Hypothesis testing: the power of the ecosystem
By Josiane Smith, Impact Consultant
Challenging the Status Quo within the Charity Sector
Rainmaker Foundation was setup in 2012 with a purpose of inspiring generosity and connecting philanthropists with small charities. The Foundation has embarked on its own journey of transformation over the last couple of years, channeling the support of the Rainmaker Network through an intense 6-month accelerator programme. This shift was a response to noticeably unequal models of support around startups (early stage enterprises) versus charities (high impact, low income entities). That support differs, in part, because of the fundamentally dissimilar approaches between charities and their commercial counterparts towards technology, money, operations and scale.
Cosmina Popa, CEO of Rainmaker Foundation has experienced the transformative power of startup acceleration and the ecosystems of support accelerators can catalyse for participants, and was keen to apply similar frameworks to small charities.
“I spent years exploring these types of questions: What is the role of business in society? How can we create organisations that care as much about people as they do about profit? With the rise of new breeds of companies — call them conscious businesses, social enterprises, tech for good — how do we ensure the charity sector, which holds tremendous frontline knowledge is not left behind?” The path of change for charities is not easy. But the time for change is now — and not a moment later.
One of the ways that the Rainmaker Foundation has committed to accelerating the impact of charities is by catalyzing a “startup-style” ecosystem around each cohort of charities; putting to use their abundant and diverse network. As their website says, “We are entrepreneurs, social innovators, charity sector experts, passionate storytellers, authors, relationship builders and investors coming together to challenge the status quo within the charity sector.”
Together, this network has a real shot at enabling charities to be more effective, amplifying their impact and becoming more sustainable; to help them learn about new ways of harnessing technology; to explore what innovation means in a non-profit context, to inspire shared learning and caring relationships between cohort participants, and to harness entrepreneurial energy in ways that radically alter the way the charities approach strategy, income generation, and to some extent also their service delivery. Above all, it’s about creating a shift in mind-set.
It ought to be noted that the Rainmaker Foundation is a charity itself, and therefore part of the very same system it is trying to “disrupt”. Due to its progressive mission, it bridges the two worlds of startup and nonprofit with varying degree of success. In some ways, the Rainmaker Foundation’s values take inspiration from the business world, owing entirely to their progressive management team: non-aversion to risk and experimentation; venturing into unknown territory; continuously learning and pivoting from failures; and dispelling the myth that failure is a terrible thing.
“We knew the transformation process would be fraught with challenges and that we would fail along the way, but all along the aim has been to get crystal clear about what is our highest point of contribution to the sector, and ultimately to the beneficiaries the charities serve”, says Cosmina Popa. On the other hand, there are core differences that seem to align more with the sincerity of the social impact space: for instance, operating a model of collaboration not competition, as well as actively cultivating a culture of kindness and generosity. Its Curriculum Handbook and Cohort Agreements mention phrases like “safe space” and “extraordinary love”, but also more tangible components like expectations and commitments in mentoring relationships and how to engage properly with Masterclasses and Workshops.
When asked about these cohort agreements, Cosmina Popa explained: “When you bring an array of mentors in contact with the organisations they are there to support, it’s easy for those being mentored to be overwhelmed and sometimes confused if they get conflicting advice. Our aim was to curate the mentor connections as much as possible and focus on delivering tangible value to the charities, but equally the charities were asked to process and filter the advice they receive. As for some of the seemingly softer aspects of the Cohort Agreements, there’s a lot of fear in the sector. When you bring in the energy of understanding, compassion, love, fear loosens its grip”.
This begs the question of what the impact of Rainmaker Foundation is, to the extent that it promises to accelerate the impact of others. Part of my work has been to design the impact research and measurement framework around the foundation’s key success metrics, and then to independently assess how close it came to achieving those. At the time of writing, the 2017 cohort has just graduated with an inspiring Demo Day at the iconic BT Tower, attended by the Rainmaker community and other key stakeholders in the sector. This article sets the stage; outlining the hypotheses that were being tested with the ambition to prove them true once the programme evaluation is complete.
STARTUP ECOSYSTEM IN THE UK
In the UK, there are 163 accelerators supporting an estimated 3,660 new businesses per annum. Those might seem like large numbers, but over half a million startups launched in 2017 (567,826 according to StartUp Britain). So there’s an undeniably growing market for startup support services; and accelerators are doing their level best to keep pace — 45 new accelerators were created in 2016 alone. Sources say that startup accelerators raise £33 million annually in startup investment; a reasonable figure considering the top five sectors they invest in are lucrative, spanning digital, B2B, health & wellbeing, financial technology, and social enterprise.
Comparatively concerning the charity accelerator, I found no definitive resource on charity accelerators (technically, I managed to find, as the sole fruits of an extensive google search, four other charity accelerators and a few pro-bono mentoring schemes from local agencies and CSR teams). This may be a size issue here: for some context, there are 5.5 million privately owned companies in the UK (96% of them are so-called “micro-businesses”, employing 0–9 people but accounting for 32% of employment and 19% turnover here); whereas there are almost 35 times less registered charities in England and Wales (165,000 as an estimate — according to the FT).
Moreover, the combined annual turnover of SMEs was £1.8 trillion, comprising 47% of all private sector turnover in the UK; whereas all charities make less than £75 billion in annual income, with almost three quarters (73%) having an annual income bracket not more than £100,000, according to the Charity Commission. Again, total employment in SMEs is over 15 million (comprising 60% of all private sector employment in the UK as referenced by the National Federation of Self Employed and Small Businesses Ltd), whereas the voluntary sector employs not even close to 1 million (827,000 — according to NCVO).
So one has to ask, in a world obsessed by numbers and capital gains — is it any wonder that the startup ecosystem has developed so far and so fast, whilst the charity sector has been more or less ignored?
Hypotheses
Rainmaker Foundation has identified several hypotheses about these industry dynamics and has used these hypotheses as guiding principles for the way it seeks to create change.
Midway through its 2017 cohort, this accelerator remains on its mission to find evidence to support four ideas: there is power in “the ecosystem”; “the ecosystem” can be catalyzed for the benefit of charities; there is minimal difference between startup founders and charity founders in terms of their need for support; and the charity sector can be “retooled” for more efficient, sustainable and impactful work. Each one will now be explored in more detail.
There is power in the ecosystem
‘Ecosystem’ is to many an overused phrase due to its arguably idealistic interpretations of nothing tangible. But the word ‘ecosystem’ actually refers to the nature and network of support that surrounds a particular cause, sector or — in biology — organic entity.
To me, the phrase depicts a powerful system of birth, growth and death of ideas, capital, organisations, and structures that exist to serve something greater than any individual part — the ‘sum of all parts’. Looking at the startup ‘ecosystem’, for instance, there is a clear flow of capital around specific sectors, involving a variety of stakeholders from public bodies, to civil society, to individual experts, to large private entities, and smaller ones too.
This map of participation and contribution is powerful. Either in its own form or in the form of something similar to that which already exists around startups, a substantial and strong ecosystem can be harnessed with the goal to improve charities, too.
The ecosystem can be catalysed
Which leads us onto the next hypothesis that the ecosystem can be catalysed. Through the personal networks of founders, rainmakers*, wavemakers*, other supporters and participants, the right kind of help can be found for the charity participants.
Through the sessions provided by experts in the ecosystem -in the form of participatory workshops, masterclasses, and one-to-one lean and business model coaching- charities gain new insights, are provoked into new ways of thinking and, in theory, improve their operating models by osmosis.
Through the requests that come from charity participants to the Rainmaker Foundation, support can be sourced by non-traditional givers — millennials in corporate teams could timebank their pro-bono work with charities; entrepreneurs joyfully giving tech and time could help charities with specific challenges where technology can unlock great wins, mentors coming from finance sector could help a charity in education reform; peer learning becomes a wholly acceptable and fruitful avenue to take.
Private sector can help with third sector
So far, events like the Mentor Mixer titled Making Ideas Happen hosted by Rathbones, demonstrated that an ecosystem can indeed be catalysed, not just in the form of venue space where charity founders and managers can convene, but also in terms of meeting representatives from usually unreachable sectors, and having new conversations with potential mentors where 59 connections were made. Carl Stick, Executive Director of the Rathbone Unit Trust Management said of the event, “This was a terrific evening. As a Rainmaker, I found it fascinating. As hosts, we were all thrilled, and got some great feedback from our colleagues.”
The Campfires, a series of 5 smaller events brought together audiences of entrepreneurs, business leaders and philanthropists in a collaborative setting to help the charities work through specific challenges, were received with great enthusiasm by audiences and charities alike.
“The campfire was great — I was buzzing with ideas and couldn’t sleep afterwards! We learned a lot! We learned a lot about how we should be thinking about our idea and presenting it. We got ideas on what type of funding to go for and what not. We got insight into how an investor thinks, we learned about big hairy goals and the need to really think how we address our capacity issues. We are going to rethink how we are run, our funding strategy and priority our product roadmap. Overall a very useful and interesting session” — Rachael, Just: Transcription
There is minimal difference between startup founders and charity founders
From the stories of charity founders who left corporate jobs to start an impact initiative, but wrestled with years of dissuasion from leaving due to bonuses and promotions; or the charity founders looking around for more meaning in their life as educators, or searching for a solution to a problem as politics majors, only to find that there was nothing substantial out there yet. Charity founders who after months, even years, still don’t know what the “right path” looks like, but feel that the growth, energy, service validation, tangible change, public discourse, they’ve expereinced on their journeys are better indications than none. These same charity founders also doubt the robustness of their endeavours when a new ‘competitor’ springs up, or when progress is slow, or when mental and physical wellbeing takes a knock, and when finances get tight — these same charity founders also learn about “getting comfortable with the uncomfortable,” as one mentor said, and about “living in the present.” These experiences are no doubt familiar to startup founders, too — so with the wealth of support services for startup founders, why aren’t the same resources available to charity founders also?
The charity sector can be “retooled”
As the Rainmaker Foundation website states: “We see a world where everyone who wants to make a positive impact can have the tools, resources and connections to do so effectively.” But the tools, resources, support, capital and talent which are currently accessible to charities are insufficient for the nature and needs of the charity sector, especially as it’s navigating the tumultuous and rapidly changing landscape.
Of their journey, one of the accelerator participants shared: “This accelerator programme was extremely useful for MAC-UK, enabling us to ask the bold questions and help to set the direction for our long term sustainability. This unique and forward thinking accelerator specifically designed for the non-profit and beyond profit community challenged us to work across the sector divide and unlock and share assets in a way that truly inspires possibility in the face of rapidly changing times. One of the most beneficial aspects was the opportunity to network with industry experts and with peers who were going through similar stages of growth as we are. We learned a lot from each other and have refined our focus on tech and digital solutions that will help us for the years to come”.
An alternate quote: “This accelerator, in true form, has energised MAC-UK. A 10-year old organisation, adopting lean principles and pivoting on an emergent strategy, we’ve been connected to inspirational and passionate wave-making entrepreneurs, creatives, wicked problem solvers and digital innovators to help us tackle tomorrow’s challenges and pursue our vision with fresh eyes.”
In closing, there are several open avenues to explore when it comes to the four main hypotheses of the Rainmaker Foundation’s current charity accelerator: there is power in “the ecosystem”; “the ecosystem” can be catalyzed for the benefit of charities; there is minimal difference between startup founders and charity founders; and the charity sector can be “retooled” for more efficient, sustainable and impactful work. The next phase of research concerns reaching out to broader audiences, not just the charity participants, when it concerns the charity and startup sectors in the UK. Broader public opinion and advice will be critical in forming a systems-change approach that actually iterates and improves the existing paradigms around charities, impact, financial sustainability and economic growth. The story thus continues…
Further References
https://medium.com/rainmaker-foundation
https://makepositive.com/wp-content/uploads/2017/06/Rainmaker-Success-Story.pdf
https://trustees-unlimited.co.uk/become-a-trustee/5315/chair-rainmaker-foundation
https://www.mac-uk.org/news/mac-uk-completes-participation-in-rainmaker-accelerator
