Ep. 9: 2023 in Review
By Maddie Vann
Episode 9 in Network for Good’s “mini-podcast” where we are sharing key learnings for how to bring durable capital to sustainable outcomes
TL;DR / Highlight: We revisit our “podcast” conversations from 2023 and reflect on how Network for Good’s vision and direction has evolved over the course of the year. We discuss lessons learned and what’s in store for 2024, as Network for Good spins out its new parent holding company: Durable Capital for Sustainable Outcomes (DCSO).
To close out 2023, I talked with Network for Good’s CEO, Abby Ross, about what the year has looked like as we’ve explored how NFG can bring “durable capital to community-aligned, sustainable outcomes” and what’s in store with the new DCSO holding company in 2024.
Here is the transcript from our conversation:
Maddie: Abby and I wanted to come back together and record a last conversation for 2023 to recap everything we’ve been up to. We’ve recorded eight conversations to date, reflecting on a monthly cadence about what we’ve been up to over here. I thought it’d be nice to start with a timeline of what those eight conversations have been about and what we’ve been up to. In conversations 1–4, we talked about finding the use case for the vision of Network for Good. Can you talk to me a little bit about how you’ve been reflecting on that? What have you taken away from revisiting those four conversations?
Abby: Going back and looking at those conversations, they were all about building conviction and finding a use case for our vision of how we can be a source of durable capital that drives sustainable, community-aligned outcomes. Those first four episodes are really a recap of exploring the urgency and pervasive nature of climate driven disasters and how it’s changing our entire construct and infrastructure around what we need to build a more resilient society over the next hundred years. So that was all about how we scope our work and find a use case for the vision — and we kind of nailed it on this as a really important issue. That then led us to define how we’re thinking about community and how we define it. If we’re going to measure and hold ourselves accountable for what durable capital for a sustainable outcome looks like, we need to define for whom. Then we went deep building a theory of change and finding what levers we’re best suited to impact. Actually, that was my favorite episode that we did and my favorite thing that we did, and it built a lot of conviction. And those levers are: 1) the velocity of funds; 2) the persistence, the number of people that make it through the process to receive money after a disaster; 3) the flexibility of how those funds come in and flexibility of how they go out; 4) how we can catalyze potential resources; 5) how we can help build community capacity; and 6) how we rebuild with resilience. And then that took us into episode four, which was a deep dive into how communities are building and thinking about resilient solutions, related to our partnership with IDEO on the Climate Resiliency Challenge.
Maddie: And then conversations five and six that we had, focused on what role we could play in the ecosystem. Can you talk a little bit about what we reflected on in those two conversations?
Abby: Yeah, we had two hypotheses: First, was that giving platforms, like Network for Good, need to work together with other platforms to mobilize philanthropic capital in the time of disasters. And if we want to change how money flows into communities, we need to work together. So we put together the Giving Platform Collaborative as a way to start building the muscle for the philanthropic sector and philanthropic capital to work together. And we had the suspicion that this will be critical for future disasters, knowing that they hit the U.S. close to every two weeks now. So building that muscle feels like something that we’re actually going to have to do more of. So we found a way to bring giving platforms together with Back Black, which was a way that we could say, “hey, what if we all work together to raise more money for black led nonprofits in August, which is Black Philanthropy Month?” And I think that proved to be a very interesting experience of how platforms–like Bonterra, PayPal and, Meta, and Give Butter–could all work together with a common goal. So, that idea of being an ecosystem convener is very much at the forefront of that.
The second hypothesis, which was episode six, is about the conclusion we came to that the financial infrastructure for nonprofits is really brittle and very limiting. We have not capitalized that sector to do what we are asking of them. And at Network for Good, we’ve been financing nonprofits for the past 20 years in this innovative way, but they need access to more capital. So we started incubating a fintech platform with an entrepreneur in residence, a CEO in residence, and a CTO in residence. And they’ve started cooking on this FinTech platform that we’ll likely spin out as a separate company.
And those two experiences, with the Giving Platform Collaborative and with our fintech pilot, are what led us into what became episodes seven and eight, where we realized we’re going to have to play a bigger game here, and we need to structure ourselves differently.
So, episode seven was about how we’re going to build a holding company. And the rationale and the reasons for why we’ll do that were to protect Network for Good, and the 20 years it has as an operating asset. And the mission of unleashing generosity and helping nonprofits raise more money is a very specific and important mission, and we did not want to start operating and doing things that could jeopardize that status or that mission, and we also need to make sure that it’s a financially sustainable asset. So a holding company is what gave us the structure to be able to step outside of that mission and start playing across the capital stack. And then testing out our holding company vision of how we build, buy and invest in critical infrastructure that will help build a more resilient society over the next hundred years; we got an opportunity to test that (and our storytelling about it) at SoCap. We got to figure out like how people respond to that. That kind of brings us to where we are today.
Maddie: So as we’ve reflected on all of these ideas and pilot explorations we’ve pursued over the last year, it’s been interesting to see where we were right, where we were wrong, and where we were right, but it maybe manifested differently than we originally assumed. What are your thoughts on that, what have you been reflecting on about what we’ve learned?
Abby: The first half of the year, I feel like we were in “climate-driven disaster land.” We talked to so many amazing people who have done this for decades as their career–from disaster case management to emergency response. And we got a lot of validation on our levers. A lot of people had very specific perspectives on the importance of persistence and the role technology can play in increasing the number of people who receive access to funds after a disaster. I think in every space we walked into, everybody says resilience is such a critical thing, in terms of ensuring a sustainable outcome. And the thing that the IDEO Challenge really opened my eyes up to, was that there’s a lot of really exciting community-led innovation in resilience and there are a lot of ways to think about how to be a capital allocator. So it helped us think about how we can partner and build relationships with other people working on the same problem set.
Maddie: Talk to me a bit about what we got wrong. You mentioned that we kind of stayed within our networks — can you say more about what we could have done better this year?
Abby: We stated, in our vision, that this is about community aligned, sustainable outcomes. And I think the community alignment piece, we kind of skipped over a little bit; we didn’t put enough rigor into how to operationalize that. So I would consider that partially ignored. It’s not that we got it wrong, we just don’t have enough around that piece yet. We’re also not the right people to do it, which is why we’ve brought in Frontline Solutions to help lead that practice here. So that’ll be a big focus for 2024.
Maddie: If you think about the eight conversations we’ve had here as sort of “season one” of this podcast, how would you describe it?
Abby: Well, with the benefit of hindsight, now that we know how the year is ending, basically we’ve built conviction in why we needed to build a holding company and what we’re going to do with it. And that sets us up for future “seasons” to be about how to build a holding company, because that’s what we’re about to do. I mean, that’s season two, because that’s what year two (2024) is going to be about: building the holding company.
Maddie: So how are we going to do that?
Abby: As a continuation of the work we’ve been doing, we’ve flagged that we need to develop this community alignment framework. How do we make decisions for building, buying, and investing to ensure community alignment? How do we authentically engage with community leaders in this investment process? And we will also be thinking about how we build a studio, to build and incubate novel solutions where critical infrastructure gaps leave community needs unmet. We’re also going to be thinking about targets of other critical infrastructure companies to add to the portfolio for Durable Capital for Sustainable Outcomes, Inc (DCSO), this new parent holding company (new website is here: https://www.dcso.org/). And then another exciting initiative is thinking about how we can work with public-private partnerships, knowing that there’s so much government research and capital that goes into building more resilient societies, especially in the times of climate-driven disasters. So how might we build a pipeline for testing and then future distribution with a public-private partnership. And then, we also have work to do with everything from telling our story, to building a product of what this holding company is, to then recruiting amazing people for our team and board to help us do the work.
Maddie: We’ve done a lot of that in 2023 at Network for Good. I think we tripled the NFG team since the beginning of 2022 to now?
Abby: Yes! And now it’s going to be run as two distinct and separate organizations, and Network for Good has a really exciting future ahead for how they can unleash generosity on a massive scale and continue to be this public utility and asset that exists for hundreds of years to come and that charities continue to rely on.
Maddie: And what are you excited about with the DCSO holding company side of the house in the next year?
Abby: I’m excited to start looking at deals, getting closer to the work and the innovation and see what amazing things are being built that align with our investment thesis. Looking forward to going out and finding companies (tax status agnostic on that) that are producing sustainable outcomes and need us as a source of durable capital. And so I’m asking myself the question of “why would a founder or CEO want their company to be part of our holding company?” So that’s something that I’m excited to dig into. And how we can prove our investment thesis to attract future capital investors so we can have an even broader impact. Lastly, as an entrepreneur myself, I’m excited to find the gaps so that we can fill that in, and build new things or help things achieve scale that aren’t today.
Maddie: We flagged that this year we were vague about how we define “community-aligned” sustainable outcomes, and I’m really excited to lean into that definition and the work we’re going to be doing with Frontline to filter what we prioritize. And I’m excited to be working with you and have this shared alignment that it’s the community voice that we want to center in helping us prioritize.
Abby: Yeah, we have this investment thesis and we’re saying that community alignment is a piece of that. We don’t want to invest in things that communities don’t want. So how do we grow assets under management in a way that is authentically aligned to community interests? There are models of that today that I’m interested in being able to figure out how to incorporate, like participatory investing is a really interesting concept that, now as a holding company, has some potential for us to be able to do community-aligned investing.
Maddie: Yeah, it will be interesting to explore innovative ways of building out our definition of durable capital and the truly practical methods for making capital durable. What does “durable capital” mean? In the Circles program that we ran this year, and in other conversations, I’ve learned more about cooperative ownership models and how to maintain ownership of these kinds of critical resilient infrastructure organizations within communities. So cooperative ownership is one vehicle and tool that I’m excited to explore as a way to potentially do that. And there’s interesting evidence for community resilience being embedded into these kinds of employee ownership and cooperative ownership concepts and models. So that’s one piece I’m excited to think about too. I don’t know what that looks like, but it’s a conversation we’ve been having. So Abby, if season two is all about proving our investment thesis, what can we expect? What does that mean?
Abby: Well, first off, I’ve so enjoyed recording this with you. You’re a fantastic host and collaborator through this entire year and process, and I couldn’t have been here without you. And I’ve liked doing these each month as a forcing function to reflect on what the heck we just did and pick our heads up and tell other people what we’ve been doing. So shout out to the team and our board, our advisors for listening to what we’ve been up to, and to everyone who’s provided advice and feedback along the way. I’m so thankful to have such a supportive group that gives critical feedback but also pushes us to do big bold things. This was a real, raw, uncut version of who we are and what we were thinking about. And I think the goal with season two (if this past year was all about building conviction), is about how to prove an investment thesis as a holding company. We want to bring in new people and voices. So that includes the stakeholders who might become part of our holding company, or those who might want to invest with us one day, or the skeptics who don’t believe that we can make durable, repeatable returns as a model with this. Or be authentically aligned to community while doing that. And holding that tension and debating through it is a big part of what we’ll be up to in 2024. So I’m really excited about what’s next, both in doing the work and then using this as a forum to bring people along in “the what,” and “the why,” and “the how” of this.
