a potential merger incorporated thoughtful planning to account for any and all sensitivities, whether they materialized or not. On both sides of the deal, for instance, were devoted directors whose contributions were integral to the growth and impact of YRF and Darca, as independent organizations. The very idea of a 20-person board, the deal architects recognized, would not appeal to anyone on either side.

Multiple layers of governance were thus created, with checks and balances, comprised of a traditional board with representation across key stakeholders as well as a general assembly and newly created roles for other valued observers to guide discrete initiatives. Through addressing these types of questions early in the process and being transparent as different scenarios were considered, we were able to create alignment around the more material goals of the combination, which was to amplify the reach and the impact of the combined organization.

Even something as simple as branding, for instance, was carefully mapped out. Today, while Darca represents the operative organization in Israel, YRF maintained its legal independence in the United States given the brand equity it developed over the previous 30-plus years and its presence in the U.S. market. Moreover, the decision to maintain both brands reflects our desire to preserve the history of each organization and ensure stakeholders on either side wouldn’t feel marginalized.

We’ve also taken pains to quantify and report on Darca’s impact to both create accountability and also demonstrate how the combination continues to contribute to positive outcomes. Darca, since the merger, has roughly doubled the number of institutions within its network, and today runs 43 secondary schools with approximately 24,500 students. More importantly, matriculation rates increase exponentially once Darca assumes control of a failing school. The most mature programs within the Darca network, today, boast a matriculation rate of 93 percent, which is on par with many leading schools in wealthier districts, but also significantly ahead of the national average in which fewer than 50 percent of students pass the Bagrut (required for eligibility to attend Israel’s post-secondary schools). To put the impact into perspective, schools new to the Darca network generally start with a matriculation rate well below the national average.

Other, unexpected benefits, also emerged over time. The scale of the combined organization had a gravitational effect as other programs with complementary missions were drawn to the Darca platform to gain both efficiencies and traction. For instance, The Azrieli Foundation integrated its Azrieli Institute for Educational Empowerment into the Darca Network, an affiliation that provides a powerful resource to reach at-risk students. The Azrieli Institute for Educational Empowerment, like YRF, also gains access to a captive audience of administrators with committed strategies to integrate these resources into the supported curriculum.

The Payoffs (Through a Nonprofit Lens)

If the Darca/YRF merger occurred in a corporate setting, it would be classified as a vertical acquisition, in which the combined entity adds critical components of the value chain to build out a more comprehensive and integrated offering. Horizontal deals, by contrast, might include absorbing other challenged schools and leveraging the proven Darca model and available resources to quickly catalyze change.

In either case, efficiencies are achieved through the elimination of administrative redundancies, and enhanced as the combined organization adapts best practices. Economies of scale also become more pronounced as size yields influence. This is not an insignificant consideration in education, where other stakeholders – such as unions and local governments—can either limit or facilitate the ability to effect change. And growth, of course, is inherent to any merger, but acquisitions can also streamline the path to accelerate “organic” growth in the future.

These synergies, of course, are not exclusive to nonprofit deals. They also tend to characterize the thesis behind most corporate mergers. However, other overlooked benefits are unique to nonprofits.

New funding streams. Funding stability, of course, is the primary motivator for nonprofit merger activity that occurs during periods of economic distress. For healthy and thriving organizations, however, this benefit is often amplified as both sides are bringing financial resources to bear. In most cases, the combined organization is able to expand its reach into new circles of influence, within new geographies, and across certain professions.

The newly constituted Darca board, for instance, enjoys deep networks extending from North America and Europe to the Middle East. The philosophy is not unlike any investment thesis in public or private markets, to eliminate “concentration” risk and proactively facilitate stability through creating a “diversified portfolio” of funding sources. Moreover, by reducing the organization’s cost structure, charitable contributions go even further. This is a compelling proof point that now distinguishes Darca among prospective donors.

Cognitive diversity. While some may be dissuaded by the perceived political hurdles that confront nonprofit M&A, most also overlook the extent to which a merger can bring together accomplished leaders able to impart a more ambitious vision. Just as important, they can bring together the skill sets to execute against it.

One of the greatest payoffs for Darca has been the cross-pollination of different ideas and perspectives. The “newly” constituted board is comprised of leaders from the Rashi, KIAH-Alliance and Adelis foundations, YRF, and the Azrieli Foundation. It boasts deep experience in banking, private equity, and real estate investing, as well as expertise in law and education, and deep familiarity with the socio-economic challenges confronting families in Israel’s periphery communities.      

This wealth of experience was the catalyst behind the creation of a robust set of measurable KPIs tracking  the extent to which the new organization is meeting expectations, and the creation of a long-term strategic plan borrowing elements from the leaders’ corporate playbooks. This cross-section of different backgrounds also allows the board to make connections that wouldn’t otherwise be discernible and devise new solutions that advance the collective mission.

The general assembly, too, has proven to be critical to ensure key contributors and former board members still have a venue to stay involved and reinforce governance. Other valued patrons have assumed new roles to observe and guide new streams of activities, which adds bandwidth as our ambitions for change also grow.

Innovation. Any merger will re-energize an organization and create a shared sense of excitement. This alone can stimulate action. But coupled with the resulting cost savings, administrative efficiencies, and diversity of thought, mergers provide the wherewithal to tackle the issues that may have previously seemed out of scope.

Darca, for instance, recently launched an “Educational Leadership Accelerator” to help recruit and train managerial talent. Through the rapid growth of the network, a pressing need in the market for experienced administrators quickly became apparent. In fact, it’s an issue shared by schools across the country. According to a 2019 report in TheMarker, a leading newspaper in Israel, the State’s Ministry of Education needs to fill some 600 school principal positions each year and generally faces a shortage of 200 to 300 certified administrators each September. Accentuating this problem, approximately a quarter of new principals end up leaving the job within their first two years, underscoring inadequate preparation and training. Darca’s scale, when the program is fully ramped up, should provide the resources and reach to recruit as many as 70 fellows annually and put them on a track to assume managerial responsibility within three years.

This type of program, which involves case-study driven lessons, on-the-ground job shadowing, and in-person site visits, wouldn’t be possible without the combined resources and skill sets available through the partnership. The program is completely aligned with Darca’s existing efforts and mission, but the upshot is that it will have a material impact on the entire educational system in Israel.

Julius Rosenwald, in discussing the philosophy behind his charitable efforts, once noted, “Benevolence has become altogether too huge an undertaking to be conducted otherwise than on business lines.”

This doesn’t just explain how he gave, but also helps to illustrate why his gifts were so effective. M&A isn’t just about scaling an organization; deployed strategically, it’s a tool to help formulate a more complete solution.

Environment, Social, and Governance (ESG) investing—an approach to investing designed to consider a wider set of factors that influence financial returns—is everywhere. ESG is so hot, it will be a $1 trillion market by 2030. Finally, it seems, finance is thinking seriously about social factors in investment.

But whilst “ESG goes mainstream” is an attractive and seemingly good-news headline, the reality so far is mixed at best, underwhelming at worst. Specifically, the way the ESG market has developed limits the potential benefits these trillions of dollars of capital could have on society and the planet.

These limitations exist for two primary reasons. First, because only factors that affect financial returns are considered “material” for ESG investors. And second, because the S in ESG remains woefully underdeveloped.

The definition of S is still up for grabs and, without a serious reflection on ESG to date, we run the risk of compounding the original sin of ESG: ignoring the issues that matter to people and planet but don’t directly affect the bottom line. If we continue down this path, ESG investing is almost certain to remain a smokescreen, one that creates the appearance of a more socially impactful approach to capitalism while ignoring some of the most significant negative effects business can have on people and communities.

The Limited Goals of ESG

Although ESG investing is often lumped in as part of the broader impact investing ecosystem, it’s important to be clear about their differences at the outset.

In its most simplified form, ESG investing is “negative screening”—not investing in companies with harmful practices or actively engaging company leadership to change those practices—whereas impact investing refers to investments made with the intention to create measurable positive impact alongside financial return. ESG investing is widely perceived as the “do good” alternative to traditional investing, but this approach as it is currently practiced does not generate or measure positive impact, other than by reducing harm relative to the status quo.

Reducing harm is a worthy aim, but the specific harms that ESG has focused on thus far are limited  to those “material factors” that impact the finances of a company. Because of this “financial materiality screen,” the harms deemed relevant to ESG vary greatly by sector: they could include waste management for one company, carbon emissions for a second company, and worker health and safety for a third.

What ESG does not consider, by definition, are harms that a company may have on society or on the environment that have no relation to financial bottom line. “Materiality” is industry jargon for anything that has direct consequences or creates risk for investors.

Who Is ESG Working For?

Whenever we see the word “materiality,” we must remember to ask: what risk, and for whom? ESG frameworks were developed by standards bodies for investors, so it’s hardly surprising that their focus has been on identifying and addressing key operational and reputational risks to the financial bottom line. And while it is true these bodies deserve credit for widening the scope of what the investment community should consider in their investment decisions, the fundamental flaw with this approach remains: there are loads of things companies do that contribute to the problems of the world without it affecting company profitability.

This problem is particularly acute when it comes to social factors in ESG. As NYU professor Hans Taparia stated in a recent SSIR article, “Most ESG ratings don't have anything to do with actual corporate responsibility as it relates to societal factors.”

The Illusion of S

What should the S in ESG refer to? It is logical to assume that it refers to social outcomes associated with our individual welfare or with thriving communities, and measures things like mental or physical health, education, and learning, or elements of subjective well-being like personal dignity or community cohesion. However, as currently conceived, the S in ESG regularly has very little to do with this intuitive and well-recognized understanding of social impact.

Instead, for the reasons highlighted above, ESG frameworks like those developed by the Sustainability Accounting Standards Board (SASB), which is used by hundreds of major corporations around the world to make sustainability claims to investors, are limited to very specific financially material and compliance-focused dimensions such as labor rights, data security, and consumer privacy.

Because of this limited definition, there are many companies that are mistreating workers and worsening health outcomes—doing obvious harm to society by improving their bottom line—while still garnering top ESG ratings. How else could one explain the fact that British American Tobacco has been part of the Dow Jones Sustainability Index for the past 20 years, garnering top scores along the way.

In the absence of any attempt to understand our collective or individual social well-being, S ratings resort to the existence of policies or committees. For example, a company with a well-written diversity policy or a workplace safety council will earn a favorable ESG rating, but, in most cases, these same companies often have limited or no data from employees themselves to capture the impact of these policies on people or places.

A more meaningful assessment of social impact by companies would consider the variety of stakeholders impacted by a business—from suppliers and employees to customers and communities—and try to understand and account for all the positive and negative impacts that the business may be having on those stakeholders. This approach would be more closely aligned to the steps being taken for climate disclosures: more and more companies are now expected to understand their carbon emissions throughout their supply chains, taking stock of both their direct and indirect activities.

Changing Course

Without a fundamental shift from the profit-first, society-second mentality that currently dominates ESG, the whole approach will likely exacerbate one of the biggest social issues of our time: growing inequality. As a result, ESG could be structurally designed to have a negative impact on S. After all, the system as currently designed reinforces the paradigm of shareholders’ returns trumping stakeholders’ demands. Without a fundamental reconsideration, ESG could be even worse than a “wheatgrass cure to tackle cancer,” the depiction given to it by Tariq Fancy, BlackRock’s first Global Chief Investment Officer for Sustainable Investing. Could it be that over the long term ESG could come to be seen as a diet of cigarettes and alcohol to shrink a tumor?

This is not to say that there isn’t space to course correct. Indeed, such opportunities present themselves all the time. One such chance, which recently passed us by, was the creation of the International Sustainability Standards Board (ISSB), which aims to harmonize existing ESG standards. Unfortunately, the current framing of the ISSB retains the structure of looking at issues that pose a risk to profit, rather than those that are of greatest consequence to people and planet. Our hope is that, in time, the standards bodies revise this definition of “materiality,” and recognize what we all know in our hearts: that it is not only material to understand the impact that social issues have on a company, but also to understand the impact that a company has on people, communities, and society. Otherwise, much of ESG, and especially the S, will remain a charade.

Paths Forward

To change this, those who are focused on the power of investing as a force for positive change need to be more vocal on the risks posed by current ESG frameworks. Collectively we should be championing the strongest interpretations of “double materiality,” a now widely-accepted principle in financial disclosure which states that information on a company is considered material if “a reasonable person would consider it [the information] important.”

Adoption of this broader definition of materiality would require companies and ratings agencies to consider corporate impacts on society and the environment even where there is no immediate financial value to shareholders in doing so. Such a step would avoid confusing signals like the ratings upgrade of McDonald’s by MSCI in 2019, citing their environmental practices, despite McDonald’s continued increase in carbon emissions to 54 million tons that year. Surely that additional harm to the environment should have been included in any credible assessment of the company’s impact. The fact that carbon emissions were not even part of the sustainability ratings calculation explains why researchers Cam Simpson, Akshat Rathi, and Jaijel Kishan believe that most MSCI investment ratings are an “ESG Mirage.”

This concept of double materiality is integrated into the EU’s Sustainable Finance Disclosure Regulation (SFDR)—perhaps the most far-reaching piece of formal legislation in this space. In its guidance to corporations, the EU has explicitly expanded the definition of materiality to require a company “to disclose information on environmental, social and employee matters, respect for human rights, and bribery and corruption, to the extent that such information is necessary for an understanding of the company’s development, performance, position and impact of its activities.” This is regulation in the right direction, creating requirements to disclose not only the risks to the business from ESG factors but the risks to people and planet from business activities.

Next, the S in ESG needs a down-to-the-studs, build back better renovation. Material social factors required by disclosure standards should be reconstructed to align more closely to established international well-being frameworks. This would encourage inclusion of subjective measures of social value such as dignity or personal autonomy that we know from extensive stakeholder consultation are amongst the most important aspects of social value. Being required to account for these stakeholder impacts would have the added bonus of creating a much stronger impetus for companies and investors to systematically listen and respond to the needs of customers, workers, and suppliers.

Lastly, we should return to having separate categories and frameworks for E, S, and G. Currently, companies focused on E or G but neutral or even negative on S can get a high aggregate ESG rating. This incorrectly implies that they perform well on all three. Separate rankings on environmental, social, and governance factors should be clearly distinguished so that both companies and investment funds could be selected and evaluated based on their performance on individual dimensions.

ESG investing will continue to grow, and the consideration of ESG factors may become even more widely adopted. But if material factors continue to be limited to those of financial consequence to the firm and the S continues to be comparatively overlooked, then serious negative social consequences will continue. We must demand higher standards and reformulate our collective understanding of materiality, centering on our collective well-being rather than the profitability of a few.

Is the planet really more important than the people? According to CNBC, most money managers who use ESG (environmental, social, governance) factors in their investment analysis have focused on the E, or climate change, as their leading criteria for their decisions. But what about the S, or social dimension of corporate impact? As one fund manager put it to me in a recent conversation: “Planet isn’t necessarily more important than people, it’s just easier to measure. Investors like measuring things that they can put into their models, and carbon is easy to quantify.”

No doubt, quantifying social impact is a challenge. A 2021 Global ESG Survey by BNP Paribas revealed that 51 percent of investors surveyed (covering 356 institutions) found the S to be the most difficult to analyze and embed in investment strategies. The report concluded: “Data is more difficult to come by and there is an acute lack of standardization around social metrics…. Investors have been willing to accept data that does little to actually assess the social performance of the companies in which they invest.” For most investors, S is merely a check-the-box exercise. 

So, what can be done to improve S data?

The Meaning of S

First, we need to better understand how the field currently defines S. Commentators and investors have described S in many different ways: as social issues, labor standards, human rights, social dialogue, pay equity, workplace diversity, access to health care, racial justice, customer or product quality issues, data security, industrial relations, or supply-chain issues. S&P, one of the leading ESG ratings agencies, describes the S in terms of social factors that pose a risk to a company’s financial performance.

In a blog post titled “What is the ‘S’ in ESG?,” S&P outlines three types of S issues:

• How can a company's workforce requirements and composition present problems for the organization in the future? Labor strikes or consumer protests can directly affect a company’s profitability by creating a scarcity of skilled employees or controversy that is damaging to a corporation’s reputation.
• What risks come with the safety implications of a product or the politics of a company’s supply chain? Corporations that ensure their products and services do not pose safety risks, and/or minimize the exposure to geopolitical conflicts in their supply chains, tend to face less volatility in their businesses.
• What future demographic or consumer changes could shrink the market for a company’s products or services? Complex social dynamics, from surges in online public opinion to physical strikes and company boycotts by different groups, affect long-term shifts in consumer preferences. Decision-makers can consider these as important indicators of the company’s potential.

It’s all a bit of a hodge-podge. The purported through-line, as S&P puts it, is “relations between a company and people or institutions outside of it.” That’s a pretty ambiguous definition that can cover a lot of things. One could argue this lack of precision in clearly defining S is a major reason why it’s so poorly measured.

But there’s a deeper existential issue going on here. Rating agencies like Moody’s and S&P view ESG almost exclusively through the lens of materiality (i.e. information that is impactful to a company’s financial performance). That makes sense because the bread and butter of those agencies is rating corporate and municipal debt, and the primary concern of any investor with respect to debt is, of course, repayment. Risk analysis focuses on the likelihood of repayment. The problem is, most of the interest in ESG is not from lenders evaluating credit risk; it’s from investors evaluating equity risk. And equity investors seek to maximize their returns, not just mitigate their risks. Indeed, simply de-risking ESG exposure is unlikely to help investors make affirmative bets on which companies will outperform the market. As State Street Global Advisors noted, “ESG information tends to be the most effective at identifying poor ESG firms that are more likely to underperform as opposed to predicting future outperformers.”

The very nature of social impact isn’t just about risk; it’s also about prosocial behavior. In other words, a company’s actions, policies, and investments can and should positively impact people’s lives. Of course, there are social impacts like human rights violations, labor relations, and supply chain risks that can negatively impact a company’s license to operate and financial stability, and those are important. But there are also many social impacts that can positively affect a company’s financial performance through competitive advantage, business growth, market relevance, brand purpose, and securing license to operate. Positive social impacts are not accounted for in today’s ESG data. Yet, as Larry Fink pointed out in his 2019 letter to CEOs, profits and social impact are “inextricably linked.” 

Michael Porter, George Serafeim, and Mark Kramer, in a 2019 article titled “Where ESG Fails,” argued that “investors who [want to beat the market], as well as those who genuinely care about social issues, have clearly missed the boat by overlooking the significant drivers of economic value arising from the power of social impact that improves shareholder returns.”  

Solving for S

To be relevant, the ESG field must modernize the way it measures S factors. To do so, we must overcome several key conceptual challenges: standardization, quantification, and reporting.  

Standardization. One of the biggest challenges in measuring social impacts has been the absence of a reliable, quantitative measurement standard. The result is that every company (and NGO) defines, measures and reports every social impact differently. For investors, this results in unreliable, incomparable, and low-value data that cannot be used in financial models. While there have been a few attempts to create frameworks for reporting social impacts, most have fallen short. 

The United Nation’s SDGs (sustainable development goals) is among the most prominent of these purported frameworks. However, a 2018 KPMG study titled “How to report on the SDGs: What good looks like and why it matters” found that only 10 percent of companies surveyed had set specific and measurable (SMART) business performance targets related to the global goals, and less than one in ten companies (8 percent) reported a business case for action on the SDGs. Why is this the case? SDGs are primarily designed to track national, population-level statistics such as “mortality rate attributed to unintentional poisoning” or “reduce the global maternal mortality ratio to less than 70 per 100,000 live births.” SDGs were not designed to be directly attributed to any discrete social program or intervention. In addition, the SDG goals were intentionally designed to advance the UN’s agenda of global development by focusing attention on high-priority topics such as over-fishing, poverty reduction, sustainable tourism, clean water and sanitation, reduced illicit arms flows, etc. While these may be important political goals established by the UN, they are not universally relevant to all companies and all communities.

The ESG field needs an objective standard for reporting social outcomes. Outcomes-based standards are designed to measure the quantum of social change that was realized as a result of a program, strategy or intervention. An outcomes-based S standard could be used voluntarily by companies and NGOs to self-select which outcomes they want to report against. Investors could also use outcomes data to conduct more robust social impact analysis. For example, investors might analyze whether the impacts generated were in a company’s headquarters community or at large? Or whether the impacts are advantageous to recruitment, business growth, competitive advantage, diversity, innovation, market development or employee health? What “bang for the buck” or ROI did the company generate on the shareholder funds invested? How did this return compare to other companies or to the industry average? Which populations or communities were most impacted? The power of standardized, comparable social impact data gives rise to a whole new level of S analytics that is more incisive, precise and relevant.

Quantification. Once social impacts are standardized and classified, they must be properly quantified. In the E world, independent bodies like Verra define standards for measuring “units” of environmental impact such as greenhouse gas emissions. Verra refers to these standard units as Verified Carbon Units, or VCUs. Rigorous rules and methodologies are established to ensure consistency and reliability of data across heterogeneous projects. For example, a 1.6 MW Bundled Rice Husk Based Cogeneration Plant in India is measured against the same outcome of VCUs as the Afognak Forest Carbon Offset Project in Alaska.

Social outcomes could be quantified in a similar way. Standards should set thresholds for what constitutes a “unit” of impact for outcomes like hunger, education, and employment. Similar to how carbon credits work, an “impact developer” (i.e. company, NGO, or social enterprise) could report data and have their results verified against the standard. For example, a company might claim that it has helped 1,000 families become “food secure” by providing evidence that each family has achieved the threshold level of criteria for that outcome (i.e. ongoing access to healthy, nutritious food, in a reasonable proximity to their home, on a free or affordable basis).

Using such a standard, ESG analysts could easily roll-up and aggregate a company’s total impact on society. Investors and other stakeholders could actually assess the level of contribution of a business to a critical social issue. Companies could be compared by industry or across industries. Quantification could also be used to price and benchmark social impact. Imagine being able to put a value on a unit of social impact, and eventually trading social impact credits much like carbon? As Scott Kirby, the CEO of United Airlines noted recently in a CNBC interview: “If you put a price on carbon, the public markets will figure it out.” It’s time we set a price for S and let the public markets figure that out too.

Reporting. In the traditional ESG paradigm, reporting is all about disclosure of “material” risks. But as many researchers have pointed out, there are both negative and positive aspects of materiality. Some activities create material risks that could negatively impact corporate performance and merit disclosure. At the same time, some corporate activities create material benefits that could positively impact corporate performance. In fact, the view that materiality only means material risk is inconsistent with the way mainstream financial markets define the concept. Relying on a long history of existing legal precedent, the SEC defines information as “material” under its Selective Disclosure and Insider Trading Rules if there is “a substantial likelihood that a reasonable shareholder would consider it important” in making an investment decision. There’s no suggestion that only risks or negative factors qualify for disclosure. Indeed, many insider trading lawsuits initiated by the SEC are based on materially-positive information that contributed to substantial financial gains.

To improve S reporting, the ESG field must expand its view of materiality. The Sustainability Accounting Standards Board (SASB) initially created its “Materiality Map” in 2014 to help investors identify ESG issues that could negatively affect a company’s financial performance. Today, the ESG market also needs an “Impact Materiality Map” to help investors identify ESG impacts that positively affect a company’s financial performance. An Impact Materiality Map could help investors determine which social impacts are most strategic and beneficial to companies by industry. For example, improving the STEM education pipeline could materially impact innovation and growth in technology firms. For retail grocers, food security and sustainable agriculture could materially influence topline sales. For financial services companies, financial inclusion can materially expand their customer base and market penetration. For health care companies, social determinants of health can materially influence their cost structure and patient well-being. And so on. These social impacts are every bit as “material” an influence on corporate performance as risky social issues. Positive social impacts can also serve as risk mitigation for risky social issues. Take Diversity, Equity, & Inclusion (DE&I) impacts for example. A company’s affirmative investment in DE&I outcomes (not just box-ticking employee numbers) can have a significant impact on mitigating talent loss and reducing risks to company reputation. These impacts are potentially more material than climate change reduction to financial services firms, who already face significant reputational risk in Black communities.

Some social impacts are emerging as universally material to all companies. These can and will change over time, depending on social and political dynamics. Among these “social impact macro factors” are:

1. Public health and its social determinants. If the COVID-19 pandemic taught us anything, it’s that major public health crises can affect every business, every industry, and every geography. How companies respond to and address public health needs can be hugely influential over business survival and success. A related issue is health equity, or social determinants of health. The impact of such factors as housing, financial health, and social capital, among others, on chronic illness, employee productivity and consumer health is directly relevant to all companies.
2. Racial equality. This is more than just a matter of risk and reputation. To compete and grow, companies must focus on inclusivity in their workforce, respond to racism in society at large and make their products and services equitably accessible to all communities. It affects sales, business partnerships, government regulation, employee performance, and competitive positioning.
3. Income inequality and financial inclusion. Of all US households, approximately 44 percent or 50 million people are considered low-income, according to Brookings Institute. That’s a pretty massive market segment. Globally, that number is even more significant: 71 percent of the world’s population remain low-income or poor, living off $10 or less per day, according to Pew Research Center. To grow and prosper, companies must be able to find ways to include these marginalized populations in the economy and expand the reach of their products and services. 
4. Workforce development. Developing a diverse pipeline of talent is critical for every industry and every company. It’s not just a positive social impact, it’s a key barrier to business growth. Cummins, one of the largest diesel engine manufacturers, can’t service its customers in Africa without trained technicians. Boeing can’t build more airplanes without STEM graduates coming out of the public schools. And according to Generation T (an initiative of Lowe’s Companies), more than three million trade skills jobs will sit vacant through 2028, which will significantly affect the growth of their business. Growing the nation’s workforce, particularly by including underserved populations, has a direct bearing on the growth of almost every business.  

Social impacts can also be more or less “material” for different stakeholders: employees, customers, suppliers, or community members. More analysis of social impact materiality will emerge as this data becomes readily available to the investment analyst community. 

The Future of S

The markets have become transfixed with ESG, and the demand for more and better ESG data will only grow in the years ahead. The success of E data has laid the groundwork for a thriving carbon market—especially the voluntary carbon market. It has also proven that intangible commodities can be standardized, priced and traded. This can and will lead to greater impact on the environment than mere advocacy or philanthropic efforts. Indeed, more money is traded through markets every day than is spent by all world governments every year. To function efficiently, markets must rely on simple, consistent, reliable data. But that data has to signal something. Statistics devoid of meaning have no influence. It’s time that the markets value S as much as E and G. The only thing that stands in the way is better data.

There are three practical steps that ESG investors, rating agencies, and companies can do to elevate the importance of S to the markets:

First, and most importantly, companies should start reporting S impact data consistently. Standards have to start from the ground-up. There’s no need to wait for rating agencies to catch up or standard-setters to adapt. Irrespective of these players, companies have their own independent fiduciary duty to measure and disclose material S information to their shareholders. Companies should start voluntarily measuring and report their S impacts and get independently verified. This data can then be included in a company’s own sustainability reports and 10-Ks. It can also be reported proactively to rating agencies like MSCI, DJSI, Sustainalytics, Moody’s, and others. The corporate sector will have a lot more influence over what standards are set if they start producing the underlying data now instead of waiting for the world to agree on it. 

Second, ESG investors should start asking for S impact data and making it a requirement. Impact investors like Forthlane Partners in Toronto, Baillie Gifford in Edinburgh, and Planet First Partners in London are already asking for this data. But the process is still manual, the data being requested is inconsistent, and the S analysis isn’t as directly linked to corporate performance as it could be. By banding together around a standard for S, data will flow more readily and with less burden on portfolio companies. Over time, with leadership, other investors will join and ask for the same standard S data. The funds that start using this data early will gain a significant edge over competitors. And they will also likely attract new capital faster than run-of-the-mill ESG funds that struggle to answer the fundamental question of so many investors these days: “What impact is my money having?”

Finally, ESG rating agencies, standard-setting bodies, and data providers should align with a specialized S data provider to up-level the value of their data. S impact data is complex; it cannot be simply captured in a one-dimensional box-ticking survey. Reliable, high-quality S data requires specialized taxonomies, questionnaires, and independent verification. This will also create a whole new level of ESG S analysis—that shared value advocates and academic researchers have long argued for. Using this S impact data, rating agencies and others can now begin to evaluate a company’s competitive advantage, growth potential, employee resilience, access to new markets, enhanced value chain productivity, and improved operating environment.

As of today, approximately one-fifth (21 percent) of the world’s 2,000 largest public companies have committed to meet net zero targets. Reducing carbon emissions and mitigating the risks of climate change for investors is a major accomplishment. But to achieve true sustainability, we must also improve the quality of life for the people who live on this planet. We can’t manage what we can’t measure. It’s time we raise the bar on social impact measurement, create better S data and give the market something to price into their models. It’s time to go from net zero to net impact.

The US has a massive shortage of Black, Latinx, and Indigenous professionals in high-skill health-care roles. Black Americans are only 4 percent of physicians and less than 7 percent of recent medical school graduates—despite making up 13 percent of the population—and the proportion of Black men in medical schools has actually dropped over the past 40 years (the share of Hispanic men and women has stayed constant, while Black women have shown some growth). This lack of diversity fuels gaps in health outcomes: Research shows that patients that share racial identity with their doctors accept more preventative treatments, show better awareness of their medical risks, and adhere more closely over time to doctors’ instructions. One recent study documented a 15 percent reduction in inpatient mortality when Black patients were paired with Black doctors. Another clinical study found a 19 percent reduction in the Black-white mortality gap for outpatient cardiovascular care with patient-physician race-match.

Black, Latinx, and Indigenous communities are not only underrepresented in leadership: They are overrepresented in low-paying support roles. Indeed, there is already a significant talent pool of the Underrepresented in Medicine (or URM); they are simply segregated at the bottom of the career ladder. 59 percent of direct care workers in the United States are BIPOC and 86 percent are women, but they are often underpaid, under-supported, and suffer from high turnover rates (15 percent live below the federal poverty level.) During the pandemic, the vulnerability of health-care support and direct care workers became especially apparent: More than 3,600 US care workers died in 2020, many deemed “essential” yet lacking basic PPE, training, or hazard pay. The majority of direct care and health support workers will not go through baccalaureate programs and lack accessible options for upskilling and career progression.

To address these systemic challenges, philanthropic actors must fund all along the pipeline, from children in K-12 all the way to health systems leadership. Each area involves a range of organizations and activities that support URM at different stages of their medical careers, and requires being grounded in local, institutional ecosystems, as well as in the needs of underserved communities:

In California’s Central Valley, for example, UC Davis School of Medicine specifically seeks to address the health needs of local underserved populations by prioritizing future physicians from these communities, where Latinx represent around 70 percent of the population, yet only 5 percent of the physicians, 8 percent of nurses, and 4 percent of pharmacists. In addition, many localities in Central California have half of the physicians recommended for the population size, with rapidly growing demand. To grow the number of enrolling URM medical students, UC Davis must develop a contiguous pipeline that considers the support that local high schools are providing for STEM students, pipeline partnerships with minority-serving community colleges, and specialized enrollment and scholarship programs to ensure these students matriculate. After their graduation, the medical school partners with residency programs to remove barriers for the new physicians to serve in their home communities and address key regional health needs. As a result, UC Davis was ranked this year as the most diverse medical school on the West Coast, with nearly 40 percent of its students joining from URM groups in 2020.

1. Entering the Pipeline

Nearly all experts emphasize the importance of in-school and extracurricular support for primary, secondary, and early college students, for a strong start. If students are not empowered to follow STEM studies at an early age, they are much less likely to pursue higher-level studies. However, minority districts in high-poverty areas receive an estimated $1,200 less per student annually from public sources, leading to inferior facilities, fewer highly experienced teachers, and fewer curricular and extracurricular options. Philanthropic funders have invested hundreds of millions of dollars to ensure children of all socio-economic backgrounds have these resources, but the gap persists.

Philanthropy can play a key role supporting community-based programs to ensure that students can see themselves in medical fields and understand the path to get there. While there is need for more resources across this area, we see two specific opportunities:

• Creating second chance pathways: Many URM students fall out of the system before even making it to medical school applications. These students disproportionately lack support resources and exposure to professionals that come from similar backgrounds to their own. There are three major drop-off points: (1) matriculating from one school to another (e.g., high school to college, community college to four-year institutions, etc.), (2) the first or second year of STEM college courses, and (3) standardized testing. For example, Black males are less likely to retake the MCAT after a low score compared to any other group.  Secondary and early college students need support to re-apply, re-train and improve, or to receive informed advice for alternative pathways available, such as health-related associates degrees after high school graduation or post-baccalaureate medical programs after college.
• Bridge programs connecting different educational stages and extending support: Transitionary periods when URM students are moving from minority-serving institutions—such as undergraduate HBCUs, community and tribal colleges, and mentorship programs—into schools outside of their community contexts are significant drop-off points. But programs that bridge high school to college, or community/tribal college to four-year schools, can support students through the changes, as can programs that bridge school to career transition and preparation, such as Health Career Connection.

2. Disrupting the Existing Higher Medical Education System

Philanthropy has recently begun granting long-overdue resources into expanding HBCU programs, which is hugely important. However, to truly scale the number of Black dentists, doctors, and high-skill medical professionals—as well as reach other underrepresented populations such as Latinx and Native Americans—the broader medical education community needs to take a larger role. As Dr. Montgomery Rice of the American Medical Association put it, “We cannot absolve the other 151 medical schools of their responsibility [to help diversify the physician workforce].”

“It’s not just about support, it’s about reorienting education,” as Dr. Michelle Ko, Co-Director of the Center for a Diverse Health Care Workforce at UC Davis put it, “The current medical admissions process does not serve URM students or our communities.” For this reason, select medical schools have begun to prioritize diverse classes of doctors and to focus on the needs of underserved communities. Before 2015, the four HBCU medical schools were graduating more Black doctors than the next 10 schools combined. But the trend has shifted and 2019 was the first year where non-HBCUs graduated more than 90 percent of Black doctors, fueled by public universities such as the medical colleges at Augusta University in Georgia and University of Indiana. The trend holds across other underrepresented groups as well: The top schools graduating Latinx doctors outside of Puerto Rico were University of Illinois, University of Texas, and Florida International University, with public universities also holding the top three slots for Native American doctors. Eight out of the ten most diverse medical schools are public.

Philanthropy can play a catalytic role here. Institutions with successful programs require resources to expand, and other institutions need to be incentivized to follow their lead. Dalberg has identified three high-level opportunities for philanthropic funders to engage:

1. Help medical schools to grow their pipeline and provide specialized pathways, both before matriculation and after graduation. To ensure access, graduate medical schools need to build contiguous pipelines into underserved communities to support URM students in their secondary and post-secondary studies. This involves supporting partnerships with minority-serving institutions as well as post-graduate opportunities to practice in their communities. It can also involve special enrollment programs, including BA/MD and post-bac pathways.
2. Fund BIPOC faculty chairs and institutional anti-racism efforts. Currently, fewer than 10 percent of full-time medical faculty identify as Hispanic, Black, or Indigenous. The number of faculty chairs held by underrepresented community members is a key factor in determining diverse enrollment. Diversifying faculty positions should be part of larger anti-racism approaches and changes within the institution, such as providing support for URM faculty to pursue research on health equity topics and develop curricula.
3. Ensure funding for programs is catalytic and sustainable by requiring matching public funds. Public universities are under tremendous budgetary pressures, especially following COVID-19 cuts to state education funding. This, in turn, increases reliance on tuition funding and away from initiatives targeting low-income students. Philanthropic funding should not try to replace public funding; instead, strategic funders can require matching public funding to help change the incentives faced by university administrators to funnel scarce resources into diversity initiatives.

3. Advancing Support and Direct Care Workers Into Higher-Skill, Better-Paid Roles.

The US health-care workforce is predominantly low-wage support and direct care positions, roles such as home health aides, nursing assistants, and technicians. Health-care support occupations are expected to grow at 4x the rate of all jobs in the economy. Considering the current funnel of workers, that leaves a huge shortfall, especially for roles supporting underserved populations. Making these positions more attractive and providing advancement opportunities is key; however, the ecosystem is complex. The most effective strategies will center on facilitating partnerships in the education-to-employment pipeline.

In line with Dalberg’s previous article on equity in the US care economy and the role of private investment, there is a significant opportunity to build out the infrastructure supporting care providers and those aspiring to enter careers in this space. We firmly believe that a multi-sector, multi-actor response is needed to solve the challenges.

For example, philanthropy can facilitate the ecosystem of employers and community colleges/career training centers. The majority of workers in this space will not go through baccalaureate programs; community colleges are the largest trainers of the health workforce in the US, with health professions ranking as the third most popular category of associate degree nationally. Associate degrees in nursing (ADN) programs educate more than half of all minority nurses and are a key first step towards ascending the career ladder to high-paying registered nurse (RN) positions. There is a significant need to provide upskilling and career entry pathways that fit the needs of mid-career adult learners from underserved communities. For example, over 40 percent of California’s community college students are older than 25 and already working, 69 percent are BIPOC, and the system awards around 6,400 nursing degrees per year. A common career ladder, home health aide (HHA) to certified nursing assistant (CNA) to licensed practical nurse (LPN) to registered nurse (RN), is often very challenging to complete due to financial or family constraints, e.g. single parents lacking child care options, unless training institutions offer services to meet these students’ needs. Organizations such as the Health Career Advancement Program (HCAP) play a key role creating the local ecosystems necessary to expand available upskilling options and empower connections between training and career pathways.

Philanthropy also needs to advocate for policy support and worker rights. To create systemic changes, policy change and innovative public-private partnerships will be needed. Recent work by the Brookings Institution highlighted key federal and state-level changes, such as mandated hazard pay, increased Medicaid funding, and expansion of paid sick leave. Furthermore, government-funded training programs can play a key role, such as programs in Washington and Tennessee. New Jersey, with support from Social Finance, is developing a Pay It Forward program, which blends public, philanthropic, and corporate funding into a recycling fund to support training in locally-relevant high-demand sectors. Federally supported Area Health Education Centers (AHEC) also work to connect local support with nationally supported training initiatives. It is time that these “essential” workers are brought out of the shadows and provided with economic security.

4. Enhancing the Current Workforce With Community-Centered and Culturally Competent Care

The engagement of underserved communities and ensuring that individuals with lived experience are at the helm of these initiatives are essential to ensuring the health care system can fulfill its social mission. 

To integrate community needs into care systems, we must promote diverse health systems leadership. While 32 percent of patients are BIPOC, members of these communities represented only 11 percent of hospital executive leadership in 2015. This is a reduction from 12 percent in 2013. While 96 percent of surveyed hospitals said they had commitments to diversity, only 45percent said that they had a comprehensive plan for achieving it. Professional groups such as the National Hispanic Medical Association provide trainings for their members to ascend to leadership positions within their hospitals and health systems. In 2019, the American Hospital Association released a Health Equity Toolkit, that includes guidance for measuring diversity and inclusion in hospital leadership and governance.

We must also provide data-driven, community-centered practice that informs programming and cultural training. The evidence is still being formed on the comparative efficacy of various culturally competent health-care practices. Programs such as linguistic matching, involvement of families, and use of community health workers show promise in many settings, and health systems should be intentional about developing a holistic strategy to deliver culturally informed care that fits local needs. One example of innovation is an initiative by the University of New Hampshire’s Institute for Health Policy and Practice to create geographically specific community data reports for hospital CEOs to better inform preventative care priorities and community engagement. Philanthropic funders can play a role piloting and researching community-centered practices for informed care.

The Opportunity for Philanthropy Is Clear and Pressing

Diversifying and empowering the health-care workforce presents an area of significant need. It is also currently an area of significant innovation, carrying the opportunity for systemic change.  There are many intersecting objectives for working to improve the health-care workforce: narrowing the racial gap in health outcomes, meeting underserved communities’ increasing need for more health care, and providing economic security to millions of vulnerable, low-wage health employees. Resources and solutions are needed in high-skill positions, such as physicians and dentists, as well as support and vocational roles. State and federal policy is beginning to shift much-needed resources to scale solutions. Traditional institutions, like public university and community college systems, are also showing that they can move the needle on equity and inclusion with policies that center local communities. Philanthropy can play a key role in supporting promising practices, bringing various actors into alignment around health equity outcomes, and catalyzing change across the talent pipeline.

The authors would like to thank the Abbvie Foundation for funding in support of this article. Read more about the Abbvie Foundation’s work here.

The series “Collective Impact, 10 Years Later” has elevated a range of voices from people catalyzing, implementing, funding, and supporting collective impact work. The series reflects on how the field has evolved since Stanford Social Innovation Review published the first article on collective impact a decade ago and shines a spotlight on the importance of placing equity, community ownership, and sharing power as essential components of collective impact work.  We are grateful to all of the authors and partners for their insight, wisdom, and time shaping the field and capturing these learnings.

Collective impact remains as relevant today as it was 10 years ago. In fact, during times of political divide, pushback against movements for racial equity, denials of science, and other dividing narratives in our culture, collective impact initiatives in many settings remain places where people representing diverse perspectives are finding ways to co-create a future together that bridges divides. In addition, when comprised of stakeholders from both formal positions of power and community leaders calling for bolder, more transformational change, collective impact initiatives hold great promise for braiding together improvements in existing systems.

As we look ahead to the next decade, approaches to collective impact and other collaborative place-based work will continue to evolve. This evolution will be driven by changes from multiple directions: It will come from our external environment as we face new, challenging, or unpredictable circumstances that affect our work, our communities, and ourselves; It will come from within as we individually reflect on how we build and improve our own personal practices so that we can be stronger partners in our work and in our communities; and it will come from within our relationships and partnerships with each other as collective change is built by mutually contributing, sharing, learning, and doing together to reach a better, more equitable, and transformational future. 

The Collective Impact Forum and our partners see several areas for further evolution, learning, and energy over the coming years.

How can collective impact initiatives sustain commitments to and progress toward equity?

Many authors in this series have elevated practices for keeping equity at the forefront of local and national work, and as outlined in “Centering Equity in Collective Impact,” equity is now embedded into a new definition of collective impact:

Collective impact is a network of community members, organizations, and institutions that advance equity by learning together, aligning, and integrating their actions to achieve population and systems-level change.

Partners engaged in collective impact work must remain committed to equity over the long term, even and especially when the work gets hard, pushback against equity surfaces, and shifting toward neutrality feels easier. Sustaining progress toward equity requires grappling with the ever-present reality of racism, marginalization, and oppression and relentlessly pursuing transformational change, even in the face of adversity. Local context will dictate the focus of equity efforts, but without unwavering attention and action, backbone teams, steering committee members, and local partners can easily slide back into old habits and ways of being.

Funders, leaders, and backbone teams engaged in collective impact initiatives should ask: How does our work advance equity at every juncture? And those investing in and supporting collective impact efforts, such as intermediaries, consultants, and technical assistance providers, must ask how they can support practitioners and communities to continue this work.

How can practitioners build upon collective impact to center racial equity and shift imbalances of power?

One essential component of shifting imbalances of power is to create the conditions where community members own and lead collective impact initiatives. In order to do this, collective impact initiatives must assess how traditional power is dispersed in governance structures and decision-making, disrupt internal and external power dynamics and oppressive structures, share power, invest in the leadership development of community advocates, and create and sustain trust-based relationships. 

To further shift imbalances, collective impact initiatives can learn from the leadership, expertise, influence, and commitment of grassroots organizers and community-led coalitions that have long been on the front line of systems change efforts. Collective impact initiatives should engage grassroots organizers and community-led coalitions to understand their strategic priorities. An ongoing examination of whose vision the initiative is trying to achieve can keep the work community-focused and community-driven. This understanding can underpin discussions to determine where there may be an opportunity and interest in coalescing around a mutual agenda and will clarify any barriers to successful partnership. If opportunities for partnership do exist, collective impact initiatives should work with grassroots organizers and community-led coalitions to determine their respective roles and how each can leverage their power and influence.

Tension can arise when building connections with grassroots organizing groups, especially if those relationships are new. Trust-building, commitment, and showing up for the community are key, as well as understanding that some grassroots organizing groups may never want to formally join the collective impact table, as the collective impact initiative may be seen as too closely aligned with the power holders that are being called to change. In those cases, how are collective impact initiatives offering support, resources, and partnership to community-led efforts without requiring organizers to join the table? How are initiatives supporting their local organizers’ strategies?

How can collective impact initiatives make progress on the structural, relational, and transformational dimensions of systems change?

As addressed in several pieces in this series, collective impact initiatives are striving to achieve systems change through their work. Some collective impact initiatives are focused on the more structural pieces of systems change–shifting things like policy and resources allocation. But as described by the Collective Change Lab in “The Relational Work of Systems Change,” few initiatives have focused exclusively on the more transformational work of shifting mental models, narratives, and culture alone.

In order to sustain shifts over the long term, transformational work must occur in parallel with structural work. Mindset shifts and culture change will require work not only at the collaborative and organizational levels, but at the individual level, which will require personal transformation work. This dimension of systems change work has been far less present in collective impact initiatives to date and is ripe for further learning and attention in the field.

How can multiple collective impact initiatives in a community maximize resources and impact?

As place-based collaborative work continues, many communities now are home to multiple collective impact initiatives. While increased collaboration has benefitted communities, there’s a risk of collective impact initiatives themselves becoming siloed from each other. As COVID-19 has laid bare, the challenges in our communities are interconnected and share root causes. The presence of multiple collective impact initiatives in a community can cause initiatives to compete for local attention and funding, to do redundant work, such as building parallel community data systems, and to miss opportunities to collaborate and address related root causes. One solution to more effectively connect collective impact initiatives across issues is a field-building catalyst. In “How Field Catalysts Accelerate Collective Impact,” the Tamarack Institute describes its role as a field catalyst mobilizing collective impact initiatives across Canada in support of a living wage. Collective impact leaders can learn from this example and ensure local initiatives don’t create silos they were designed to reduce.

How can learning be shared globally? 

Collective impact initiatives have taken root across the globe, with the approach adapted for local history, context, resources, and capacity. The adaptations of the approach in a range of contexts have begun to illuminate valuable lessons for the global field, as we see in the reflections shared in “Power and Collective Impact in Australia.” But learning across continents has been minimal to date, and the trans-continental learning that has occurred has primarily been amongst western, English-speaking countries. More investment in sharing learning globally promises to accelerate this work.

For example, what can be learned from implementation of collective impact in more resource constrained environments, such as Saamuhika Shakti, a collective impact initiative focused on improving the quality of life of informal waste pickers and their families in Bangalore, India? And what can be learned by practitioners in the United States from collective impact initiatives in Europe, which have a much larger engagement from government than in the United States? What can we translate from those experiences about increasing the role of government as a partner? And what can practitioners learn about engaging the private sector in collective impact work, as has begun to take root in Good Job 5060 in South Korea? A resourced, proactive effort to share learning bilaterally across different regions would benefit all.

How can collective impact work be sustained?

We cannot conclude without talking about the critical importance of sustainability, both in terms of sustaining partners’ momentum, engagement, and a commitment to equity as we referenced above, and financial sustainability. The authors of “Working in Partnership With Opportunity Youth” emphasized this point with an observation from William Bell, president and CEO of Casey Family Programs: “It is not possible to solve generational challenges on a grant-making timeline.”

There is no single recipe or formula for sustaining engagement and momentum in long-term, emergent, systems change focused work. However, initiatives that have sustained themselves, long before, during, and through crises such as the COVID-19 pandemic have been flexible and adapted to the changes in their environment while still maintaining their mission and north star. The Communities That Care Coalition of Franklin County and the North Quabbin (CTC), highlighted in “Centering Racial Justice and Grassroots Ownership in Collective Impact” demonstrates this evolution and ability to sustain work over time. Since 2012, CTC has used the collective impact framework to improve youth health, well-being, and health equity in rural communities in Western Massachusetts. A nimble, learning, adaptive orientation is one key ingredient in sustaining momentum. As work in the field persists, we hope to learn more about how initiatives are keeping stakeholders focused on their essential work.

Sustaining funding for collective impact work is another vital area to explore. Many collective impact initiatives working to create lasting community-level change struggle to fund their work for more than an initial few years. Collective impact initiatives need to garner resources to support their collaborative infrastructure (e.g., backbone staff, data infrastructure, community engagement), and this funding must be committed over longer timelines. Increased commitments from philanthropy, government, and the business community can all contribute to greater sustainability:

• For philanthropy, continuing and increasing long-term support for collaborative work is essential to achieving systems change. And as philanthropy’s role in these initiatives continues, we hope funders will continue to evolve toward more trust-based, community-centered philanthropic practices that funders have begun to increasingly embrace such as those described in “How Funders of Collective Impact Initiatives Can Build Trust.”
• As shared in “The Leading Edge of Collective Impact: Designing a Just and Fair Nation for All” and “Reflecting on Collective Impact for Place-Based Social Change,” government funding and policy change holds the potential to truly sustain and scale the impact of collective impact work—be that through federal grant program like Promise Neighborhoods, requirements for multi-stakeholder coordination written into state funding streams, county-level allocations that fund backbone staff in agencies such as departments of public health, or through local grant programs to support innovative local efforts.
• With a few exceptions, corporate philanthropy and corporate social responsibility efforts remain largely unengaged in place-based collective impact work, another lost opportunity.

As a field, we need to find ways to increase the commitment of this range of funding types if we are to resource and sustain collective impact initiatives over the next decade.

Looking Ahead

People engaged in collective impact work around the globe have contributed to shaping the field, and many new changemakers are diving into collective impact work each year who will continue to bring fresh insights as this work evolves going forward. The residents in our communities, particularly those experiencing the greatest marginalization and oppression, require us all to address these questions and more. We hope you join us in this work.

The Collective Impact Forum would like to thank Matt Wilka and Tracy Timmons-Gray for their contributions to this series.

B Corp, the well-known brand and certification granted to socially responsible businesses, has moved into the spotlight as more and more companies consider how they might restructure their operations to create a more-sustainable business ecosystem. Today, B Lab, the brand’s nonprofit evaluation entity, has certified more than 4,000 companies (including large, global companies) across 77 countries as B Corps, and is working hard to build a community of entrepreneurs that improves through mutual encouragement, cooperation, and information sharing. It sees a need to develop a standard and model of management practice under the new business environment of the 21st century, and to systemize cooperation for global expansion.

Amid these developments, the number of companies obtaining B Corp certification is gradually on the rise in South Korea. Seventeen Korean companies have been certified as B Corps to date, starting with a forest-building social venture Tree Planet in 2013. One or two companies have obtained B Corp certification each year since then, and seven companies have been newly certified in the past three years. But while this implies increasing interest among Korean companies, the movement within South Korea remains disappointingly trivial both compared to the global trend and in light of the region’s strong interest in sustainability and environmental, social, and corporate governance (ESG).

To draw more Korean companies into the movement, business leaders and the B Corp system itself must overcome four main limiting factors. These include a lack of awareness of its benefits, weak correlation between certification and financial integrity, ambiguity around the role of B Lab Korea (the Korean partner institution of B Lab), and insufficient attention to cultural differences and local contexts. Here’s a closer look at each of these limitations, as well as ideas for how the field might move beyond them.

Raising Awareness About the B Corp Movement

In South Korea, most Certified B Corps are relatively small social enterprises or acceleration/investment institutions unfamiliar to the general public. One example is Dot, which produces assistive devices for the visually and hearing impaired. Even though it recently won the 2021 Extreme Tech Challenge with its cutting-edge enabling technology, it’s still a small company with fewer than 50 employees and limited visibility. Another promising Korean B Corp, Todo Works, offers an Internet of things-based mobility solution for the disabled with fewer than 30 employees. Leading social enterprise accelerators and impact investors like Impact Square, Mysc, and D3 have only around 20-40 employees, and even Crevisse Partners, which has around 80 employees, is tiny compared to mainstream Korean companies such as Samsung, LG, and Hyundai Motors. In our interview with Taeeun Jeong, B Lab Korea’s senior manager, she pointed to this as a reason for the country’s lack of awareness about B Corps and their benefits.

The ultimate reason most companies seek to acquire the certification is to highlight their sustainable practices, and gain public interest and support. But even companies aware of this potential are reluctant to invest in acquiring the certification knowing there isn’t sufficient context for recognition. Korean consumers aren’t familiar with B Corps, which means they can’t empathize with B Corp values. And while Tree Planet and Dot say they’ve received support from abroad because of their B Corp certification, this benefit isn’t well recognized among most Korean companies, which mainly target local consumers. Without strong reference points, it’s especially hard to induce the participation of big companies and mid-sized firms.

Making B Corp certification more desirable, and thus spurring greater corporate commitment to social and environmental impact, requires more real success stories. For this to happen, raising awareness among consumers—particularly the MZ generation, which seeks to make values-driven purchases—is imperative and requires active promotion of the certification. Finding ways to attract large, Korean conglomerates—especially in the cosmetic, fashion, and food industries—to the movement and leveraging their MZ consumer bases to spread the word would draw the attention of other big companies and boost greater general awareness among the Korean public.

Improving Measurement of Financial and Social Integrity

The second limiting factor is B Lab’s B Impact Assessment (BIA), which deduces non-financial information related to a company’s sustainability by assessing its business model and management practices—according to governance, workers, customers, community, and environment—rather than its financial performance. This implies that conventional indicators of financial health (such as profitability, marketability, and growth potential) are of less importance in the B Corp certification process, and this weak correlation between certification and financial integrity is one of the obstacles to the expansion of the movement. In fact, critics have pointed to several cases where the financial sustainability of Korean B Corps was severely in doubt. If a firm can’t pay for salaries, interest, and taxes on time, it can hardly make a social impact in a sustainable way.

Meanwhile, BIA mostly measures the company’s social impact at an output level—for example, according to new hires, employment rates for people with disadvantages, ratios of female managers to male ones, energy reduction rates, donation amounts, or community service hours—instead of at an outcome or impact level. And while output-level measurement is useful for monitoring, it doesn’t sufficiently indicate whether the company is changing people’s lives in a meaningful way.

Another issue is that the BIA’s five evaluation domains don’t have individual minimal requirements, so the system can’t prevent imbalance between them. For instance, if an eco-friendly company’s employers abuse their power in franchise agencies but the enterprise scores very high in the environmental field, it may still be able to pass the BIA and qualify for certification. What’s more, there’s little post-certification management. Several B Corp-certified Korean companies have run into controversies regarding corporate ethics. Yet B Lab has failed to hold those companies truly accountable by investigating them and taking appropriate actions—for example, official warnings and/or retractions of certification. This has made it challenging to gain the trust of Korean people who are interested in the B Corp movement.

BIA must begin to more seriously consider social impact at an outcome or impact level, and let independent tertiary institutions investigate or verify results during the recertification process. Since it would be difficult for B Lab headquarters to oversee the operations and impact of certified B corps outside the United States, local partner institutions need to play a role in monitoring them, reporting back, and helping resolve issues that arise.

Empowering Local Partners

The third limiting factor relates to the ambiguity of B Lab Korea’s (and other local B Lab’s) strategy and role, resource constraints, and lack of capability—an issue connected to the seemingly lacking global strategy. For example, B Lab Korea, founded in January 2019, has engaged in activities such as hosting conferences and workshops to encourage companies to pursue socio-environmental achievements, but the fact that the movement has yet to spread significantly leaves its future in question. This is especially true given its lack of resources and capabilities; its small size and budget make it hard to envision growth toward a meaningful and sustainable impact.

Another problematic aspect of global strategy is that B Corp makes all certification decisions in the United States. It’s virtually impossible for US headquarters to oversee all of the post-certification management and community formation for B Corp-certified companies in other countries. Neglecting quality management of B Corp certifications can be particularly detrimental, as there is a high risk of companies using it for motives far from its original purpose, such as impact washing. Countries outside the United States are especially susceptible, as they have comparatively weaker surveillance. Yet local offices lack the power to manage certification, and they won’t gain the power they need without an appropriate division of roles and delegation of resources.

To solve the first issue, B Lab Korea may need to put in the effort to build its own business model and value proposition as a nonprofit startup in order to secure resources and capabilities. At the same time, US headquarters and local/country offices must heighten the efficiency of the B Corp certification process while properly managing the quality of B Corp certifications. This requires that offices work together to do due diligence for certification, make decisions regarding certification, analyze certification results and write reports, conduct consultations based on data, execute post-certification management for certified companies, build communities between certified companies, and advertise or host events for the spread of the B Corp movement. It also means co-developing a global-scale strategy to spread the movement worldwide, starting with redefining the roles and responsibilities of local/regional partners.

Accounting for Cultural Differences and Local Context

The fourth factor involves important differences across cultures and contexts. One of the most noteworthy characteristics of Korean culture, for example, is its obsession with speed, or ppalli-ppalli (“faster and faster”) culture. This culture is prevalent in the everyday lives of Korean people, and some experts have attributed the rapid growth of the Korean economy to it. By contrast, B Lab’s certification process is long and complicated. Certified Korean companies report that it takes more than a year, and potential applicants see this as costly and painful.

The ability for local/country partners to identify local/country-specific blind spots and adapt standardized processes accordingly can help overcome these challenges. Empowering B Lab Korea to play a role in shaping the certification process by placing more focus on human resources, for example, would make application more appealing to Korean companies. It’s also imperative that local partners in Korea and other countries encourage executive management teams to consider B Corp certification by establishing their own planning, execution, feedback, and reward systems.

Other Considerations

If the B Corp movement is about “transforming the global economy to benefit all people, communities, and the planet,” then, as noted earlier, the participation of big companies is important. Jinseok Seo, who has headed corporate social responsibility at SK Group for more than 15 years, believes that for-profit firms must actively renew their mindset, evaluate their social values, and establish sustainable purpose as their ultimate goal. At a recent conference co-hosted by Hanyang University and B Lab Korea, he emphasized that businesses should view B Corp as a way to improve internal issues and sustainability, rather than good marketing, and consider the full range of impact they have on society, rather than cherry-picking practices to advertise to the public. 

An additional consideration is how to open the floor for social discussions regarding the purposes of companies and the direction of their goals. Collaboration with academia offers a way forward. For example, the current and future chairmen of the Korean Academic Society of Business Administration, which consists of around 13,000 business management scholars and practitioners, recently came together to emphasize the importance of stakeholder capitalism and a new relationship between companies and society. Encouraging professors and researchers who teach management and lead social discussions can contribute to shifting the purpose of companies from “maximization of shareholder value” to “the pursuit of stakeholder happiness,” which can have significant social influence.

Making B Corp more than a certification process and securing its position in society as a legitimate movement that spreads positive influence worldwide will require effort, sacrifice, and cooperation from many people and many institutions in many different regions. Those involved need to emphasize the spirit of “glocalization”—the idea of “think global, act local”—to empower local partners and adapt to local cultures and contexts. What we’ve observed in Korea’s case may not apply to all other countries, but our insights shed light on the importance of collective action in spreading the movement globally. The time is right for B Lab and its local partners to review current policies and procedures, think deeply about future strategy, and build up systems that address local challenges and achieve a global agenda—systems that “make business a force for good” not just in a few countries, but around the world.

Last year, Andrew King and Kenneth Pucker argued in SSIR that “new proposals for monetizing corporate planetary impacts are alluring, impossible, and perilous,” and specifically referenced the Impact-Weighted Accounts project at Harvard Business School. Since their statements about our work and its goals also apply to the entire impact valuation community, we have written this response to reiterate our position that impact monetization is the most expedient way for multi-stakeholder impact considerations to be incorporated into management and investor decision-making.

Fundamentally, impact monetization is about translation: converting non-intuitive metrics from a variety of disparate academic fields—from environmental science, public health, human resources management, and public policy—into currency units that can be understood by board members, senior leaders, investors, employees, and customers. Financial accounting and monetized impact accounting are dynamic and evolving processes which provide important context for decision makers. But impact monetization practitioners don’t envision a single static methodology to determine the value of social and environmental externalities. Rather, just as financial accounting continues to adapt, impact accounting will do the same. In contrast to King and Pucker’s interpretation of our goals, our aspiration is to converge on ranges of acceptable monetization factors based on context and science (a concept known as “bounded flexibility”), rather than prescribe rigid interpretations of stakeholders’ preferences.

Impact monetization is not perfect, of course, and there are risks that must be understood and managed. But it represents a substantial step toward more integrated, inclusive, and sustainable decision-making by making inevitable tradeoffs and conflicting needs transparent and comprehensible to a broad set of users. Indeed, our experience working with senior leaders of organizations has shown time and again that monetized impact resonates far more saliently for decision-making than disparate metrics such as Particulate Matter 2.5 or a CEO to Median Salary ratio.

Is Monetization Impossible?

The first argument King and Pucker make against impact monetization is difficulty: “Because different product impact measures are bespoke to each industry, the complexity of determining consumer surplus grows exponentially,” they write, going on to assert that “most economists believe that it is impossible to solve the “economic calculation problem” (i.e. the efficient allocation of production to meet consumer desires) in a centralized way.”

We would suggest that “most economists” is a generous interpretation and that these challenges are not reason enough to throw in the towel. We don’t dispute the difficulty of the undertaking. But the monetization of corporate externalities is already happening: Numerous companies have begun using forms of monetization to better understand their risk, including case studies published by both Impact-Weighted Accounts and the Value Balancing Alliance. Further, this is the direction that impact measurement is moving; the G7 Impact Taskforce in December 2021 formally recommended impact valuation in its report Time to Deliver. We, and our colleagues, choose to add data, rigor, and stakeholder engagement to this existing practice, rather than let impact-washing control the $35 trillion in assets under management that are currently stamped with an ESG or “impact” label and sold at a premium to investors and consumers alike.

To illustrate the difficulty of impact monetization of the value of a product such as airline travel, the authors zero in on a single calculation in one of the Impact-Weighted Accounts framework’s three primary pillars (environmental, product/service, and employment impact). But just as we would not recommend making determinations about a company’s financial health by looking at a single line item on an income statement, we similarly do not suggest that conclusions about the value of a firm’s externalities on society be drawn from a single component of impact accounting statements. To suggest that an airline would change its fundamental business model based on that single component is an extrapolation far beyond the intent and actual practice of impact accounting. It is precisely the point, in fact, that instead of a single bottom line impact number, impact accounting envisions a system where value creation and destruction are broken out by stakeholder and by dimensions of well-being (i.e. human rights vs well-being increases) to provide critical context.

Further, the relevance of King and Pucker’s concerns regarding difficulty has significant range across different components of impact accounting, just as it does in financial accounting. For example, there is significant empirical research to support the convergence around a carbon price, which we would use to monetize a company’s environmental footprint. On the other hand, monetizing the impact of a product or service once it has been purchased by a consumer is a comparatively more recent endeavor, and therefore can easily be explained away as “too hard.” Financial accountants will find this range familiar, as they think about the relative ease of accounting for internal payroll expenses versus tracking revenue from disparate income sources.

We must avoid building a false binary between financial accounting and impact accounting, presenting the former as a science, while the latter as an art. Reality lies in between the two, both are necessary for a dynamic and effective system, and it is crucial to stay humble, and to evolve. Thus, when King and Pucker write that “The problem of measuring the value of possible changes is further aggravated by the dynamism of modern economies: Economic conditions are always changing, so impacts would need to be updated constantly,” we would observe that this same dynamism permeates any financial measurement (ask anyone who has been keeping up with the continuously evolving changes to accounting treatment of operating leases or revenue recognition). In finance, no less than in impact, evolution is part of the fundamental DNA of the system and is critical to ensuring the relevance of financial accounts to current economic contexts. This evolution is a tool to combat what the authors present as a risk inherent in impact accounting: that a far-removed, static, and elite group will make the rules that the rest of the economy needs to follow.

Is Monetization Un-Democratic?

A second primary theme of King and Pucker’s article is the disintermediation of customers’ needs and preferences by a select (meaning elite) group of experts, citing Arrow’s Impossibility Theorem and the challenges of calculating consumer surplus (which they argue proponents of monetization have not considered). This seems to us to be a scare tactic, envisioning a “single mainframe computer to calculate the true value of each exchange to sellers and buyers, third parties and planet as a whole,” which would transfer the valuation role from consumers to experts; “In an impact accounting system,” they write, “these experts would decide how much consumers benefit from flying to various destinations, or from drinking a glass of water or buying a handbag… [leading] to waste and the further accumulation of decision-making power” analogous to that of the communist economies of the mid-twentieth century.

To put it mildly, central planning is not what has been envisioned by the Impact-Weighted Accounts team nor by other experts in the impact-monetization field. Social Value International, the membership network that has overseen the “Social Return on Investment” since the early 2000s, defines “stakeholder involvement” as its first core principle, despite common misconceptions. (The following statement from SVI’s Standard for applying Principle 3: “Value the Things that Matters,” illustrates the importance placed on stakeholder involvement in the valuation process: “Value is subjective in its very nature. Therefore, it is critical that Principle #3 “Value what matters” is applied in conjunction with Principle #1 “Involve stakeholders” so that we value outcomes from their perspective.”

The Impact Management Project (IMP) facilitated a discussion on this point between IMP Practitioner Experts on impact valuation and monetization, whose key findings (and contradictory view-points) are summarized extensively in a public document. On the topic of whether agreement could be reached on the relative priority or worth of different impacts, the consensus was that less than or about half could be:

“Even if an enterprise or investor were to be wholly altruistic and subordinate in its interests to those of its stakeholders (including the environment), there does not appear to be one “correct” way of doing so. It appears inevitable that enterprises and investors will have to rely at some point on their own preferences and values to make decisions. In these situations, organizations leading on this topic traditionally encourage practitioners to engage with stakeholders if they haven’t already, to codify (and question) their assumptions, and to be internally and externally transparent about what data and methodologies were used to prioritize impacts.”

The vision for what might be agreed upon in impact monetization is best described as bounded flexibility, or choice within limits. There is no single value for each impact that will stand across time, stakeholders, cultural, and geographic contexts, but that there are limits, based on stakeholder engagement, science, and other price/preference discovery methodologies that can inform the upper and lower bounds of acceptable valuations and provide guidance on confidence intervals. In “Mutually Compatible Yet Different,” Nichols and Zochowski acknowledged Arrow’s Theorem, postulating that “bounded flexibility places consensus-based boundaries on the limits of the expected deviation in an impact valuation within a framework. This maintains a level of comparability whilst allowing for context…[acknowledging] that preferences can be dynamic in nature and may require adjustment.” The strawman of a hegemonic dystopian selection of preferences by an elite group of experts doesn’t do justice to the complexity of views held by the impact monetization movement.

But what of the authors’ faith in the efficiency of markets and consumers’ ability to influence prices? The efficient markets hypothesis relies upon the assumption of perfect information. Not only is this clearly not the case for most products that we consume, but the role of monetization is to make the true cost of such decisions more transparent, arguably increasing market efficiency. For many products, especially staples, consumers are price takers as can be seen in energy, gasoline, and food markets with substantial forces beyond simple supply and demand driving prices. Critically, the value created or destroyed for other stakeholders—like the environment, community, or workforce—are not readily priced into the interaction between a firm and its customers. A single focus on supply and demand forces, with the hope that government regulation will intervene on behalf of other stakeholders, simply has not worked. Climate change and growing social inequality can speak to this truth.

It could be argued that all monetary valuations are inherently biased, even when derived through accepted price-discovery methodologies: Many of them rely upon asking the population, or one of similar properties, about their preferences or valuations. However, the very process of seeking out valuations for the impacts from affected populations is a notable improvement beyond investors and corporations imposing their values upon others. Where impact monetization directly incorporates stakeholder voices this can only democratize valuation and increase the accountability of impact measurement.

Ironically, the alternative proposed by the authors of “Heroic Accounting” is closer to the centralized dystopian system that they envision resulting from monetization, by proposing that government regulation be the most important driver of impact management. When the authors propose a one-sided system of regulation of impacts and the disclosure of impact metrics on consumer packaging, they do not explain how stakeholder’s needs, preferences, or rights would be incorporated into those governmental regulations nor how consumers or government officials would manage to understand the magnitude of impacts represented. How could a carbon price that actually reflects the true social cost (rather than the politically convenient cost) be determined absent monetization? One cannot have a tax on environmental impact without measuring that impact, nor can you incentivize job quality without valuing the cost to employees and society from poor employment practices (and just as importantly, the positive impact created from good employers). Monetized impact is not only a tool to ease analysis, but the transparency of the approach makes it possible to back out of calculations for regulatory use. It also helps to prepare companies for the internalization of impacts by translating risk and opportunities into financial figures.

Impact monetization proponents are in support of an ecosystem of actors; investors, corporations, employees, consumers, and government regulation all have transparency and agency with which to advocate for their preferences and needs. There is no need to assume that impact-weighted accounts and government intervention must be mutually exclusive; in fact, we argue that they should be complementary.

The Potential of Impact Monetization

The language of currency allows the broadest audience to understand and act upon social, environmental, and financial information. After all, would you buy a product if all you knew was that its price was “medium” or expressed in a different currency than the one in your pocket? Or, would an investor put capital into a company with “strong” returns without any actual numbers? That’s essentially what we are asking in the absence of impact valuation. There is tremendous appetite from investors, employees, and consumers to engage with “responsible” companies, but very little consensus on how to assess a firm’s commitment to social and environmental performance.

Impact monetization gives all stakeholders a clear understanding of the social and environmental cost of their decisions. Furthermore, monetization also helps businesses to understand the true costs of production when accounting for total value derived from other capital types, which are referred to as dependencies. Proposals for displaying impact monetization results also call for the clear disclosure of all assumptions made as well as separate “balance sheets” and “income statements” for each stakeholder group, in terms that are easily understood by non-experts. By publishing their assumptions, other market players could check whether the valuations were reasonable, i.e., within the range of “bounded flexibility,” or whether the organization was somehow manipulating the numbers (just as happens today with financial information assurance).

For many, it feels uncomfortable to put a monetary value on something of intrinsic or sublime value, as governments do with cost-benefit analyses to aid decision-making for the public good, or life insurance companies have been doing since their inception. We are all making choices every day that impact these intrinsic or invaluable goods and aspects of well-being, whether we put an explicit price on them or not. In our view, choices made with more transparent and comprehensive data that is informed by those experiencing the impacts are better than those made with less (as long as the assumptions which underlie that information are valid). By making decision makers accountable for all of their organization’s externalities, rather than just financial results, we move in the right direction.

The best social sector solutions are the ones that address multiple challenges at once. Food systems transformation touches on many different global crises: climate, health, nutrition, economic self-determination, even the pandemic. However, for decades, the cooperatives, social entrepreneurs, small farmers, and government agencies working to build sustainable, healthy food systems have been doing so with one hand tied behind their backs. We are competing in a skewed marketplace with misguided incentives, to produce the most possible food at the cheapest price, regardless of the impacts on climate, health, workers’ rights, or equitable distribution.  

“True Cost Accounting” (TCA) helps to level the playing field, as well as serving as proof of concept that food systems transformation can accelerate progress across a host of global challenges. True Cost Accounting is a decision-making approach that captures the positive and negative impacts that food systems have on the economy, the environment, and society. TCA has its origins in ecological economics, which emerged in the 1970s, and expands traditional economic accounting systems of aiming to identify externalities, including cost-benefit analysis.

With growing awareness about the need to measure and count the hidden costs of our food systems in full, it has become possible to calculate the true cost and value of food, a policy and business-making approach that could scale impact and drive innovation across diverse sectors. What we’ve learned from 10 years working to develop TCA, and from our assessment of food systems initiatives around the world, is that transformation is already happening, and True Cost Accounting is a tool to make it visible.

You Can’t Count What You Don’t Measure

Industrial food systems are some of the largest drivers of climate change, habitat destruction, biodiversity loss, displacement of Indigenous peoples, disease, and the double burden of malnutrition. In many parts of the world, food production directly drives conflict, poverty, and mistreatment of workers. But as “costs,” such externalities are mostly unaccounted for. A recent report by The Rockefeller Foundation showed that the health and climate consequences of the American food system cost three times as much as the food itself. A paper prepared by the UNFSS scientific committee estimated that the current externalities of food systems are almost double ($19.8 trillion) the current total value of global food consumption ($9 trillion).

Governments, businesses, and world economic and governing bodies are only beginning to track these costs. The most commonly used metrics for food production around the world are still volume and price: yield per acre and price per unit. You can’t count what you don’t measure: If the negative externalities of unsustainable, unhealthy, and industrial or ultra-processed foods are never considered in decision-making, innovators and changemakers can never compete. The same old approaches will continue to be put forward. Poor outcomes will continue to be incentivized while better, less damaging practices will be unable to thrive.

A Tool That Tracks Change 

We need frameworks to help us think more systemically. A fuller understanding of the connections between humans, the environment, and food systems—as well as the multiplier effect these connections have on health, well-being, social justice, and livelihoods—can be harnessed for ever-more positive impacts across food systems and sustainability as a whole. True Cost Accounting provides that holistic understanding of the relationships between agriculture, food, the environment, and human well-being. Already in use by a plethora of countries, organizations, and businesses, TCA provides a systemic approach to assess, measure, and value all externalities—the positive and negative impacts—of food systems.

The results are already promising. Over an eight-month period, our organizations undertook an exhaustive study in collaboration with six diverse food systems actors from around the world, applying a true cost accounting evaluation to each initiative. The report, True Value: Revealing the Positive Impacts of Food Systems Transformation, focused on diverse qualitative data for each organization. All six were pushed beyond their usual evaluative approaches and data and encouraged to think about their work in more holistic and systematic ways than ever before. From Lagos, Zambia, the Philippines, Malawi, India, and the Americas—spanning farmer collaboratives, food banks, government agencies, researchers, and social enterprise—the report showed significant benefits: reduced health costs due to lower disease burdens as a consequence of reduced pesticide use; improved crop yields as a result of reintroducing traditional knowledge and agroecological farming practices; and increased local food security thanks to the sharing of Indigenous seed varieties through seed banks, and helping farmers to adapt to changing climates and gain financial independence by transitioning away from synthetic fertilizers.

These impacts do not register in a market defined by yield per acre and price per unit. Only by using a “true value” lens could we see them.

The story of these impacts is not abstract.  percent: that’s the increased food quantity for participating farmers in India’s Community Managed Natural Farming Initiative, which has helped 86 percent of growers improve living conditions and cut emissions by 55 percent. $426,656,078: the total value of sustainable farming practices undertaken by COMACO, a social enterprise in Zambia that supports the local community to adopt agroforestry, put an end to poaching, and address food insecurity. True Cost Accounting allowed the Lagos Food Bank to better understand the impact of its volunteer program. It helped MASIPAG in the Philippines better track and understand the positive effects of collective decision-making and local ownership in farming communities.

These more systemic measures of progress are central to the success of these initiatives, and to their social and economic impact. But if you never ask the question, you never get the answer.

Debating True Value

This approach has been the subject of debate, perhaps not surprisingly, given the sharp break it represents from the wholly profit-based model by which we normally measure and understand “success” in agriculture and food systems. Big agriculture performs poorly on social, environmental, and human metrics. For example, in the recent SSIR essay “Heroic Accounting,” Andrew A. King and Kenneth P. Pucker levied a number of concerns about true cost and true value accounting methods. But their wide-ranging scepticism overlooks the extent to which “True Cost” and related methods are already enabling social enterprises to grow and scale. And we would assert that characterizing TCA as “heroic” is misleading: TCA is grounded in advancing integrated, systems-based, representative, participatory, and equitable decision-making.

For a start, King and Pucker claim that “impact accounting” requires centralized decision-making, laborious estimation, and ultimately will remain unverifiable. But the United Nations Development Programme’s TEEBAgriFood Evaluation Framework is already in use in more than 80 countries across the world, dispelling these concerns. And there are many other frameworks and tools available in the pipeline to support this kind of “impact accounting,” from indexes to open data sources. Harmonization work by a diverse set of advocates, stakeholders, and communities of practice is already underway to collaboratively create clear guidance, standardization, and metrics, TCA can function like any other business or policymaking tool.

More concerning is the argument—both in “Heroic Accounting” and in a recent Nature piece—that TCA “dilutes the economic power of individual choice,” that “centralizing choice,” as put it, weakens the ability of consumer choice to shape the market.

In response, we would argue that individual choice over food is not a universal phenomenon. Hunger and malnutrition do not come down to choice, but to economic power and access. People often don’t have enough money to buy healthy food, while food environments are the cultural and socio-economic contexts that shape how accessible, affordable, desirable, and convenient this food is. Furthermore, today’s accounting obscures the climate impact of industrial food production, and their hidden impacts on global health. If companies disclose their climate- and nature-related impacts, consumers, investors, and decision makers can understand the full impact of a company, unedited, and decide for themselves.

One leading company already lets its customers do just this. Eosta, one of Europe’s largest importers, packers, and distributors of sustainable, organic, and fair-trade fruits and vegetables, uses a sustainability evaluation tool to monitor the performance of growers against ecological and social indicators. In 2017, Eosta launched a “True Cost of Food” campaign, which assessed and attached a price tag to compare conventional farming versus organic farming. “Buy organic apples and save 27 sick days (per hectare and year),” stated a cheeky campaign ad in which a grocery consumer was shown reaching for an apple from a hospital bed. When the pandemic hit, they instituted a “living wage” policy recognizing how important this was to resilience across their supply chains.

The campaign has been a hit, growing the company’s market share and brand positioning, and educating millions of consumers.

Which Way Forward?

Valuing these true costs of food systems so that we can mitigate harmful externalities and amplify positive externalities is no small feat. It is a significant break with the industrial status quo, and, as such, it’s something those with vested interests in the current way of doing business will challenge. But it is essential if we are to progress on climate, food, health, and other issues of global significance.

As an opportunity to integrate economic, natural, social, and human accounting into a unified framework, True Cost Accounting offers a powerful path forward to the social enterprise sector. New frameworks for assessing the cost, value, or impact of food systems are proliferating, as a product of the inadequacy of the old ways of measuring progress. However, not all approaches are created equal.

The most significant issue in fully implementing True Cost Accounting is achieving a global consensus about the needs and standards for application. Governments have so far been virtually absent from the TCA landscape. Although they have agreed on frameworks like the UN Sustainable Development Goals for national development, moving towards the Goals remains trapped within old-fashioned institutional structures.

Progress Is Happening Now

In September, the first-ever UN Food Systems Summit yielded a global coalition—not yet a commitment, but a start—to carry forward True Cost Accounting on a global scale. In Germany, a study by the Federal Ministry for the Environment determined that TCA increased support for agroecology and sustainable agriculture. In Sweden, a TEEB study resulted in the government adopting a bill on a Swedish strategy on strengthening biodiversity and ecosystem services, which the parliament adopted in 2014.

These are inspiring, important, and necessary signs of progress. And in 2020-21, the pandemic showed our collective capacity both to change and to take urgent action. Our research shows that food systems initiatives around the world are central to that action, simultaneously feeding and uplifting communities and enhancing economic and social resilience. Their work, and their positive impact counts, and feeds the world.

In the winter of 2011, the same year as the release of the seminal collective impact article in Stanford Social Innovation Review, I stepped out of my comfort zone to pursue more substantial, population-level impact for children and their families. I left my career with the US Department of Housing and Urban Development in Chicago and joined PolicyLink, a national research and action institute advancing racial and economic equity. I was the inaugural director of the Promise Neighborhoods Institute (PNI) at PolicyLink. Combining the leadership of PolicyLink, the Harlem Children’s Zone (HCZ), and the Center for the Study of Social Policy, PNI worked to build and sustain Promise Neighborhoods. We worked in partnership with the federal Promise Neighborhoods program, itself modeled after HCZ, and envisioned all children and youth growing up in a Promise Neighborhood with access to great schools and strong systems of family and community support that would prepare them to attain an excellent education and successfully transition to college and a career.

When I took the helm of PNI, Geoffrey Canada’s leadership at HCZ and the power and potential embodied in collective impact inspired me. I was obsessed with improving the lives of the millions of children in America living in poverty. For years, local leaders had advocated for new federal investments, and they finally had them in the Promise Neighborhoods program. At PNI, our job was to organize the Promise Neighborhoods grantees into a national community of practice and support their work with technical assistance, evaluation, and fundraising support. We soon realized that without a disciplined approach to moving from talk to action, it would be difficult to accelerate results. Consequently, PNI fostered the collective impact approach to social change, and soon, our network of leaders from more than 40 communities across America adopted the framework.

I spent several years at PNI learning how to improve outcomes for children and their families. My pursuit of results commensurate with the scale of the problems in distressed neighborhoods across America led me to seek and find the most significant leading edge of collective impact: designing a just and fair nation where all can participate, prosper, and reach their full potential. As PNI partnered with leaders from more than 40 rural, tribal, and urban communities, I was impressed by their ability to adopt the collective impact framework and work in a data-informed, results-driven manner. Within the Promise Neighborhoods network, something special was happening. Place-based practitioners were becoming more sophisticated and applying the five conditions of collective impact. Consequently, we witnessed indicators of well-being trending in the right direction.

Because of local leaders’ unprecedented impact, in 2015 Congress permanently incorporated the Promise Neighborhoods program into the Every Student Succeeds Act. While this was a seminal victory because it provided a significant source of revenue for place-based collective impact efforts focused on supporting children and their families from cradle to career, I was dissatisfied with the scale of our impact. The Promise Neighborhoods network was helping thousands of children and achieving exceptional results like reading readiness scores increasing from 19 percent to 55.7 percent in Berea, Kentucky, and 55 percent of elementary students achieving at least one year of reading growth in four months after participating in after school and summer programs in Minneapolis. Despite these local successes and many more, millions more children needed our help. As we disaggregated data to understand better how to accelerate and scale our impact, I had an epiphany. The more we analyzed data, the more I saw how anti-Black racism undercut our results. Housing discrimination increased the number of times students and their families would move and enter and withdraw from school during the year, negatively impacting student mobility rates. Lead poisoning from paint in homes and drinking water impaired cognitive development and prevented students from entering kindergarten ready to learn. Food deserts put children at risk of obesity. Low-wage jobs with no or few benefits increased toxic stress at home and decreased the quality of parenting. The design of our nation was undercutting our results, and civic leaders’ reluctance to address issues of race meant that asking for high returns on investment (ROI) was folly when unaddressed systemic issues undercut ROI.

While leaders in the national Promise Neighborhoods community of practice were not consistently achieving scaled impact, oppressive systems like the ones I describe above were. Members of the community of practice were providing short-term relief to children and their families, and more was needed. To marshal solutions proportionate to the barriers faced by participants in our community of practice, we needed to learn to hold greater complexity in our collective impact work. This meant finding the right mix of solutions—families contributing to their own well-being, nonprofits providing consistently high-quality programs and services, and where appropriate, leaders implementing systems and policy changes.

Too often, local leaders’ mix of solutions were overweighted toward the first two—families contributing to their well-being, and programs and services. Unfortunately, my experience suggests that scale is rarely achieved with these two solutions. Scale is achieved through systems and policy changes. Based on the history of truly scaled impact in the United States, like the creation of the white middle class through policies like free or low-cost college, the GI Bill, and the Federal Housing Administration’s mortgage guarantees, the scaling mechanism is not civil society; it is government. It is unfair to ask nonprofit leaders to achieve population-level impact when corporations and government are allowed to undercut progress through practices that are exclusionary, harm the environment, and create a democracy and economy that to this day leave nearly 100 million people in America economically insecure.

While we must continue launching and sustaining a variety of collective impact efforts that give us the greatest opportunity to realize the promise of equity in our lifetime—just and fair inclusion in a society where all can participate, prosper, and reach their full potential—the collective impact work that will yield transformational results demands we intentionally design a nation for the “all” in the equity definition. This is a moment for leaders committed to achieving collective impact to shake off the husks of complacency, accept our inheritance as stewards of this nation, and compel it to be all that it can be. Equity is the soul of collective impact, and there is new soul work to be done. Our soul work necessitates a continued focus on place-based practice while simultaneously getting to the unfinished business of designing a multiracial democracy where everyone belongs.

Cross-Sector Collaborations for Liberation

When corporate, government, and civil society leaders work in alignment to compel government—especially the federal government—to become anti-racist, we come closer to being a just and fair nation for all. When our nation’s zeitgeist, laws, regulations, customs, and institutions de-center whiteness and center the liberation of Black and Brown people, we will achieve a positive, population-level impact for millions of children and their families. We will finally be governing for all. This is not wishful thinking. At this moment, all three sectors—government, civil society, and corporate America have begun to focus on racial equity and are advancing systems and policy changes that are achieving population impact. Here are a few examples where cross-sector leaders are redesigning a nation to liberate all and oppress none.

• Enacting Reparations | It’s difficult to achieve results at scale when past wrongs have not been righted. Reparations are an example of the type of evolved consciousness needed to move collective impact beyond the realm of charity to liberation. It is wishful thinking to believe that you can design a nation to privilege specific groups for hundreds of years, become alarmed at the subsequent disparity in outcomes between groups, and then think traditional collective impact efforts alone can right these wrongs. Redlining operated at a national scale from the 1930s to 1960s, and vestiges of the practice still occur today. To repair the harm of discriminatory housing policies and practices, the City Council of Evanston, Illinois, approved the implementation of the Reparations Restorative Housing Program. The program provides $25,000 for down payments or home repairs. While this is a small pilot program, it is significant because it has the potential to shift attitudes and perceptions about reparations. Collective impact efforts can replicate this model, place the pursuit of results in historical context, and design reparative practices alongside programmatic ones.
   
• Ending Cash Bail | Imagine collective impact efforts designed to build wealth in communities, only to have it stripped away by criminal justice systems and the demands of cash bail. This is one of the most pervasive and destructive examples of a design feature of our society that undercuts local charitable efforts and keeps indicators of well-being like the employment rate trending in the wrong direction for too many people. California no longer requires cash bail for those who can’t pay, resulting in millions of people continuing to work, go to school, and care for their families instead of being punished for being poor.
   
• Raising the Maximum Child Tax Credit | While many of us have worked for years to reduce the poverty rate in our communities, with the stroke of a pen, President Biden lifted 3 million children out of poverty by increasing the child tax credit from $2,000 to $3,000. This is what I mean when I say government, not civil society, is our collective impact scaling apparatus. Promise Neighborhoods and thousands of charitable efforts operating over several years have not achieved the level of impact that the Biden administration accomplished in less than 12 months. Now collective impact leaders must fight to sustain this level of impact.
   
• Changing Perceptions and Narratives About Race | Leaders in the Black Lives Matter movement stand on the shoulders of those who built our civil rights and equity movements, and they are forcing America to address issues of white supremacy. The movement is growing a multiracial coalition committed to advancing racial equity, and people in America, including the leaders of collective impact, are addressing issues of systemic racism in ways never seen before. Did you ever think you’d see all three sectors—government, civil society, and business—championing racial equity in your lifetime? This is the power of aligned collective consciousness and action. Collective impact efforts can engage in this important racial justice work by examining their structure and programs and designing collaborations that center equity and bring an anti-racist approach to collective impact.

Leaders from all three sectors are manifesting the radical imagination necessary to build an equitable society. This is unprecedented in our nation’s history. Their efforts can’t be one-offs. They need to be scaled and made permanent fixtures in American life. This leading edge of collective impact requires us to change the nature and logic of our governing institutions to become anti-racist. The collective impact approach to social change will serve us well in this moment. It has given our lives and careers purpose. I have grown up in this work, and I am humbled to share my vision for an equitable America. Each generation is invited to perfect our democracy. This means tending to the immediate needs of people in this nation, while simultaneously creating a new multiracial meaning of the nation’s founding documents that result in new ways of governing or governing for all. This nation-building work is the highest form of collective impact. Disciplined, collective action focused on designing a just and fair society for all, thereby ensuring all people in America—particularly those who face the burdens of structural racism—participate in a just society, live in a healthy community of opportunity, and prosper in an equitable economy. Here’s to 10 more years. Stay strong and encouraged.

A gap between the generations is a given—due to pop culture, technology, and the inherent need for every generation to explore and pursue its own vision for the future. But today there is a new tension between youth and adults. Currently, we’re facing a problem that is global in scale, that disproportionately will impact youth, and that adults mostly created: the climate crisis.

The latest report from the Intergovernmental Panel on Climate Change (IPCC) shows that global greenhouse gas emissions will need to be reduced by 45 percent by 2030 in order to maintain a climate where future damages can at least be tolerated and managed. Instead, the world is on a trajectory to increase emissions by 2030. Adults, who wield all the decision-making power to solve this problem, after three decades of warnings, have so far failed to do so. In the simple words of Ugandan youth climate activist Vanessa Nakate at the 2021 Youth4Climate Summit in Milan, “It’s time.” The intergenerational tension today is qualitatively different from the past because the consequences of adult failure will be felt long after the adults are gone. Youth are rightfully mad as hell, in part because they feel they have little say in their future.

Efforts at adult contrition often backfire—“I’m so sorry my generation messed this up. You’re the future! It’s up to you to fix this!” This framing may seem apologetic and deferential, but instead it makes youth even more resentful. At the same time, youth sometimes convey an analogous message—“You caused this. Just get out of our way.”  Neither attitude is helpful.

We live in an increasingly polarized society. We’re divided by race, income level, education, geography, gender, occupation, culture, and of course, politics, to name a few. But rarely is our generational divide acknowledged and discussed beyond lighthearted derision (e.g., “OK Boomer”). It is an awkward division that is accepted in modern American society. But when it comes to climate change, we accept it at our peril.

Understanding how to bridge this intergenerational divide was the purpose of our 16-person Intergen Climate Group, composed of eight youth (15-26 years old) and eight elders (55-78 years old). We are two members of this group, one Boomer (age 65) and one Gen Z teenager (age 15). The group, formed by the Maine Climate Table, supported by a grant from the Dorr Foundation, has met for 90 minutes once a month for the past year. Our hypothesis was that we could work more effectively together rather than separately on the climate issue. But first we had to understand each other.

Here we share what we have learned together through a yearlong process of learning by listening. We hope these lessons will help anyone, youth or elder, who wants to bridge our generational divide and get something done that would not have been possible without the other generation. Most of our lessons are relevant to the many other divisions in our society today.

1. Understand our methods of communication differ.

At a simple operational level, part of the generational divide stems from the fact that our generations prefer different methods of communication.  Boomers tend to prefer face-to-face, in-person interaction or lengthier written messages. Gen Zers often use texting, Facetiming, and an array of social media instruments to engage with each other quickly. Both methods are effective, but a preference for one or the other makes it easy for the generations to bypass one another. Or, as psychologist Elza Venter explains, our different forms of communication can even create conflict between the generations. Learning how to use the communication methods of the other generation is a good, practical place to start for bridging the generational chasm. We need to open communication channels with each other. To do this we might have to ask for help from the other generation, such as providing transportation to an in-person meeting for youth who can’t drive yet or offering technical assistance to elders on how to use social media.

2. Combine passion with pragmatism.

Part of the work of the Intergen Climate Group was to understand the other generation. To that end, we inventoried our respective generational assets and liabilities. We found that the younger generation has greater passion—they are generally more motivated. The older generation is more pragmatic, in part from a lifetime of having to solve one problem after another. No surprises here, but how do we combine the passion that comes from youth’s understandable concern about their future with elders’ pragmatism for problem-solving?  Elders might know what works and what doesn’t, but only in the world they’ve constructed. Youth are better at thinking outside the box because they haven’t lived for decades in the same box.

A concrete example of combining these intergenerational assets is the intentional cross pollination of membership in different climate groups. By working together through representatives that bridge Maine Climate Action Now! and Maine Youth for Climate Justice, the former organization is able to advance the interests of the youth organization in spaces where the youth voice is not affirmed. And these bridging members of Youth for Climate Justice gain valuable knowledge from adult members of Maine Climate Action Now!

Combining these assets—passion and pragmatism—is one of our biggest challenges to working in solidarity across the generations on climate change. Because we don’t typically mix socially or professionally, and maybe because we’re not entirely comfortable with each other anyway—perhaps even intimidated by each other—it’s easier to not interact at all. This is a mistake. Each generation needs to marshal the courage to seek out the other generation. Do not wait for the other generation to come to you. Go to them. And take humility with you, because you will need it.

3. Combine energy with knowledge.

Youth have energy. Elders have a lifetime of accumulated knowledge. These respective assets are normal—expected—a part of the natural order of things. Youth, when elders, will have much greater knowledge too. And elders once had the energy of youth. Combine energy with knowledge and a powerful force for action emerges. Energy without knowledge, or knowledge without energy, is less likely to be effective. These assets should be combined if we hope to address climate change in a timely manner. Each generation should be respected, embraced, and appreciated for the different assets each brings to the table.

4. We face different stressors, but the intensity is often the same.

We discovered that each generation has life commitments and stresses that limit their capacity to create the change they desire. Like elders once upon a time, youth are facing the challenges of establishing their place in the world. Concerns ranging from driver’s ed to surviving and benefiting from the educational system often sap the seemingly limitless youthful energy for action. Layer on top of that the COVID-19 pandemic, which has constrained opportunities to build professional networks—something elders did not have to deal with decades ago. While we will get beyond COVID-19 at some point, it still comes at an unfortunate time for those young adults who are trying to establish themselves at a critical point in their careers. Mental health is also a massive issue as anxiety and depression plague a generation growing up in a seemingly broken world.

At the same time, many elders find themselves caring for even more elderly parents, and are stretched to the emotional breaking point. Climate change is important, but today a 60-something elder may have to find suitable housing for their 90-year old parent, and figure out how to pay for it. In our group, we learned that we all have our stressors, irrespective of generation. We can only give so much today and make it until tomorrow when we hope to give more. Despite our misconceptions going into the first Intergen Climate Group meeting, now we know we are alike in this regard. Our respect for one another has grown. Our compassion for one another has grown. Trust, respect, and compassion for each other are the building blocks of solidarity.

5. Be aware of self-created obstacles.

Over several meetings, one member observed that the elders tended to dominate our discussions. This may derive from the confidence that comes with age, or a tendency for well-intentioned adults to be overly exuberant or even overbearing. It could derive from a learned generational hierarchy. Every child is taught that their parents know best, and to sit back and listen when mentors, teachers, and other adult figures speak. This leads to young activists being uncertain of their position in intergenerational spaces and worried that their lack of experience means their contributions won’t be recognized as valid. It was too easy for experienced and accomplished elders to unwittingly dominate the airtime of our meetings.

We had not anticipated this issue. Once we knew it was a problem, elders became careful to not fill so much “space” during our meetings. We used one of our scheduled monthly meetings to meet separately by generation so that each age group could reflect on how they used their voice, and how much airtime they occupied in a meeting. Given our society’s hierarchical mores, if elders want to be a positive force for intergenerational work, they need to be deliberate about creating space for youth to lead with their voice and their actions. At the same time, youth need to be willing to occupy the space as adults learn how to yield their power and leadership. Each group needs to be more self-aware.

6. Relationships come first.

The most important lesson we learned from our year together came in the last two months. Perhaps as a preemptive solution to the anticipated awkwardness of spending time together, we likely “overengineered” our meetings in the first half of the year. Members of the group were asked to lead discussions about specific climate issues that interested them. We thought this approach would be a way to learn how the different generations viewed different climate issues. One topic example was, “what role should corporations play in solving the climate crisis?” While we did reveal interesting and instructive differences between the generations on various issues, this approach failed to build mutual trust and respect, which was what we really needed to work on. Having discovered this late, but not too late, our last two meetings were devoted to getting to know each other personally—what mattered in our lives, what were our hopes for the future. Agenda items and overly structured discussion questions were what got in the way of real connection in our first meetings. Once we swept the bullet-points away, free-flowing conversation and interpersonal learning followed.

Likely the most profound observation of the year came from a youth member at our last meeting—“This group is the first time I’ve worked with adults where they didn’t have some kind of power over me—as a parent or a teacher or an employer.” It took us most of a whole year to learn what we should have known at the beginning—that relationships of trust and mutual respect were all that we needed to work together, a lesson that could be applied to many of our societal divides today.

From Conversation to Action

These observations from our Intergen Climate Group may seem obvious. Still, they are rarely articulated so directly or analyzed objectively for the purpose of achieving intergenerational action. The important question is, what are we going to do with these observations? How can we apply what we have learned from each other, taking concepts from discussion-based Zoom meetings to tangible action? It’s good to know our differences, and our assets and liabilities, but now what?

One simple action all elders can take is to press organizations they are involved with to create decision-making leadership positions for youth. Give up your privileged board seat with the provision that you will be replaced by a young person. If you are an elder in a position of power, collaborate with and help fund youth movements. There is an element of truth to getting out of the way so new ideas can come forward. Hopefully, youth will ask for elders’ wisdom because they know it will make them more effective agents of change.

Elders, beware of tokenism—of inviting only one youth member to a board, or a steering committee, or whatever the governance body might be. Populate these decision-making bodies with a substantial balance of youth so that their generation can fully contribute. Sure, young people may make misjudgments because of inexperience, but they bring fresh thinking to the problems of our time—a good tradeoff.

A more specific example of combining generational assets comes from recent legislation in Maine to divest the state’s pension fund from fossil fuel companies. Without the joint efforts of the Maine Youth for Climate Justice Coalition and the largely adult-led Sierra Club of Maine, this bold climate policy would not have succeeded. Youth activists organized the advocacy effort, working with Margaret O’Neil, a state legislator, who sponsored the bill and is a young person herself. Adult activists and allies worked on the technical side, providing critical analysis of the performance of the Maine Public Employees Retirement System, skills that youth do not yet have. Each generation complemented the skills of the other and valued what each brought to the effort.

We do not interact intergenerationally for all kinds of reasons, from our methods of communication to unintentional intimidation of the other, to power differentials that naturally come with age, to simple laziness and lack of courage. This is a mistake. We encourage everyone, regardless of age, to reach out to someone of a different generation and start a dialogue. Start by listening, not speaking. No more reason is needed than a genuine interest in understanding the perspectives and aspirations of the other—a desire to bridge the divide so your own values might be better realized. The relationship will likely flourish, and you will accomplish things you could not have accomplished otherwise.

At the final meeting of the Intergen Climate Group in December 2021, every member voted to continue for another year, but focus on doing rather than talking.

A whole bunch of organizations have gotten a whole bunch of money of late. Mackenzie Scott is on fire, spending billions on a wave of grants to hundreds of organizations, more than doubling the budgets of a few. Funder collectives like Audacious, Blue Meridian, and Co-Impact are making an increasing number of big bets, doing multi-year grants well into the eight figures. There’s plenty of reason to believe the trend will continue.

It’s great. These people really want to solve problems. But when one of these big grants lands on an organization, other funders often ask, “So, do they still need our money?” 

That’s the wrong question. The right question is this: “Can they still create a lot of impact with our money?”

Think about it. If you had a chance to invest in a company with great profits and prospects, would you ask if they need your money? Of course not! You don’t invest in commercial enterprises that need your money; you invest in the ones that will make you money. A need-based investment strategy is a good way to go broke. 

Philanthropy’s not that different. The goal in finance is maximum profit. In philanthropy, it’s maximum impact (or at least it should be). Your job is to find and fund the organizations best able to create change, the ones that are best at turning your money into impact. That’s why your investment should be focused on future impact, not on some ill-defined sense of present need. Need-based investment doesn’t work any better in philanthropy than it does in commercial investing (even if, sadly, nobody goes broke for lack of impact).

In the world of finance, money seeks maximum profit based on the risk/reward tastes and calculations of individual investors. When a nonprofit organization has gotten one of these big-bet grants, an analogous impact-based approach—“can they create a lot of impact with our money?”—will help you make an optimal decision. It’s useful to look at some scenarios based on three stages:

1. R&D: development and iteration of the idea, and initial evidence of impact
2. Replication: rigorous proof and steady, linear growth of impact
3. Scaling: steeper—sustained non-linear—growth of impact, often accomplished by the recruitment of other, bigger doers

(Note that I didn’t put time estimates in the description of stages: Sometimes it is necessary—optimal, even—to spend a long time in R&D, and some organizations never get beyond linear growth and remain mid-stage indefinitely.)

In the context of those three stages, how might you think about the value your additional funding might achieve going to these seemingly flush organizations? Mulago typically starts funding early and we keep funding as long as we see persuasive progress through the stages, so we’ve had to think about our own approach to post-big-bet funding. Scenarios like these helped us think through our own approach:

• An early-stage organization that has done smart R&D, has a high-potential solution, and a promising strategy that, despite the big grant, is not fully funded: As with all early-stage organizations, it’s a risky investment, but it could result in a huge impact pay-off. In effect, you’re leveraging that big grant.
• An early-stage organization that has done a good job of R&D, but isn’t yet thinking very big, and now has enough money to carry out its near-to-medium term strategy: You might want to wait a bit to see how things shake out.
• A mid-stage organization with proven impact, a strong track record, and a very ambitious, but smart and credible, scaling strategy that is not yet fully funded: This is less risky than an early-stage organization, and could still provide a great impact return on your money.
• A mid-stage organization with a strong track record and steady growth that doesn’t have an inspiring, credible scaling strategy: It’s hard to see how additional money right now is going to generate a lot of additional impact.
• A late-stage organization with a strong track record that has achieved a sustained surge in impact, and has an ambitious, smart, and credible strategy that is not yet fully funded: This is the jackpot for those who don’t want much risk but are looking for a solid impact return. 

The questions that drive good decisions are not easy. Is that really a smart and credible strategy? Is there solid evidence of impact? Is the model really scalable? Do they have the chops to execute on their plans? You may or may not feel that you have the expertise to make those calls. The safest bet, especially if you don’t have a professional staff, is to invest in later-stage organizations with proven impact and a solid track record. Otherwise, find other impact-focused funders whose track records you admire and draft off their choices. 

And speaking of drafting: All the big grants I’m familiar with (and there’s a lot of them) came in the wake of high-quality due diligence. These funders think there is a big impact upside to be had, and they are putting major skin in the game. They are endorsing the organization’s strategy and plan. If that plan is not fully funded, well, there’s your opportunity. 

I’d be remiss if I didn’t point out that organizations that don’t seem to need your money ... probably do need your money. That’s especially true if it’s smart money: unrestricted, multiyear, and minimal hassle. Philanthropy is only beginning to emerge from the Dark Ages of tight funder control, and even the biggest organizations struggle to get vital unrestricted money. Moreover, the big-bet money will eventually run out and organizations will still need a diverse donor base they can count on. For a high-impact organization, smart money is always additive.

And finally, this: If you still need to ask, “do they need our money?” then think of “they” as the people the organization has set out to serve. If it’s a high-impact organization, the answer is always, “Yeah, they still do.”

The COVID-19 pandemic hit communities of color in the United States with a disproportionate ferocity that exposed and exploited generations of inequity. For vulnerable youth and young adults residing in these communities—including young adults between the ages of 16 and 24 who were out of school and out of work (a population known as opportunity youth)—the impact of the pandemic was devastating. Despite a decades-long drop in the opportunity youth population, which decreased from 5.8 million to 4.4 million between 2011 and 2021, during the pandemic the number of opportunity youth rose dramatically to more than 6 million. But even before COVID, having more than 4 million youth disconnected from education and the economy was far too many. Unfortunately, without new dedicated pathways into education and careers, opportunity youth will experience reduced life outcomes, including double the chances of living in poverty and a less than 1 percent chance of ever getting a college degree.

The Aspen Institute Forum for Community Solutions’ Opportunity Youth Forum (OYF) was created to change the life trajectories of our country’s most vulnerable youth and young adults. At OYF, we invest in community-based, cross-system, and cross-sector collaboratives focused on building education and career pathways for opportunity youth. Our national network has grown to include 40 local collaboratives in urban, rural, and tribal communities that are home to more than 3 million young people. Using a collective impact approach and working in partnership with opportunity youth, local collaboratives led by a community-appointed backbone organization work in tandem to knit together the many systems that touch the lives of opportunity youth, including school districts, community colleges, workforce agencies, juvenile justice, and child welfare. Far too often, these systems allow young adults to fall between the cracks in their transition to adulthood. OYF invests in young people and their communities to deepen the infrastructure and capacity of collaboratives to improve outcomes for young people and future generations of low-income children and families.

As OYF approaches a decade of impact, we convened long-time partners from across our network, including young people, community leaders, national partners, philanthropic investors, and others, to reflect on the most salient lessons from the work thus far. These lessons are meant to assist community leaders who are considering a collective impact approach. Funders, policymakers, and system leaders can take our experiences to heart as they work together to improve outcomes for youth and young adults.

1. Driving Impact Requires Both a Local and National Strategy

From its inception, OYF has been deeply committed to both accelerating local progress and driving national impact. Central to this is a shared framework that the OYF network has refined over time, containing seven components:

1. Collaborating for impact
2. Building effective pathways
3. Rigorous measurement and impact
4. Developing supportive policies
5. Leveraging funding for innovation
6. Supporting youth leadership and youth-led change
7. Advancing racial equity

Based on their local context, communities across the network design strategies that reconnect opportunity youth to education and careers, while focusing on each part of the framework as a key driver in improving youth outcomes. By being both non-prescriptive in how local communities approach youth reconnection strategies and clear about a framework that guides strategy and learning, communities across a range of geographies are able to leverage unique local assets to meet the needs of youth and young adults, and lessons can be aggregated to the national level.

This framework likewise informs OYF’s national efforts around learning and policy change. For instance, community leaders across the network have noted the transformative power of national content that is deeply resonant and spurs local action. National convenings are designed in collaboration with local partners and OYF staff. Community members of local teams attend convenings and identify the most pertinent lessons to mobilize local action. Communities have organized around a range of issues based on what’s shared at national convenings, including prioritizing postsecondary outcomes for boys and men of color in Boston, partnering with employers to hire undocumented youth in San Francisco, and securing more than $11 million in public funding to meet the needs of opportunity youth in South King County, Seattle. In Boston, a presentation from Tia Martinez and Arnold Chandler on ending the school-to-prison pipeline helped guide the local collaborative to make this issue a focus of their work.   

OYF also emphasizes national policy change guided by local advocacy efforts. Given that OYF brings together national advocacy organizations working to unlock federal investments for opportunity youth, local communities are an important voice in identifying key sources of public funding. At the federal level, these efforts have led to reallocations within the Workforce Innovation and Opportunity Act, so that additional funding was set aside and prioritized for opportunity youth. In Maine, local advocacy efforts aimed at improving outcomes for vulnerable youth and young adults led to the passing of LD 1683, legislation that allows foster care youth to continue receiving services through the age of 26, so long as they are enrolled in postsecondary education.

Philanthropy’s commitment of general support and flexible funding has enabled the national and local OYF to respond more effectively to the needs of opportunity youth. For instance, a consortium of philanthropies provided a minimum of four years of initial funding to OYF to support each participating community. These general support grants provided necessary operating funds that were flexible and allowed OYF backbone partners to hire and retain talented OYF “site leads” who could spend time and effort building strong local collaboratives and creating inroads into the many systems affecting the lives of opportunity youth. Flexible philanthropic resources have also allowed for targeted technical assistance to support learning. For example, OYF convenes communities of practice focused on the unique aspects of collective impact in a rural context and data sovereignty amongst tribal partners.

2. Shifting Power Requires Consistently Lifting Up Youth Voice and Leadership

When OYF extended its first invitation to community partners to apply for funding, the initiative required youth engagement and leadership to ensure people proximate to the issues designed solutions. Over time, policy makers, funders, system leaders, and other local and national stakeholders have recognized that young people must also play leadership roles at the system, collaborative, and policy levels—from youth advisory groups to youth testifying in policy forums. For instance, in Hopi, Arizona, the Hopi Community Foundation is deeply committed to ensuring Hopi-Tewa youth are part of every decision-making process of the Hopi Opportunity Youth Initiative (HOYI). The collaborative consistently consults the HOYI Youth Advisory Council, which is comprised of representatives of various youth groups across Hopi and overseen by a full-time youth liaison. When the collaborative was awarded a grant to support their work around innovation, they engaged in a strategic planning process to inventory jobs and employers on Hopi, all led by young people.

In several OYF communities, young people were initially not at the table, or their voices were not central in driving the work. To help build this capacity, OYF pursued several strategies to put youth at the center of collective impact partnerships in more meaningful ways. For example, community leaders demonstrating authentic youth engagement were convened—in partnership with young leaders—to share key lessons on how to move from basic youth engagement, which includes general feedback and youth consultation, to youth influencing program and system change, which is exemplified by youth leading on advocacy, determining funding and resource allocation, to young people informing program design and organizing for better, community-wide outcomes.

To deepen a national commitment to youth-led change, OYF joined national partners in founding Opportunity Youth United (OYU). OYU is a national network of young leaders—created by young people who were former opportunity youth—organized to influence local, state, and national policies that promote better outcomes for current opportunity youth. OYU works to expand public investment in opportunity youth to combat structural barriers, such as the school-to-prison pipeline or policies that marginalize immigrants. Over time, OYU aims to improve conditions for young people to lead on issues that are important to them, such as registering young people to vote or organizing to reform the youth justice system.

Finally, at both the national and local levels, words have power and can influence whether a collaborative is successful at accomplishing its goals. Based on input from young people, collaboratives have made progress on changing two narratives in their communities: 1) creating an asset-based frame of “opportunity youth” and 2) elevating recognition of the systemic, rather than individual, nature of challenges these youth face. Over the years OYF has worked in partnership with young adults to change language and perception of youth away from “disconnected,” “at risk,” “troubled,” and worse, toward “opportunity youth” and the unique assets and attributes these young people bring into the education and workforce sectors. With young people leading from the center of collaborative efforts, communities such as Los Angeles, Hartford, Connecticut, and Greenville, Mississippi, have seen employers use “opportunity youth” language to describe potential employees. In places like Philadelphia and Boston, local leaders running for public office have identified opportunity youth as a priority population and have committed resources to support their outcomes.

3. Racial Equity Is Critical to Improving Outcomes for Opportunity Youth

Across OYF, 88 percent of opportunity youth participating in partner programs are people of color. In other words, in order to meet the specific and unique needs of opportunity youth, it is critical that the network adopt and center a commitment to racial equity. From the first cross-community convening in 2012, OYF introduced a racial equity lens focused on structural racism. Since then, leaders of OYF remain steadfast in their commitment to addressing and dismantling historically racist policies that have created barriers to opportunity for our country’s most vulnerable young people. Collaboratives across the network are advancing racial equity in the following ways:

• Creating a culture of equity that guides local strategy
• Using data to understand disparities and inform priorities
• Setting universal goals and targeting strategies to improve outcomes for priority populations

Creating a culture of equity across and within local collaboratives requires cross-system and cross-sector partners to understand what equity is and what it looks like in practice. Some communities engage in “equity audits” and use other tools that help partners understand the flow of resources and whether resources reach neighborhoods and/or youth-serving partners with the greatest needs. For example, the Southern Maine Youth Transition Network used the Race Matters Institute Assessment to examine how they were advancing racial equity as a team of collaborative partners. The assessment led the network to engage in small, peer-led conversations and trainings examining the impact of a history of racism on their work. Other communities in the OYF national network bring equity into community-wide discussions of opportunity youth (or even broader discussions of youth, employment, or education) with local stakeholders, partners, and employers with a focus on how different sectors can address the most pressing needs of this population.

OYF collaborative partners also use disaggregated data to track the progress of young people entering and completing postsecondary education and achieving work readiness. By disaggregating this data by race, gender, and other indicators, communities can identify inequitable outcomes and suggest where resources and attention are most needed. For example, the Road Map Project has documented steady progress in improving student achievement from cradle through career in South King County, Seattle. However, despite this progress, disaggregated K-12 academic proficiency data demonstrated persistent gaps by race. Recognizing that universal, one-size-fits-all strategies do not work for opportunity youth, the collaborative designed unique and specific culturally based strategies to address the needs of different youth groups and close opportunity gaps. The collaborative’s ensuing “Equity Essentials” indicators included 1) equitable funding; 2) increase culturally relevant school climate and supports; 3) strong family engagement practices and functions; 4) increase access and dismantle barriers to opportunity; and 5) strong civil rights policies to meet the needs of their most vulnerable, underserved youth.

Collaboratives prioritize the education and career needs of youth and young adults based on race, gender, and other indicators to achieve community-wide impact for opportunity youth. This strategy paid off when OYF launched Opportunity Works in partnership with Jobs for the Future. As part of the partnership, seven OYF communities built pathways to postsecondary education and training with a priority focus on young men of color. An evaluation by Urban Institute found that Opportunity Works improved the postsecondary credential completion rate of participants seven times over the comparison group.

What’s Next for OYF?

Looking ahead, OYF will build a more just and inclusive future for our country’s most vulnerable youth and young adults by:

Building more paths forward for the current generation of young leaders while cultivating the next generation. Young leaders who have emerged in the last decade of OYF have begun to move into staff positions in national and local opportunity youth-focused organizations, and others have stepped into entrepreneurial roles and have founded organizations committed to equity and social justice. Overall, however, there has not been enough consistent cultivation of this talent as the next generation of organizational leadership emerges. In the years ahead, OYF will partner with other organizations and philanthropy to invest in these leaders and bring their vision for social justice and racial equity to the fore of the opportunity youth movement.

Infusing culturally affirming identity development throughout pathways and systems for opportunity youth. Across programs and at the systemic level, OYF will focus on shifting exclusionary-based approaches and system policies to be more welcoming to all races, ethnicities, and cultures, most especially Black, Latino, and Indigenous youth. We will lead with culturally affirming approaches aimed at supporting positive racial identity development. Some youth development programs have done this for decades; however, very few systems and major institutions take this approach.

Growing the opportunity youth movement nationally and globally. Building on the learning and momentum of Aspen’s network in the United States, the Global Opportunity Youth Network, which launched in late 2018, now includes nine communities in seven countries (São Paulo, Brazil; Bogotá, Colombia; Mexico City, Mexico; Mombasa, Kenya; eThekwini, South Africa; Thiès, Senegal; Pune, Ramgarh, and Barwani, India). Hundreds of partners and youth leaders have come together in local collaboratives to identify and address historic inequities and systemic barriers that impede the more than 3 million opportunity youth living in these communities from accessing life-sustaining work and career advancement opportunities. Together with our global partners, we will continue to look for ways to lift up youth voice and accelerate a US and global narrative that prioritizes equitable opportunity and catalyzes deep and broad-based systemic change for the next generation.

Building on Collective Wisdom

A long-term partner and investor in the Aspen OYF network, William Bell, president and CEO of Casey Family Programs, noted that “it is not possible to solve generational challenges on a grant-making timeline.” Bell’s call for long-term, multi-year investments that provide communities with general operating support to achieve both system change and metric impact reflects OYF’s theory of investment and strategy for achieving meaningful progress over time.

As we approach the 10-year anniversary of the network, we celebrate the progress communities have made in their efforts to meaningfully connect young adults of color to education and careers. At the same time, we lift up the broad range of geographical diversity, culturally relevant pathways, strategies to address structural racism, and deep commitment to centering the lived experiences, expertise, and wisdom of young people. These are shared values that align many of the communities in the national network.

A great deal of work remains to advance equitable outcomes for youth, especially young people of color. In the years ahead, we will expand and deepen partnerships with young people and communities. OYF will continue to drive narrative change, advance healing practices, promote culturally relevant interventions that center identity affirmation in programs, systems, and policies, and bolster youth organizing and youth-led change. We will build on the collective wisdom of the network to center intergenerational relationships, knowledge, and practices with an aim to achieve better outcomes for young people and communities of color.

Over the past several months I have received calls from dozens of philanthropic leaders eager to help ensure that the trillions of dollars flowing to US communities through the federal Infrastructure and Jobs Investment Act reach the country’s most vulnerable communities. But they often don’t know where their dollars will make the most impact.

While building things like roads and bridges or providing clean water is traditionally the work of government, public-philanthropic partnership provides a framework to ensure that local, state, and federal governments work closely with community-based organizations and philanthropic entities so that government funding actually serves people’s needs and lays the groundwork for lasting, equitable change.

The good news is that we have strong models for governing in partnership with the philanthropic sector to support local communities and scale impact at all levels of government. In cities across the country, Bloomberg Associates’ Collaborative Cities initiative, for example, is seeding partnerships between the public, private, and nonprofit sectors to help cities creatively tackle social issues. The initiative helps different partners marshal resources, coordinate responses, and leverage the unique assets each brings to the table. In Michigan, the Office of the Foundation Liaison has an 18-year track record of forging partnerships between state government and the philanthropic sector to encourage programs or policy reforms that would improve the lives of residents. And in California, Governor Newsom has led 42 public-philanthropic partnerships leveraging more than $4 billion in private funding to advance policy priorities like addressing homelessness and fighting the COVID-19 pandemic.

Based on the dozens of public-private partnerships we’ve led in California, we see three areas where philanthropic funders would do well to invest now:

1. Civic Infrastructure Through Community Capacity Building

While the majority of the focus on the infrastructure bill has been on roads, bridges, and broadband, one major opportunity that often gets overlooked is the chance to invest in civic infrastructure. Philanthropy is well-poised to support the capacity building of local organizations so that they can build the strength and voice they need to effectively represent community interests, not just now but for the long run.

This kind of cross-sector collaboration was a force behind our efforts to count all Californians in the 2020 census. The state worked with foundations to invest a combined $130 million in supporting community-based organizations (CBOs) so that they could reach people of color, as well as disabled, low-income, and other traditionally hard-to-count communities. We took worked with CBOs to do door knocking, calls, and outreach events, targeting zip codes where people were at-risk of not being counted.

As the census wrapped up, COVID-19 vaccines were just getting approved, so we doubled down on our partnerships with these organizations to reach those same less-resourced communities. As of the end of this year, our partnerships with Public Health Institute’s Together Toward Health Initiative, Sierra Health Foundation’s Vaccine Equity Campaign, and California Community Foundation have channeled more than $100 million to more than 700 CBO partners, reaching people in all of California’s 58 counties to educate them about the importance of getting vaccinated and provide support with vaccine appointments.

Now is the time to build on networks of local partners to ensure that infrastructure spending is distributed equitably. For example, our office is developing a partnership between the California Natural Resources Agency Water Foundation and the Water Foundation and Water Funders Initiative to build community power and capacity to benefit from public funding, support water leaders who can represent community priorities, and support systemic solutions by aligning relief efforts with long-term strategies such as infrastructure investments.

In the coming months and years, state and local agencies across the United States will be distributing trillions of dollars that community-based organizations often can’t access, because they are too small to apply for complicated public funding grants. Philanthropic investments can help ensure that these organizations don’t end up on the sidelines by supporting their capacity to help influence how funding is distributed.

2. Technical Assistance

State and local agencies now tasked with implementing major expansions of programs like the child tax credit, broadband, and public transit projects will need to bring on more staff to distribute infrastructure funding within the bill’s time constraints. And state employees aren’t always in the best position to get out into communities to ensure that they are aware of these programs and how to participate. Philanthropic partnership can help provide the technical assistance agencies need to both ramp up their programs and to ensure that communities are part of the program design from the start.

One example is a partnership we developed in California to support technical assistance for workforce development organizations. The High Road Training Partnerships (HRTP) program, managed by the state Workforce Development Board (CWDB), supports high-quality jobs by funding collaboration between private employers, local community-based organizations, and labor. HRTP collaborations develop high-quality opportunities in targeted industries, get workers jobs, and enable them to develop stability in those jobs.

Partnerships like these are critical in the context of infrastructure, where for every billion spent, an estimated 20,000 jobs are created. This year, the state invested $100 million to expand the HRTP program, and CWDB has partnered with Jobs for the Future—a national nonprofit that drives change in workforce and education systems—to create technical assistance microgrants that cover pre-application costs and help CBOs and other small organizations apply for the funding.

Additionally, the Community Economic Resilience Fund, a $600 million state fund to support regional economic development planning in 13 regions in California, is a huge opportunity to build jobs for the future and develop inclusive, sustainable local economies. Philanthropic partners led by the James Irvine Foundation have come together to support mapping of existing community efforts and facilitation by California Forward, a statewide economic development organization, and PolicyLink, a national institute to advance racial and economic equity, to ensure that communities have the resources to put inclusion and racial equity at the center of these plans.

By working in partnership with the state to support these types of technical assistance, philanthropy can help give vulnerable communities greater agency in determining how to spend the influx of public dollars, having potential impact for generations to come.

3. Research and Evaluation

Philanthropic organizations have a long tradition of supporting research and evaluation in partnership with government, but with so much public funding at play, this is a moment to scale innovative policies and programs like never before. But making these programs sustainable requires that we develop strong data and evaluation practices to determine whether they are actually having an impact. Philanthropic partners are well poised to support evaluation efforts which could be used to improve these initiatives and advance policy advocacy for future programming.

For example, during the early days of the pandemic, we launched an initiative called Project Roomkey to house 50,000 unsheltered people in hotels and motels across the state rather than in congregate shelters. The program is potentially game-changing for our ability to house Californians in the long run, but to prove its full impact, California Health Care Foundation and Hilton Foundation are working together with the California Health and Human Services Agency to evaluate it, with a specific focus on the health impacts of providing housing and services.

Philanthropic leaders should examine opportunities to partner with state and local agencies to ensure that research and evaluation are built into infrastructure spending from the start, as opposed to being an afterthought.

We must not let this historic moment go to waste. With trillions of dollars flooding state and local agencies over the next several years, philanthropic partners can and should find ways to ensure that those dollars are truly reaching the communities that need it most. If that happens, we will be able to look back and know that this was a moment when America reversed the tide of inequity in our society.

Sometimes we lose sight of a simple truth about systems: They are made up of people. Despite all of the frameworks and tools at our disposal and all of our learning as a field of practice, purely technical, rational approaches to systems change will not make much of a dent in shifting power or altering our most deeply held beliefs. If most collective impact efforts fall short of supporting people to change in fundamentally consciousness-altering ways, then, the system they are a part of will not significantly change either.

However, over the past two decades, the prevailing view among many funders, board members, and institutional leaders has been that only quantifiable and predetermined outcomes can create impact. But if the interrelated, devastating, and deepening crises and divisions over the past two years have taught us anything, it is that complex, adaptive problems defy tidy logic models and reductive technical solutions. It is time to invest our collective energy in more relational and emergent approaches to transforming systems.

Embracing Emergence and Prioritizing Relationships

Relationships are the essence and fabric of collective impact. What’s critical for those who facilitate collective impact efforts is to support relationship development in ways that build true empathy and compassion so that authentic connections happen, particularly between diverse participants. These deeper connections can form new avenues for innovation to address the social problem at hand.

Take the work of Wesley Community Action in New Zealand. Wesley is a place-based collective impact initiative working throughout Wellington to support community-led initiatives that increase the quality and dignity of life of traditionally marginalized individuals. One of the groups Wesley works with is the Mongrel Mob, an organized street gang of predominantly Māori and Polynesian members with 30 chapters across the country. According to government census data, more of New Zealand’s prison population is affiliated with the Mogrel Mob than any other gang, and rates of substance abuse and violence are substantially higher than in the general population.

Core to Wesley’s theory of action is the belief that people are the experts in their own lives. Rather than build a three-year strategic plan with predefined outcomes to achieve the collective’s goals, Wesley Director David Hanna embraced an emergent approach to systems change and began building relational trust with members of the Mongrel Mob during planned social gatherings over many months. Staff members, gang members, and even their extended family members got to know each other through group activities in relaxed, informal settings, including a camping expedition. Through these experiences, Wesley staff and the Mongrel Mob built the relational trust necessary to transform a system that had many times failed to see the power of the lived experience.

Hanna would be the first to admit that embracing emergence creates discomfort and is not without risk. But by placing people with lived experience at the center of the collective impact effort, new ways for players in the system to work together began to emerge.

“So much of our work isn’t planned but has a relational ‘go with the heart’ feel,” Hanna said. “The connections that form release energy for new possibilities.”

For example, several wāhine (gang members’ female relatives) organized a group called the Mumzys with the goal of improving life outcomes for families. Their work led to a presentation in front of the New Zealand Parliament, and also sparked the creation of NZ P-pull, a community-led process across 24 gang chapters to help members tackle their methamphetamine addictions.

As the work of Hanna and Wesley Community Action illustrates, making meaningful progress on the complex challenges of our time requires totally different ways of working together that prioritize relational practices. Based on research and conversations with practitioners who engage in transformative change practices, particularly those stemming from nondominant cultures, these more radical and relational ways of working generally share five qualities: deep relational work, space for healing, inviting in the sacred, inner change that leads to outer change, and transforming power dynamics. In practice, these qualities never stand alone but function in interrelated ways to support the transformation of systems.

1. Deep Relational Work

Everything we know about systems tells us relationships are the core. Most collective impact leaders ascribe to the mantra: If you want to change the system, get the system in the room. As the late systems theorist Brenda Zimmerman said, “The most important unit of analysis in a system is not the part (e.g. individual, organization, or institution), it’s the relationship between the parts.”

By deep relational work, however, we mean a fundamentally different way of being in relationship. This starts with creating a space for the work that is viewed by all, especially those who do not have institutional power, as a safe environment where participants can express themselves freely and be vulnerable, connect with each other, and experience their common humanity. It is particularly important for leaders of collective change efforts to walk the talk in modelling vulnerability, and to create the conditions that encourage those in power, such as funders and board members, to do the same.

Building deep relationships with others takes time, tenacity, and a willingness to keep showing up, but the payoff is immense. When we are in deep relationship with others, we shed more of the baggage that weighs us down, share what’s in our hearts, and bring a cleaner energy to our interactions. “It is so powerful,” Hanna reflected, “that we are leaning into doing more deep relational work. We are now creating a space for conversation with opposing gangs.”

2. Cultivating Space for Healing

Unresolved, unhealed trauma is a force to be reckoned with in most, if not all, of the largest systemic issues we face. And it is far more common than we acknowledge among people involved in collective impact work.

Take the case of United for Brownsville (UB), which was created three years ago to improve the early childhood system in Brownsville, New York. Early on, UB’s cofounders David Harrington and Kassa Belay, together with Dionne Grayman, a restorative practitioner with deep local roots, recognized that being in deep relationship with parent residents means addressing collective healing from past and ongoing racial traumas. This involves acknowledging that, even though the painful or traumatic events may have occurred in the past, the felt trauma still exists in the present and will remain an impediment to future progress unless it is dealt with.

“We realized that if we're not laying the groundwork to anticipate trauma, create space for people to process their trauma, and grow into leadership amidst that trauma being relived, then we're not following through on our commitment to build capacity in a genuine way,” Belay said.

Healing circles attended by parent residents only are one such collective healing process. Funders, early childhood service providers, and even UB staff are not allowed to enter. Parents share their experiences of oppression and resilience and forge connections with each other that facilitate collective healing. Another difficult yet necessary process is mediated conversations that take place between parent residents whose families have been traumatized by early childhood service providers and representatives of those same agencies. These conversations help parents feel ready and safe when working with people in positions of power. Mediated conversations also deepen empathy among service providers and serve as an accountability mechanism for past wrongs.

3. Serendipity and the Sacred

Working together in a way that invites in the sacred and welcomes serendipity is perhaps the most difficult of the five qualities to capture on a page, in large part because people often equate words like sacred with religion or think it refers to faith-based initiatives. On the contrary, bringing the sacred into the process does not require or even assume everyone involved has a spiritual orientation.

In the collective impact context, it means setting a tone for the work that encourages everyone involved to open their hearts to enable a universal source, or grace, to enter into the work. Use of rituals, personal stories, and community narratives can help groups establish a sacred tone for their work together, as well as finding inspiration from art, silence, or contemplative practices such as meditation. While specific methods may vary depending on the local context, what unites this quality across cultures is the intent to support participants in being present to the work and to each other. It’s also about grounding the work, individually and collectively, in love.

Massachusetts-based youth organization Roca, for example, uses rituals learned from the Tagish Tlingit people in the Yukon Territories, such as burning sage, performing spoken word poetry, and passing a talking stick in the peacemaking circles they facilitate between police officers, corrections officers, and youth who are affected by urban violence. The circle “keeper” sets the sacred tone and helps participants who may view each other with hostility to let down their guard and share their stories. Sharing deeply personal stories slowly builds trusting relationships, and over time, opens people to see the whole human who they had previously reduced to a stereotype.

Roca’s approach has helped its public systems partners ground their work in forgiveness, empathy, and love. Police and corrections officers who have participated in peacemaking circles have demonstrated a willingness to change their standard policing and judicial practices, including new procedures to protect youth in dangerous situations and the introduction of support services for youth re-offenders. For example, in Hampden County, the Massachusetts local district attorney introduced the state’s first youth court that helps 18- to 24-year-old re-offenders avoid jail time by providing intensive probation supervision as an alternative.

4. Inner and Outer Change

People who work with collective impact efforts are all actors in the systems they are trying to change, and that change must begin from within. The process starts with examining biases, assumptions, and blind spots; reckoning with privilege and our role in perpetuating inequities; and creating the inner capacity to let go of being in control. But inner change is also a relational and iterative process: The individual shifts the collective, the collective shifts the individual, and on and on it goes. That interplay is what allows us to generate insight, create opportunities, and see the potential for transformation.

We can see clear examples of the interplay between inner and outer change in the system leaders and community stakeholders in New Zealand and Brownsville. In New Zealand, government stakeholders had to reckon with their assumptions and biases about the Mongrel Mob’s capacities and will for self-determination while the gang members had to begin unpacking male trauma and how it manifests in violence and drug addiction. These inner changes enabled the collective to establish more authentic dialogue between government stakeholders and gang members in their efforts to change the system. As a result, the New Zealand government and the Mongrel Mob formed a groundbreaking partnership in 2020 in which gang members act as advocates and service providers who receive government funding to address methamphetamine addiction and the crime that often results from addiction. 

In Brownsville, UB’s backbone leaders’ inner work opened their hearts to more humble and authentic relationships with the community. Part of Grayman’s role as a lifelong Brownsville resident is to hold up a mirror to co-founders Harrington and Belay, who are both outsiders to the community, and ensure they remain accountable to the group’s principles of participatory planning and anti-racism. In addition, UB invests significant resources in the form of facilitated healing circles referenced earlier and personal development workshops to support inner change among parent residents and social service agency representatives. Parents have begun to claim their power and this has opened up space for power dynamics to shift and collective healing in the community to begin.

5. Transforming Power Dynamics

Collective impact efforts must be intentional about not replicating the power imbalances of the systems they work in. UB’s approach to working with the community provides an example of how to transform power dynamics through relationships. “If you're not partnering with parents in an authentic way, you're replicating a history of disempowerment and neglecting key stakeholders who have the potential to transform the work,” Harrington said. Recognizing this dynamic, UB created a family advisory board, a formal structure comprising Black and Brown residents, homeowners, individuals in the shelter system, people living in public housing, immigrants, and third-generation locals.

Hypotheses and project ideas generated in the closed-door family advisory board meetings are brought to UB’s provider action team, which is comprised of representatives from government agencies. “Early on, we talked about power dynamics and sketched out a decision-making role for the family advisory board,” Belay said. “There’s an interplay between residents and social services, but the decision-making rests with the residents first. That’s critical to address power dynamics.”

As UB has evolved over time, power dynamics are shifting in other, unexpected ways. For example, their most significant donor has now set up their own resident advisory committee as part of their decision-making process for a separate grant program.

Accessing Deep Wisdom

By calling on our sector to invest its collective energy in more relational and emergent approaches to transforming systems, we are merely naming what many of us already know: The ways we currently collaborate are simply not up to the magnitude of the task given the complexity of the social and environmental problems we are trying to solve. To get to more radical outcomes, we need more radical ways of working together. It is both as simple and as hard as that.

Those ways demand much of us as leaders and move us out of our comfort zones quickly. We must constantly remind ourselves that the process is the solution, and we must remain open to exploring new and difficult questions. What can each of us do to bring people into deep, authentic relationships with each other and create safe spaces for vulnerability? How do we design profound experiences of healing and connection to our shared humanity? How can we embrace emergence and cultivate our capacities as leaders to follow the new energy, creativity, and innovations that surface? We believe this is the next frontier of systems change. Only once we start exploring answers to these difficult questions will we begin to foster shifts in individual and collective consciousness powerful enough to transform systems.