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Catchafire, a new skills-based volunteering platform that could transform how professionals engage with nonprofits, has just launched in public beta. The company was started by 28-year old Rachael Chong, who left investment banking to found the company. She recruited Andrew Lin, former VP of Technology at Hulu, to work with her as her Chief Technical Officer. For more background about the platform, see our piece here.

I had the chance to ask Rachael and Andrew a few questions about starting the company, leaving the corporate space, and their long term business potential:

Change.org: Both of you have made the jump from a purely commercial business to the social enterprise space. Was that something you knew you wanted to do, or did it just sort of happen?

RC - It was definitely something that I wanted to do. I went into investment banking after college with a purpose, to learn as much as I could and then get out of it to do something in the social good sector where I could apply business skills. I left investment banking faster than I imagined I would, which was accelerated by the fact that I had a hard time trying to find opportunities to give back in a meaningful way while I was a busy banker. My transition into the nonprofit sector was deliberate. I was very passionate about microfinance so to get into the space, I did what it took at the time, which was volunteer my skills full time for six months for a microfinance institution called FINCA International that is headquartered out of DC. My time at FINCA gave me the experience to later score a great job to help start up BRAC USA, the US affiliate of the bigger BRAC, the largest poverty alleviation organization in the world. At BRAC USA, we relied on skilled volunteers to help us build our business, which was a very effective strategy that helped us raises tens of millions of dollars in our first year. After witnessing firsthand how powerful skills-based volunteering could be for nonprofits, I was propelled to investigate why a scalable skills-based volunteer didn't already exist, and it was after this careful research that I started Catchafire to fill this huge need.

AL - While working at Hulu, I knew I wanted my next job to be working in towards some socially benevolent cause. When I left, I was primarily looking to help charitable organizations, preserve the environment, or improve education, and that's what I focused my search on when I arrived in New York.

Change.org: Andrew, have you noticed a big difference in what it takes to get a startup like Hulu moving versus something like Catchafire that has an explicit social as well as financial mission, or is it a similar process?

The much buzzed about volunteering 2.0 startup Catchafire has just opened its public beta. Based in New York City, the platform is trying to be the best place to connect nonprofits with skilled volunteers. Here are three reasons it matters:

1. It actually takes on the core challenge of volunteering - management: The transformation needed in volunteerism is not just a more efficient mechanism for finding volunteer opportunities, but a better managed execution of the volunteer relationship. Managing volunteers is really tough - their incentives aren't all the same, their effort can be inconsistent, and they can leave at any time. But being a volunteer isn't easy either. It's often unclear to feel like your effort actually contributed to something meaningful.

Catchafire takes this on directly in the way its product is design. Volunteering isn't just about matching a person to an organization, but about matching them to a specific, discreet project that has a specific timeline, hourly requirement, and deliverables. It's more like a pro-bono consulting engagement than what we normally think of as volunteering. And instead of a bill, the volunteer can prominently see how much they're saving the organization.

2. Their product is really well designed: Most products - whether nonprofit platforms or new consumer web technology - just aren't very well thought out. Catchafire has a clear simple user experience. Volunteers come to the site, sign in, fill out a skills profile, and can browse projects by organization, field, or by the type of skill required. Catchafire also makes suggestions about projects that seem like a good fit for the volunteer.

There is a concept that good entrepreneurs know only too well, but nonprofits could stand to explore. A "value proposition" is the unique value a product or service provides a consumer. Without a value proposition a business has no place in the market. For a nonprofit, a social value proposition is just as critical to success, but often ignored. In an increasingly competitive marketplace, due in part to the growth of for-profit social entrepreneurs, nonprofits must analyze, articulate, and deliver on a social value proposition.

In the past, nonprofits could exist without a value proposition. Donors wouldn't argue that a library, homeless shelter, food pantry or school provided a necessary service. But as we move further down the road of social innovation, the assumption that money will automatically follow good works is no longer valid.

The issue is complicated by the fact that nonprofits have two sets of consumers: those who benefit from the product or service (clients) and those who buy the service (funders, investors, philanthropists). There is increasing competition for both sets of consumers.

In order to attract the consumers who buy services (and who, by the way, increasingly want a social return on their purchase) nonprofits must articulate the value that the consumer (donor, investor, philanthropist, sponsor, whatever you want to call them) receives by writing a check.

In the nonprofit sector the closest thing to a value proposition has been a case for support. But when this is created (which isn't often) it tends to focus on the organization and its needs rather than on the potential social return on investment for the funder. A good value proposition articulates how an organization is uniquely positioned to create significant social impact that is much greater than the costs associated. It involves an organization analyzing, understanding and delivering on three very important things:

1. Capability: What is the organization uniquely positioned to provide to the community (the marketplace). Why is this organization better positioned than other organizations (nonprofits, for-profits, government) to deliver it?
2. Social Impact: What change is the organization creating in the community, region, world? Why is this significant? Why should/will consumers (funders) care?
3. Cost: How do the costs of the service being delivered compare to that social impact? Is there a social profit being achieved, i.e. are the costs involved in delivering the service significantly less than the benefits? Will a funder (who is paying these costs) receive a significant social return on their investment in the organization?

A value proposition is less about a well-articulated statement and more about an organization's ability to think through these questions and really understand the marketplace in which they operate. More and more the nonprofit that can effectively execute on a social value proposition will find the financial stability that ultimately leads them to create lasting social change.

Photo Credit: Tim Snell

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.

Hot on the heels of last week's announcement of venture funding for rural lighting startup D. Light Design, the Omidyar Network's has announced more funding, although this time it's from their nonprofit grant-making arm. They will give $2.3 million to Global Voices, mySociety, and the XYZ Show -- all startups that bridge technology and global good.

The funding comes as a part of Omidyar's program to increase government transparency and accountability. The goal of their government transparency funding is to increase the foundation upon which people base their civic participation. The three grantees accomplish this goal in different ways.

Global Voices is the granddaddy of global change social media platforms. Since 2005 it has been giving people around the world, connect by common interests in political reform, international development, and social entrepreneurship the chance to write about the world as they saw it. It is often the best place to discover what engaged citizens of the developing world think about what's happening in their own countries, and to discover a few of development from another perspective. The new funding will support a significant strategic expansion, with an emphasis on discovering new voices from less-heard parts of the world.

MySociety.org is a web shop in the UK that has been taking advantage of an increased volume of publicly available government data to give citizens better information. Rather than just create one site or application, they have built a variety of platforms from tools to help get local needs like filled in potholes met to easier interfaces for discovering MP voting patterns. The grant from Omidyar will help MySociety collaborate with African nonprofits and developers to build similar platforms around the continent.

The other grantee is Keyna's The XYZ Show, a satirical television puppet show that lampoons major figures in the country, and enables dialog and conversation about difficult topics. For those who are skeptical of the value of that, just think about the importance of satire in American politics - the Daily Show, Colbert, South Park. These are the cultural artifacts that keep us honest even when our general discourse goes completely insane. The funding will help expand the reach of the program with online engagement, distribution and more.

Read more about the grants on Omidyar.net

Photo credit: ItzaFineDay

I've been working in the nonprofit sector long enough to observe a special brand of dysfunction that seems unique to the field. For awhile I just thought I worked for crazy people (which may be true), but I'm also realizing that their hands are tied when it comes to borrowing business principles that could make nonprofits more effective. Here's the top three reasons they can’t:

Number 1: The IRS
I recently co-founded the nonprofit Project LACE and on our initial application to the IRS for tax-exempt status I made a mistake; I showed a positive balance on our projected budget at the end of the year. Yes, that was a mistake. I just thought the nonprofits I previously worked for didn't know how to save money for a rainy day. I didn't realize the IRS prevents them from doing so. There is no permission for long-term financial planning (unless you are lucky enough to have an endowment). That's insane.

Number 2: Puritans
I just finished reading Dan Pallota's book Uncharitable: How Restraints on Nonprofits Undermine Their Potential. He illustrates that nonprofit ideology is based on a Puritan mindset which encouraged making lots of money in business. The catch was, you had to feel guilty, give some of your money to the poor, and then you could feel good about it. However, if you chose a life of service to the church, for example, there was no room for selfish interests and sacrifice was the only penance you could pay for being born a sinner (because people, according to the Puritans are inherently evil). Pallotta argues that someone can sell expensive sneakers to poor kids in the ghetto, for example, turn around and give some of that money away to a children's charity, and be a hero. But if you choose to dedicate your life to charity, the only way you can be a hero is by sacrificing your interests and having a "missionary spirit" which basically means that you work for close to free. That creates burnout and does not attract top talent to nonprofits.

Some social entrepreneurs love fundraising. They love being able to passionately tell the story of their work to new audiences and engage donors in a growing relationship for change. But then there are a lot of social entrepreneurs (and nonprofit leaders in general) who hate fundraising. Sometimes it's just a question of personality type. Sometimes these leaders feel like their time is better spent on the ground or creating organizational capacity and impact.

The latter group includes Appropriate Infrastructure Development Group (AIDG) founder Peter Haas, and for all the development professionals out there, he has a suggestion: create a company based solely on outsourcing the fundraising process.

Writing on the TED Fellows blog, Haas lamented the lack of good options for external organizations that could help him reach their fundraising goals -- goals currently undergoing new pressure because many of AIDG's regular donors have already given their annual donation to help with the organization's post-Haiti efforts.

One of the interesting things about Haas' post is that he sort of pokes a hole in the consultant's approach to this problem. He basically argues that, although he's done a number of different fundraising coaching and support programs, at the end of the day, his strength as founder is not as fundraiser, and there are pretty good reason's to think that it's a bad use of his particular strengths to have him, as he puts it, labor over every word in a fundraising pitch.

Learning from complex adaptive systems is arguably the hottest area of organizational strategy today.

In a nutshell, a complex system is one in which simple interactions work together to produce a greater whole.  In the natural sciences, complexity is essential for understanding the dynamics of environmental sustainability.  Applying principles derived from complex systems in nature has also become a primary source of inspiration for sustainable social design, from green buildings patterned after termite mounds to ecosystemic models of health care reform.  Complexity science is also emerging as the cutting-edge of social enterpreneurship research--in fact, Routledge's new Journal of Social Entrepreneurship, edited by Skoll professor Alex Nicholls, includes an excellent article presenting a complexity science model of social enterprise.

However, for many people new to the field, the very word complexity--not to mention such concepts as dynamical networks and attractor basins--can make the field seem somewhat daunting.  Fortunately, a new book has appeared to help social entrepreneurs apply the core insights of complexity science without the math and academic jargon.

Adjacent Opportunities: Sparking Emergent Social Action provides a crisp, compelling introduction to what author Ron Schultz aptly describes as the "ordinary magic" of social innovation.  Through a series of engaging anecdotes and fun observations, Schultz explains how social systems work, underscoring in particular the importance of small differences and quiet voices in creating a cultural shift.

As Schultz observes, focusing on rigorous efficiency and system-changing solutions can actually lead us to devalue the small but significant actions from which systemic change will emerge.  Instead, we need to learn how to find opportunities in the unexpected--and to develop the courage, or "Applied Chutzpah," to take "audacious action" without knowing where it will lead.

There's much more I could say about Adjacent Opportunities, from its insights on cultivating a constituency to its fresh perspectives on CSR, microfinance and practical decision-making, but the best way to learn its lessons is to read it yourself.  Just as Schultz celebrates how recognizing our deep interconnectedness within a complex adaptive system is an "exhilarating and joyful" experience, the same is also true of his book.

Photo credit: Anacin Extero

Panera Bread Co., the national restaurant franchise, has established a non-profit Panera Bread store in the affluent City of Clayton, Missouri. The new store is like any other Panera, except there are no food prices. Instead, patrons pay what they want as a donation for the items they receive.

The idea of a pay what you can restaurant is not new, other non-profits have tried the model before, some to reasonable success and sustainability. However, this move is notable because it is a social entrepreneurial effort spearheaded by a corporation that on face seems to risk cannibalizing its for-profit's core business.

In the social enterprise space, most corporate initiatives have been focused on corporate social responsibility (CSR), which I view as corporations minimizing harm in pursuit of profits. I do not mean to slight CSR with this definition. Indeed imbuing a sense of social responsibility in business is essential, especially in the aftermath of the collapse of the financial sector at the hands of unscrupulous profit pirates. But Panera's efforts go beyond simple corporate social responsibility. What Panera is doing is proactive, creating a a full on social enterprise.

While the pro-action is impressive, the question becomes, like with many social enterprises, what is the point? It is significant that Panera is conducing their experiment in an affluent community. On the one hand, this makes a lot of sense, the model is predicated on the idea of consumers not only being able to but feeling social pressure to pay for the food they eat. But social enterprises should be rooted in achieving social outcomes. What is the social mission of this venture?

Even if the non-profit Panera is able to generate the revenue it needs to sustain itself, the social value of this venture is less clear than it might seem on face.

Is hunger a significant problem in the community Panera is targeting? And if it is, is a free Panera the best way to combat food insecurity? Probably not. Social enterprises need to be more than self sustaining, they must be designed to produce social value. The City of Clayton, where Panera is piloting its experiment, is a small city of 16,000 people, 85% of whom are white with a median family income of $107,356 per year (487% of the poverty line for a family of four). This hardly sounds like a distressed community.

While Panera's experiment might function in a community that doesn't necessarily need the service, I have serious doubts about whether it wold work in a low-income area where food insecurity is a significant issue. So while the non-profit Panera sounds like an interesting idea, especially for someone like myself who frequents Paneras, the target demographic for this new venture are people who don't need a free lunch, which is exactly the point.

Photo credit: Tobyotter

It is true to say that if you stick around in the social entrepreneurship world for any length of time, you will go to your fair share of conferences and events. Like me, therefore, you may find the words “final plenary” strikes fear into your heart; that you find yourself lost amidst a maze of exhibition stands; that you start giving other people someone else’s business card; that your eyes glaze at the 256th powerpoint slide; and that you wonder quite why you spent a day, and hard-earned cash, on getting away from the ever-growing to-do list back at work.

Three years ago, four organisations (Ashoka UK, The Hub, School for Social Entrepreneurs, UnLtd) that support social entrepreneurs in the UK sat down with similar thoughts, and agreed that conferences weren’t working for the people we were trying to help. Generally, they were too expensive, not practical or relevant, not at all interactive and, well, pretty boring.

The Shine Unconference was born, aiming to address all of those concerns: we cut the price, cut the powerpoints, cut the big plenary panels, allowed attendees to suggest and run sessions, scheduled lots of 1:1 sessions on relevant topics (investment, legal, marketing, impact measurement etc), and built networking into everything. And all based around the principle that ‘the talent and wisdom is in the room’. Other events like the excellent Oxford Jam (aka “the Skoll World Forum fringe”) have recently been run along similar lines.

Last weekend was the 3rd Shine and the most successful yet. 300+ social entrepreneurs at all stages of growth; 1:1 sessions with experts in marketing, investors, consultants, pitching, measurement and more; social investment speed dating; flip chart business plans; free videos made on the spot; workshops on everything from ‘how to clone myself’ to ‘diversifying income streams’. All in an amazing venue with a huge variety of spaces and places to work, chat and connect; the type of place where you walk round a corner to find six people sitting on cushions discussing what the election means for social entrepreneurs, then into a room where 30 people are filling out a storyboard of how their project makes change (see photos on Flickr or search the hashtag #shine_2010 to check out the tweets)

The highlight was undoubtedly ‘Fink Club’, though. In a boxing ring, in the middle of the venue, four social entrepreneurs defended a different point of view (their corner) about the movement. It was Fight Club meets poetry slam, with boxing gloves (kindly loaned by the great social enterprise Fight For Peace) and people from the crowd entering the ring to get involved…in the debate that is. There was the punch and counter-punch of ideas, traditional nicknames (Rod “The Brooklyn Bruiser” Schwartz sticks in the memory), a whole lot of laughs, and, as you can see in the picture, a worthy winner in Bradford’s own Saeeda Ahmed.

So what are the take-aways? Social entrepreneurs learn best from each other, and in relation to their actual work. Accessibility builds diversity and critical mass (and richer networks). Events can be entrepreneurial too: take risks and responsibility. Fun, like profit, is not a dirty word. Mixing formats and venues keeps it fresh. And the talent and wisdom really is in the room.

Oh, and no-one misses the powerpoints.

Photo credit: KWDesigns