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Stand Together Foundation: Discovering solutions through venture philanthropy

Justin Wheeler
•
September 20, 2023
•
42 minutes
EPISODE SUMMERY

Evan Feinberg · Executive Director, Stand Together Foundation | As ED of Stand Together Foundation, Evan leads a community of changemakers dedicated to breaking the cycle of poverty through innovative, disruptive ideas—and sometimes failure.


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EPISODE NOTES

Listen up! Nonprofit leaders and social entrepreneurs—if you're feeling frustrated because traditional charitable "best practices" aren't moving the needle, if you feel like the odd one out because you're more focused on the people you're helping than your donors, and if your idea of impact skews more transformational than a boring board report, then today's conversation is for you.

Hang in there, friends; you're not alone. We're talking to Evan Feinberg, Executive Director at Stand Together Foundation, a group of disruptors that you maaaaay relate to.

Not sure I'm talking about you? Let me assure you: Stand Together is supporting game-changers just like you! Take The Phoenix, a physical fitness addiction recovery program. The Phoenix's community-based approach results in just 30-50% of the relapse rates that the best clinical programs in the U.S. see—and The Phoenix expects to grow to 1M members by 2026.

So put your great-ideas thinking cap on and listen in as Evan and I break down top-down approaches to impact, venture philanthropy, compensation philosophy, and scratch the surface of measurement methodology. This is a discussion that a disruptor like you can't miss.

TRANSCRIPT

Hello, I'm Justin Wheeler, and welcome to this episode of Nonstop Nonprofit!

Listen up! Nonprofit leaders and social entrepreneurs—if you're feeling frustrated because traditional charitable "best practices" aren't moving the needle, if you feel like the odd one out because you're more focused on the people you're helping than your donors, and if your idea of impact skews more transformational than a boring board report, then today's conversation is for you.

Hang in there, friends; you're not alone.

We're talking to Evan Feinberg, Executive Director of Stand Together Foundation, a community of changemakers dedicated to breaking the cycle of poverty through innovative, disruptive ideas—and sometimes failure.

Not sure I'm talking about you? Let me assure you: Stand Together is supporting game-changers just like you! Take The Phoenix, a physical fitness addiction recovery program. The Phoenix's community-based approach results in just 30-50% of the relapse rates that the best clinical programs in the U.S. see—and The Phoenix expects to grow to 1M members by 2026.

So put your great-ideas thinking cap on and listen in as Evan and I break down top-down approaches to impact, venture philanthropy, compensation philosophy, and scratch the surface of measurement methodology. This is a discussion that a disruptor like you can't miss.

Justin Wheeler Evan, thank you so much for joining the podcast today, how are you doing?

Evan Feinberg I am doing fantastic. It is so great to be with you, Justin.

Justin Wheeler Well, thank you for taking the time. Super excited to dive into a couple different topics that definitely correlate specifically around the concept of venture philanthropy. But before we get too far down that road, I'd love to start with just your story. Tell us a little bit about yourself and how you landed in the nonprofit industry.

Evan Feinberg Yeah, absolutely. Well, look, I've always been someone who cared a lot about the ideas that make the world go around and how to make the world a better place. I mean, I was sort of an ambitious young person when I was in high school. I did Lincoln-Douglas debate and I was obsessed with philosophy and just frameworks for creating a better society. And so that led me down a path of studying political science and public policy and getting into the think tank world, ultimately working on Capitol Hill and running for office myself. But ultimately really inexorably led me to the social change space and doing this work in communities because I think the most important work that's happening anywhere in America at any given time is not in fancy boardrooms or the halls of Congress or even in the academy where a lot of ideas are discussed. But it's happening in our communities, in our neighborhoods, people helping people, people overcoming significant barriers to improve their lives. And so, you know, one thing led to another throughout my life and career to get me to a place where I get to be involved in what I think is the most important work out there.

Justin Wheeler Amazing. Amazing. I actually didn't realize that about yourself, that you ran for office. So an interesting little factoid there that I just learned.

Evan Feinberg Yeah. Well, I ran for Congress back in 2012. I was one of the first millennials to run for Congress. I challenged a member of my own political party at the time in a primary. You know, my idea was the politics were broken, and so I felt like I could just get involved and help be a part of shaking them up. But really, what I've learned over time is the politics are downstream from culture, and our culture is really broken. Our culture is one in which people are trying to win an argument. They want power and control, and they feel like their ideas can win the day. And so they want others just to do it their way. And frankly, our politics are going to just reflect that culture. I think there's a real opportunity instead to roll up our sleeves together in a common cause, solving real and important problems in our communities. And if we do that, the politics will begin to take care of themselves. I'm very glad to be on this side of that equation.

Justin Wheeler And one of the things, or rather big goals that you have as an individual is to end poverty here in America, and you've built one of the largest communities of philanthropists, of nonprofit organizations, social impact organizations. Can you share a little bit more about this big, audacious goal that you have? And, you know, just tell us more about that and what you're doing on that side of things.

Evan Feinberg Yeah, the organization I lead, it's called Stand Together Foundation, and our big vision is to break the cycle of poverty in America. And I tend to use that language, break the cycle of poverty because poverty is a really hard term to define. And many people think about poverty as a resource problem, as a deficiency problem. They define it by what people lack. And so it's easier to use language like end poverty. When you think about it like that and say, Hey, we just need to meet a certain level of need and then we've solved the problem. But I don't think that's the that's poverty. I don't think of people as being broken and deficient and lacking something. Instead, people have incredible, unique gifts and talents to contribute. They have extraordinary potential. And when you think about poverty that way, you realize it's actually an innovation problem. It's a problem of how do you take the leading asset of people's ability to contribute and connect it back to meaningful full participation in our society and our economy? And so we talk about breaking the cycle of poverty and that there's a problem if the same people find themselves in poverty for long periods of time. There's a problem if we've got generational poverty, where the situation of your birth begins to dictate your outcomes, that situation is what we want to try to make a difference on and Stand Together Foundation. Now there are so many people in poverty in America. There is 40 million Americans in poverty and depending on how you define it, there is as many as 100 million Americans that are at or near poverty. And so with a problem that big, you can't solve it by coming up with big, sweeping solutions that can cover that whole problem. Instead, what you have to do is disrupt people's mental models, we have to change the way people think about poverty. We have to get away from this top-down deficiency-based view and toward a bottom-up empowerment view, that really believes in people. And so the work that we're doing to Stand Together Foundation is to lead the way by going out and finding the disruptors and the innovators, the stories and examples and leaders who their very work can transform not only the problem they're trying to solve, but really how the entire sector begins to operate. And if that happens, we believe we've got a meaningful shot at breaking the cycle of poverty in America.

Justin Wheeler Very interesting. So thank you for explaining that. It was very, very enlightening. I imagine that those types of people, the disruptors are a bit harder to find than, say, your traditional organization may be addressing poverty in sort of the way, you know, I framed the question. So how do you find these individuals or these organizations around the country that are really, you know, working towards this disruptive mentality?

Evan Feinberg Yeah. Well, I'll start with there's a few key traits of a disruptive and innovative nonprofit that really is empowering people from the bottom up. And the first is they've got to treat the people they serve as their customers. You know, too often you find nonprofits out there that treat their donors and their stakeholders and society at large as their customer. And they're treating, the people that they're working with that are experiencing poverty sort of inputs in what they're offering, the social change that they're offering and we know that those organizations are not going to be a fit for the work that we do. So we're looking for customer-focused organizations that are relying on knowledge about what is truly helping those individuals to improve their lives. So that's a social entrepreneur to us. That's the kind of group that we're looking for. Then we're looking for leaders and cultures that are not just trying to comply with today's evidence-based best practices. They're trying to discover what creates value for individuals and society. And what do I mean by that? Today of the social sector operates as if we know all the answers to solve everyone's problems. If we just get the right people to implement those solutions and get people to, you know, on the ground to participate in those solutions. We just know that's not true. We're spending over a trillion dollars a year in social welfare spending, both public and private, every year. We know that we don't know the answers yet. We have to discover the answers. So we need leaders and cultures of social entrepreneurship that are finding new and better ways to solve the problem. Which means if we come across a nonprofit that just tells us about their random control study and how they're pushing out their program, that's not a fit for us. We're looking for leaders and cultures that are learning things and discovering things, and what they're doing today isn't what they're going to be doing a year from now or 10 years from now because they're constantly innovating. And then we do look for demonstrated outcomes we expect them to be, the proof's in the pudding. Are they doing and discovering something that's actually making a difference in people's lives? And then we fundamentally look for groups with cultural leverage. If they're successful, are they like the Uber of the issue that they're working on? If they're successful, do they disrupt their industry? And do they get people to think differently? You take Uber. Not only did Uber disrupt the taxi cabs as competitors, they disrupted transportation because if I can get a cheap ride, I might not even take the subway anymore of the bus anymore, or I certainly won't pay through the nose for a car service and whatnot. And then finally, they usher in the gig economy because people are like, man, this is a better way to organize people. To allow people to work independently and connect directly to those that they can serve. And so you get Airbnb and everything else afterwards. So we go out looking for those things. And at the end of the day, if you're not looking for, if you don't know what you're looking for, you're not going to find it. We know we're looking for those folks and we go out to them and go find them.

Justin Wheeler Are those individuals, have they hit a certain level of scale? Or do you see sort of the partnership that you provide as the opportunity to take that disruptor and to really scale their idea to the next level?

Evan Feinberg Yeah. For us, we are mostly looking for groups that have some demonstrated outcomes that have a clear vision and track record. But that's not because we think that that's the only way to do this work. We have consistently explored ways to work earlier stage with people that have ideas or with larger incumbents that want to, that truly have a desire to rethink how they're approaching it. But generally speaking, for Stand Together Foundation, we've worked with groups that have, you know, annual revenue anywhere from one million to twenty-five million dollars, roughly. Some bigger, some smaller. But groups that have some track record, have a staff. You know, they're trying to grow what they're doing and they're we think they're on something and that if they get a little bit of support from us and to be clear, we provide both financial support and then we really offer management training around culture, right? How do you build a leadership and professional and management culture that unlocks the ingenuity of your people? And so we're looking for groups that are able to kind of take those frameworks and apply them to their operations.

Justin Wheeler And many ways it's very similar to that, like private equity, right? When a private equity firm goes to invest in a business, you know, they're bringing in obviously capital playbooks and so forth. And I've heard you talk about venture philanthropy in the past. And so is it at all modeled by what you've seen and experienced in like the capital markets? Or is it something totally different in terms of the playbook that you guys use and are continuing to build for your portfolio of organizations?

Evan Feinberg Yeah, we take we're probably somewhere in between or maybe both of venture philanthropy, and I don't know if you want to call it philanthropic equity. I don't know what the right way to describe it might be, but we're looking to help incredible innovators to do a whole lot more. And what that means is we don't think we know the answers sitting in our offices as to what will help people living in poverty to transform their lives. But when we come across one of these disruptive innovators that are driving change in people's lives, we see real, tangible results. We ask how can we help them do more? And so that means we're working with lots of groups. We've got a six-month management training program that we call our Catalyst program that looks probably something like venture philanthropy. We provide small grants to lots of organizations. We help them apply these frameworks to get better results. And our hope is that all of them will get significantly more impactful as a result of being a part of our community and getting these management frameworks and support from us and a little bit of financial support. And then from among those where we're sort of also, the more on an analog to private equity, when we see an organization that can go toe to toe with the prevailing top-down approaches that are dominating the social sector, we make much larger financial commitments and management support and operational assistance, and we open our networks and our influencer networks to help that organization to take a much bigger step forward. So you take a group like the Phoenix that we've been working with, maybe the longest of any group, it's a peer-to-peer physical fitness addiction recovery program and it gets anywhere from half to a third of the relapse rates of the best clinical programs in the country. And the way they do it is by disrupting the approach that if you're in addiction, you're broken and you've got sort of a major deficiency. And so the top-down approach is an addiction are to incarcerate, to treat drugs with other drugs, which might save lives but doesn't solve addiction as a problem. Clinical treatment beds, which have horrible results and there's not enough clinical treatment beds in America to solve the problem. But a group like the Phoenix networks together, individuals experiencing addiction to recover together to tap into each of their own strength and resilience. By having this a safe and supportive community and being a part of the community and staying sober is your contribution to the community. And so we're just thrilled with this partnership with the Phoenix. We helped them go from about 4,000 people a year to forty thousand people a year by opening up new locations and starting to do staff-led programming without physical, brick and mortar locations through partners in communities, CrossFit and the like. But the real opportunity we think they're going to hit a million members over the next five years. And how are they going to go from 40000 thousand to a million? Well, the core of the Phoenix wasn't a in-person CrossFit box, gym-like, workout together. The core of the Phoenix were people recovering together and so through technology and training and certification and feedback loops of the technology, any person with a bike can get together with others with bikes and ride and recover together.  They can climb and recover together. They can run and recover together. They can do yoga, they can play cards, and recover together. And so we are really excited about the evolution of the Phoenix because you've got a great management group that we've been able to support and come alongside with the financial resources, the management frameworks, the operational systems, the celebrity influencer relationships, you name it, to help them get to that big number.

Justin Wheeler That's amazing. It sounds like the Phoenix would be sort of a poster child of the type of organizations that you work with. It got me thinking about, the challenges I often see in the nonprofit community is, you see a lot of talent leaving the nonprofit community going to the for-profit. A lot of this is tied usually to compensation and, you know, I mean, just a lot of nonprofit leaders, I'm sure you've heard this, you just feel like they're when they're operating a nonprofit both hands are tied behind their back. And so I would love to get your perspective as a funder, someone who's investing in management in these big ideas, understanding to scale an organization from 40,000 members to a million, it's going to take some real infrastructure. It's going to take some, you know, some real talent to be able to execute on on a mission like that. What's your position on just the way a nonprofit should, should be structured or the way compensation should be handled? Should it be different then than the for-profit space? I'd love to get your thoughts on that just because I think this is a big challenge that we see today.

Evan Feinberg Yeah. Well, I think compensation philosophy is broken in most for-profit companies, and it's certainly broken in most nonprofit companies. So I'd love to unpack compensation philosophy quite a bit more, but let me broaden for a second. You know, the ideas around nonprofit management are so, so broken. They're just like the overall sector. You know, this idea that the amount you spend on administrative and overhead, is it all relevant to whether or not you create value for your customers, whether or not you're helping people to transform their lives? I mean, I don't know how you code your salaries at your organization, but you know, a lot of times somebody who codes is as overhead, quote-unquote is one of the most important people for the organization to achieve its vision and mission. It's just so silly that we would look at like a 10 percent or a 15 percent number and say, well, that means you're a good nonprofit or an efficient nonprofit. That's a measure of whether you're efficiently pushing out services at a low cost. But if we don't know what services to offer, if we're not learning, discovering how to create value for people, then that might make sense. But efficiency metrics like administrative overhead, they're nonsense. If you're trying to build a an entrepreneurial organization, all the you should care about is your total spend for the amount of value you create in the world, right? Your price per participant transformation, right? Price per success point. So I think all of that's really, really honestly, it's just stupid, and nonprofits should move away from it as quickly as possible. Another story for another day, or we can talk about it more later, I think we need fundamental disruption in measurement in the social sector, and we've got some ideas for what that could look like on management. I think that the problems that the groups that we work with are solving the problems that my team Stand Together Foundation is working on, they're the most important problems in America. People should be getting paid well to solve those problems. We should be recruiting top talent to go solve those problems. So to me, this idea that we need, that someone is a trade-off compensation or fulfillment or their career to come work at nonprofits is a devastating blow to our sector. We've got to reframe it. We have to be willing to pay talented people because when we pay talented people, they deliver better results for the people we serve, and that's the standard we should apply ourselves to. So compensation philosophy? This is, we're kind of peculiar in this regard. We pay people what they were worth, looking backward every year. We want a win-win relationship with every one of our employees every year. So what does that mean? Most companies try to pay their employees the least amount they have to to get the largest contribution. They're trying to profit off of each employee by bringing down their costs for their total contribution. We see it differently. If you pay people for their total contribution, you're going to get more contribution from them. And so every year we look blindly, we try to disregard what their base salary was and say, what would the market value their total contribution at? And we pay them that much. And if they made $50,000, but the market would have valued their contribution at $100,000 if the market knew what they were going to contribute. We pay a $100,000 a year, not being one 100% bonus on their salary. That might be a rare, not a lot of people are doubling up, necessarily, but that's the kind of thing that we would say, why would you not pay people what they're worth in terms of value and start rethinking comp. philosophy, management philosophy like that, you're likely to get a whole lot more value out of your team.

Justin Wheeler Yeah, I also think what directly correlates to, you know this conversation here is also, you know, I think there needs to be a whole conversation and there probably is somewhere around just impact philosophy. I think that so many nonprofits get stuck in this like annual cycle of how many people or products, or whatever like the impact stat is like, how many of those things did we achieve this year? Did we grow it this year? Whereas like when you're trying to break the cycle of poverty or, you know, in a case where organization, I'm pretty involved in Liberty In North Korea, when you're trying to support the people's freedom inside North Korea, this is a long term problem that's going to require a long term approach. And so when we get stuck on, like, when we get stuck on just the cycle of like yearly impact, I think that also can have a direct impact on what a budget looks like, right? And what I mean by that is if you're trying to achieve 30% growth in programs year over year, you're going to allocate resources to those programs to grow them versus if you're like, well, you know, in 10 years, we want to be at like 3000% growth. And in that case, you probably have to divert resources from programs and put it more to talent and infrastructure and so forth. So I think we also need to reframe the way an organization reports on the annual basis because it does take resources away from, you know, operational expenses that could actually produce, or have more of a yield from, in the long term.

Evan Feinberg Yeah, I think you're 100% right Justin. I mean, nonprofits are not the only sector that has to think about this. This is the age-old problem of privately versus publicly held companies. As soon as a company is publicly held, they're trying to nail their quarterly numbers even when they know their short-term value that they've got to deliver is at the expense of the long-term value that they're trying to create. You know, nonprofits are perpetually stuck in this cycle of trying to prove outputs to get more money, rather than define the value they're trying to create and set up a clear vision and bring along philanthropic partners that are excited about and buy into the same bet, the same risk profile, the same impact value metrics that the staff is aligned to. I can't tell you how many times I've talked to nonprofits who report a bunch of measures out to their donors, and I asked him the question, do you think those are the important metrics to run your business on? If you had infinite amounts of money, right, or you didn't have to worry about fundraising? Are those the metrics you'd use to run your business? And they say, no. And I'm like, well then, you are training your donors to care about the things that you don't care about and you're wasting all this time over here working with your donors on those metrics that then are just pulling your organization off of the things that you think actually matter to demonstrate those. I couldn't be more in agreement with your perspective on it. I also think that there's a bigger problem with sort of nonprofit measurement in general that they are sort of trying to comply with what the funders already want to pay for. So, you know, a lot of times a funder puts out an RFP essentially for nonprofits and nonprofits become they even call themselves agencies to go out and go chase that. Hey, I can deliver this value to you, donor or government bureaucrat who's got a program. Then they chase that value with their services, and they always say, If I just had this money, I can create this value. So if I can get this grant, that's not quite right, but I'll get the money in the door, then I'll build the staff, then I'll go create my value. And they never get around, actually creating the value. They get stuck in this endless loop of chasing government or foundation money unhelpfully. So we believe, and I think you've probably seen this over and over again in the fundraising space that nonprofits underestimate how if they just go create the value, how much easier it is to raise money from donors who all they ever wanted in life was a nonprofit that could go deliver that value and are so excited to fund stuff that's working.  

Justin Wheeler Yeah, absolutely. I mean, and there and there are definitely are some amazing organizations that, you know, these are organizations that are growing at unbelievable rates that really do focus on the value and the donors find them. The donors, you know, go to that flock to that. There's a huge audience of people wanting to give and if you can prove the value could show the value to your point, it's going to be so much easier, especially in the long run. Another challenge I see often is that nonprofits, and I think this impedes on innovation, nonprofits have a fear of failure, right? And especially because I think it comes from the sense of like we're taking donor money or promising we're going to deliver something and oftentimes in order to deliver that things are more conservative, maybe in sort of that approach they're taking to solve problems. Something you said earlier, which really resonated, is that you're trying to find individuals who are essentially going against the status quo, who are trying to find new solutions to problems. I imagine, you know, there are failures, a lot of failures, when you're trying to disrupt, when you're trying to create a new paradigm. So how does your team think about failures and how do you encourage organizations not to be afraid of failing fast or whatever it might be in your guys' case?

Evan Feinberg Yeah. Well, I mean, we try to lead by example by providing risk capital. So we generally speaking work with our nonprofits to develop a vision that requires them to understand what are they trying to learn in the world? What are they trying that is uncertain? And how are they growing their organization in a way that sort of systematically reducing that uncertainty in order to grow? They're not just experimenting for the heck of it, they're trying to systematically learn what should they do to be able to help a whole lot more people transform their lives in a whole lot more significant way. And so we try to lead by example by being willing to fund that. So we do good analysis, usually alongside them and if we know that we're investing in something that has a 30% chance of being successful, that's OK. We've all held hands and know that that means there's a 70% chance that it's not going to be successful. But what we try to do is bake into that, oK, so let's say the 70% happens, what will you learn in that experiment that will help the next dollars to go toward something that's no longer 30% chance of success, but 50% chance of success or 70% chance of success? Because a lot of times you learn more by trying things and failing than you ever could, by playing it safe or by trying to discover it in the boardroom of your organization, trying to study it and plan it out well enough. So we've had plenty of groups that we supported that tried to launch in a new market, and it didn't go that well. Launched a whole new program area that didn't work that well. You know, it happens often with us and we just, we have a better risk appetite than I think most funders do. So we try to lead by example. I don't know the long-term solution for the sector. I think the more innovators that experiment, learn and then ultimately grow, scale and deliver superior value, the more other funders will follow our lead and start placing growth capital risk bets rather than just funding sort of reliable outputs. If we just fund reliable outputs, we'll get a whole lot more of what we have today, which is 60 years of the war on poverty and similar efforts in foundations and philanthropic approaches. We're making poverty easier to endure, but harder to escape. Social mobility is on the decline. We've got a million and a half, literally a million and a half, human service, anti-poverty type, nonprofits in the country. We're spending $400 billion a year in private philanthropic capital, probably over a trillion dollars in public funding. Some people estimate those lower like to three hundred and eight hundred but depending how you count it. Either way, we're spending a lot of money and getting mediocre results. Our sector has never been bigger in terms of bloating. Total staff, right? Total number of people that are working in this industry. If we don't, we don't do something different. We're going to beat our heads against the wall and get more of the same.

Justin Wheeler When you think about the approach to our foundation is taking and investing in these disruptors across the country. And you know, with the goal of breaking the cycle of poverty, is there a time frame that you think about when trying to break this cycle? Is it more fluid? Is it something that we're going to be living with the rest of our lives, but it's going to get incrementally better, or, you know, from your guys' approach and perspective, is that breaking this cycle, does it have a definitive end date?

Evan Feinberg Yeah. So I'm a Christian, and Jesus taught us that the poor will always be with us. And I've really wrestled with that scripture because saying that the poor will always be with us does not mean that the same people will be in poverty, that they'll always be with us and that the same that somebody is kids because their parents were are poor will also be poor. So to me, to some extent, we'll never achieve the goal of, say, ending poverty. The definition of poverty is whether individuals are tapping into their gifts and talents to. Tribute. If that's the definition that we use, breaking the cycle of poverty means that we won't see the same people on the sidelines for their entire life and certainly intergenerationally. So there's no time horizon for me when we've achieved that, but I can tell you this right now, we're going the wrong direction as a country. Social mobility steadily throughout American history increased in percentage of people that were growing from poverty into middle-class or upper-class situations. The rate of social mobility is now on the decline for really the first time since we've been recording these types of statistics. And so there's something going on that's wrong now. The social scientist will impact that, right? It's very hard to understand social mobility when quality of life is improving for everyone. I get that. But in my opinion, we are. We are doing the wrong things if what we care about is breaking the cycle of poverty. We're spending more money and frankly, if your goal is to make people's suffering, go away, generally having a free market economy with a very healthy social safety net is a pretty good strategy. Right. People in poverty in America live much more comfortable lives than people in poverty, in other countries or throughout American history, for example. But that doesn't mean that doesn't matter. It matters to me. I care about people not suffering, but that's not really what we exist to do. We exist to make sure that people live to their full potential and living more comfortable lives. Isn't that? And so we want to do something different, and I don't have a time horizon. Sooner the better.

Justin Wheeler Yeah, that makes sense at Liberty In North Korea. You know, we actually have a similar sort of philosophy in that there's an aspect of our work where there is a need to alleviate like immediate suffering, right? And we look at that sort of it's like the human imperative to address this problem because we can we're well-positioned to do it. But if that was the only thing we were to focus on, we're not going to make any steps forward in terms of the goal of seeing, you know, liberty in North Korea. And instead it's, and we say the exact same thing, it's investing in the potential of the North Korean people, specifically those that are still living inside the country, those who are undermining the regime through free market activity and so forth. Them living up to their potential is what's the direct threat is to the North Korean regime. And so I love and couldn't agree more with what you're saying is by allowing by empowering people to really tap into their potential. It's hard to like, know what exactly the outcome is going to be from that, but it's going to be a lot better than if they, you know, it's going to be a lot better than living under a certain social condition or not being empowered to really achieve that thing that you're meant to do. So couldn't agree more with that, that sort of philosophy, and I really appreciate that perspective.

Evan Feinberg Yeah.

Justin Wheeler Well, my last question as we wrap up here, I can't believe been almost 40 minutes. I'd love to hear as we kind of get through 2021 and go into 2022 and beyond, what's something that you're excited about as a leader in the nonprofit space? What are you looking forward to or what are you excited to see come to fruition in the coming years ahead?

Evan Feinberg So I think there is an incredible opportunity. I mentioned this briefly earlier to disrupt measurement in the sector, and it's because of the power of technology today. So in other areas of the economy, we can really deeply understand the customer what they value, what would create value for them. And so the nonprofit sector, though, has not really leveraged this kind of understanding. So I'll give you an example. I went into the AT&T store the other day. I had a problem with my account. I wasn't going to buy a new phone and whatnot. I went in, I got the service I needed. I walk out and I got a text message on my phone. Scale of one to 10, how likely are you to recommend AT&T to a friend or family member? And I answer my question. The Net Promoter score question and the reason why they ask it is because they've done tons of research, tons of experimentation, and net promoter score is a very predictive metric for whether I'm going to buy an iPhone in a year when my iPhone plans up right from that AT&T store. And so it's just an example of what the customer service industry has discovered. Technology and customer focus has made that possible. I think this is possible in nonprofits. One of the things we're pioneering at Stand Together Foundation is a measurement methodology to truly understand the services that individuals in poverty demand and benefit from and to get feedback loops. For example, we're learning Net Promoter Score works for a lot of nonprofits, but like food banks get pretty good net promoter scores because you would recommend, hey,  if you're hungry, go to the food bank. They'll be able to serve you. But we've pioneered some transformation metrics. To what extent is this organization transformed your life for the better? And as people ask that question, we're separating out those nonprofits, food banks get terrible scores, whereas many of the groups we work with get off the charts, averaging 9 and 10 on a scale of 10. On how much is this organization transformed your life for the better? And to what extent do you feel empowered to break the barriers in your life and other questions like this that using technology we can get regular answers from people and then compare across sectors across different types of organizations, across similar organizations? So I'm really bullish on the idea of transforming the management practices of nonprofits through better measures because of the power of technology and customer focus.

Justin Wheeler It sounds like, and correct me if I'm wrong here, it sounds like it's more of a focus on the qualitative aspect of a service and program, as you mentioned. What's the value that you're getting versus what I think a lot of nonprofits could stock is on the quantitative side of what they're actually delivering. Is that is that fair to say? Or would you say it differently?

Evan Feinberg Well, I think both are important. And these are qualitative measures can be quite quantitative, and they also correlate to a lot of harder measures. So social sciences show us that subjective well-being scores, for example, correlate to lifetime income and earnings quite well. So obviously, there's a chicken or the egg, like is it the income that makes people happier and more satisfied with their life? Or is it the life satisfaction that drives income? But either way, if they correlate, we should be able to measure those things over time to be able to predict. So often, nonprofits are measuring by just sort of doing a snapshot of their graduation rates five years after they start working with somebody, but doesn't really help. You know whether you created value for that person last week, whether one case manager your organization is better than another case manager, whether certain types of customers value the specific programs of yours more than others, so you can tailor your offerings to customize to their unique needs and offer them what's most beneficial to them. So I think it's it's not so much quantitative versus qualitative. It's measures that you can capture in real-time. It might be that you learned that when the average person we work with gets three meaningful relationships out of our services, right, they make three friends. They do much better in life. So then you can track that measure. That, to me, is really valuable to run an organization and works a lot better than, you know, once every year checking in on your total graduation rates. Are we generally doing good or bad?

Justin Wheeler Yeah, I see that mix that makes a lot of sense. It sounds like we need to have a follow-up podcast here just on the measurement methodology because I do think this is an interesting challenge in the nonprofit space. There's obviously several different methodologies that are out there today, but just from what you're sharing, I think it would be really beneficial to kind of dig into it more in another podcast dedicated to it, because I think this is getting this right is really, I would say, is what allows an organization to be able to scale effectively regardless of how efficient, or effectively, is I think around this concept. So definitely one to dig in more with you on this methodology.

Evan Feinberg Yeah, looking forward to it.

Justin Wheeler Well, Evan, thank you so much for your time. It flew by today. But I do appreciate you jumping on and just sharing with us more about just your experience and leadership in the space. And that's going to be super impactful for our listeners. So thank you for joining the show today.

Evan Feinberg Yeah, so great to be with you.

Justin Wheeler Have a great one.

Evan Feinberg You, too.

Thanks for listening to this episode of Nonstop Nonprofit!

This podcast is brought to you by your friends at Funraise. Nonprofit fundraising software, built by nonprofit people. If you’d like to continue the conversation, find me on LinkedIn or text me at 562.242.8160. And don't forget to get your next episode the second it hits the internets. Go to nonstopnonprofitpodcast.com and sign up for email notifications today.

See you next time!

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PODCAST

Stand Together Foundation: Discovering solutions through venture philanthropy

Stand Together Foundation: Discovering solutions through venture philanthropy

Justin Wheeler
October 21, 2021
•
42 minutes
EPISODE SUMMERY

Evan Feinberg · Executive Director, Stand Together Foundation | As ED of Stand Together Foundation, Evan leads a community of changemakers dedicated to breaking the cycle of poverty through innovative, disruptive ideas—and sometimes failure.


LISTEN
EPISODE NOTES

Listen up! Nonprofit leaders and social entrepreneurs—if you're feeling frustrated because traditional charitable "best practices" aren't moving the needle, if you feel like the odd one out because you're more focused on the people you're helping than your donors, and if your idea of impact skews more transformational than a boring board report, then today's conversation is for you.

Hang in there, friends; you're not alone. We're talking to Evan Feinberg, Executive Director at Stand Together Foundation, a group of disruptors that you maaaaay relate to.

Not sure I'm talking about you? Let me assure you: Stand Together is supporting game-changers just like you! Take The Phoenix, a physical fitness addiction recovery program. The Phoenix's community-based approach results in just 30-50% of the relapse rates that the best clinical programs in the U.S. see—and The Phoenix expects to grow to 1M members by 2026.

So put your great-ideas thinking cap on and listen in as Evan and I break down top-down approaches to impact, venture philanthropy, compensation philosophy, and scratch the surface of measurement methodology. This is a discussion that a disruptor like you can't miss.

TRANSCRIPT

Hello, I'm Justin Wheeler, and welcome to this episode of Nonstop Nonprofit!

Listen up! Nonprofit leaders and social entrepreneurs—if you're feeling frustrated because traditional charitable "best practices" aren't moving the needle, if you feel like the odd one out because you're more focused on the people you're helping than your donors, and if your idea of impact skews more transformational than a boring board report, then today's conversation is for you.

Hang in there, friends; you're not alone.

We're talking to Evan Feinberg, Executive Director of Stand Together Foundation, a community of changemakers dedicated to breaking the cycle of poverty through innovative, disruptive ideas—and sometimes failure.

Not sure I'm talking about you? Let me assure you: Stand Together is supporting game-changers just like you! Take The Phoenix, a physical fitness addiction recovery program. The Phoenix's community-based approach results in just 30-50% of the relapse rates that the best clinical programs in the U.S. see—and The Phoenix expects to grow to 1M members by 2026.

So put your great-ideas thinking cap on and listen in as Evan and I break down top-down approaches to impact, venture philanthropy, compensation philosophy, and scratch the surface of measurement methodology. This is a discussion that a disruptor like you can't miss.

Justin Wheeler Evan, thank you so much for joining the podcast today, how are you doing?

Evan Feinberg I am doing fantastic. It is so great to be with you, Justin.

Justin Wheeler Well, thank you for taking the time. Super excited to dive into a couple different topics that definitely correlate specifically around the concept of venture philanthropy. But before we get too far down that road, I'd love to start with just your story. Tell us a little bit about yourself and how you landed in the nonprofit industry.

Evan Feinberg Yeah, absolutely. Well, look, I've always been someone who cared a lot about the ideas that make the world go around and how to make the world a better place. I mean, I was sort of an ambitious young person when I was in high school. I did Lincoln-Douglas debate and I was obsessed with philosophy and just frameworks for creating a better society. And so that led me down a path of studying political science and public policy and getting into the think tank world, ultimately working on Capitol Hill and running for office myself. But ultimately really inexorably led me to the social change space and doing this work in communities because I think the most important work that's happening anywhere in America at any given time is not in fancy boardrooms or the halls of Congress or even in the academy where a lot of ideas are discussed. But it's happening in our communities, in our neighborhoods, people helping people, people overcoming significant barriers to improve their lives. And so, you know, one thing led to another throughout my life and career to get me to a place where I get to be involved in what I think is the most important work out there.

Justin Wheeler Amazing. Amazing. I actually didn't realize that about yourself, that you ran for office. So an interesting little factoid there that I just learned.

Evan Feinberg Yeah. Well, I ran for Congress back in 2012. I was one of the first millennials to run for Congress. I challenged a member of my own political party at the time in a primary. You know, my idea was the politics were broken, and so I felt like I could just get involved and help be a part of shaking them up. But really, what I've learned over time is the politics are downstream from culture, and our culture is really broken. Our culture is one in which people are trying to win an argument. They want power and control, and they feel like their ideas can win the day. And so they want others just to do it their way. And frankly, our politics are going to just reflect that culture. I think there's a real opportunity instead to roll up our sleeves together in a common cause, solving real and important problems in our communities. And if we do that, the politics will begin to take care of themselves. I'm very glad to be on this side of that equation.

Justin Wheeler And one of the things, or rather big goals that you have as an individual is to end poverty here in America, and you've built one of the largest communities of philanthropists, of nonprofit organizations, social impact organizations. Can you share a little bit more about this big, audacious goal that you have? And, you know, just tell us more about that and what you're doing on that side of things.

Evan Feinberg Yeah, the organization I lead, it's called Stand Together Foundation, and our big vision is to break the cycle of poverty in America. And I tend to use that language, break the cycle of poverty because poverty is a really hard term to define. And many people think about poverty as a resource problem, as a deficiency problem. They define it by what people lack. And so it's easier to use language like end poverty. When you think about it like that and say, Hey, we just need to meet a certain level of need and then we've solved the problem. But I don't think that's the that's poverty. I don't think of people as being broken and deficient and lacking something. Instead, people have incredible, unique gifts and talents to contribute. They have extraordinary potential. And when you think about poverty that way, you realize it's actually an innovation problem. It's a problem of how do you take the leading asset of people's ability to contribute and connect it back to meaningful full participation in our society and our economy? And so we talk about breaking the cycle of poverty and that there's a problem if the same people find themselves in poverty for long periods of time. There's a problem if we've got generational poverty, where the situation of your birth begins to dictate your outcomes, that situation is what we want to try to make a difference on and Stand Together Foundation. Now there are so many people in poverty in America. There is 40 million Americans in poverty and depending on how you define it, there is as many as 100 million Americans that are at or near poverty. And so with a problem that big, you can't solve it by coming up with big, sweeping solutions that can cover that whole problem. Instead, what you have to do is disrupt people's mental models, we have to change the way people think about poverty. We have to get away from this top-down deficiency-based view and toward a bottom-up empowerment view, that really believes in people. And so the work that we're doing to Stand Together Foundation is to lead the way by going out and finding the disruptors and the innovators, the stories and examples and leaders who their very work can transform not only the problem they're trying to solve, but really how the entire sector begins to operate. And if that happens, we believe we've got a meaningful shot at breaking the cycle of poverty in America.

Justin Wheeler Very interesting. So thank you for explaining that. It was very, very enlightening. I imagine that those types of people, the disruptors are a bit harder to find than, say, your traditional organization may be addressing poverty in sort of the way, you know, I framed the question. So how do you find these individuals or these organizations around the country that are really, you know, working towards this disruptive mentality?

Evan Feinberg Yeah. Well, I'll start with there's a few key traits of a disruptive and innovative nonprofit that really is empowering people from the bottom up. And the first is they've got to treat the people they serve as their customers. You know, too often you find nonprofits out there that treat their donors and their stakeholders and society at large as their customer. And they're treating, the people that they're working with that are experiencing poverty sort of inputs in what they're offering, the social change that they're offering and we know that those organizations are not going to be a fit for the work that we do. So we're looking for customer-focused organizations that are relying on knowledge about what is truly helping those individuals to improve their lives. So that's a social entrepreneur to us. That's the kind of group that we're looking for. Then we're looking for leaders and cultures that are not just trying to comply with today's evidence-based best practices. They're trying to discover what creates value for individuals and society. And what do I mean by that? Today of the social sector operates as if we know all the answers to solve everyone's problems. If we just get the right people to implement those solutions and get people to, you know, on the ground to participate in those solutions. We just know that's not true. We're spending over a trillion dollars a year in social welfare spending, both public and private, every year. We know that we don't know the answers yet. We have to discover the answers. So we need leaders and cultures of social entrepreneurship that are finding new and better ways to solve the problem. Which means if we come across a nonprofit that just tells us about their random control study and how they're pushing out their program, that's not a fit for us. We're looking for leaders and cultures that are learning things and discovering things, and what they're doing today isn't what they're going to be doing a year from now or 10 years from now because they're constantly innovating. And then we do look for demonstrated outcomes we expect them to be, the proof's in the pudding. Are they doing and discovering something that's actually making a difference in people's lives? And then we fundamentally look for groups with cultural leverage. If they're successful, are they like the Uber of the issue that they're working on? If they're successful, do they disrupt their industry? And do they get people to think differently? You take Uber. Not only did Uber disrupt the taxi cabs as competitors, they disrupted transportation because if I can get a cheap ride, I might not even take the subway anymore of the bus anymore, or I certainly won't pay through the nose for a car service and whatnot. And then finally, they usher in the gig economy because people are like, man, this is a better way to organize people. To allow people to work independently and connect directly to those that they can serve. And so you get Airbnb and everything else afterwards. So we go out looking for those things. And at the end of the day, if you're not looking for, if you don't know what you're looking for, you're not going to find it. We know we're looking for those folks and we go out to them and go find them.

Justin Wheeler Are those individuals, have they hit a certain level of scale? Or do you see sort of the partnership that you provide as the opportunity to take that disruptor and to really scale their idea to the next level?

Evan Feinberg Yeah. For us, we are mostly looking for groups that have some demonstrated outcomes that have a clear vision and track record. But that's not because we think that that's the only way to do this work. We have consistently explored ways to work earlier stage with people that have ideas or with larger incumbents that want to, that truly have a desire to rethink how they're approaching it. But generally speaking, for Stand Together Foundation, we've worked with groups that have, you know, annual revenue anywhere from one million to twenty-five million dollars, roughly. Some bigger, some smaller. But groups that have some track record, have a staff. You know, they're trying to grow what they're doing and they're we think they're on something and that if they get a little bit of support from us and to be clear, we provide both financial support and then we really offer management training around culture, right? How do you build a leadership and professional and management culture that unlocks the ingenuity of your people? And so we're looking for groups that are able to kind of take those frameworks and apply them to their operations.

Justin Wheeler And many ways it's very similar to that, like private equity, right? When a private equity firm goes to invest in a business, you know, they're bringing in obviously capital playbooks and so forth. And I've heard you talk about venture philanthropy in the past. And so is it at all modeled by what you've seen and experienced in like the capital markets? Or is it something totally different in terms of the playbook that you guys use and are continuing to build for your portfolio of organizations?

Evan Feinberg Yeah, we take we're probably somewhere in between or maybe both of venture philanthropy, and I don't know if you want to call it philanthropic equity. I don't know what the right way to describe it might be, but we're looking to help incredible innovators to do a whole lot more. And what that means is we don't think we know the answers sitting in our offices as to what will help people living in poverty to transform their lives. But when we come across one of these disruptive innovators that are driving change in people's lives, we see real, tangible results. We ask how can we help them do more? And so that means we're working with lots of groups. We've got a six-month management training program that we call our Catalyst program that looks probably something like venture philanthropy. We provide small grants to lots of organizations. We help them apply these frameworks to get better results. And our hope is that all of them will get significantly more impactful as a result of being a part of our community and getting these management frameworks and support from us and a little bit of financial support. And then from among those where we're sort of also, the more on an analog to private equity, when we see an organization that can go toe to toe with the prevailing top-down approaches that are dominating the social sector, we make much larger financial commitments and management support and operational assistance, and we open our networks and our influencer networks to help that organization to take a much bigger step forward. So you take a group like the Phoenix that we've been working with, maybe the longest of any group, it's a peer-to-peer physical fitness addiction recovery program and it gets anywhere from half to a third of the relapse rates of the best clinical programs in the country. And the way they do it is by disrupting the approach that if you're in addiction, you're broken and you've got sort of a major deficiency. And so the top-down approach is an addiction are to incarcerate, to treat drugs with other drugs, which might save lives but doesn't solve addiction as a problem. Clinical treatment beds, which have horrible results and there's not enough clinical treatment beds in America to solve the problem. But a group like the Phoenix networks together, individuals experiencing addiction to recover together to tap into each of their own strength and resilience. By having this a safe and supportive community and being a part of the community and staying sober is your contribution to the community. And so we're just thrilled with this partnership with the Phoenix. We helped them go from about 4,000 people a year to forty thousand people a year by opening up new locations and starting to do staff-led programming without physical, brick and mortar locations through partners in communities, CrossFit and the like. But the real opportunity we think they're going to hit a million members over the next five years. And how are they going to go from 40000 thousand to a million? Well, the core of the Phoenix wasn't a in-person CrossFit box, gym-like, workout together. The core of the Phoenix were people recovering together and so through technology and training and certification and feedback loops of the technology, any person with a bike can get together with others with bikes and ride and recover together.  They can climb and recover together. They can run and recover together. They can do yoga, they can play cards, and recover together. And so we are really excited about the evolution of the Phoenix because you've got a great management group that we've been able to support and come alongside with the financial resources, the management frameworks, the operational systems, the celebrity influencer relationships, you name it, to help them get to that big number.

Justin Wheeler That's amazing. It sounds like the Phoenix would be sort of a poster child of the type of organizations that you work with. It got me thinking about, the challenges I often see in the nonprofit community is, you see a lot of talent leaving the nonprofit community going to the for-profit. A lot of this is tied usually to compensation and, you know, I mean, just a lot of nonprofit leaders, I'm sure you've heard this, you just feel like they're when they're operating a nonprofit both hands are tied behind their back. And so I would love to get your perspective as a funder, someone who's investing in management in these big ideas, understanding to scale an organization from 40,000 members to a million, it's going to take some real infrastructure. It's going to take some, you know, some real talent to be able to execute on on a mission like that. What's your position on just the way a nonprofit should, should be structured or the way compensation should be handled? Should it be different then than the for-profit space? I'd love to get your thoughts on that just because I think this is a big challenge that we see today.

Evan Feinberg Yeah. Well, I think compensation philosophy is broken in most for-profit companies, and it's certainly broken in most nonprofit companies. So I'd love to unpack compensation philosophy quite a bit more, but let me broaden for a second. You know, the ideas around nonprofit management are so, so broken. They're just like the overall sector. You know, this idea that the amount you spend on administrative and overhead, is it all relevant to whether or not you create value for your customers, whether or not you're helping people to transform their lives? I mean, I don't know how you code your salaries at your organization, but you know, a lot of times somebody who codes is as overhead, quote-unquote is one of the most important people for the organization to achieve its vision and mission. It's just so silly that we would look at like a 10 percent or a 15 percent number and say, well, that means you're a good nonprofit or an efficient nonprofit. That's a measure of whether you're efficiently pushing out services at a low cost. But if we don't know what services to offer, if we're not learning, discovering how to create value for people, then that might make sense. But efficiency metrics like administrative overhead, they're nonsense. If you're trying to build a an entrepreneurial organization, all the you should care about is your total spend for the amount of value you create in the world, right? Your price per participant transformation, right? Price per success point. So I think all of that's really, really honestly, it's just stupid, and nonprofits should move away from it as quickly as possible. Another story for another day, or we can talk about it more later, I think we need fundamental disruption in measurement in the social sector, and we've got some ideas for what that could look like on management. I think that the problems that the groups that we work with are solving the problems that my team Stand Together Foundation is working on, they're the most important problems in America. People should be getting paid well to solve those problems. We should be recruiting top talent to go solve those problems. So to me, this idea that we need, that someone is a trade-off compensation or fulfillment or their career to come work at nonprofits is a devastating blow to our sector. We've got to reframe it. We have to be willing to pay talented people because when we pay talented people, they deliver better results for the people we serve, and that's the standard we should apply ourselves to. So compensation philosophy? This is, we're kind of peculiar in this regard. We pay people what they were worth, looking backward every year. We want a win-win relationship with every one of our employees every year. So what does that mean? Most companies try to pay their employees the least amount they have to to get the largest contribution. They're trying to profit off of each employee by bringing down their costs for their total contribution. We see it differently. If you pay people for their total contribution, you're going to get more contribution from them. And so every year we look blindly, we try to disregard what their base salary was and say, what would the market value their total contribution at? And we pay them that much. And if they made $50,000, but the market would have valued their contribution at $100,000 if the market knew what they were going to contribute. We pay a $100,000 a year, not being one 100% bonus on their salary. That might be a rare, not a lot of people are doubling up, necessarily, but that's the kind of thing that we would say, why would you not pay people what they're worth in terms of value and start rethinking comp. philosophy, management philosophy like that, you're likely to get a whole lot more value out of your team.

Justin Wheeler Yeah, I also think what directly correlates to, you know this conversation here is also, you know, I think there needs to be a whole conversation and there probably is somewhere around just impact philosophy. I think that so many nonprofits get stuck in this like annual cycle of how many people or products, or whatever like the impact stat is like, how many of those things did we achieve this year? Did we grow it this year? Whereas like when you're trying to break the cycle of poverty or, you know, in a case where organization, I'm pretty involved in Liberty In North Korea, when you're trying to support the people's freedom inside North Korea, this is a long term problem that's going to require a long term approach. And so when we get stuck on, like, when we get stuck on just the cycle of like yearly impact, I think that also can have a direct impact on what a budget looks like, right? And what I mean by that is if you're trying to achieve 30% growth in programs year over year, you're going to allocate resources to those programs to grow them versus if you're like, well, you know, in 10 years, we want to be at like 3000% growth. And in that case, you probably have to divert resources from programs and put it more to talent and infrastructure and so forth. So I think we also need to reframe the way an organization reports on the annual basis because it does take resources away from, you know, operational expenses that could actually produce, or have more of a yield from, in the long term.

Evan Feinberg Yeah, I think you're 100% right Justin. I mean, nonprofits are not the only sector that has to think about this. This is the age-old problem of privately versus publicly held companies. As soon as a company is publicly held, they're trying to nail their quarterly numbers even when they know their short-term value that they've got to deliver is at the expense of the long-term value that they're trying to create. You know, nonprofits are perpetually stuck in this cycle of trying to prove outputs to get more money, rather than define the value they're trying to create and set up a clear vision and bring along philanthropic partners that are excited about and buy into the same bet, the same risk profile, the same impact value metrics that the staff is aligned to. I can't tell you how many times I've talked to nonprofits who report a bunch of measures out to their donors, and I asked him the question, do you think those are the important metrics to run your business on? If you had infinite amounts of money, right, or you didn't have to worry about fundraising? Are those the metrics you'd use to run your business? And they say, no. And I'm like, well then, you are training your donors to care about the things that you don't care about and you're wasting all this time over here working with your donors on those metrics that then are just pulling your organization off of the things that you think actually matter to demonstrate those. I couldn't be more in agreement with your perspective on it. I also think that there's a bigger problem with sort of nonprofit measurement in general that they are sort of trying to comply with what the funders already want to pay for. So, you know, a lot of times a funder puts out an RFP essentially for nonprofits and nonprofits become they even call themselves agencies to go out and go chase that. Hey, I can deliver this value to you, donor or government bureaucrat who's got a program. Then they chase that value with their services, and they always say, If I just had this money, I can create this value. So if I can get this grant, that's not quite right, but I'll get the money in the door, then I'll build the staff, then I'll go create my value. And they never get around, actually creating the value. They get stuck in this endless loop of chasing government or foundation money unhelpfully. So we believe, and I think you've probably seen this over and over again in the fundraising space that nonprofits underestimate how if they just go create the value, how much easier it is to raise money from donors who all they ever wanted in life was a nonprofit that could go deliver that value and are so excited to fund stuff that's working.  

Justin Wheeler Yeah, absolutely. I mean, and there and there are definitely are some amazing organizations that, you know, these are organizations that are growing at unbelievable rates that really do focus on the value and the donors find them. The donors, you know, go to that flock to that. There's a huge audience of people wanting to give and if you can prove the value could show the value to your point, it's going to be so much easier, especially in the long run. Another challenge I see often is that nonprofits, and I think this impedes on innovation, nonprofits have a fear of failure, right? And especially because I think it comes from the sense of like we're taking donor money or promising we're going to deliver something and oftentimes in order to deliver that things are more conservative, maybe in sort of that approach they're taking to solve problems. Something you said earlier, which really resonated, is that you're trying to find individuals who are essentially going against the status quo, who are trying to find new solutions to problems. I imagine, you know, there are failures, a lot of failures, when you're trying to disrupt, when you're trying to create a new paradigm. So how does your team think about failures and how do you encourage organizations not to be afraid of failing fast or whatever it might be in your guys' case?

Evan Feinberg Yeah. Well, I mean, we try to lead by example by providing risk capital. So we generally speaking work with our nonprofits to develop a vision that requires them to understand what are they trying to learn in the world? What are they trying that is uncertain? And how are they growing their organization in a way that sort of systematically reducing that uncertainty in order to grow? They're not just experimenting for the heck of it, they're trying to systematically learn what should they do to be able to help a whole lot more people transform their lives in a whole lot more significant way. And so we try to lead by example by being willing to fund that. So we do good analysis, usually alongside them and if we know that we're investing in something that has a 30% chance of being successful, that's OK. We've all held hands and know that that means there's a 70% chance that it's not going to be successful. But what we try to do is bake into that, oK, so let's say the 70% happens, what will you learn in that experiment that will help the next dollars to go toward something that's no longer 30% chance of success, but 50% chance of success or 70% chance of success? Because a lot of times you learn more by trying things and failing than you ever could, by playing it safe or by trying to discover it in the boardroom of your organization, trying to study it and plan it out well enough. So we've had plenty of groups that we supported that tried to launch in a new market, and it didn't go that well. Launched a whole new program area that didn't work that well. You know, it happens often with us and we just, we have a better risk appetite than I think most funders do. So we try to lead by example. I don't know the long-term solution for the sector. I think the more innovators that experiment, learn and then ultimately grow, scale and deliver superior value, the more other funders will follow our lead and start placing growth capital risk bets rather than just funding sort of reliable outputs. If we just fund reliable outputs, we'll get a whole lot more of what we have today, which is 60 years of the war on poverty and similar efforts in foundations and philanthropic approaches. We're making poverty easier to endure, but harder to escape. Social mobility is on the decline. We've got a million and a half, literally a million and a half, human service, anti-poverty type, nonprofits in the country. We're spending $400 billion a year in private philanthropic capital, probably over a trillion dollars in public funding. Some people estimate those lower like to three hundred and eight hundred but depending how you count it. Either way, we're spending a lot of money and getting mediocre results. Our sector has never been bigger in terms of bloating. Total staff, right? Total number of people that are working in this industry. If we don't, we don't do something different. We're going to beat our heads against the wall and get more of the same.

Justin Wheeler When you think about the approach to our foundation is taking and investing in these disruptors across the country. And you know, with the goal of breaking the cycle of poverty, is there a time frame that you think about when trying to break this cycle? Is it more fluid? Is it something that we're going to be living with the rest of our lives, but it's going to get incrementally better, or, you know, from your guys' approach and perspective, is that breaking this cycle, does it have a definitive end date?

Evan Feinberg Yeah. So I'm a Christian, and Jesus taught us that the poor will always be with us. And I've really wrestled with that scripture because saying that the poor will always be with us does not mean that the same people will be in poverty, that they'll always be with us and that the same that somebody is kids because their parents were are poor will also be poor. So to me, to some extent, we'll never achieve the goal of, say, ending poverty. The definition of poverty is whether individuals are tapping into their gifts and talents to. Tribute. If that's the definition that we use, breaking the cycle of poverty means that we won't see the same people on the sidelines for their entire life and certainly intergenerationally. So there's no time horizon for me when we've achieved that, but I can tell you this right now, we're going the wrong direction as a country. Social mobility steadily throughout American history increased in percentage of people that were growing from poverty into middle-class or upper-class situations. The rate of social mobility is now on the decline for really the first time since we've been recording these types of statistics. And so there's something going on that's wrong now. The social scientist will impact that, right? It's very hard to understand social mobility when quality of life is improving for everyone. I get that. But in my opinion, we are. We are doing the wrong things if what we care about is breaking the cycle of poverty. We're spending more money and frankly, if your goal is to make people's suffering, go away, generally having a free market economy with a very healthy social safety net is a pretty good strategy. Right. People in poverty in America live much more comfortable lives than people in poverty, in other countries or throughout American history, for example. But that doesn't mean that doesn't matter. It matters to me. I care about people not suffering, but that's not really what we exist to do. We exist to make sure that people live to their full potential and living more comfortable lives. Isn't that? And so we want to do something different, and I don't have a time horizon. Sooner the better.

Justin Wheeler Yeah, that makes sense at Liberty In North Korea. You know, we actually have a similar sort of philosophy in that there's an aspect of our work where there is a need to alleviate like immediate suffering, right? And we look at that sort of it's like the human imperative to address this problem because we can we're well-positioned to do it. But if that was the only thing we were to focus on, we're not going to make any steps forward in terms of the goal of seeing, you know, liberty in North Korea. And instead it's, and we say the exact same thing, it's investing in the potential of the North Korean people, specifically those that are still living inside the country, those who are undermining the regime through free market activity and so forth. Them living up to their potential is what's the direct threat is to the North Korean regime. And so I love and couldn't agree more with what you're saying is by allowing by empowering people to really tap into their potential. It's hard to like, know what exactly the outcome is going to be from that, but it's going to be a lot better than if they, you know, it's going to be a lot better than living under a certain social condition or not being empowered to really achieve that thing that you're meant to do. So couldn't agree more with that, that sort of philosophy, and I really appreciate that perspective.

Evan Feinberg Yeah.

Justin Wheeler Well, my last question as we wrap up here, I can't believe been almost 40 minutes. I'd love to hear as we kind of get through 2021 and go into 2022 and beyond, what's something that you're excited about as a leader in the nonprofit space? What are you looking forward to or what are you excited to see come to fruition in the coming years ahead?

Evan Feinberg So I think there is an incredible opportunity. I mentioned this briefly earlier to disrupt measurement in the sector, and it's because of the power of technology today. So in other areas of the economy, we can really deeply understand the customer what they value, what would create value for them. And so the nonprofit sector, though, has not really leveraged this kind of understanding. So I'll give you an example. I went into the AT&T store the other day. I had a problem with my account. I wasn't going to buy a new phone and whatnot. I went in, I got the service I needed. I walk out and I got a text message on my phone. Scale of one to 10, how likely are you to recommend AT&T to a friend or family member? And I answer my question. The Net Promoter score question and the reason why they ask it is because they've done tons of research, tons of experimentation, and net promoter score is a very predictive metric for whether I'm going to buy an iPhone in a year when my iPhone plans up right from that AT&T store. And so it's just an example of what the customer service industry has discovered. Technology and customer focus has made that possible. I think this is possible in nonprofits. One of the things we're pioneering at Stand Together Foundation is a measurement methodology to truly understand the services that individuals in poverty demand and benefit from and to get feedback loops. For example, we're learning Net Promoter Score works for a lot of nonprofits, but like food banks get pretty good net promoter scores because you would recommend, hey,  if you're hungry, go to the food bank. They'll be able to serve you. But we've pioneered some transformation metrics. To what extent is this organization transformed your life for the better? And as people ask that question, we're separating out those nonprofits, food banks get terrible scores, whereas many of the groups we work with get off the charts, averaging 9 and 10 on a scale of 10. On how much is this organization transformed your life for the better? And to what extent do you feel empowered to break the barriers in your life and other questions like this that using technology we can get regular answers from people and then compare across sectors across different types of organizations, across similar organizations? So I'm really bullish on the idea of transforming the management practices of nonprofits through better measures because of the power of technology and customer focus.

Justin Wheeler It sounds like, and correct me if I'm wrong here, it sounds like it's more of a focus on the qualitative aspect of a service and program, as you mentioned. What's the value that you're getting versus what I think a lot of nonprofits could stock is on the quantitative side of what they're actually delivering. Is that is that fair to say? Or would you say it differently?

Evan Feinberg Well, I think both are important. And these are qualitative measures can be quite quantitative, and they also correlate to a lot of harder measures. So social sciences show us that subjective well-being scores, for example, correlate to lifetime income and earnings quite well. So obviously, there's a chicken or the egg, like is it the income that makes people happier and more satisfied with their life? Or is it the life satisfaction that drives income? But either way, if they correlate, we should be able to measure those things over time to be able to predict. So often, nonprofits are measuring by just sort of doing a snapshot of their graduation rates five years after they start working with somebody, but doesn't really help. You know whether you created value for that person last week, whether one case manager your organization is better than another case manager, whether certain types of customers value the specific programs of yours more than others, so you can tailor your offerings to customize to their unique needs and offer them what's most beneficial to them. So I think it's it's not so much quantitative versus qualitative. It's measures that you can capture in real-time. It might be that you learned that when the average person we work with gets three meaningful relationships out of our services, right, they make three friends. They do much better in life. So then you can track that measure. That, to me, is really valuable to run an organization and works a lot better than, you know, once every year checking in on your total graduation rates. Are we generally doing good or bad?

Justin Wheeler Yeah, I see that mix that makes a lot of sense. It sounds like we need to have a follow-up podcast here just on the measurement methodology because I do think this is an interesting challenge in the nonprofit space. There's obviously several different methodologies that are out there today, but just from what you're sharing, I think it would be really beneficial to kind of dig into it more in another podcast dedicated to it, because I think this is getting this right is really, I would say, is what allows an organization to be able to scale effectively regardless of how efficient, or effectively, is I think around this concept. So definitely one to dig in more with you on this methodology.

Evan Feinberg Yeah, looking forward to it.

Justin Wheeler Well, Evan, thank you so much for your time. It flew by today. But I do appreciate you jumping on and just sharing with us more about just your experience and leadership in the space. And that's going to be super impactful for our listeners. So thank you for joining the show today.

Evan Feinberg Yeah, so great to be with you.

Justin Wheeler Have a great one.

Evan Feinberg You, too.

Thanks for listening to this episode of Nonstop Nonprofit!

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