Helping Innovations Survive, Thrive, and Go to Scale
by Aliza Mazor
Bikkurim: An Incubator for New Jewish Ideas has been the proud home of 26 innovative start-ups over the past decade. We have served as a laboratory for new ideas, giving them physical space, start-up capital, skills training, coaching, consulting, a peer community, visibility, and more. Our goal has been to nurture the growth of these ideas, help them become effective organizations, and enable them to achieve lasting impact. This article highlights some of what we have learned in the “lab” over the past decade and our understanding of what enables innovators to gain credibility, attract investors, and bring projects to scale.
Of the 26 organizations we have helped incubate since our founding, 5 have ceased operations, 9 have created high-quality small or local programs, and 12 are actively pursuing growth and expansion. For some of these projects, still in their early stages of development, it is hard to tell where this growth and expansion will lead.
How do you gain traction for your organization if you are an unknown quantity? Innovators usually have two strikes against them: They are trying to popularize a new or untried idea, and they lack a track record of accomplishments. The first step out of the starting gate is to create solid programs – programs that meet real needs and resonate with target audiences. But solid programming is not sufficient for gaining credibility, and too often innovators are overly preoccupied with program development to the detriment of other areas. In addition to programming, innovators need to build out stakeholders, demonstrate integrity at every level of organizational life, align actions to mission, increase visibility, and foster organizational learning.
The idea behind a new venture is often the brainchild of one individual or a small group. To gain credibility, the initiators must attract a large number of people who not only endorse the idea but are also ready to contribute money, time, and energy to the cause. The best ideas undergo serious revision once they are in the hands of a group. Founders need to be able to bring others to the table, share vision and values, and empower others to own and improve on the original idea.
Uri L’Tzedek was founded to inspire and empower the Orthodox community to engage in social justice. It was created by a group of rabbinical students with full-time study commitments in addition to the time demands of running a fledgling organization. From the start, Uri L’Tzedek worked to put its empowerment philosophy into action by recruiting and training members of its target audience to run and lead its programs. More than 50 volunteer leaders head its programs, which include the Social Justice Beit Midrash, the Tav HaYosher program (which certifies the ethical employment practices of kosher restaurants), and the University Summer Internship. Despite having only a single staff member, Uri L’Tzedek reached 10,000 people this year. More importantly, the interests and passions of its volunteers have helped shape and define these initiatives going forward.
New leaders and leaders of new initiatives have lots of hurdles to overcome. They must build trust with communal leaders, potential investors, and the broad public. They must demonstrate that they have the skills and capacities to run complex organizations. They must show that their initiative is not about ego or “newness for the sake of new” but has real value to bring to the marketplace. And sometimes, these leaders need to persuade their audiences to buy into challenging constructs and ambitious goals. To achieve these goals, an innovator must maintain a high level of personal and professional integrity. The innovator needs to keep ego in check, work honorably with others, and build a strong positive reputation. Integrity – on an individual level for leaders and for the organization as a whole – is essential to maintaining credibility.
Encounter was founded to provide Jewish leaders in the Diaspora from across the religious and political spectrum with exposure to Palestinian life. At a time when many Jewish organizations sidestep the topic of Israel altogether to avoid provoking disagreement, Encounter has a unique and important mission. However, Encounter could not be as successful as it is – engaging participants from all streams of Judaism and the leadership of major Jewish institutions – if it did not practice tremendous organizational integrity. Encounter has carefully selected its board so that it does not become a battleground for politicized, polarized debate. Encounter’s staff and board spend lots of time crafting messaging and choosing words so that they can play as constructive a role as possible in this difficult conversation. Integrity – on every level – has led them to legitimacy and credibility where other similar efforts have failed.
To be successful in gaining and maintaining public support, organizations must have a clear mission. But to maintain credibility, they must ensure that their actions and program priorities are consistent with that mission. Mission alignment is critical at all stages of organizational life but particularly in the early stages when an organization is building its brand and reputation. It is easy for innovators to get distracted and for start-ups to chase opportunities – a funder with an off-mission project idea, a co-sponsorship opportunity that contradicts the organization’s core values, or a low-priority project that begins to swallow up too many organizational resources. Organizations that are vigilant and rigorous about mission alignment are more credible to stakeholders and funders.
Limmud New York is an organization that promotes Jewish learning through an annual conference and other events. They have several core values that they seek to maintain: (1) Volunteers are at the center of the organization and are responsible for creating and running every aspect of their events, (2) everyone is a teacher and everyone is a learner, and (3) it practices true pluralism where all perspectives are welcome and everyone is encouraged to learn from perspectives that are different from their own. Over the years they have been approached with partnership opportunities that would have forced them to stray from these values. And each time they have held firm – so much so that even people who have not directly participated in their events know about this credo.
One of the greatest challenges for small nonprofits is visibility. Often operating with small or no staff and responding to tremendous needs, they make little effort to be seen in the community and operate “under the radar.” It is tough to be credible if you are not visible. Visibility is not just a validation of the organization’s existence; it is a mechanism for popularizing the issues that it deals with, making known the needs of its target population, and defining how this organization fits into its field.
Survivors for Justice (SFJ) works to address child sexual abuse in the ultra-Orthodox community. Early in its existence it realized that one of its primary challenges was that many people did not believe that such abuse existed. Because of the stigma attached to child sexual abuse and the fact that many legal cases were plea bargained or settled out of court, there was very little attention to the issue. SFJ made it a top priority to engage in aggressive outreach to the press. It prepared members of the organization to serve as spokespeople, hired a PR firm (which gave many pro bono hours in addition to those that were paid for), and built a network of relations with the Jewish and secular press. Over the past year, SFJ has had more than 100 articles, press interviews, and features written about its work. SFJ is now a “go to” source for the media when following these cases. The organization successfully brought the issue and its role as advocates to light.
The final critical factor in gaining credibility is the need to create and maintain a culture of organizational learning. Organizations must use a systematic means of evaluating their efforts and integrating the knowledge gained from this evaluation into their strategy and planning. They must be able to demonstrate to stakeholders and especially funders that they understand how investment leads to impact and that they are making the most effective use of all available resources.
Canfei Nesharim (“the wings of eagles”) is an organization of Orthodox Jews dedicated to educating the Orthodox community about the importance of pro- tecting the environment from the perspective of Jewish tradition and Jewish law. In its early years Canfei Nesharim ran a wide range of programs from a newsletter to Shabbatons (Sabbath study days), to educational forums, but did not have a sense of which activities actually affected people’s behaviors and habits as consumers. Canfei undertook several small evaluation studies – mostly conducted via online surveys. It quickly discovered that the target audience was hungry for discourse on halakhah (Jewish law) and the environment and that there was even an audience for this material beyond the Orthodox community. It also discovered that, although educational forums were important, it mattered who was speaking. Its target audience wanted to hear about both scientific perspectives and religious law. In response, Canfei quickly created a Scientific Advisory Board to work in parallel to the Rabbinic Advisory Board it had already assembled.
Over the past decade, the number of investors specializing in and supporting early-stage organizations and innovation has grown considerably. There are capacity builders, funders, awards, prizes, and guidebooks that seek to draw attention to innovators and their work. This has been very helpful to innovators in the start-up phase and has given them multiple channels of financial and technical support for growing their ideas. I am in no way suggesting that start-ups are swimming in capital or that this funding arena is oversaturated, but its growth and evolution should be noted. It should also be noted that the community has not kept pace in funding the next stage of development. There are few resources available to grow organizations from local to national and to help organizations multiply the impact of their work.
Credibility is certainly a prerequisite for attracting serious financial investment, but as the experiences of our organizations have demonstrated, it is not sufficient. As Bikkurim alumni are beginning to attract second-stage investors, we are staring to learn about what is required to move beyond seed funding.
Vision becomes even more critical as organizations seek second-stage funding and contemplate growth. Funders want to know what the “big transformative ideas” are and how this organization will bring those ideas to fruition. It may feel counter-intuitive at this stage to be selling “big ideas” because up until now the organization has had to package its ideas as specific, fundable programs. However, the investment required for growth cannot be obtained piecemeal. The investment at this stage needs to be unified around an articulate, compelling vision.
Hazon, now entering its tenth year, made its initial mark on the Jewish community through Jewish environmental bike rides. It quickly added community-supported agriculture (CSAs), a national food conference, work on climate change, and more to its repertoire of programs. However, the big vision (the literal translation of the Hebrew word “hazon”) is to create “a healthier and more sustainable Jewish community and a healthier and more sustainable world.” Hazon has succeeded in animating a conversation among investors about how its goals of engagement, empowerment, Jewish learning, and environmental protection can be seamlessly integrated – where one idea is not being promoted in service of the other, but they are all being integrated to achieve a larger, greater good. As a result, Hazon has attracted funds for national expansion and is slowly framing a conversation for its next phase of growth.
Funders of growth-stage organizations look for sound management practices. Some funders are very “forgiving” in the start-up stage if innovators fall short on management. They assume that the urgency of the mission combined with the relative inexperience of the leadership makes some gaps in management acceptable. However, second-stage funders look critically at management capacity and are often reluctant to invest if they believe that management skills are lacking.
The Jewish Farm School is an environmental education organization working to promote sustainable agriculture rooted in Jewish tradition. The organization began as a collective working on a consensus-based decision model. Members of the organization worked hard to create their programs – literally from the ground up. As they enter into conversations with investors about multiyear projects and joint ventures, they are finding that they must shift their organizational model. For this stage of growth they are creating clearer role definitions, hierarchy in decision making, a supervisory system, and other formal structures. To feel comfortable investing in their growth, funders must be confident that there are efficient decision-making structures and mechanisms for accountability.
To attract funders beyond the start-up stage, organizations must demonstrate a commitment to good governance and create strong boards. Entrepreneurs are often reluctant to build strong boards and so place the task of board development low on their “to do” lists. Who wants to empower someone, in effect, to serve as their “boss”? For funders, a strong board is evidence that the organization is not a “cult of personality” but rather a viable enterprise that can take the mission forward long after the founder has moved on. Also, as funders make increasingly significant investments, they want to ensure that those investments are managed prudently, and ultimately responsibility for fiscal management rests with the board.
Kehilat Hadar was founded as a halakhic (based on Jewish law), egalitarian minyan (prayer community) in New York (see the article by Rabbi Kaunfer in this issue). During its first decade of operations it relied on a trim budget and a team of dedicated volunteers. In 2006, the founders of Kehilat Hadar set out to actualize the next stage of their vision – a full-time egalitarian yeshiva and a national support system for new minyanim (prayer communities). A new entity – Mechon Hadar – was created to carry out this work. Careful work was undertaken to create a board of directors to support the founders, help shape the vision, and provide the confidence to donors that would enable significant financial investment. The founders spent countless hours in conversation with community leaders to identify individuals with the right combination of commitment to core values, business savvy, networks, and willingness to work on behalf of the organization. Mechon Hadar has successfully raised multiyear grants and a five-year matching grant – financial investments that would not have been possible with-out a strong board.
Revenue Streams and Community Support
Funders of growth-stage organizations are preoccupied with sustainability. They are keenly aware of the limitations of foundation funding and are concerned that innovators may be overly reliant on grants. Therefore they are attracted to organizations that have built viable revenue streams or strong bases of grassroots support. A revenue stream is not a practical option for every start-up. In essence, creating one is equivalent to starting a small business inside your nonprofit (and we all know how high the failure rates are for new small businesses). Revenue streams are most successful when they have a strong fit with mission, rely on in-house expertise, and integrate well into other areas of organizational activity.
For example, JDub Records – a media and culture organization – has developed a successful revenue stream marketing CDs and downloads; it accounts for nearly a third of its organizational income. Other organizations focus on building out their grassroots base and securing small contributions from large numbers of stakeholders. Sharsheret, an organization that supports young Jewish women facing breast and ovarian cancers, holds an annual benefit that attracts nearly 500 supporters, raises several hundred thousand dollars, and celebrates the contributions of volunteers who are the center of its organizational model. In addition to being a good revenue stream, this annual event also signals to funders that Sharsheret has a large, committed base of supporters.
Just as integrity is critical to early-stage funding, reputation is key in securing growth-stage funding. Funders share information and have strong networks. An organization that has gained a reputation for failing to uphold grant agreements, not meeting deadlines, disrespecting colleagues, or operating in a manner that is counter to its own core values may jeopardize future funding regardless of the excellence of its programs.
Going to Scale
The final frontier is taking these ideas to scale. Our own experience and evidence on this topic are limited because many of our organizations are just now embarking on this process. Likewise the Jewish community is beginning to awaken to the idea that organizations that are launched as innovative start-ups need different types of help and support to grow into sustainable enterprises. There is still considerable debate as to how we should define “sustainability” or what it means for an organization to “go to scale.” At the 2009 Slingshot Day, a gathering of organizations selected as leading innovators by the Slingshot Fund, Leslie Crutchfield, author of Forces for Good: The Six Practices of High Impact NonProfits, defined sustainability as “reaching 85% of your target market.” I would hazard that even the most high-impact Jewish organizations are reaching far less than 85% of their intended targets.
At the end of 2010, Bikkurim will launch a study of mezzanine-level organizations, those that have moved beyond start-ups, the challenges they face in going to scale, and the models and best practices from the broader nonprofit world that can be applied to facilitating their growth. Stay tuned for detailed results next spring. In the meantime, based on our limited experience and exploration, these are some of the areas that the Jewish community will need to address in helping innovators take great ideas to scale.
At the Jewish Funders Network conference in spring 2010, Brent Copen, of LaPiana Consulting, challenged some of the conventional wisdom around nonprofit financial models. Most nonprofits aspire to “break even” – raise enough revenue to cover expenses and possibly maintain a small reserve. Small nonprofits and start-ups are particularly susceptible to a mentality that says “keep reserves small so that funders won’t think we have too much money.” Funders encourage this thinking by stipulating that grant monies must be spent in the year that they are granted and by viewing a large reserve as a reason not to fund a small organization (they don’t really need our funding if they have cash on hand). Copen argues that this mentality inhibits growth and that nonprofits need sufficient reserves to expand, innovate, and grow. To take new ideas to scale, we may need to rethink our financial models and our funding strategies.
Partnerships and Alliances
Growing does not mean that organizations must remain stand-alone enterprises. One of the critiques of the “innovation sector” is that it is generating too many small, “boutique” nonprofits. I believe that this proliferation of ideas is very healthy for the community, but the work of taking ideas to scale may necessitate consolidation and alliances. There are several interesting experiments in process that will teach us a lot about what is gained and lost through close collaboration, merger, and alliances that leverage economy of scale. Last Year the 14th Street Y in Manhattan “adopted” Storahtelling. They combined forces around the facilities, advertising capacity, and regular foot traffic of the Y and the unique programming of Storahtelling. In the fall, Hazon will launch Makom Hadas – a shared-space arrangement for growth-stage nonprofits. These experiments and others should tell us a lot about what can be gained through partnerships and alliances.
To grow start-ups into sustainable enterprises and to take programs that are local to a national scale, innovators need to reposition themselves in the market- place. Some innovators are used to “thinking small” as a way to set out and accomplish achievable goals. Some are cautious by nature, and others are just being conservative with the resources they have available. Organizations that are contemplating growth need to think about positioning and to look for creative ways to break out of perceptions that have already been formed about them and their work. The work of shifting perception needs to take place at all levels of the organization – from the board to the staff, from marketing to program, and beyond. Sometimes the work around positioning involves magnifying and amplifying a shift that has already taken place, and sometimes it is helping an entire organization embrace a new identity.
The leadership that is required to bring organizations to scale is very different from that involved in founding start-ups. There are definitely examples of leaders who succeed in evolving alongside their growing organizations, but there are just as many examples of founding leadership who had to “get out of the way” for the organization to grow and expand. The experiments at Bikkurim are still too young to test any theories of first- and second-stage leadership, but this is an area of great interest to us and the other organizations engaged in funding and capacity building around innovation. We look forward to gathering data on this question and building out our capacity to support the leadership transitions that are necessary for growth.
Risk makes everyone jittery – innovators, investors, the community at large. But change and risk are linked, and without change, our community stagnates. The Jewish community needs to increase its tolerance for risk around new ideas and increase its investment in taking the best ideas to scale. The payoff will be a vibrant Jewish community – a community that engages people deeply, embraces its best new ideas, harnesses creative energy effectively, and cherishes its history and heritage by making it relevant in each generation.
Bikkurim has been privileged to shepherd some of these innovative ideas through their initial growth. In our next decade we will continue to be a laboratory for innovation while we collaborate with colleagues to identify the best way to nurture second-stage growth and take innovations to scale. To be successful in taking innovative ideas to scale, the entire community will need to get behind the effort. Each institution and subcommunity will need to look for ways to encourage and support innovation from within. Funders will need to rethink funding models and commit themselves to helping new ideas go to scale. Innovators will need to work hard to gain credibility, attract investors, and take ideas to scale. Researchers will need to help us monitor our experiments, integrate our learning, and make better decisions.
“It takes a village,” but no worries, we are one creative, entrepreneurial tribe.
Aliza Mazor is the Program Director of Bikkurim: An Incubator for New Jewish Ideas. In a career spanning more than two decades as an organizational development consultant specializing in nonprofit start-ups and social change organizations, she has helped midwife scores of innovative ideas and new organizations in the Jewish community and beyond.
This article appears in The Journal of Jewish Communal Service, Vol. 86, No.1/2, A Tradition of Innovation. Reprinted with permission. To receive the complete issue, you can subscribe here.