Social change work is hard and frustrating and wonderful and terrible; it is also, at times, funny, quirky and just plain fascinating. With this blog we hope to capture all that goes into what we do at Capital Good Fund, and we invite you to join the conversation!

Saturday, October 26, 2013

Would You Buy A Share In Capital Good Fund?

Here are are the lessons I've learned after 5 years of running a non-profit, illustrated in a simple formula:

 X(scale + innovation + implementation + luck) = social change, where X = money

Here are those lessons put another way: the math of social change should be algebraic but rather resembles a calculus problem

Why So Hard?
Let's consider the non-profit paradigm.  Non-profit begs for money from individuals, foundations, corporations and government.  Money dribbles in.  Money is predominantly spent on programs, because funders don't like their donations to go toward "overhead" (read that: infrastructure, personnel, marketing, etc.).  Programs result in some good stories that touch the hearstrings of funders.  Money dribbles in again.  Rinse and repeat.

Notice that scale and social impact were left out of that equation.  Now consider the for-profit paradigm. For-profit pitches the investment opportunity to investors.  For-profit knows how much it need to become profitable.  Investors evaluate for-profit for profit potential.  For-profit makes necessary investments: it probably loses money for several years as it builds up back-end systems, refines the business model, markets its products and services and grows its market share.  For-profit seeks new investment as needed.  Some for-profits return profit to investors; others go under.  Those that are profitable continue to grow and either go public or are purchased by a larger company.  

Notice that social impact is left out of the equation.

The Tie That Binds Us...To Arithmetic Growth
Here's the situation in which I find myself.  5 years of innovation has gotten Capital Good Fund to a point where we know what to do to change lives and solve problems.  We have the business model, the data systems, the social impact measures, the policies and procedures, that are needed.  And by non-profit standards, our growth has been tremendous: we now have 13 full-time employees, over 85 volunteers, and are about to open offices in Woonsocket, RI and New London, CT.  But this is dwarfed by the scale of the problem we're trying to solve: 150 million Americans at 150% of the federal poverty line or below, and a $100 billion / year industry that preys on the poor--payday lenders, check cashers, pawn shops, refund anticipation lenders, auto title lenders, rent-to-own stores, pre-paid debit cards, etc.  Arithmetic growth won't get us there, yet exponential grow is beyond our reach.

Indeed, our growth is herky-jerky.  For instance, we need to make a few more hires to ensure the success of our Randomized Control Trial (RCT), but we can't even advertise the positions until we raise the funds.  Yet though the need for these funds is urgent, funders operate on their own timelines--timelines that neither match our cash flow nor our spending needs.  We lurch forward when money comes in, and stagnate when it slows down.

A Non-Profit IPO
I am committed to contributing to the eradication of poverty in America in 30 years.  To do that, we need to borrow from the for-profit world and meld that with our mission-centric strategies.  As I look around for non-traditional strategies, I've come up with an idea for which I'm seeking your feedback: the non-profit Initital Public Offering (IPO).

Other non-profits have tried this concept with reasonable success.  The idea is to raise funds by enabling the public to buy "shares" in your work--except that instead of getting an ownership stake in the company's profits, you're donating money that gives you a share in its social impact.  Organizations that have gone this route include Homeward Bound of Marin County and DonorsChoose.

So I ask you: would you buy a "share" in our IPO?  What I'm going to do is calculate how much money we'd need to raise in order to get on a path toward self-sufficiency and impact.  This way, instead of waiting for grant approvals, I can focus all my energy on doing whatever it takes to get us where we want to go.  Let's suppose, then, that we decide we need a million dollars so that, in three years, we can earn 80% of our budget from non philanthropic sources (such as interest income on loans and fees charged for Financial Coaching).  Let's further suppose that we price each "share" in CGF at $100, meaning that we need to sell 10,000 shares to meet our goal.

What Would You Get For Your Investment?
First, every dollar you invest is tax-deductible!  That's par for the non-profit course.  Where this concept  becomes unique is in the additional things we can offer.  Here are some examples:
  1. A prospectus.  We will send you a confidential document that outlines all of our financials, social impact metrics, plans for growth, challenges, opportunities, weaknesses, etc.
  2. A voting stake.  If you were to buy shares totaling 1% of the IPO, then you would actually get a 1% voting stake in key organizational decisions.  On a quarterly basis we would send out votes on various organizational issues: the design of a new marketing campaign, the decision to expand to a new city, the roll out of a new product.  Want to have more say?  Buy more shares!  How cool is that?  Without having the legal and time responsibility of being on a Board of directors, you get to vote on the direction of the organization!
  3. The ability to "sell shares."  If you bought your shares for $50 and wanted to increase your donation, you could either buy more shares, or sell some to your friends--getting a "social impact profit" in the process.
  4. Attendance at an annual meeting.  We would host an annual meeting to which all shareholders would be invited, giving them the change to meet staff and clients, tour our office, etc.
  5. Other opportunities to engage in our work.  Want to attend a financial coaching training?  Volunteer as a tax preparer?  Have a chance to get on a conference call with our Executive Director?  As a shareholder, all of those things would be available to you.
Taken together, I thing these are pretty exciting possibilities, and actually take the non-profit IPO idea to the next level!

Is this a gimmick?  Sure: we're still asking for donations, with the difference that instead of asking for funds that will immediately go out the door to cover expenses, we are asking for the funds we need to have breathing room and "work our magic."

I think that if we were to get a high-profile person to buy a share, we would be able to get enough attention from the public to get the ball rolling.  For instance, Warren Buffet bought the first share in Homeward Bound's IPO to build an environmentally friendly housing complex for the homeless. At the end of the day it comes down to this: we can't tackle poverty without your support and buy-in. If you don't invest in us--financially, philosophically--we won't achieve our mission.

So again, would you buy a share in CGF?  And if so, would you help me design, roll out and make successful the IPO?


  1. Andy,

    I have been a follower of CGF for a long time now. I am a student at Clark University in Worcester, MA. I just briefly had a blog for a project at Clark you can find here:
    It may give you a sense of what I am interested in. I am totally unfamiliar with the concept of a non-profit IPO but am a huge supporter of this "bridging" for-profit and non-profit thinking. According to what Homeward Bound seems to have done, they simply "re-branded" the idea of raising money. I wonder if you can go beyond that to create a social good marketplace. I don't endorse speculation in this way but I do wonder if you could do more than simply rebrand typical fundraising. This is partly what appeals to me about B-Corps, L3C's, and other hybrids. They enable nontraditional thinking in the for-profit sector which, in my opinion, is a sector that has a lot of potential if properly motivated.

    Regardless of the format, I will buy a share without hesitation. CGF has an opportunity to be a leader in the NE (and the country) in shifting the oil and water relationship between profit and donation models. As you said, the magic needs room to happen. I look forward to hearing more as you progress with the idea, and will be glad to be part of the conversation.

    Thank you,


    1. It looks like this post was edited since I made my comment (?). Perhaps the blog just isn't showing up properly for me. I'll have to read more specifics and amend accordingly. Thanks for more info!

  2. Hey Taylor,

    I added another section titled 'What Would You Get For Your Investment?'

    Sorry for the delay in replying, but thank you so much for commenting on the post! It's refreshing to know that people read it :)

    I'd love to find a time to speak by phone so we can continue the discussion.

    Perhaps during the evening one day this week? Are there some days/ times that work best for you?

    Feel free to email me directly at: