To this end, I remembered that Diane Grams, now at Tulane (profile), did some research that was incorporated into a report for the Illinois Arts Alliance (report description here). In her work on executive compensation in the arts sector, she found that only 10% of respondents reported that their organizations contributed to a retirement fund, and of course we should interpret this even more carefully, because it is often the case that arts organizations employ many casual employees, who would not have any benefits at all. In a different research paper she presented, she pointed out that sadly, having a spouse or partner who was well paid was the main predictor of people staying in the arts area. (I’m too busy to track that one down at present.)

What concerns me is that it seems that in the US, then, people who go into the cultural areas are not only lower paid, but they are going into an area without a social safety net or provisions for retirement. Without going into any type of political discussion about the fairness of pay or whether we should value the arts more highly, it concerns me to think about people who by default in their career will have no provision for health care, and little provision for either retirement and unemployment issues. The way that these issues are handled relies on an assumption of long-term employment conditions that seem outdated even for workers outside the arts today, where job switches and contract work have become quite frequent. The erratic and contract based nature of creative jobs is even more dissimilar to our traditional views of working for one firm who would provide for health care and retirement. (Firms themselves find retirement and health care costs increasingly difficult to bear, even if they might want to, but that is a topic for another time.)

But there are now also a few interesting programs that are being set up to try and provide for the welfare of artists. In the case of visual artists, we have the Artist Pension Trust which is attempting to provide for artists in the future through donations of their work over time. (Interestingly, they incorporated as a for-profit financial services firm, currently private, although if one thinks about compensation structures for people in finance, a nonprofit structure might not have been able to attract as many financial experts.)

It is also interesting to think about what happens when these provisions are not via a firm, but are instead handled by the government, as we see with the quite different situation in the UK and EU. Although they are having similar pension struggles with older workers, in the UK working artists can use the benefits of the National Health Service (NHS), pensions via the national insurance scheme, and more flexible unemployment benefits that are more compatible with the flexible, short-term contract based work of artists and performers.

We only have to look at the vibrant contemporary arts production in cities like London and Berlin to realize that artistic work might not be well paid, but that it does not necessarily have to mean that you should not be able to have health care, unemployment, disability or basic retirement provisions.  Well, if I were an artist, I think you can imagine where I might be looking to move.

Let’s face it, we all want to believe that our organizations, or we as individuals, have a high capacity to innovate (and for the sake of humanity, let’s hope we do,) but let me pose a rhetorical question here: is it safe to say that things we think are innovative sometimes aren’t? It’s been the go-to descriptor of products and services in business and marketing for years, and has expanded to various other niches such as organization innovation, ancillary innovation, and so on. For the past year, the White House Office of Social Innovation and Civic Participation and the Social Innovation Fund have been on the radar of just about anyone connected to, or having an interest in the third sector. Beyond this, it has attracted a renewed interest in the ways government works with nonprofit organizations and socially conscious businesses. And, thus, we’re enamored with innovation all over again.

My friend and colleague Jasmine McGinnis offered her take on the pros and cons of the Social Innovation Fund and concluded with this statement:

…I fear that without changing the process of awarding these funds to innovative nonprofits, the Social Innovation Fund risks falling into a trap of being just another organization that provides grants–and that my friends, is simply not that innovative after all.

She’s right. Doing something that another organization has done before–time and time again–is anything but innovative. Research on innovation has told us that in order for something to be innovative, it has to be novel, unprecedented, or even groundbreaking, as it were. We have yet to see this from the Office of Social Innovation, but some, including Harvard Business School professor Clayton Christensen, believe it will be a “new paradigm for solving social problems.” Professor Christensen wrote last year that the “social sector in its current form…fails to foster, support, and scale innovation. Fundamental shifts need to occur in the structure of the social sector in order for systems of innovation to truly take hold.” Now, because I study innovation–specifically organizational environments that foster innovation–I am a fan of Professor Christensen and his work. We even share a few things in common. However, I take slight umbrage with the first part of his statement. The social sector has indeed fostered, supported, and depending on your perspective, scaled innovation. That’s not to say that the nonprofit sector hasn’t confronted a fair share of challenges, though as much as Christensen claims “innovation in the private sector has been the key to our nation’s longstanding economic prosperity,” I dare say current times aren’t prosperous enough for me to be too enthusiastic about this statement. We will all wait with great hope that the White House Office of Social Innovation and Civic Participation and the Social Innovation Fund provide the paradigmatic shifts Professor Christensen outlines.

Here is a list of three simple things I try to keep in mind when thinking of innovation and how we can put the accompanying minutiae in perspective:

1. We need to quit playing the “my sector is better” game. If you think about it long enough, you’ll realize that there are good components to any type of organization. Businesses, nonprofits, and yes, even government, all have the capacity to innovate. Facebook CEO Mark Zuckerberg recently garnered some press when he claimed that nonprofits can’t change the world. There is marginal truth in that statement, but only as it applies to nonprofits whose mission it is to change the world. Most of them, however, are much more grounded in reality and recognize that they do better by focusing on specific areas within their realm of control. As for the other part, he’s quite wrong. Nonprofits have already changed the world in the way goods and services are delivered. They provide an alternative to commerce and government, and fill in gaps that those two sectors leave open. Zuckerberg believes that “building a company is the best way to change the world, because it’s the best way to align the interests of a lot of smart people…to build something that’s great and serves people.” There are plenty of smart people in the other sectors, too, Mark. Their interests are aligned, and they serve people, too. The takeaway here is that each sector is important in its own right, as since collaboration among organizations of differing sectors is common, we would do best to look for strengths within a given sector and how they match with others.
2. Innovation has a life cycle. This is pretty simple. As innovations become more diffuse over time, they evolve into standard practice (or even “best practices”…more on that in a second), and thus their saliency as an innovation diminishes. Or, in some cases, what was once an innovation in one respect, is taken over by something else even more innovative (in fact, you may want to look up Professor Christensen’s concept of disruptive innovation.) This, quite obviously, forces an organization to look to continually innovate, even if only to maintain legitimacy. What is innovative today won’t be innovative tomorrow, especially if you come up with something more innovative next week.
3. “Best practices” should be used carefully, and re-evaluated often. I am not necessarily against best practices, but I share a view espoused by Sandford Borins in one of his books: do not become beholden to them. An unwillingness to deviate from the comforts of best practices could diminish an organization’s capacity to innovate. The failure to evaluate on a constant basis perpetuates the stereotype that governments and nonprofits can’t sustain innovation. Governments and nonprofits can and often do sustain innovation. There’s a great book by Paul Light for those who might be curious as to how they innovate, called–wait for it–Sustaining Innovation.

Innovation may be a buzzword, but at least it’s one that keeps us talking and thinking.

NOTE: For those newly interested in social innovation, I would suggest a new book by Stephen Goldsmith called The Power of Social Innovation. I haven’t read it yet, but it quickly captured my interest and it’s on the top of my reading list. Goldsmith himself is a great example of a social innovator, so I look forward to reading it and discussing it with anyone else who reads it as well!

I like many others have been closely following the unveiling of the Social Innovation Fund under Obama’s Administration, not only watching ‘who’ is advocating and supporting this Fund, but also what the process will be like. As someone who is especially interested in better understanding how supply side aspects of grantmakers impact both intended and actual outcomes of grantmaking there are so many reasons that I’m excited about this fund but also extremely cautious. Since many bloggers, practitioners, and academics are writing about this I would love to get some general feedback on perspectives about the process as perhaps this advice could be taken into account in the actual distribution and administration of funds. So please feel free to leave comments or contact me offline.

I’ll start with the positive and really what I’m excited about. . .

1. The explicit recognition by government that real, long term solutions to complex social problems in the United States require collaboration between ALL sectors. This in itself is tremendous and an acknowledgment linking back to Salamon’s theory of nonprofit and government as complementary partners

2. A focus on evaluation (I’ll discuss my extreme hesitation about why I’m cautious about getting excited about this below). However, the fact that this fund will provide monies for nonprofits beyond operations while also having nonprofits COMMIT to data collection and evaluation is HUGE. I hope this  has a signaling effect to ALL nonprofits that evaluation is a necessary component of doing ‘good’ work

3. It’s use of intermediary grantmakers instead of using the government to distribute these funds. Not only is there an American distaste for more government involvement in any sort of decisions, but truthfully if these funds were solely distributed by the government, we can all imagine the bureaucratic red tape that would exist. Additionally, it is likely that the intermediary grantmakers who specialize in particular focus areas while also having overall expertise in grant making provide a better conduit to distribute these funds

Everything so far sounds good, but again I’m most excited about the overall signals the social innovation fund creates but extremely concerned about  the actual process.

Here are my initial concerns

1. A focus on evaluation =) Yes, I know I mentioned I was excited about this above but when it really comes down to it, several of my favorite evaluation questions emerge. What are you measuring? How? With what resources? Will this fund taken into account already established metrics like The Urban Institute’s Outcome Indicators Project or The United Way’s outcome metrics? Will it consult academics or experts in evaluation about how, why and what to measure within these nonprofit organizations?

2. This idea of growth capital. Plainly stated – I’m confused. I keep reading it but can’t figure out why the Social Innovation Fund is considered growth capital? The fund almost seems like a recognition by government that what most nonprofits need to grow is access to equity capital so they can scale up to size, but still not allowing a legal form that accommodates this within the U.S.  (see literature on social enterprise for more info. on this and how successful these legal forms have been internationally, particularly in the U.K.)

Scholars have found that many of the difficulties associated with nonprofit organizations scaling up to size is a lack of access to capital. In fact, many social enterprises and innovative nonprofits are funded by foundation grants, which ultimately ‘expire’ after 3 years of funding. So how is this fund any different?

Why do we continue to think that innovative organizations need more grants, more evaluation, more data? What exactly is innovative about this fund? Is it government working explicitly with philanthropists, because that has been occurring since the beginning of American philanthropy and still occurs to date.

3. Finally, how can we ensure that local, community based organizations who are doing great work CAN actually scale up without risking their mission. Scholars have found that some of the reasons nonprofit organizations work, and work well,  is because they are local and community based.

More importantly, for those nonprofit organizations who do receive funds won’t they be the larger, more established, more professionalized nonprofits? These organizations will likely  have the capacity to not only go through the administrative process of applying for grants, but also the financial and operational capacity to accept a large grant.

Overall, I fear that without changing the process of awarding these funds to innovative nonprofits, the Social Innovation Fund risks falling into a trap of being just another organization that provides grants – and that my friends,  is simply not that innovative after all.

It is in this last category, which I am interpreting here to broadly mean those individuals, groups and organizations that fund the non-profit organizations, where the complexity arises. When a nonprofit organization is funded primarily through government grants and donations they have two constituencies– the government and the donors; if they are funded primarily by private donations then it is only one constituency. However, what if they get government grants, donations, private contracts and they also charge a fee for some of their services? At this point you have four constituencies not including the employees or volunteers and some of those who are receiving the goods or services (assuming not all of the services are fee-for-service). The example of a large public research university, though not a nonprofit institution, will be useful in illustrating the issue at hand. Many of these organization receive significant amounts of funding from state governments (appropriations and financial aid), donors (additions to the endowment as well as donations to operating expenses), students and/or their parents (tuition income), the federal government (research grants and financial aid in the form of both grants and subsidized loans) and occasionally private companies (private research grants or contracts). So when you have constituencies that hold a significant amount of power within the organization but also are “external” to the organization, for example the state and federal governments and private donors, how do we define the boundaries of this organization?

Historically organizational researchers have conceptualized the wider environment as interacting with and influencing the organization at the organizations’ boundary, without really impacting its core. But in the case of the research university the only constituency that is clearly “internal” to the organization is the students (note that this does not include their parents); the others would generally be understood to be part of the environment that surrounds this institution. However these constituencies still exert a huge amount of influence on the internal workings of this organization. This can be illustrated by looking at the role of state governments during the 2009-2010 academic year. There have been numerous accounts in The Chronicle of Higher Education as well as other media outlets about layoffs, restructuring, departmental elimination, course cancelations, and imposed furlough days in response to the budget cuts enacted by state legislatures across the country. In these cases the environment, specifically the state governments, are having a significant impact on the core of these institutions.

So the question I raise is how do we as researchers deal with the fact that in the case of nonprofit organizations, or really any organization that is subject to multiple diverse constituencies, there are powerful constituencies that are in the environment (traditionally considered “external” to the organization), and yet have significant impacts on the operations of the organization? In effect how do we define the boundaries of the organization and study the role of the environment when we are dealing with organizations which are not internally independent, and instead are reflections or sub-units which have internalized key aspects and forces of their environments?

I do not currently have a clear answer for this question. Preliminary evidence from my dissertation research suggests that a more accurate picture of organizational behavior and finances can be achieved by ignoring the black and white distinction between organizational and environmental characteristics and viewing the situation as a continuum. Constituencies are either more internal or more external to the organization or constituencies have more or less influence. This is probably not that surprising; more information is generally seen as a good thing. However, how do we conceptualize the organization without clear boundaries? How do we say this piece of the federal government support is part of this university and this part is part of this university? How do we redraw the lines? Or, the larger question, are there still lines or are they something else?

There are different ways to make a financial investment in artwork, but due to the complicated nature of the art market and the many expectations that differ from traditional financial market exchange, I usually suggest that novices with investment goals start by searching for an art investment fund, rather than buying work outright. Most of gallerists whom I have spoken with recognize that artwork does have investment value, but they tend to prefer someone who will buy works that have an emotional resonance, or aesthetic appreciation value. Given the recent troubles with people who have thought of their houses as too much of an investment, I also share this caution. Furthermore, being able to pick artwork at a low price that will go up in value over time requires some expertise, and a greater return is necessary to compensate for the relatively high transaction costs of buying and selling at auction.

Art funds, however, usually provide this expertise in-house, the same way that a hedge fund manager has expertise in stocks, bonds and other investments. Although this type of securitized art investment is fairly new, there are a number of established and upcoming funds with different goals. The best funds will offer the benefits of a diversified portfolio of artwork, expert advising, financial expertise, and transparency about management costs, goals and other factors. When you put money into one of these funds, which are usually structured as private equity, you are essentially buying a ‘share’ of their portfolio. Many of the funds have the added benefit of annual dividends, which could be preferred to a direct purchase of art, where the investor only sees money at the end of a fairly long holding period.

But is this socially responsible investment (SRI)? Well, if we think about the meanings of sustainable investing, through screens and filters, as well as other types of socially responsible investing, such as faith-based goals, artwork would be considered acceptable for many of these goals. For example, according to one expert in Islamic finance, the fact that the funds are backed by real assets means that they could be a type of Islamic investment. Another consultant that I spoke with laughed at the idea that artwork was socially responsible, but he said they could be seen as a type of passion investment. Artwork is not usually associated with sin products, environmental pollution, or other areas typically associated with negative screens. Credible fund managers  will also carry out due diligence on any work purchased, to make sure that it is not stolen property or under dispute.

While some people oppose the idea of treating artwork as a financial investment, a good number of those involved in the art market welcome new buyers, even if they are investors rather than traditional collectors. Purchasing shares in an art fund is not the same thing as donating to a museum, but it is a way of directing money toward arts and culture.

Potential investors with an SRI agenda should know that this type of (fund-based) investment does not usually benefit the artists directly. This is because living artists are paid for their work when it is sold for the first time through a gallery, but unlike film producers or musicians, they do not typically enjoy profits on future sales of their creations. Intellectual property rights protect them others profiting from the unauthorized use of the images or ideas, but artists are not paid from future sales of the actual piece. The exception is that in the European Union, and a few other places, auction sales are taxed by the droit de suite, or artist’s resale rights, which provide a form of royalty to the artist or their estate. Nonetheless, while the artists may not benefit directly if funds are purchasing work in the secondary market, it is possible to make the argument that for an artist to gain a greater following in the secondary market does improve their career prospects, at least indirectly.  (There are a few funds that have goals of providing income to actual artists, but these typically have a different structure, so I will not discuss these here.)

With these considerations in mind, my personal opinion is that we can think of art funds as socially responsible investing, but you have to think about your goals. This type of (fund-based) investment can provide some benefits to artists and those in the market, but bear in mind that it is not the same thing as directly “investing in the arts” by donating to a museum or other nonprofit engaged in arts and culture.  It might be more accurate to say that you are investing in the art market, as opposed to the arts. However, if you want to invest your money according to your values and interests, this seems to be a reasonable way to go about it.

As with all investment advice, be sure to do your research and due diligence.

My academic background, like many nonprofit researchers, is also a little eclectic. My undergraduate degree is in Economics and Sociology from Baylor University and my graduate work here at the University of Arizona has focused primarily on organizations, methods, higher education, networks, and statistics.

My dissertation work is situated at the intersection of higher education, organizational strategies, governance, nonprofits, and methodology. Broadly speaking it examines the different organizational strategies that are pursued by institutions of higher education, the factors that dictate which strategies are pursued and the impacts of those strategies on the various constituencies of higher education.

Like many of my colleagues, my interest in nonprofit studies and social entrepreneurship came about through various other channels. Upon graduating with a degree in journalism from Arizona State University, my intention was to go to law school. A close mentor of mine who was on the faculty of the School of Public Affairs at ASU suggested I look into getting an MPA first to boost my chances of getting into a good law school. For this and various other reasons, I followed this advice and after I completed my master’s I had more or less forgotten about law school and was intent on pursuing a PhD. While earning my MPA, I had the opportunity to work in some unique capacities such as directing all of the student events for the 2004 Presidential Debate at ASU. From there I worked as a graduate intern in the state and local government relations office at Salt River Project, one of Arizona’s largest electric utilities (and some might say, due to their intricate system of dams, the reason Phoenix is able to exist in it’s current state.) After that I worked as a contracted consultant for various organizations before I was hired as the Policy and Research Analyst at the Arizona Association of Counties (AACo), a 501(c)4 organization that represents Arizona’s 15 counties before the Arizona State Legislature. While I loved my time at AACo (and some days still wish I was there) I cut my time short in order to pursue my PhD in the Department of Public Administration and Policy at UGA.

Some might say I can’t make up my mind; I just like to think I’m interested in a lot of different things. When I arrived at Georgia, I had in tow a completely different set of intentions than I have now. While I am very interested in public management, I have also gained a keen interest in contracting, cross-sector collaboration, or partnership between organizations of differing sectors by any other name, which logically exposed me more to the nonprofit and commercial sector. And furthermore, it all made sense to me as nearly all of my previous professional work experience  involved collaborating with partners of a different sector. I have been fortunate enough to use some of these examples in my current research.

At this time, I am in the dissertation writing phase of my program, and I will go on the academic job market at some point this year. The topic of my dissertation is on the subject of organizational innovation and how managers of public and nonprofit organizations perceive and value innovation within their respective agencies given a set of environmental and managerial characteristics. I enjoyed presenting this work at conferences in 2009, but will be much more gratified by getting it into a bound book in 2010.

Other research I’m working on includes a project on service learning and volunteerism by students providing free tax services to the public, a comparative study on social enterprise and social innovation initiatives, and a study on accountability measures in cross-sector collaborations.

I look forward to writing on all of these things in the coming months, and also look forward to interesting and spirited dialogue with my colleagues here!

The theme for this year’s conference is Philanthropy in Communities: Finding Opportunity in Crisis. It is relevant and timely, and I am really excited to see the research that will be presented. I will be presenting two papers: the first is on managerial perceptions of innovation value in public and nonprofit organizations, and the second will be a case study of the now defunct Arizona 2-1-1 Online program. I’m also excited to be participating in a colloquium entitled “Does Real Action Happen Online?” I’m very eager to hear my colleagues’ response to what I view as a question of ever-increasing importance.

In addition to presenting my research, Lindsey McDougle and I will also be helping with the social media coverage of the conference. I’ll post a few updates on my blog and here at thirdsectornetwork.org. Also joining me in the social media coverage are:

So, even if you can’t join us in Cleveland, we hope you’ll join us online!

In the company of these fine nonprofit researchers, I feel like a bit of a black sheep, because my interest in nonprofits has come as a result of my dissertation research, which is on the use of artwork as a financial investment and how this ‘financialization’ came to be. This led me to write a policy  paper about the potential negative consequences to museums that treated artwork as a financial investment, with some modest proposals about how we might avoid the loss of stakeholder trust that comes from liquidating permanent collections. Working on that paper has led me to thinking more about nonprofit assets and governance.

Despite my outsider status in the area of nonprofits (I have not specialized in nonprofit organization studies), I do have a healthy regard for nonprofit management as a part of organization theory and management studies. One thing that I liked in my training in public policy and management at Carnegie Mellon University was that we were encouraged to see ourselves as having the flexibility to move between government, nonprofit and corporate work throughout our careers. I suppose I have already done this alongside my academic career, because I have had the opportunity to work for several nonprofits in my role as a part-time GIS mapping consultant, including the Trust for Public Land and OpenLands in Chicago. While I am now pursuing an academic career, in the future I hope to do more research on nonprofits, as well as consulting work, and when teaching project courses, I hope to have local nonprofits as clients for my future students, which is a good way for universities to give back to the surrounding community.

I do have another rallying cry to study nonprofits, which is that from a theoretical perspective, if we study nonprofit and other forms of organization, this increases the diversity in the types of organizations studied, which is likely to bring about new findings for organization and management studies. (To make an analogy, anthropologists often  study one society at a time, but through comparison they are able to create more general theories and insights that inform researchers who work on different geographical regions.) Well, that’s my Chicago theory coming to the foreground, and I suppose I should end on that note, rather than going on about the increasing professionalization of the nonprofit community and creation of new epistemic cultures around nonprofit management. I look forward to seeing how this forum will evolve in the future.

Welcome to my first official blog post! My name is Jasmine McGinnis and I am a second year Ph.D. student in a joint public policy program through the Andrew Young School of Policy Studies at Georgia State University and the Ivan Allen College of Public Policy at Georgia Institute of Technology.

I have a rather interesting career trajectory that has led me to have two areas of interest in research. In my “first life” I was privileged to work for several years at Emory University’s Rollins School of Public Health. I began working there as an undergrad as a transcriber and eventually became a Research Project Coordinator for an NIH study examining cocaine/crack use in 18-25 year old drug users living in Metro Atlanta within the context of the family unit. It was truly incredible to be a part of this project where the ultimate goal was to develop culturally relevant and appropriate treatments in order to respond to the rising needs of Atlanta’s drug using population.

It was this initial experience, coupled with a strong desire to serve others that provided the drive to pursue further studies in public service. I was specifically becoming interested in the tremendous ability to transform lives that the public sector has. I received my MPA from the University of Georgia and engrossed myself in examining human resource issues. This led me to a body of work around the impact of diversity on client and organizational performance and representative bureaucracy. I loved this research area and thought that perhaps one day I would get my Ph.D.

I ended up spending several years working in the nonprofit sector before going back to school and ended up in fundraising. I knew that my strengths in an organization would be in administrative and fundraising capacities–which was a great fit for my personality. I worked for small grassroots organizations and large prestigious organizations within the Atlanta area.  My last place of employment was at Special Olympics Georgia where I was a Senior Development Manager. Working in the nonprofit sector as a fundraiser led me to develop a strong desire to research “giving” at the Ph.D. level.

Last year, under the guidance of my major professors I became engrossed in an analysis of foundation grant making with a unique dataset of a sample of foundations within Georgia.  With this data, I conducted research understanding foundation grant making within Boulding’s (1973) concept of a grants economy. This research has led to several conference presentations and proposals. The results of one study used principal agent theory to understand how different “types” of foundations (i.e. family vs. independent foundations) prefer certain nonprofit characteristics (size, sector, financial health/efficiency characteristics). Additionally, I’ve conducted research using elite network theory to understand grant making preferences of elite foundations in Georgia (those foundations who are the largest by both total assets and total giving).

I have another stream of research where I examine wage differentials within specific demographics of the workforce (i.e. Generation Y). I also have a paper in the works looking to use public and private sector methods to evaluate the impact of workforce diversity on client outcomes in the nonprofit sector.

My goal is to not only earn my Ph.D. and join the ranks of academia where I can contribute to scholarship in this field but also to become a professor who serves as a role model inspiring students to pursue careers in the public sector.