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I'm at the Unreasonable Institute in Boulder as a mentor this week, and later today I'll be giving my take on the presentation that has kicked off the stay of each of the several dozen mentors that they have hosted this summer. Since it's the end of the program, I'm going to go a little meta and talk about the big, meaty bet we're all making on our generation to change the world.

A Unique Combination of Influences. Our cohort grew up with a strange combination of influences. We got a big dose of the holdover idealism of the 1960s generation. At the same time, we got the skepticism that characterized the boomer echo and Gen Xers. The important thing about this combination is that it has predisposed us to be critical and not shy about critiquing organizations driven by good intentions rathe than real impact, while keeping us generally idealistic and optimistic about the value of social change efforts.

A Strange Historical Moment. The 1990s was a truly weird moment in history. The Cold War ended, and as much as it was supposed to be the glorious 'end of history,' it actually was the most violent, turbulent decade since WWII. As we started to get into college in the 2000s, and -- in many cases prompted by the horror of September 11th -- looked back to see the real state of the world, many of of us found that what we remembered and what we experienced was vastly different than what most of the world was experiencing.

At the same time, the internet was creating the architecture for an expansion in human capacity and human connection unlike anything in history. Travel was becoming easier, and the end of the Cold War had seen an explosion in global civil society and nonprofit organizations.

Learning in Person. Taking advantages of these opportunities, our generation has had consistently growing rates of volunteerism. Study abroad is growing on just about every campus, and the places that people are going and the types of programs they're studying in are expanding just as rapidly. There is no learning as essential as learning directly from people experiencing the problems, and we've been fortune to have a lot of that very early.

A Growing Support Structure. Importantly, along with the growth in young people getting their hands dirty with social change has been a boom in the institutions that are designed to support that work by critiquing it, contextualizing it, and offering it new expression. Undergraduate centers, incubator and accelerator programs, training conferences - there is an entire ecosystem of organizations working to make sure that young people's efforts have the impact they wish.

Aligned Frameworks. As there has been an expansion in youth engagement, there has also been an expansion in social change efforts of all types. The heightened prominence of "social entrepreneurship" has enabled young people to tap into a language and a field that takes their work out of the context of young do gooders and actually involves them in the global conversation about how best to change the world.

Global Peers. If most of what is discussed here refers to a specific subset of the generation -- namely a certain class of American young people -- the global peer infrastructure is changing rapidly, and from internet communicaton to global conferences, young people who may have a different history but share a common future are finding one another and letting themselves be influenced by one another.

A Question of "Success." No generation has ever had as much of what it needs to change the world so early. In the long-run, however, whether we live up to that promise will be largely based on how we define success in our personal lives, and how that translates to our professional endeavors. If we decide in five years that money and comfort is the primary objective, we'll compromise left and right and quickly learn to the next group to pick up where we left off. If, instead, we define success to include not only money but impact and engagement, it will change the entire structure of our economy.

Photo credit: Mikael Miettinen

Priya Parker has worked in India, Africa and the US on peace-building and social-innovation. Read all of Priya's blog posts here.

In my last blog post I wrote about the Afghan peace jirga held in June.  One idea that was put forth in President Karzai’s peace proposal was to pay insurgents not to fight. Like any interesting idea, not only is the devil in the details, but it’s also in the implementation.  Apparently the Iraqi government has experimented with a “cash for loyalty program” and at least according to some accounts it “turned the tide” in the country.

What would have to happen for this to work?

•    Incentives must be aligned.  The government would have to figure out a way to make subscribing to this program attractive to citizens who are otherwise fighting for primarily economic reasons.  The government would have to structure the program, including pricing, delivery, and timings of payments in such a way that meets and surpasses the opportunity cost of joining the Taliban. 

•    Given that it’s a government program, how would they avoid corruption, leakage of payments, or inadvertently funding the Taliban? In any cash transfer program, it is commonly known that leakage happens.  In India, for example, a country that struggles with corruption, Rajiv Gandhi once famously estimated that only 15% of development aid reaches the poor.  How would the government secure such payments, particularly when funds could strengthen the fighting forces?

•    Would it cause a price-war between the Taliban and the government? While it sounds a bit strange, by paying someone not to fight it both acknowledges that as an important choice, but it also commodifies the action.  If the Taliban knows the government is paying a certain amount not to fight, perhaps the Taliban could just pay the same people more.  

•    How would they safely transmit money?   Perhaps through mobile payments. 

•    If they have funds to pay people not to fight, what else could they pay them to do?  Work brings dignity as well as something to do during long days.  Perhaps the government can also pay Afghans to work or help with security projects. 

•    How would one guarantee they didn’t fight anyway? 

Do any readers know of any other examples of governments paying citizens not to fight in a civil war? 

While the last few decades have seen an approach to copyright law that is more about protecting the dying business models of big industries than protecting small artists and creators, an update from the US Copyright Office released yesterday actually constitutes good news for those who think that copyright has gone off the rails.

Copyright is an interesting thing. It arose as a way to ensure that creators could derive value from their work that would allow them to continue to focus on their creation as their primary pursuit. The goal was not just to support the rights of a particular class of individuals, but a recognition of the fact that those individuals had a significant role in creating a vibrant artistic, scientific culture and civil society. The earliest copyright law in England had to do with the growing number of books being printed for broad consumption.

The internet has put immense stress on copyright. Simply put, the digitization of all media has lowered the cost of creating a copy of any movie, book, or song to zero. What's more, it has disrupted the role of the intermediaries who used to be charged with discovering, creating, and disseminating that media. Without the natural friction of either the cost of production or the cost of discovery of talent, the internet has created a Wild West in which anything can be shared and exchanged freely with just a few clicks.

Some see this as an amazing opportunity for opportunity to flourish and for the old monopolies of the publishing companies and record labels to be broken. Companies who have been intermediating value from the work of creators obviously see it as an existential threat.

One of the center pieces in the ideological battle has been the Digital Millennium Copyright Act (DMCA), US legislation that passed in 1998 and created strict provisions for digital rights management (DRM). The act has given legal standing for companies to pursue legal action against "pirates" who use their content in ways not intended and who distribute it without permission. Groups like the Electronic Frontier Foundation have decried it as stifling free expression and inhibiting fair use -- a term which refers to the legitimate ways a customer can use media once they have purchased it.

Every few years, the US Copyright Office issues clarifications about what previous laws mean. The most recent DMCA clarification was a big win for user-advocates. Among the clarifications:

• People can use clips from DVDs they've purchased for the sake of education or criticism;
• People can use lawfully obtained software on their phones, even if the phone manufacturer doesn't support that software;
• People can repurpose their phones to run on the network of their choosing, even if the manufacturer doesn't support it.

The last two are directly relevant for Apple. Apple's iPhone has been tied exclusively to AT&T, but with this ruling, it is now legal for someone to unlock the phone and use a different network compatible with Apple's hardware (which effectively means T-Mobile). Apple's App Store has been the gatekeeper of the programs that can run on the iPhone, but tech savvy users have used a work around called "Jailbreaking" in order to install programs that haven't been approved. This ruling makes this activity completely legally sanctioned. This matters in part because Apple has used its store approval policies to keep out certain software it saw as competitive - like Google Voice.

It seems unlikely that this will have a dramatic impact on the day-to-day lives of most media consumers. But it will impact the way developers and entrepreneurs think about their opportunities, and could also influence other legal rulings about the changing nature of intellectual property law. Ultimately, those effects could be significant.

Photo credit: Horia Varlan

In this late edition of the Weekend Entrepreneur Links, most of the posts focus on the Social Innovation Fund, an initiative of the Corporation for National and Community Service that just announced its first set of grant intermediaries -- the foundation partners who will distribute the money to specific nonprofits. In my estimation, the Fund veered hard toward funding "what works" as opposed to funding risky, novel innovation. Ultimately, the question is how much value they add.

Builders, Buyers & the Social Innovation Fund: Sean at Tactical Philanthropy has been the most stalwart voice supporting the Social Innovation Fund process. This post, which actually started as an email to me, does a good job of articulating his reasons for this excitement. What it comes down to is a frustration with the nonprofit funding world's tendency to fund projects and programs rather than organizational capacity, and what Sean sees as a really bold statement from the US government that the way forward to a healthy social sector is investment in great organization, not preselected funding priorities. I can buy that, but I'm less sure that's the best value add for the government.

Wise Picks? Commentators Weigh In on the Social Innovation Fund Grants: As usual, the Chronicle of Philanthropy's roundup of commentary from the SIF decision covers wide ground and gets the essentials of the various arguments. One of the more interesting links is to a Google map of the recipients (and grantees who have been announced so far).

Open Society Foundations Partner with Federal Government to Drive Innovation and Opportunity Combating Poverty in Communities Nationwide: The title of this piece is basically what you need to know about the story. I include it here because even if I am somewhat disappointed in the approach the Social Innovation Fund took, I absolutely want it to succeed in the direction it has taken. One of the major promises of the Fund was to recruit matching partners, so the fact that that is happening is a very positive sign.

Trader’s Cocoa Binge Wraps Up Chocolate Market: This one has nothing to do with the SIF, but is worth reading. It's the story of a trader who is snatching up a huge portion of the world's cocoa market in order to be able to influence prices. According to the piece, he has about 7% of the global crop. This piece reminds us of the huge questions about unfettered financial power.

Photo credit: r-z

Seed funding and support organization Echoing Green sees a huge number of early-stage social entrepreneurs apply to its fellowship program each year. They've just released some aggregate data that comes straight from a survey filled out by their semifinalists, and the information is fascinating. Among the trends are the youthfulness of founders, changing types of previous experience, and increasingly innovative organizational structures.

Trend 1: Social Entrepreneurs are starting early. 55% of EG finalists over the last four years have been under 35. In 2009, they made up 70% of the semifinalist pool. In 2010, 65 of the finalists indicated that they had first studied the issue they are working on in college. This certainly resonates with what I'm seeing - which is an explosion of programs catering to the passion of young people (particularly under- and recent graduates) and attempting to provide skills and discipline.

Trend 2: Previous nonprofit experience still the norm, but not a necessity. In 2010 15% fewer of EG semifinalists had previously worked in nonprofits or governments. 49% had worked for for-profits or been self employed, which was up 13% from the previous year. A little over a third of them had previously founded an organization, of which about two-thirds were still in existence. All of this is a hugely positive sign to me, as it suggests that there is more movement from the business space into social entrepreneurship, which I think is a natural next step.

Trend 3: A strong growth towards hybrid organizations. This is another one that seems pretty positive to me. 2010 saw 37% of EG semifinalists structure their organizations as hybrid nonprofit/for-profit models, which is up 20% from the previous year. The number of people starting pure nonprofits was down 20% and the number of pure for-profits remained consistent, at only 8% of the total.

Some additional demographic data that was interesting: Almost 50% of the semifinalists in 2010 were Millennials, the most of any generational group. Just over 25% were African-American, which is awesome to see.

This information is really useful for anyone interested in where this field is going, and I'm glad Echoing Green took the time to summarize it and make it available. More than anything, I think it validates the growing appeal of solving social problems to for-profit entrepreneurs, an essential next step for our field to continue to grow.

Learn more about the survey on Echoing Green's website.

Photo credit: Echoing Green - Social Change Starts Here

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Well, the results are out. The much-discussed Social Innovation Fund, run by the Corporation for National and Community Service, has just announced its first set of grant-winning partners, the funding intermediaries who will distribute the funds to the ultimate recipients. The results show the SIF is primarily focused on "funding what works" versus making more risky bets.

The central mission dissonance of the Social Innovation Fund has always been the question of what its real objective was. Was it meant to be a fund that really pushes an experimental agenda and deploys capital in favor of new approaches to social change that have both high risk and high reward? Or was it alternately a chance for the government to get a hand in on organizations whose models started as innovative and who were reaching an inflection point where new resources and government support could help them achieve the scale their proven model demanded. Even the title of the press release announcing the new grants demonstrates the tension: "Inaugural Social Innovation Fund Grants Awarded to Experienced Innovators" (emphasis mine).

My preference would have been to see the first approach above enact. I tend to think that the relative smallness of the amount of resources being deployed lend themselves well to this being the "sandbox space" where the government could support really experimental efforts that could go nowhere, but could also have the disruptive potential that just couldn't be enacted through a government structure that is designed fundamentally to be incremental.

That said, I can appreciate an approach which is about scaling nonprofit innovation as well. There is a real challenge in getting resources to fully expand organizations to their potential. Even more than that, there has never been a really coherent pathway between nonprofits providing social services and government agency adoption of the most successful things they've learned.

The early evidence suggested that ultimately, the Social Innovation Fund was actually going to behave a lot more like the Social Funding What Works Fund. When the funding guidelines were released, they included an emphasis on randomized control trials as evidence of success. And even though they eased off after expert and community commentary, the focus on a record of success continued to be a supreme concern.

This list of grant recipients seems to validate this emphasis. A third or so of them are foundations with heavy existing involvement of the government. Among the others, a number of them are decades old. This doesn't necessarily mean they're not innovative, but it does certainly bias towards accumulated learning versus constant experimentation.

For me then, the question of how we evaluate this has to be based on the grants that these intermediary partners ultimately make, and even more, how much unique value the fact that these resources are coming from the government provides. It just doesn't make a whole lot of sense to me to have the government deploy resources just because it thinks it should be in the funding game. There has to be some unique compelling value that they provide.

I'm fine to get over my own wish for a more risky, experimental fund if the SIF can ultimately deliver on the decisions its made to focus on "proven innovation," but I think "delivering" will mean demonstrating some real differentiation in the value of their resources.

Check after the jump for the full press release.

Photo Credit: Vince Alongi

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Inaugural Social Innovation Fund Grants Awarded to Experienced Innovators

Portfolio is a collection of bold programs targeting $123 million in resources to community solutions in the areas of economic opportunity, health and youth development

WASHINGTON, July 22 /PRNewswire-USNewswire/ -- In response to the increasing health needs, economic challenges and gaps in youth achievement facing low-income rural and urban communities, the Corporation for National and Community Service announced its inaugural Social Innovation Fund (SIF) grants today. The grants will target millions in public and private funds to grow effective solutions to persistent social challenges across more than 20 states.

The SIF portfolio consists of 11 organizations selected through a rigorous review process involving 60 external experts. The grantees, who represent a diverse set of nonprofit organizations and private and community foundations, share a track record of success at identifying and growing high-performing nonprofit organizations and their proposals offer a set of compelling ideas for how to use innovation and evidence to tackle social challenges in a new way.

"This portfolio is a collection of extraordinary organizations with an unparalleled body of knowledge and expertise on growing what works," said Patrick Corvington, the Corporation's CEO. "They are all driven by the search for bold solutions and recognize that we must use evidence to target limited resources where they will have the greatest impact."

The grantees will address urgent needs across three key issue areas – economic opportunity, healthy futures, and youth development and school support – by providing funding and other support necessary to drive results and impact. The portfolio includes $74 million in secured private match funds, which is beyond the statutory requirement of $50 million. When combined with federal resources, this will result in $123 million being targeted toward promising nonprofit organizations that train the unemployed, increase access to heath services for the underserved and prepare youth for academic and economic success.

An initiative that represents a new way of doing business for the federal government, the $50 million SIF fund leverages a 3:1 private-public match, sets a higher standard for evidence, empowers communities to identify and drive solutions, and creates an incentive for grant making organizations to more effectively target funding to solutions that generate real impact. The SIF is a critical component of the Administration's broader agenda – led by the White House Office of Social Innovation and Civic Participation – to redefine how evidence, innovation, service and public-private cooperation can be used to tackle urgent social challenges.

"Over the long-term, the SIF will contribute to the development of the grant making infrastructure that supports the work of high-impact nonprofit organizations and inform other federal, state and local efforts to address social challenges," said Paul Carttar, Director of the SIF at the Corporation. "It offers an avenue for community-driven solutions to grow and demonstrate their value."

To select grantees, the Corporation implemented a rigorous, multi-phase application review process over a three-month period. Over 60 experts with extensive experience as social innovators, directors of nonprofit organizations, and evaluators of social programs, provided external input across three stages of the review, assessing applications against the criteria published in the SIF Notice of Federal Funds Availability (NOFA) in February of this year. The applications were evaluated based on their program design, organizational capacity and budget. In the final stage of the review, senior members of the Corporation's staff were joined by external reviewers to assess the qualities of the top applications against the portfolio criteria in the NOFA. The finalists were asked to participate in clarification discussions to help the Corporation further assess the merits of their applications.

SIF grantees will conduct open competitions across multiple geographies to select nonprofit organizations (subgrantees) within six months of receiving awards. Three of the 11 grantees applied with competitively pre-selected subgrantees. Each of the eight pre-selected subgrantees have evidence of effectiveness along a continuum of preliminary, to moderate, to strong; intermediaries are required to fund approaches with at least preliminary evidence and fund evaluation efforts to grow the number of approaches with moderate to strong evidence.

Below is the list of the SIF grantees and a short description of the work the grants will fund. Click here to read more information about the portfolio and the grantees' track records of success.

Economic Opportunity

Jobs for the Future, Inc. ($7.7 million; 2 year grant) and the National Fund for Workforce Solutions (NFWS) will expand their targeted training and technical assistance to at least 23,000 low-income individuals over three years while also addressing the critical skill needs of more than 1,000 employers. The funds will dramatically increase economic opportunities for disadvantaged workers and job seekers through investments in regional workforce collaboratives that partner with employers to identify jobs and career pathways in high-growth industries.

Local Initiatives Support Corporation ($4.2 million; 1 year grant) will grow Financial Opportunity Centers – a workforce development and asset-building model that boosts earnings, reduces expenses and coaches low-income families on how to make better financial decisions – to five new cities and 7,500 total participants. The Centers are a core component of the organization's strategy to build sustainable communities.

Mayor's Fund to Advance New York City ($5.7 million; 1 year grant) and the NYC Center for Economic Opportunity (CEO) will replicate five effective anti-poverty programs originally piloted by CEO in eight urban areas. By advancing the education, employment and financial savings of low-income adults and families, the programs will combat poverty across a diverse cross-section of America.

REDF ($3 million; 2 year grant) will create job opportunities for thousands of Californians with multiple barriers to employment – including dislocated youth, individuals who have been homeless or incarcerated, and those with severe mental illness – in sustainable nonprofit social enterprises in low-income communities throughout the state. The project includes testing to determine the potential of these enterprises as scalable employment vehicles.

Healthy Futures

Foundation for a Healthy Kentucky ($2 million; 2 year grant) will improve access to needed health services, reduce health risks and disparities, and promote health equity in 6-10 low-income communities in Kentucky. Subgrantees will focus on testing innovative strategies to increase physical activity, improve nutrition, curb smoking and other unhealthy habits, and, increase access to health services in underserved communities. Competitively pre-selected subgrantee: Barren River District Health Department ($250,000).

Missouri Foundation for Health ($2 million; 2 year grant) will invest in 10-20 targeted low-income communities across the state to reduce risk factors and the prevalence of two preventable causes of chronic disease and death: tobacco use and obesity. The project draws on an integrated community change model blending two transformative models of prevention on obesity and tobacco control.

National AIDS Fund ($3.6 million; 1 year grant) will support innovative strategies that increase access to care and improve health outcomes for at least 3,500 low-income individuals living with HIV/AIDS. The project will employ rigorous evaluation, informing the implementation of the White House National HIV/AIDS Strategy and offering lessons that reduce barriers to care for a broad range of people living with HIV/AIDS and other chronic diseases.

Youth Development and School Support

New Profit Inc. ($5 million; 1 year grant) will collaborate with five to six innovative youth-focused nonprofit organizations with existing evidence to yield significant improvements in helping young people navigate the increasingly complex path from high school to college and productive employment. The project will expand the reach of these nonprofits to improve the lives of nearly 8,000 young people in low-income communities throughout the country. Competitively pre-selected subgrantees: College Summit ($2 million); iMentor ($750,000); Year Up ($2 million).

The Edna McConnell Clark Foundation ($10 million; 1 year grant) will combine large grants, strategic business planning, rigorous evaluation and capital aggregation to increase the scale and impact of up to 10 youth development organizations in communities of need across the U.S. The subgrantees will focus on improving economically disadvantaged young people's educational skills and workforce readiness as well as helping them to avoid high-risk behavior.

Venture Philanthropy Partners ($4 million; 2 year grant) will create a powerful network of effective nonprofit organizations in the Washington D.C. National Capital Region supporting an integrated approach to addressing the education and employment needs of low-income and vulnerable youth ages 14-24. Competitively pre-selected subgrantees: College Summit National Capital Region ($372,000); KIPP DC ($656,000); Latin American Youth Center ($500,000); Year Up National Capital Region ($207,000).

Multi-Issue

United Way of Greater Cincinnati ($2 million; 2 year grant) the Strive Partnership and other funders, will address the needs of low-income children and youth from "cradle to career" in the Greater Cincinnati-area though investments in early education, mentoring and literacy programs, college access, career pathways and other innovations.

About the Corporation for National and Community Service:

The Corporation for National and Community Service is a federal agency that engages more than five million Americans in service through its Senior Corps, AmeriCorps, and Learn and Serve America programs, and leads President Obama's national call to service initiative, United We Serve. For more information, visit NationalService.gov.

SOURCE Corporation for National and Community Service

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The first round of the Unreasonable Institute is quickly ebbing into pitch phase, when the 20+ entrepreneurs who have spent all summer in Boulder, CO put it all on the line to find the resources they need to take their companies to the next level. I spent Monday afternoon listening to their pitches at the West Coast Pitch Festival, hosted by Hub SoMa in San Francisco.

Across all the presentations, there were certain stylistic traits that made a presentation stand out as either good or not so good, and that may have applicability in many investment presentations by social ventures.

1. In a sympathetic audience, sell the social problem more quickly. This was an audience predisposed to care about the social issues these ventures are addressing, yet a number of the presentations spent more than half of their allotted time trying to convince the audience of the importance of the problem. Scope of the problem, context of the problem, and a quick analysis of why what exists now isn't cutting it, yes, but move faster through this and into the model meat of the presentation.

2. Get to the big, bombastic, mouth watering picture faster...The emotion that these entrepreneurs have to be trying to inspire is "holy shit, I want in, now." These social investors have to feel like they'd have to be insane *not* to want to invest. At least that's the goal. Making the picture be that exiting requires convincing people of the problem, yes, but more importantly, it requires making your solution seem so clear, so tangible, so full of opportunity that buying in is a no brainer. There was one presentation that was for a really awesome company, but in which it was only the very last slide for the very last few seconds that they shared their audacious goal of reaching 100,000,000 people in the next five years.

3. ...Then work back to how, with as much proof as you have. An essential part of achieving the excitement above is having a compelling logic for why what you're selling will work. A proof of concept with saleable results is best, but whatever it is, the "how" has to be believable. One of the biggest challenges of anyone pitching for resources in the social investment space is that there are still way more examples of organizations that talk a big game than real executers in the field. Ultimately execution matters more than inspiration. A related problem was that main piece of the execution plan for many of the pitches was "We will partner with X, which will open all the doors we need." Much easier said than done.

4. Contextualize it. Maybe the biggest challenge for me was that, because there was a real diversity of business models and financial needs, it was often hard to contextualize how you were supposed to be evaluating the company in front of you. Knowing whether the presenter was looking for resources for a nonprofit, a $1-3m annual business, or a $10m+ company makes a big difference in terms of how you think about the project as it relates to your individual portfolio as an investor. I think almost everyone would have benefitted from an overview slide that gave the key points in the first 10 seconds.

5. Confidence wins. The fastest way anyone lost my attention was by appearing timid. Nervous jitters are normal and fine, but ultimately the entrepreneurship game is about willing something not currently there into existence. This takes an immense amount of convincing. Convincing investors, team members, existing power structures, and anyone else that you need to move in some way. Confidence matters as much or more to me in the social space than in the web space, because I think we have a higher burden to change the narrative. It's still too easy for people to write our field off as a set of small, charitable endeavors outside of mainstream business.

Photo credit: Nathaniel Whittemore

America has flourished throughout the centuries in large part because it has been a beacon for attracting people from around the world whose lands of origin have simply not allowed them to use their natural talent and abilities to their full potential. The Startup Visa movement is trying to extend that tradition, and has a major new ally in Senator Mark Udall from Colorado.

The Startup Visa Bill is an attempt to create a specific class of visas for foreign-born entrepreneurs to build their companies in America. The bill would basically approve temporary migrant status for company founders who had raised at least $250,000 in equity investment, with at least $100,000 of that coming from a sponsoring US investment entity. If, after 2 years, the company had created $1,000,000 in revenue (or $500,000 if the startup was located in an economically targeted area), receive at least $1m more in venture investment, or created 10 jobs, the founder would be approved for a resident Visa.

The current proposed legislation would carve the new Visa class out of an existing visa class that is currently reserved for foreign investors who are putting venture capital into American companies. The allotment for those EB-5 visas is currently under utilized, meaning that the new Startup Visa's wouldn't actually create, in pure terms, any new visa allotments initially.

The Startup Visa Bill has attracted lots of support already, including not only the better part of the venture capital community but politicians like Colorado Congressman Jared Polis (who has written the Startup Visa into his proposed updates to the EB-5 visa) and Senators John Kerry and Richard Lugar, who introduced the Startup Visa act in the Senate earlier this year.

Yesterday, Colorado VC Brad Feld announced on his blog that the state's senior Senator Mark Udall had joined in co-sponsoring the bill. Its an exciting update for an extremely important project. Score a big win for Colorado when it comes to understanding the connection between immigration and keeping America's leading edge in innovation.

To read more, check out the Startup Visa page, and please sign the petition below.

Photo credit: Jeffrey Beall

Chances are pretty good that in the last year, you've been forwarded at least one web coupon that offers major discounts for some local service or product, if and only if a certain number of people sign up in advance for the deal. The group buying space is white hot, with dozens of companies getting millions in venture capital. What might surprise you is that the company that launched it all was originally built as an offshoot of a platform for social good.

Labeling any startup "the world's hottest," is a dubious art, but by just about any metric it's hard not to look at Groupon and think it's worthy of the title. A little over two years old, the company was recently valued at around $1.3 billion dollars. It will have estimated revenue of $350m in 2010. It has a legion of competitors who have raised in excess of $100m to copy (and try to improve, presumably) its group buying model, known collectively as "Groupon Clones." A few months ago, it expanded into Europe by buying a clone of itself that had grown so quickly it already had more than 600 employees, and quickly followed that by snatching up two clone companies in Latin America. Not bad for a couple years work.

What people don't always know about this much imitated startup is that it started as an online action platform for social good called The Point. The Point was based on the premise that when it comes to advocacy causes or nonprofit donations, sometimes every little bit doesn't count. If you're raising money to dig a well that costs $10,000, and you raise $9,000, you can't build the well. The Point gave people to ability to create a campaign that would aggregate commitment that would be engaged only when a specific threshold or "tipping point" was achieved. A campaign would look something like "If 1,000 people commit to dance in front of Congressman X's office for immigration rights, I will as well."

The site inspired some excitement, but had a hard time getting traction. It was organized as a for-profit company, and after a while, they began to brainstorm what all the uses of group power might be. According to founder Andrew Mason, they had always been interested in group buying, but had seen companies try and fail to make a group buying model work in the first internet bubble, and it wasn't until they really needed to experiment that they decided to give it a shot. "Groupon" started as one daily Chicago deal embedded on a blog at groupon.thepoint.com. When it started to take off, they knew they had something significant on their hands.

The brilliance of Groupon is how everyone wins, and how easily the financial model works. When a company creates a Groupon, they set a discount on some service or product and set a minimum number of buyers needed for the Groupon to go into effect. In this way, they are assured that there is at least a minimum business value achieved. Groupon subscribers get an email about one deal per day in their city, and have the day to buy it. They have an incentive to recruit their friends to ensure that the Groupon actually goes into effect, and when the minimum threshold of buyers is reached, their credit card is charged and they get their receipt which they can cash in at the businesses. Groupon takes their cut of the transaction and everyone wins.

While Groupon has taken off, it has kept The Point alive, looking for good opportunities to reconnect to the social change roots of the company. Recently, the two companies launched the G-Team initiative to do exactly that. The idea is to leverage Groupon's 6,000,000+ subscribers to support local causes on The Point. The local causes - which could be advocacy, donations, or something else entirely - will be organized on The Point, and then distributed with related Groupons. For example, a Groupon for a discount at a theater performance might come with a campaign to help a local theater fundraise.

This could obviously be a big win for causes that have access to a massive distribution list. But it could also be a win for consumers. Generally speaking, there is a stark divide between a buying experience and a community experience. Yet phenomena like the lines that wrap around city blocks waiting for new Apple products suggest that using buying as a starting point for community may not be crazy. Groupon is a more inherently communal buying experience, and adding in cause support could amplify that, which could ultimately be a big competitive advantage for Groupon against its legion of clones.

I'm really looking forward to seeing how the G-Team works. Even if it flops, the fact that one of the most explosive for-profit startups in the world is continuing to look for ways to re-up their commitment to social good is a hugely good thing.

Photo credit: orijinal

When I look at this week's entrepreneur links, I can't help but feel movement in the air. We have a story about the big growth in seed stage investment in quarter 2, a profile of the newest crop of Skoll Scholars, and a thought piece reflecting on the human impulse to give. There is momentum for creative companies and organizations that amplify human potential right now, we just need to keep pushing it.

Seed-Stage Investments Jump Sharply in Q2 2010: This information from the National Venture Capital Association confirms what those of us in the Valley (and particularly the web space) have been feeling for the last few months -- that there is a significant influx in dollars to new ventures. The number of seed-stage deals grew 32% between Q1 and Q2 this year, and these numbers only refer to professional venture capital groups, rather than the angels who are really driving this movement.

The Give Idea or Secular Moralism: This year's TED Global theme was "And Now The Good News." As usual, frog design has maintained one of the best blogs covering the conference. frogger Sam Martin wrote this post after a talk by Kiva co-founder Jessica Jackley, who is starting a new company, Profounder, to help entrepreneurs crowd-fund seed investment. The post reflects on the connection between giving to others and happiness.

Slow spending: The Chronicle of Philanthropy recently reported about the large percentage of funds donated to Haiti in the immediate aftermath of the January earthquake that are yet to be spent. GiveWell does a nice analysis of the numbers on their blog, and come away suggesting that it's actually probably a positive thing that those dollars weren't just poured in without a real ability to solve problems.

Announcing the 2010-2011 Skollars: The Skoll Scholarship gives five students per year a fully paid scholarship to the social MBA program at the Said Business School at Oxford. This class continues the trend of excellence among the winners, and maybe even ups the ante. The Skollars have started a variety of companies across social investment domain areas, most notably Better World Books, founded by Xavier Helgesen.

Photo credit: Jessica Jackley at TEDGlobal 2010 by James Duncan Davidson for TED.

Almost certainly the biggest story in philanthropy in 2010 is the public launch of the Giving Pledge, a campaign to get the world's billionaires to commit to giving away at least 50% of their wealth. Microsoft co-founder Paul Allen has become the latest to take the commitment, and will give away at least half of his approximately $13.5 billion fortune.

The Giving Pledge was announced last month with a major piece in Fortune magazine. Over the last year, Bill & Melinda Gates and Warren Buffett have been organizing within their communities of extreme wealth to try to figure out how to increase giving among the rich.

After a number of conversations, they settled on a pledge as the best way to inspire new commitments. The campaign has major added heft because of the leadership of the Gates family and Buffett. The Gates' have pledged to give 90% of their wealth away while Buffett has pledged 99%.

More than those pledges, however, they are living examples of the sort of commitment they want to inspire. Bill Gates primary focus is the foundation. Buffett has written eloquently about his belief that his wealth is largely attributable to a 'genetic lottery' that gave him a talent for picking stocks.

Paul Allen, Gates' co-founder at Microsoft, is already an involved philanthropist, having given away more than $1 billion previously. Still, his commitment would multiply that giving by a factor of 7.

Allen's philanthropy has been largely focused on scientific research and support for initiatives near his home in the Pacific Northwest. His most significant commitment so far has been to the Allen Institute for Brain Science, a nonprofit research center trying to push the field of brain science.

Allen joins a list that includes not only the Gates family and Warren Buffett, but Eli and Edyth Broad, John and Ann Doerr, and more. We'll continue to keep track of commitments, as well as to share the questions, ideas, excitement, and concern that people have about the campaign.

For further reading, I highly suggest this amazing piece by new Change.org writer and social and tech entrepreneur Ryan Allis.

Photo credit: papalars

You might have noticed a story in the last edition of Weekend Entrepreneur Links about the Chilean government's new attempt to attract budding entrepreneurs to the country. In short, they're offering young companies up to $40,000 in grant money in exchange for being willing to spend a few months building their companies in Chile. I think it's an awesome initiative, and here's why:

1. It lets the country sell itself. The idea of the program is that a key early stage, entrepreneurs are spending time in Chile. The bet is that Chile has enough to offer that those entrepreneurs will actually want to invest in Chile as a secondary (or perhaps even primary) business zone. Entrepreneurs will get to meet local officials, and the people who can help with red tape, making the country more appealing as an international starting place. But more than anything else, the entrepreneurs will be living there during an extremely tough but highly romantic period in their organization's life. Living in a place does far more than visiting it as part of a whistle-stop business tour to give people a sense of connection, and Chile is smart to play that.

2. Offers something attractive without creating undue burden. First of all, for a young company $40,000 isn't bad. If nothing else, it takes care of the founder's salary for months they'd be in Chile. What's more, for a certain type of founder, being able to start their company from Chile will feel like getting a head start on the freedom in life that they're looking for by starting their own company in the first place. And ultimately, if it ends up not being a great experience, the commitment to be in country is only a few months, and there are no strings when it comes to future business dealings.

3. Recognizes the new reality of startups (particularly web startups). Chile is looking particularly, it seems, to attract young technology startups. They seem to recognize first that the cost of that sort of company has decreased enough that $40,000 is meaningful money and second, that we live in a Skype world where people can build a company anywhere with an internet connection. Of course, certain types of companies require more in-person relationship building up front, but for many hacker entrepreneurs, this program could be perfect.

4. Provides potentially long term benefit (and a long term perspective). When you're an early stage entrepreneur, your life is a balance of trying to keep what's 10 inches in front of your nose aligned with what's 10 miles down the road. One of the things I think is so cool about this program is that even if the short term benefit is the $40k and a cool place to hack, the long term benefit is a whole new market with great connections to people of influence. That creates a context in which young entrepreneurs think beyond their nose a little bit, and whether something materializes or not, that's valuable.

5. It's cheap. This is a seriously inexpensive program for the Chilean government. Let's round up and call the cost $50,000 per entrepreneur who participants. For a million bucks a year, they could have 20 new global entrepreneurs who are calling Chile home and looking at Chile as a market. If they do it right, each of those entrepreneurs is not just a future market bet, but an influencer and supporter of local talent as well. Honestly, it seems like a damn cost-effective way to seed innovation.

This model could be a total bust. It could turn out that going to Chile just isn't that attractive to young entrepreneurs. But I think it's smart and forward thinking, and could be a huge win for them. I'll be watching to see how it works. If anyone applies and actually participates in this program, please let me know.

Photo credit: Diegosaurius Rex

Ashoka Peace interviews Esra'a Al Shafei, founder and Director of MidEast Youth.

AP: What is the innovation you have pioneered? What are you doing that nobody else is doing?

ES: At Mideast Youth, we leverage the power of new media to facilitate our struggle against oppression in the Middle East and North Africa. We're driven by our passion for civil engagement, freedom of speech, and employing innovative solutions to these pervasive and persistent human problems. Relying on open source platforms like WordPress and Ruby on Rails, we began experimenting with community-based sites, widget applications, Facebook applications, Twitter applications, Google map apps, iPhone and BlackBerry applications as well as comics, video animations and infographics that document and expose human rights violations against ethnic, religious, sexual and intellectual minorities in the region. Aside from building our own websites and tools, we also provide free hosting, development, and design to organizations and free speech advocates throughout the Middle East and North Africa.

Our latest projects include Mideast Tunes, a platform profiling and connecting underground musicians using music as a tool for social change, and CrowdVoice.org, user-powered service that tracks voices of protest from around the world. In total we operate 15 campaigns, but support the development of hundreds throughout the region.

AP: What's the biggest challenge you are facing right now?

ES: We are facing three main challenges. The first one is state censorship, and us constantly having to find better ways to easily bypass it. The second one is our personal security and the security of our authors and activists. Finally, our struggle to find interesting models to financially sustain our work. This has been hard because we really believe in the free services that we provide, and every new tool or application that we build, we wish to make completely open source. But we're spending the next year exploring ways to can monetize our upcoming projects.

AP: At what point in your life did you realize that you simply had to do this? What was your personal turning point?

ES: Increasingly frustrated in my early college years by the prejudicial stereotypes throughout media of Middle Eastern youth – a portrayal unanswered because of censorship and state control of media in the region - I turned to my keyboard to respond with my own voice, to show not only the diversity of ethnicities, religions, and cultures in the region, but also the diversity of opinion, fervor, ideals, hopes, and politics; to prominently portray in the global discourse Middle Eastern youth in all our depth, our feelings, and our complexity. The moment I started using the web I knew it had promising potential, the opportunities provided were limitless. I knew right then that I had everything I needed to turn my vision into reality, so I started right away.

AP: How do you know you’re being effective? (i.e. affecting social change)

ES: Mideast Youth has had a pronounced effect on the conversation in the region and beyond. We don’t see our success only in numbers of readers, but in the add-on effect down the line. Most of our efforts are dedicated to aiding others in setting up successful web campaigns. We know some governments are threatened by our work as many have tried to block our efforts by censoring our content. We know that millions of people are aware of our message, primarily due to the growing amount of media coverage we are generating worldwide as we raise controversial issues otherwise not covered by the press in our countries.

Read more about MidEast Youth here.

Yesterday, Commerce Secretary Gary Locke announced the full member list of the new National Advisory Council on Innovation and Entrepreneurship. While I might normally be excited about this sort of thing, I can't help read this list and think that social entrepreneurship got a big snub.

The council is designed to give the government better access to some of the best minds in the business of creating new companies. With an unemployment rate that just won't go down across the country, part of the idea of convening groups like this is to ensure that the entrepreneurial engine of the USA keeps firing to create a new generation of jobs.

Ultimately, it's hard to know how valuable these groups are. But they do create a context that can help influence the perception elected officials have about what is important to spur entrepreneurial job creation. And when it comes to that sort of influence, who is on the panel matters.

There are two things that I think a stronger social entrepreneur presence on this panel would do:

1. Focus attention on social problems where there are entrepreneurial opportunities. After spending a year in Silicon Valley, one of the biggest gaps in the for-profit entrepreneurship space I see is the limited perception of which problems are valuable (in a monetary sense) to solve. There are an insane number of companies being started to do social gaming, virtual currency, or group buying, because those are clear, strong markets with the potential for outsized financial returns. There are less education startups, health care delivery startups, or generally companies working on distinctly social problems.

I don't believe that we should prescribe what type of problem any particular individual should try to solve -- for anyone to be a successful entrepreneur, it has to come from their guts. Overall, however, I don't think there is enough of a push from investors and mentors for young entrepreneurs to think about the social problems they could be building big businesses with social impact around.

2. Focus on changing our conversation about how business is done. When we talk about shaping a new generation of entrepreneurship, we have the opportunity to shape not just what businesses are created, but how they're created, and how they view their roles and responsibilities as agents of societal improvement. There are massive, massive gains to be had in how young entrepreneurs today treat the sustainability of their sourcing partners, their environmental impact, their worker cultures and more. But those things won't just wish themselves into existence, and there are always going to be cost pressures cutting against those sort of social-focuses. Having social entrepreneurs as an integral part of this conversation could ensure not only that these conversations were on the table, but that members of the government were thinking about how to better support businesses that built social impact into their DNA from day one.

This is not a critique of the members of this list. And indeed, there are a number of folks on this list who understand the connection between entrepreneurship and social good. AOL and Case Foundation founder Steve Case, for example, is no social innovation slouch. Case will be co-chairing the committee, which is promising.

But the point is that the perspective of social entrepreneurs, who have build their business up from the day one thinking about how to maximize social good as well as profit, has far too little representation. Intentional or not, I think that's a major missed opportunity for the government, and ultimately, for us all.

Photo Credit: AIM Neutron (On a break)

I think the single most important thing for our field to be engaged in is creating the institutions of self-propogation. Put differently, I think we need to be investing heavily in universities, incubators, and other programs which make careers in social innovation and entrepreneurship both more realistic and more likely to make a difference. For that reason, I was incredibly excited to see that Legacy Ventures has entered into a strategic partnership to support Ashoka U.

Ashoka U is the university-focused program of Ashoka, one of the longstanding leaders of this field. For the last two years, it has been convening students, staff, and faculty at just under a dozen universities around the country in order to build their capacity to work with their administrations to design social entrepreneurship programs that meet the particular needs of their disctint campus environments.

I think it's infrastructure approach is the right one. When we started building out our programs at Northwestern around 2004, it took a broad range of students with connections to array of staff and faculty who were starting a diversity of different but related initiatives to really push the campus from thinking about our work as neat but small to an essential category of student activity to embed at the core of the NU experience. That sort of shift only happens when you have the right insiders empowered, and the Ashoka U program is in a particularly good place to help students learn how to do this most effectively.

Legacy Venture is a fund-of-fund that invests in a cohort of top tier for-profit venture firms and then delivers those returns to specific philanthropic causes. In this way, it not only creates a differentiated pool of resources for philanthropic investment, but creates a specific pipeline conversation between the for-profit venture space and the social venture world that I think is as, if not more, valuable, at this early stage in the industry.

Legacy is making a $100,000 investment in Ashoka U. The money will help Ashoka U triple the size of it's consortium of Changemaker Campuses over the next five years. That would mean expanding from it's current crop that includes: Babson, College of the Atlantic, Cornell, George Mason, Johns Hopkins, the New School, Tulane, UC Boulder, and the University of Maryland. This is one more example of the expanding focus on human capacity that I think is driving the startup space.

To learn more about Ashoka U, visit their website.

Photo Credit: soot+chalk

Given that the world's most-watched sporting competition - the football World Cup - just concluded, we'd be remiss if we didn't have at least one post relating the World Cup to peacebuilding.

And this heart-warming story comes from one of our own Ashoka Fellow organizations, Search for Common Ground. On their blog, they tell the story of how one of the world's best footballers, Ivory Coast's Didier Drogba, attempted to unify his very fractured country. Read the blog post here, and the full story here.

This story highlights again the extraordinarily influential role that athletes play in their respective countries, and perhaps also reveals that they could be doing a lot more, especially if we asked. What do you think can be done to involve more great athletes and other societal role models in the quest to end violent conflict?

PS: For an example of an Ashoka Fellow who uses football as a way to build a better world (including more peace), read about the work of Jurgen Griesbeck's streetfootballworld, which is also involved with FIFA and the World Cup.

[Ed. note: With this piece, we welcome iContact founder, social entrepreneur, and social angel investor Ryan Allis to the site. While this piece is more comprehensive than what we normally publish, we think you'll agree it's an incredible read. Please join us in welcoming Ryan to Change.org!]

A Vision in a Time of Peril

It's hard to see the big picture in times of turmoil. Let's go back to Wednesday, March 4, 2009. That day, Bill Gates and Warren Buffet, the richest individuals in America, wrote a letter to David Rockefeller, President of the Rockefeller Foundation. The letter suggested a gathering of their billionaire friends to discuss giving.

The letter was mailed in the backdrop of a tumultuous week. By that Friday March 6th, the Dow Jones Industrial Average reached its lowest point in twelve years, free falling 52.9% from two years before in the good 'ole days of 2007 prosperity.

March 6th, 2009 brings back vivid memories. I was visiting the White House with a group of young entrepreneurs with The Summit Series. The White House Office of Public Engagement had put together the session to discuss their plans for the Economic Recovery Act. As Jason Furman, the Deputy Director of the National Economic Council, spoke to our group, the market was in freefall.

While the media was anointing The Great Recession and debating whether it would become a depression, Gates and Buffet had the fortune and foresight, to bring together their friends for dinner in New York to discuss how to give back.

The Launch of The Giving Pledge

Out of this meeting in New York came an initiative called The Giving Pledge, "an effort to invite the wealthiest individuals and families in America to commit to giving the majority of their wealth to philanthropy."

So through The Giving Pledge Mr. Gates and Mr. Buffet are encouraging other billionaires to give at least 50% of their net worth away.

In fact, instead of the recommended 50%, Warren Buffett has pledged to contribute 99% of his net worth to charity within 10 years after his death, all to be used for immediate need and none for endowments. Laudable indeed. Buffet writes in his usual matter-of-fact style,

"The reaction of my family and me to our extraordinary good fortune is not guilt, but rather gratitude. Were we to use more than 1% of my claim checks on ourselves, neither our happiness nor our well-being would be enhanced. In contrast, that remaining 99% can have a huge effect on the health and welfare of others. That reality sets an obvious course for me and my family: Keep all we can conceivably need and distribute the rest to society, for its needs."

How Much Money Are We Talking About?

Mr. Buffet will perhaps give around $50 billion to philanthropy by the time of his death. Through The Giving Pledge, he and Gates have the opportunity to leverage their influence and connections to multiply their giving many times over and set the example for other billionaires, who can no longer give away just 10% of what they have and feel good about themselves.

The total net worth of the Forbes 400 in 2009 was $1.27 Trillion. If Gates and Buffet convince 20% of these billionaires to give half of their net worth away, they'd be able to drive another $120B into philanthropy, doubling the amount of they themselves can personally give away.

So let's say The Giving Pledge is successful and it generates another $120B in giving over the next twenty years, or about $6B per year for the next twenty years.

While an additional $6 billion per year can certainly make an impact, this amount pales in comparison to the $3.8 trillion proposed spending in the U.S. Federal Budget for 2011. It also pales in comparison to the $303B in total annual private giving by U.S. citizens.

How Can This Money Make The Biggest Positive Impact?

The two issues in our world today that are causing the greatest threat to a secure and stable human society with access to opportunity for all are extreme poverty and environmental sustainability. Most people don't know that 39% of the human beings on this planet live on under $2 per day. If our goal is global stability, not to mention justice, this cannot be allowed in our world. And most of us by now get the global economic and natural disaster that will be caused if we keep increasing our annual consumption of goods without decreasing our carbon emissions.

I believe that our mission, challenge, and opportunity as a generation is to create sustainable economic prosperity for all. We will never have a truly secure or stable world until we do. So how can this extra $6 billion per year be used to get the maximum return toward this end?

While humanitarian aid is absolutely necessary and moral, providing funds with this extra private capital for short-term gap filling needs caused by the symptoms of these issues won't solve the issues themselves.

So how can these funds best be used to generate the highest Social Return on Investment (SROI) and work toward sustainable economic prosperity for all?

The funds of these Giving Billionaires can either be given to address immediate need or invested to change much bigger systemic issues that are at the root cause of so much human suffering. While I do not know which will generate the highest return, I believe that by investing in changing global public policy (in a few select areas mentioned below) to reduce the incentive structures that are at the root cause of much suffering, lack of access to opportunity, and environmental damage these new Billionaire Givers will generate the highest SROI.

In order for this relatively small amount of additional capital to have the biggest positive impact, it must be leveraged. Philanthropic money can be leveraged by investing it in changing how other, larger, capital flows occur within our global system.

To effect real long term global change this $120B should be directed to:

1) Change U.S. domestic policy so we stop spending on the very expenditures that block access of the poorest countries to the market and creates need for more humanitarian aid and philanthropic giving in the first place (e.g. farm subsidies, trade tariffs, some military spending);

2) Influence a change in International Financial Reporting Standards and laws of nation-states so that companies can no longer off-balance sheet their negative environmental externalities;

3) As Nathaniel Whittemore has recommended, invest in social entrepreneurs who can leverage these dollars and markets (the largest capital flow of them all) to create sustainable change with dignity; and

4) Launch a campaign to encourage not just billionaires, but millionaires, to make a giving pledge and generate many trillions of additional dollars to invest in one through three.

Leverage Point 1: Invest in Domestic Policy Changes to Gain Social Return

Imagine the social good that could come from a concerted effort focused on lobbying to reduce the gargantuan $721B per year U.S. military budget (which as of 2008 was 48% of the world total military spending and larger than the next 45 countries combined) by 25% so that we could increase the salaries of every teacher in America by more than 50%.

There are 6.2 million elementary and secondary school teachers in the U.S. according to the U.S. Census Bureau's 2000 Census. The average U.S. teacher salary was $51,009 according to American Federation of Teachers Survey and Analysis of Teacher Salary Trends 2007. So in total, the U.S. spends around $316 billion per year on teacher salaries. Hence a $180 billion re-allocation from defense to education would enable us to pay teachers 57% more.

Having a this type of dollars and cents carrot might just enable Chancellors to negotiate out the single requirement of Teacher Unions that is the most damaging to our children's education--the inability to fire a teacher who is not performing due to the tenure system, allowing the best teachers to be paid well above $80,000 per year.

Take a look at the below graph of Use of 2009 U.S. Federal Taxes and you'll see where our priorities seem to lie as a nation (of course noting that most funds for education come from State Taxes). A few billion dollars per year spent on influencing our Government to re-allocate this pie a bit more toward butter and a little less toward guns might just provide a huge return.

Source: Friends Committee on National Legislation Budget Chart for FY 2009

Leverage Point 2: Invest in Global Policy Changes to Gain Social Return

If these giving billionaires that join The Giving Pledge really wanted to get a large social return they would allocate dollars to change the public policies that drive the economic incentive structures that are the source causes of many of the issues.

One of the biggest problems in the world today is of course environmental sustainability. Six billion dollars per year, if the funds were focused, might just be enough to lobby the largest world governments to make a change to their accounting principles.

If companies across the world were required by law (that was enforced) to pay for the replacement of any environmental resource that they utilize such that each company had a net neutral impact on the environment, we'd remove much of the incentive structure that causes investors to seek out companies with the highest returns, which often are companies that unethically but legally have off-balance sheet environmental externalities that are simply passed on to all human beings.

Any philanthropist who can begin to create a tipping point for governments to stop accepting off-balance sheet negative environmental externalities that are not reported in GAAP or IFRS statements would enable the return on their investment to be leveraged many times over.

Change the economic incentive structure and you've changed the flow of trillions of dollars of private capital that billions of dollars of philanthropic capital simply cannot compete with.

Leverage Point 3: Create an Investment Fund for Triple-Bottom Line Entrepreneurs

As Nathaniel Whittemore suggested two weeks ago, some of the funds from The Giving Pledge should be directed to a Social Private Equity Fund. Nathaniel writes,

"What I can imagine is an institutional actor whose specialty is helping great social businesses with good revenues get even bigger while retaining their social and environmental missions. These types of firms would bring companies into their portfolio by acquiring some of the stock that had previously been held by investors and founders, in that way providing that liquidity that is missing from the current social finance system without compromising the social mission. This would create more incentives for early stage social investors, and provide social entrepreneurs more plausible returns that could increase the variety of the people thinking about social businesses."

I agree with Nathaniel that late-stage capital for socially responsible businesses would be a help to provide liquidity, and thus returns, to the early stage investment funds already investing in triple-bottom line entrepreneurial companies.

I would add however, that any company that gets to $30M or $40M in EBITDA positive revenues, regardless of whether it has a core social mission or not, will be able to raise private equity and provide liquidity to shareholders. I don't think the gap in the market is lack of funding for profitable at-scale social ventures.

The gap in the market is lack of funding and assistance for small-scale socially-responsible businesses that have the desire and dream to grow their impact and their revenues but don't know how--both in the developed world and the developing world.

The biggest market gap I see is investment dollars in for-profit businesses in the developing world, where "microequity" investments of $5,000 to $50,000 along with some guidance and incubation can generate huge returns for a local entrepreneur who requires capital greater than a microfinance organization can provide but isn't able to take on the $50,000 to $300,000 that organizations like Acumen Fund are able to invest.

And so, to maximize both financial return and social return for the Billionaire Givers, I would recommend not just a late-stage PE firm for social ventures, but also expanding capital investments in existing or new growth stage funds for socially responsible companies, particularly those in the developing world.

The second area of leverage I see within the world of private capital markets, is to invest in putting pressure on publicly-traded companies to implement strong CSR programs and actually live up to them. A few billion dollars spent buying mass media advertising to publicly encourage (read:shame) large MNCs so they live up to global CSR standards would be dollars well spent for social return.

Leverage Point 4: Invest in The Giving Pledge for Millionaires

While I applaud Gates and Buffet's effort on The Giving Pledge, in order to enable this pledge to truly make a substantial impact, part of the funds should be directed to extend the effort beyond billionaires and create a new social norm where it is simply expected that anyone who makes way more than they need will contribute half of their net worth by the time they die to making the world a better place.

For the millionaires out there, it will just screw up your kids if you leave too much money to them. So why not ensure your legacy by committing now, publicly, to giving at least 50% away?

There are 10 million millionaires in the world, with a total net worth of $39 trillion according to the 2010 Merrill Lynch and Cap Gemini World Wealth Report. The average millionaire has $3.9 million.

Excluding the $1.3 trillion of the Forbes 400 from this $39 trillion, there is $37.7 trillion in assets among millionaires globally. What if there were a Millionaire Pledge?

If through a directed effort we can get 20% of global millionaires to commit to give half of their wealth, instead of an extra $120B for philanthropy, we'd have an extra $3.8 trillion. If we invest much of this $3.8 trillion in the three key leverage areas to fundamentally change our global economic and public policy system and use the rest to invest in filling short-term societal needs we can make a truly meaningful impact in the world.

Every multi-millionaire should commit to giving at least 90% of their wealth away by the time of their death. I made a commitment to do this in 2008 (in my book Zero to One Million) and will uphold this commitment. You can't take money with you.

So who will take up this charge? And what do you think about these four areas of recommended investment?

Photo credit: NomadicLass

With the World Cup over, all that's really left to do is resume the drudgery of waking up every day to try to make the world a better place. Bo-ring. If we have to do it though, may as well be as informed as possible. Start with these important reads from the last week.

How Experience in Foreign Cultures Facilitates Creativity: Most of the folks I know who have spent significant time of broad probably would have argued this point before they had any data to back it up, but it's very cool to see some significant research suggesting that being exposed to foreign cultures has significant, measurable positive impacts on people's ability to think creatively and solve problems. Importantly, however, the study also shows that the attitude you have going in -- the desire to actually engage with that foreign culture -- is key to actually getting these benefits.

Revitalizing the American Dream: Inc magazine put together this awesome list of tips for revitalizing the American Dream, and it's all about making it easier for people to start, join, and succeed in startups. This means teaching entrepreneurship across disciplines (not just in B-School), changing our general approach and disposition towards immigration (and immigrant entrepreneurs), and even some legal ideas like to stop enforcing "noncompete" agreements that force former employees of companies not to work for (or start) competing companies after leaving. Total must read.

Microfinance Group Unitus Shuts Down, Eyes ‘Reinvention': This is one of those confounding stories that could be incredibly significant or totally irrelevant, depending on what's behind it. Basically, one of microfinance's leading institutions has shut its doors and laid off its staff, saying that it's exploring a reinvention, without saying much of anything about what that is. If this is due to a lack of confidence in microfinance, it's significant. If it's a real-life example of a nonprofit actually "putting itself out of business" because it feels it has accomplished what it set out to do, it's significant. If, more likely, the root of this is just difference in opinion about future direction within the leadership, it's just internal politics and doesn't much matter. A story worth watching, though, for sure.

Start-Up Chile: Putting some of the ideas from the Inc story above into practice, this new program from the government of Chile is offering $40,000 in startup grants for companies that are willing to relocate to Chile for a time. The goal is to welcome the global entrepreneurship community to the country and hope that some people decide to invest in Chile as a primary or secondary home for their companies. Few strings attached money is definitely a good way to grab an entrepreneurs' attention.

Photo credit: Gonzalo Baeza Hernández

For the nonprofit sector to truly climb aboard the social innovation train, as opposed to being abandoned by it, nonprofit leaders need to move past the reactive toward the strategic.

But is that possible? Have nonprofits been stuck in a resource-constrained, charity mindset for too long to be made strategic, bold, big thinkers? It's been a vicious cycle. Nonprofits lack adequate resources so they become very protective of what they have and wary of any actions which might threaten those resources. Therefore they become exceedingly risk averse and fearful of innovation. They focus more often than not on keeping the doors open as opposed to investing time, energy and resources in long-term strategy.

But that' s just not going to cut it anymore. These times demand a radically different mindset and approach. The nonprofit sector must move from the reactive to the strategic. So how does a reactive approach differ from a strategic one? It looks like this:

When a financial crisis hits the organization, the reactive approach is to focus on keeping the doors open and staying afloat. But a strategic approach focuses on what caused the crisis and how to fix the underlying problem, model or system so that they never return there again.

When a funder wants to award a significant sum to an organization for new programs that detract from, rather than bolster, the organization's theory of change, a reactive approach focuses on the increase in revenue, but a strategic approach recognizes the misalignment and turns the money down.

A reactive approach allows program staff to continue with a status quo method of program delivery, but a strategic approach constantly asks hard questions, tracks results, pushes outcomes, restructures inefficient processes, gets underneath the surface to make programs better, stronger, more impactful, more sustainable.

A reactive leader arrives at board meetings with reports, charts and status updates, gets a rubber stamp on day-to-day activities and breathes a sigh of relief that the board didn't ask too many questions. But a strategic leader analyzes the unique contributions each individual board member and the board as a whole can make and leverages those contributions effectively, engages the board in meaningful discussions and actions around where the organization is going and trends in the external marketplace, and focuses board work on big picture issues and opportunities, creating key external networks, and building a strong financial future.

A reactive approach helps the board recruit new members that fit narrow definitions of experience, gender, ethnicity, and size of pocketbook. A strategic approach compares the long-term goals of the organization to the competencies, networks, experience and resources required and creates an intentional board recruitment strategy to get there.

A reactive leader crosses things of their daily to do list and feels satisfied because the trains ran on time, crises were avoided, and everyone got a paycheck. A strategic leader is rarely satisfied and constantly works to build key alliances with external partners, learns new skills, pushes their staff harder, evaluates their work, continually refines their model and responds effectively to a constantly changing environment all in the name of greater impact.

A reactive leader allows the natural uncertainty of running a nonprofit to cause fear and inaction. A strategic leader, like a true entrepreneur, recognizes the opportunity for innovation that uncertainty offers and embraces and uses that opportunity to continually mold the organization's solution to the external market of need and funding.

It remains to be seen whether a reactive leader can transform into a strategic one. I would bet that the success of the social innovation movement as a whole rides on it.

Photo Credit: Loren Javier