Next time you are developing a funding strategy, considering a grant portfolio, thinking through evaluation, or doing due diligence with a potential grantee, ask yourself: What we are we not doing? (and why?)

Speaking of strategic planning here is a nice example of openness in the process – check out this “twitter conversation” and Presentation on Philanthropy’s Tensions from the Peery Foundation’s strategic planning process.

Sidney Hargo interviews Katya Andresen of Network for Good and me on the future of social media, nonprofits and philanthropy. Enjoy.

One of the key noted philanthropy trends of 2008 was the growth of philanthropy prizes.

This year the buzzword is charity challenge. These challenges tend to be some form of matching grant – based fundraising opportunity that uses blogs, twitter, widgets, online video and every other possible web-based communications tool. They allow the public to vote on where the sponsor’s dollars go, or at least those recently run by Target, Toms of Maine, and American Express do so.

The Idea Index is a great (and beautiful) example of learning from the ecosystem that prize philanthropy creates. The Buckminster Fuller Institute (BFI) has taken all of the entries for its recent challenge and published them in the Idea Index. BFI refers to this as “an open-source database of solutions to the world’s most pressing problems.”

It is similar to the way Changemakers is running its prize platform. HASTAC also works to connect the many organizations that submit to its Digital Media Challenge. NetSquared‘s annual conference acts as a way for applicants to get to know one another. These opportunities for networking the people behind the ideas, those selected by competition and those who weren’t, is a wonderful contribution to the ecosystem for change.

I think the Social Entrepreneurs API, SocialActions, and AllforGood are great examples of how we can pull data from disparate sources and let people use it for all kinds of purposes. Imagine if we could mashup these “challenge ecosystems” into one massive index of ideas and idea-makers – from health, digital media, social enterprise, poverty alleviation, and so on – and see what they can accomplish when they can find each other….

Here are some examples:

Contribune provides donor analytic software that allows an organization to track the news that its potential donors read. Users enter the URL of a news story that they care about, and Contribune facilitates donations to related nonprofits, tracks those donations, and elevates the story to the “front page” depending on the actions taken by readers. This seems similar to the services offered by Good2gether.

The Contribune site and blog include a movie that explains the process, but information on who is behind this site and what the revenue model is is somewhat vague (there are photos of the founder, but no last names listed). I presume that revenue (or predicted revenue) will come from selling data (donor analytics) to fundraisers (political and nonprofit) and from news sources. I suppose there could also be a token fee taken off of donations, but my guess is this won’t be significant.

Giving is part of this model – but its really just the action that triggers the ratings that trigger the revenue. Sort of the way Nielsen ratings have been used to set broadcast advertising rates.

Contribune also launched a “charity focused URL shorteners – a technology that Twitter has made requisite. This URL shorteners allow you to clip a URL of any length into a shorter one, saving space in twitter and even allowing for some “built in” advertising. This is particularly true with the Giv.to shortener, as the clip will now look like “http://giv.to/cancerprevention” or “giv.to/savethewhales.” These URL shorteners are loved for the brevity and vanity – they also provide great metrics as you can track who clicked through on the URL and what actions they took. Again, great data of potentially great value.

Last year we saw the development of search engines that enabled giving. Now we’ve got news sites and URL shorteners. What do you think will be the next technology action to integrate charitable giving? And what should we call this kind of embedded giving?

I’m looking for examples of social change organizations that are totally native to the digital world. They were created in and around digital tools and they use these tools to manage their work, communication, programs, fund development – everything. The prevalence of these tools shaped the way the organization’s founders defined the problem they hope to influence or the solutions they seek to spread. The organizations would not exist if it weren’t for mobile or Internet-based tools that are free or cheap to use, readily available and familiar.

Here is what I’ve tracked so far. Please grow this list by adding those you know in the comments. I also welcome improvements of my working definition of “native to the digital world.” Thanks.

• Lend4health
• Ushahidi
• socialactions
• tudiabetes
• patientslikeme
• charmtracker (part of MedicalMine)
• kiva
• globalgiving
• donorschoose
• Allforgood
• mobilemovement

I am remiss as I have just realized that I have not previously tagged leverage as a buzzword. I guess it goes to show that some buzzwords become so embedded that we almost miss them.

We’ve heard a lot of bad things about leverage lately – sub prime mortgages, bank bailouts, credit default swaps, etc. all have some connection to the idea that you can use a little money to access a lot of money. And much of the economic pain we face now seems to be because too many institutions were over- leveraged.

But in philanthropy the idea of leverage is usually less about debt* and more about using dollars from Pot A to access dollars from Pot B. If a donor puts in $1 and, in so doing, attracts another $1 to the issue or organization, that is a good thing. Leverage is at the root of matching grants, NPR pledge drives, giving circles, pooled grant making funds, social venture philanthropy, affinity groups, and lots of other things that are now normative on the philanthropy landscape. (Did I just write that? Oy. Let me try this instead – “Leverage is a common concept for both donors and foundations.”)

If it is so common, why is it a buzzword? Partly because there is a good amount of discussion and innovation about how leverage is achieved. We increasingly hear foundations talking about the need to “leverage other funders” (both private and public) as part of their strategy development – especially now where stimulus funds are concerned. A lot of the discussion about “exit strategies” or “sustainability” is about leveraging other revenue sources beyond a foundation’s initial support. Buzzword #2009.2 – sidecar funds – are all about leveraging someone else’s infrastructure investment and their knowledge.

It also achieves buzzword status at this point in time because the public sector – in discussions of everything from stimulus funding to health care, to the Office of Social Innovation and State Department‘s public/private initiative – is talking leverage, leverage, leverage.

At their root, these developments represent a realization by foundations and donors that they cannot achieve their (often hyperbolic) mission statements by themselves, that they operate within funding streams that may or may not work well but are out there, and that the more each of us understands where we fit in these revenue systems the better chance we have of making them more effective and efficient. The rise of leverage as buzzword may also be a sign that systems thinking is really beginning to take hold in philanthropy. Or it may just be a buzzword.

*For discussions of debt and the nonprofit capital markets, and the ways that leverage works in that realm, I defer to the experts at the Nonprofit Finance Fund. To paraphrase Click and Clack, don’t mistake the trends discussed on this blog as consulting, financial or legal advice.

Buzzword 2009.2 Sidecar Funds
The Gates Foundation got a fair bit of attention last week for the $10million in unsolicited funds that it raised in 2008. This is not just news for the Gates Foundation but for all of philanthropy – private foundations are going into the business of managing “sidecar funds.” In the angel investing or venture capital worlds sidecar funds are those that “ride along side” major investments. The idea is to leverage (another buzzword) the due diligence, investment and monitoring that has gone into a primary investment.

In the philanthropy world, the 2006 Buffett gift to Gates is the biggest example of this – one donor riding alongside the infrastructure and due diligence of another. The many smaller gifts that make up that $10 million given to Gates represent the appeal of this approach – ride along on the investments Gates made in staff, research, strategy, process, monitoring, and learning. And not just ride, but free ride – giving gifts to Gates comes at no cost – there are no management fees, percentages taken on assets under management, or service charges levied to these donors by Gates.

Gates is not the only large foundation that serves individual outside donors. The Ford Foundation features information for donors off of its website. Several small foundations partner with others – meaning take grants from the others – to regrant in their region or issue-area of specialty.

This makes the sidecar fund phenomenon relevant to philanthropy writ large. After all, if the roles that foundation staff play in the philanthropic revenue system are those of analysts and strategists, and the CFOs of these organizations are already being paid to invest the endowment, then riding alongside these systems is the cheapest, highest quality service donors are going to be able to get – more research than from a national donor advised fund, more specialized expertise than a community foundation, and cheaper “fees” than either. It is certainly cheaper than starting your own foundation.* For donors these options might be very enticing – high quality expertise on both the investment and grantmaking side at lower cost than other vendors in the market. For the foundations, this offers one way to “leverage other people’s money” directly – manage it and give it away.

Buzzword 2009.3 Pipeline
There are two pipelines drawing buzz these days – one is seemingly void of people and the other is seemingly void of funding. The pipeline for new leaders and the pipeline of new funding opportunities are both the topic of great discussion.

There is a lot of justified concern among nonprofits about leadership, including the need to fill more than 20,000 job in the sector in 2009. This leads to discussions of leadership development and the “pipeline” of leaders. Who is coming up next? How will they prepare for management roles, how will the sector replace those who are retiring, how will we find the leaders we need? Sometimes hidden, sometimes overtly the discussion of leadership and “pipeline” is also a discussion of diversity and demographic change. In the just announced Community Leadership Project in the San Francisco Bay Area a notable amount of attention is being paid to developing leaders. About a month ago, New Profit Inc held a one-day training session for potential social enterprise leaders of color.

As for funding pipelines, well, anyone who has tried to raise money for anything lately knows about these.

*There are tax issues to be aware of if making a donation to a private foundation. Talk to an attorney.

I am not necessarily promoting these practices or organizations just pointing out the trends and buzzwords.

If you liked this blog post on “What’s Next?” you should also read Mario Morino’s latest two columns on the VPP site. They are here: The Innovation Imperative and Nurturing the National Reef.

These are two great thought pieces, drawing from worked experience, on what is possible if we dedicate ourselves – as both public actors (voters, citizens, activists, legislators) and private actors (donors, entrepreneurs) – to recognizing the enormous opportunities that new information ecosystems provide to us. These are the lessons of experience – from VPP and others (REDF, SVPI, NewProfit, Inc) who fundamentally transformed the discussion of how capital works in the social sector.

Nonprofit leaders have known about, decried, and innovated around capital challenges for decades. I believe it took the shifting conversation that VPP and others have been part of for over a decade now (Letts et al published Virtuous Capital in HBR in 1997) to make social enterprise, social investing, funding networks and hybrid organizations as familiar a part of our current landscape as they are. This is a living and lasting legacy of the theory, practice, successes and failures of venture philanthropy – it changed (and is changing) how we think about financing social good. That is significant.

Those who entered the social sector in the last five or even eight years may think concepts such as social finance or for-profit philanthropy are “givens.” In fact, they reflect essential changes in how we think about the social sector, markets and policy (a key intersection in Morino’s writings), and are innovations in their own times. The next round – the “what’s next?” that I write about and the ecosystem of innovation that Morino calls for – build from these evolutionary phases.

I know there are folks out there working on real recommendation engines for philanthropy. These kinds of engines are examples of both what is driving innovation in the information ecosystem and what will be possible as that ecosystem changes. But, in the interest of “retaining the personal touch” take it from me – read what Mario writes.