Mulla, Mulla, Mulla: What’s the $ Reality of Social Enterprises?
In a previous Weekly Ponder that dealt with how much “impact” we expect doing good to have on our wallet, the poll results suggested the majority of people do actually care about “doing good and doing well” when it comes to working for social enterprises or NGOs in terms of expecting to make a good living, too. Not only did they care, but they also seemed to agree that the level of pay seems relatively low and unattractive at present.
I’ve since then had a chance for a few good conversations with fellow Good Generation members here and there over a cup of coffee or dinner on the subject of compensation. We agreed that while NGO studies have been around for a while, there exists too little transparency and research in the relatively recent field of for-profit social enterprises on what salary levels currently are and whether this has been adequate to attract and retain talent lured by the call to “do good and do well”. More enigmatic even to me is what the expected progression should be for someone within 2, 5 or even 10 years of working for a social enterprise. The assumption of some people remains that a social enterprise should pay better than the traditional NGO because it’s more like a “business”. Interesting! But is it true?
Money Talks: Should Doing Good have more Impact on Your Wallets?
Raise your hands if you have heard the following phrase: “Doing Good While Doing Well.” Now raise your hands if you did not know that this refers to companies and investors. Yes, the money goes to them. Not to you. That is, not to most of you, who are likely neither a company nor have the money to play impact investor. If you care about such things as “doing well” (ah heck, let’s call it what it is: money), my ponder of the week may resonate.
Personally, and frankly, I cannot imagine why we would care about how much “good profits” those responsible/sustainable corporations make or why we would care that the (already wealthy) impact investors get a little extra cash in the bank, without first talking about making “good living” ourselves. Perhaps that explains my aversion to a phrase which smells like good PR but lacks personal significance that I can relate to by any measure.
A further thought. To review a perennial bone that I love to unearth occasionally (see previous post where I mentioned the issue of compensation), I continually try to tell myself that the following is not true: that the vast majority of “do-good” jobs that DIRECTLY affect the (social/environmental) bottom line, e.g., working for social enterprises and NGOs, do not seem to pay so well. We’re not even comparing to traditional for-profit jobs here. We just have to compare that to those do-good jobs that exist more to ENABLE other change-makers, e.g., foundations, institutions like World Bank, ADB, and consultancies. If you didn’t know, allow me to suggest this carefully: the latter make (a lot) more money than the former! Today’s question is not why there is a difference and whether that is appropriate or fair, or exactly what levels of positions we are talking about here (although both may be addressed by a future post). Today’s question may be simply about why do-good pay is (relatively) low and unattractive period – and whether this is okay.
Impact investing is the latest hot topic in the do-good community around the world. At its core, the idea of actually “investing” in social-purpose organizations and achieve both “social and environmental” and “financial” returns for money, as an alternative and complement to philanthropy, gets people excited. Whether you think it’s just repackaging of old ideas or a legitimate paradigm shift, this “field” has undeniably gotten significant attention in the last five years.
In Part 1 and Part 2 of this 5-part series, I proposed a 6-step mental checklist that may help you navigate your career in this field, and I started with elaborating on the first two items dealing with understanding why people seem to care about impact investing, identifying current opportunities, becoming more aware of your actual role on the job, and remain cautious because career development is probably currently not a priority for the majority of impact investing firms but those with most money, scale, and years of experience (which is very few).
In this Part 3, I will discuss the third component in the checklist, which involve understanding who you are dealing with as the so-called “impact investor”. I will claim that the personalities of people running impact investment firms nowadays spans a certain spectrum and may or may not be a good fit with you depending on your own preferences and needs. Understanding this will help you probe in your interview and during your research phase to better gauge if a particular firm is the right place for you. Trust me, this is definitely not much talked about when all the media nowadays report and debate on impact investing on its theoretical and abstract features, while paying on average rather little attention to its human level. Let me ask: while impact investing managers can talk passionately about the people their investments help all day and all night, how many can articulate where they see their employees move within their organization in five years? Lastly, do not be surprised if you see a strong theme around moneyand attitudes towards it. I write about them at length in this post because it is somewhat of an impact investing “dirty little secret” and not discussed because we are supposed to talk about doing good here, right? Well, what I would simply like to do here is to draw the connection between personalities and the way they lead people to interview and negotiate with you sometimes in rather strange, seemingly counter intuitive ways.
Although we should keep highlighting, showcasing and offering them up as inspiration, we should at the same time move away from the prevailing culture of idolizing the very few individuals that start social enterprises and other do-good organizations and instead focus more holistically on how we can attract and retain top talent to push these organizations to the next level
Once we look underneath the human resource structure of such organizations, we realize how limited actually the pool of available positions is for top talented but not as proven people. We in fact discover what I referred to as the “middle layer” made up of functional jobs and other work-horse positions that are realistically the entry point for the majority of young people looking to do-good nowadays
In this Part 3, I want to think about one aspect of what it takes to attract the right talent to the available pool of positions by focusing specifically on compensation, which I would like to show to be a major obstacle for building more world-class, sustainable social enterprises and NGOs that want to scale their impact ever more.
Yet another set of articles expounding on the encouraging trend that the new generation of “young rich”, especially around Silicon Valley, engage more and differently in philanthropy than previous generations that followed the trend of “make money first, then give away much later”
Close-up is on Laura Arrillaga-Andreessen, daughter of a real-estate billionaire, wife of Netscape’s co-founder, teacher of Strategic Philanthropy at Stanford, and latest would-be philanthropy evangelist who strongly believes that we need to not only increase number of rich young people giving, but also how effectively they do this (using business principles, being more methodical and rational, etc.)
As I write this I actually received a free copy of Ms. Arrillaga-Andreessen’s book “Giving 2.0” with my last Stanford Social Innovation Review issue. It still remains unread on my table. The theme reminds me strongly of “Philanthrocapitalism – How Giving Can Save the World” by Matthew Bishop a few years back. I also passed on that book. Let me explain.