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from San Francisco Examiner, July 29, 2000

Nonprofits' start-up tactics -
Social entrepreneurs make their pitch for philanthropic help

By Vanessa Hua

Nothing ventured, nothing gained.

So goes the credo of so-called social entrepreneurs, who are learning how to make pitches that rival the best business plans that come before venture capitalists.

Only in this instance, they're making a case for social - rather than financial - returns.

Earlier this month, Karen Nemsick, founder of local non-profit Women in Action, had a chance to show off her enthusiasm for helping women in welfare-to-work programs gain confidence through outdoor activities.

Philanthropist Lily Kanter, a Microsoft business manager who has become a multimillionaire through the company's stock, also had an opportunity to see firsthand the fire behind the ideas.

Both women were part of a forum sponsored by Craigslist, a Bay Area online community Web site. The forum convened six non-profit start-ups with causes ranging from a community garden in Richmond to a tennis program that helps at-risk youth, as well as more than 50 potential donors interested in community giving.

The forums, which started last spring with a third planned for this fall, represent a larger trend now connecting local non-profits to the area's high-tech wealth and supplementing more traditional forms of charitable giving.

In addition to charity through corporations and foundations, more individuals are starting to take an interest in direct giving where they can see a tangible effect, experts say.

"What we're seeing is younger givers who want to do things in their lifetime and become more involved. There's a lot more money out there," said Mario Morino, head of the Morini Institute, which studies the impact of the Internet on society and the economy.

This current generation of givers - who are perhaps more results-oriented and hands-on than their counterparts in the past - are applying the business acumen that made them rich to assist non-profit groups.

Microsoft's Bill Gates, eBay's Pierre Omidyar and former Netscape executive Jim Barksdale are among those pledging millions for a variety of charitable causes and projects, while social venture funds - which invest in non-profits - are popping up around the country.

"I want to see a measurable impact, rather than just writing a check and not knowing where it's applied to. It's important to know how the money is spent," said Kanter.

"I like to support causes with a driving force behind them. If someone has a lot of energy behind a cause, its odds of success are higher."

Kanter likened her approach to choosing potential organizations to a venture capitalist's approach. "You invest in people who can execute on an idea," she said.

Likewise, non-profits are becoming more savvy about persuading potential backers to help by polishing their presentations and asking for a hand in funding, marketing expertise and other forms of assistance.

Before their big day in front of potential funders, they went through a boot camp of sorts, with acting lessons, practice and critique sessions before grant-issuers and business people - all organized by Craigslist and by non-profit start-up founder Jane Leu, who conceived of the forum.

"My writing is dry. For me, this was a way to tell people, show them pictures. I came across as more passionate and fundable," said Nemsick. Afterward, one person offered to help develop a board of directors, another said she'd help write promotional information, Nemsick said. "Incredibly, I had people lining up to give me cards."

Foundations take time

By contrast, applying for money through traditional foundations - which tend to be more rigid in their application process - is time-consuming, particularly at a time when non-profit founders are swamped trying to get their organizations off the ground.

"Building an organization is very similar to building a start-up business," said Mike "J.B." John-Baptiste, a former investment banker and head of a business development group at GovWorks, which provides Internet-based services between government agencies and their clients.

"You have to develop a business plan. You have to figure out if there's a market for your service," said John-Baptiste, who peppers his talk with biz speak - "proving the organizational model," "designing a strategy" and "franchising."

"In the profit world, you have to earn revenues and profits. In the non-profit world, you ask, 'Is there value in what you've designed?'" said John-Baptiste. His experiences growing up poor and black in Toronto - combined with the influence of tennis on his life - inspired him to found San Francisco-based TennisTalk, which provides free instruction, career guidance and Internet training to middle school students.

After the TennisTalk presentation, some attendees offered legal and computer support, as well as other services for the program, which kicked off at an Excelsior middle school this spring, he said.

Money isn't everything

Indeed, many non-profits are discovering what other kinds of resources the tech world can offer besides financial assistance.

"We're looking for skills and expertise," said Suzanne Levine, who founded Disability Media Project, which promotes fair and accurate reporting of disabilities issues. "I hope we'll be able work with people from the audience who have experience in diverse business models, to see how to apply them to DMedia."

These fledgling organizations say they are committed to staying and serving San Francisco, braving the pressures of rising rents and other difficulties that squeeze non-profits in the land of plenty. Their leaders say they want to tap into the Bay Area's diversity and liberalism - as well as the personal wealth created in recent years.

"The irony is, that in this day of dot-coms, who often have little pressure to show positive returns, non-profits are under great pressure to show great returns," said Peter Schurman, 30, the founder of GenerationNet.org, an online political site for youth.

Schurman, who made a presentation at the forum, said that local financiers, who understand the power and speed of the Internet, were an ideal target for his pitch.

Some non-profits warn against relying too heavily on dot-com money, which is susceptible to the ups and downs of the tumultuous stock market.

"A lot of wealth is not fungible or ready to be deployed," said Daniel Ben-Horin, president of San Francisco-based CompuMentor, which provides technology assistance. The plunge in the Nasdaq composite index last spring delayed the launch of his non-profit's technology portal TechSoup as some financial backers apologized and then backed out. But Ben-Horin was quick to praise Novell executives for keeping their financial commitment of $50,000.

Whether the stock market is up or down, funders say they want to perpetuate this spirit of philanthropy to the younger generation.

Gilbert Fleitas of San Francisco left a successful career in real estate in February 1999 to focus on volunteer work and charitable giving. Fleitas, president of the board of the Homeless Prenatal Program, attended the Craigslist forum, bringing along a 27-year-old friend.

"My advice to him was that earlier, sooner than later, he should start building into his career volunteer work," he said.

"It may seem detracting from your career, but it's not," he said. "It's a necessity."