Innovation for a Stronger Community: Third Sector Conference Review

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A review of the Third Sector Conference on Aug 18-19th, 2016 Sydney Australia

By Steve Ward, Socialsuite

The Third Sector Expo conference entitled “Innovation for a Stronger Community” was one of the best conferences I have attended for a long while. The conference had a star-studded line-up of sector experts with a sprinkling of young, tech-savvy innovators, all with varying views on what innovation means to them. This ranged from innovative new programs, to simply improving BAU through technology, collaboration, research or just thinking differently to how we do things today.

There was an underlying theme throughout the conference summed up by Carolyn Curtis’ quote in the opening keynote, that we must “innovate for outcomes” and make “decisions based on evidence”. Carolyn’s inspiring presentation encouraged collaboration and co-design with key stakeholders, particularly designing programs with program beneficiaries.

Gonski Turnbull interview

Mr Gonski and Mrs Turnbull via @thirdsectormag

The common “start-up” mantra of fail and fail quickly, was mentioned by Carolyn and a number of presenters who followed, including Sebastian Eckersley- Maslin from start-up incubator Blue Chilli. Sebastian’s three behaviours used at Blue Chilli to embed a culture and process of innovation were cited as:

  1. “tolerance of failure”,
  2. “empowerment of people” and
  3. “speed of execution”.

He spoke of Leadership versus Management. “A manager does what is right – a Leader does the right thing”.

To have the courage to try and fail is not an easy thing, but in the current world of increased competition, and increased expectations from the government and other funders demanding better outcomes and measurement of said outcomes, there is little choice but to try.

To mitigate the risks associated with failure, common advice was to spend time up front doing research and design, to collect and review evidence frequently – to show whether you are on track and your assumptions are valid – and trial your programs in limited pilots. Be agile and pivot where evidence suggests your outcomes are not what you expected.

Agile, Pivot, Minimum Viable Proposition, Fail Quickly – these are all common terms in Silicon Valley and the start-up world. They may have been new for many attendees at this conference but one gets the sense that momentum is growing for the sector to adopt these approaches to innovation as needs dictate. Further momentum comes from the bright young Gen-Y and Millennial’s who spoke at the conference such as Sebastian, Elliot Costello and Creel Price, ply their trade with passion to the sector.

Creel’s three question approach when executing a strategy to innovate is reasonably simple:

  1. “why me”,
  2. “why this”,
  3. “why now”.

Tim Costello and his son Elliot shared a fire side chat juxtaposing the behemoth that is World Vision to Elliot’s YGAP that he founded a number of years ago. YGAP provides seed capital, mentoring and capacity building for start-up social enterprises in third world countries. It was a very interesting revelation from Elliot on how the youth of today want to not just contribute dollars but roll their sleeves up, have a crack and back themselves to make a difference and seed opportunities where no one else will. As Tim pointed out, it is really difficult for large established charities to take risks. They have more to lose from reputational, and other, risks and are not as culturally predisposed to do so. Tim referred to this as the Golden Cage. You are seated inside this beautiful golden cage but are trapped.

Jono Nicholas from ReachOut, whose core business is (and has been) digital for 20 years, gets technology and innovation however, he acknowledges the challenges to get approval to revamp and change their platform. He suggests there is an opportunity cost in not changing and there needs to be an upside for management to take that risk in investing for innovation. A simple question from Jono– “is change and hence innovation a requirement to meet my mission”? If the answer is yes, then there is no alternative – courage is required to change.

Creel, Natlie and Jono

Creel, Natlie and Jono via @thirdsectormag

The theme of being disrupted and needing to innovate was common. We even had Victor Dominello, the Baird government’s Minister for Innovation wanting for government to be disrupted. The Honourable Member was very engaging, supportive of the sector, talking up initiatives to remove red tape and have collaboration across all levels of government to enable a frictionless environment to foster innovation. In his words, it is up to the sector to run the race, but the government does not want to get in the way of you getting to the starting line.

Mr Dominello makes the point that there is access to lots of data and it is growing. Data enables better outcomes and the ability to measure outcomes. In NSW they are becoming increasingly more granular with data and can better measure government spend. The top 20 charities receive 40% of the spend, so by influencing their behaviours through evidence based outcomes, the government can drive change. Mr Dominello wants Not for Profits to innovate and thrive and wants government to be disrupted.

A salient warning from Mr Dominello was that the two things the sector is crying out for is larger grants and longer contracts. His belief is the best way to do this is to innovate and show the government evidence based outcomes, and to give them the confidence to commit larger for longer.

The flip side of the coin to innovation and growth can often be risk, compliance and governance. Having come from a finance background I have witnessed how the lack of compliance and governance around so called financial innovation led to the Global Financial Crisis. Regulatory response to that crisis is still being felt and will continue to tighten for some time to come. The lesson is to remain true to your values, embed a strong risk and compliance culture, but don’t be afraid to innovate. An early session on Day 1 was a panel discussion on governance, including John Brogden (AICD), Susan Pascoe (ACNC) and Graham Bradley, an experienced board member of large ASX 200 corporations and NGO’s. Their consensus view was that governance is “not the enemy of innovation” and should not be seen to be so in any organisation, especially Not for Profit’s.

Susan Pascoe (ACNC)

Susan Pascoe via @thirdsectormag

Some takeaways from this panel were, “stay on mission”; “be careful of accepting funder dollars with expectations that may take you outside your mission / purpose”; “regularly measure and check in on your service delivery – are outcomes as expected – mitigate risk by shorter evaluation cycles”.

An interesting session was presented by Omer Stoker on innovation, with some real world examples, mostly in the association sector. He included some nuggets of advice “start small, invest comfortably, know when to stop”. Like a few other speakers, he advocates collaboration where you don’t have resources, capital or capability. He shared a traditional African quote – “If you want to go fast, go alone. If you want to go far, go together”. Omer counselled about maintaining a traditional mindset. This is one of the biggest threats to organisations today. Remember, Kodak invented the digital camera. They saw what was coming, but did not and could not take the risk in disrupting themselves. Beware senior management who cannot change from the traditional mindset.

Another prevailing theme was that the 3rd sector has the people and creativity to be massively innovative, not just in changing the way services are delivered, but the way communities and governments think about social issues. David Crosbie passionately talked about how the CCA is helping to frame conversations around the “Australia we want”. Beyond just the economic imperative but the social, ethical, environmental and community needs and values we yearn for. It is time for the sector to advocate collectively for this Australia!

As an example of where a change to traditional thinking and innovative approaches are required, David highlighted the disparity between European and Australian incarceration and recidivism rates. Australia has more than double! Not to mention the shocking and unforgivable rates within the indigenous community.

The conference demonstrated a couple of examples of impact measurement at work. Lisa O’Brien (The Smith Family) proudly showed four years of impact measurement and how their data has helped them continuously innovate and develop programs. In fact, The Smith Family is probably one of the best examples of “pivoting for success” at scale in the Australian charitable sector. The pivot to a provider of education (for early childhood up to teenagers) 20 years ago was a remarkable transition from its early beginnings. The outcomes from educating disadvantaged children, rather than just providing help, has been game changing.

Another example of measuring impact was the Westpac Bicentennial 100 annual scholarships. Although in its very early stages (months), the scholarship program has funding for 100 years. The exciting idea of 10,000 like-minded and incredibly bright alumni collaborating is mouth-watering. The intention from the outset is to track and measure this experiment and the associated outcomes on an ongoing basis.

All these programs can be measured by collecting data after careful consideration of what data will provide a suitable measure, or proxy measure, for the outcomes achieved. As pointed out by many over the two days, we will increasingly gain access to more and more data. Government data is becoming more available. Natalie Walker, Founder of Inside Policy, advised to voraciously ingest this available data to improve program design and pitch better to funders.

Ms Walker provided examples of how to understand what outcomes funders require. In some cases these will be explicit but, in others, you may need to do some work to really understand what the funders are looking for from your program. If you can do this, capture data to evidence the outcomes of your programs, and present this back to government or other funders, it is likely funding will continue and even grow.

This was iterated by Greg Sams of the Royal Flying Doctor Service, who spoke about brand management but mentioned that by continually delivering what the community needs, and what governments want, funding will continue.

There was a greater reference to impact investing on day two. Lynn Kraus from EY was talked about how to better engage with corporate Australia and discussed shared value and how NGO’s might look for programs that align naturally with corporate partners where both organisations gain value. She also touched on impact investing, such as the Murray Darling Balanced Water Fund, and how that aimed to achieve environmental improvements and water access for irrigators, whilst providing a return to investors.

David Crosbie

David Crosbie via @thirdsectormag

A panel, chaired by Jessica Roth from the Social Impact Hub and Blue River, discussed impact investing. Kristy Muir from CSI defined impact investing as:

  1. “intention to provide a social outcome”,
  2. “provides a social and financial return”, and
  3. ” has a way to measure it”.

This is distinct from social finance or social investment, neither of which have an intent to measure a social return.

Sally Cowling gave an overview of the first Social Benefit Bond in Australia that funded the Newpin out of home care program. The bond has been overwhelmingly successful, enabling 130 kids to be placed back into their homes and providing investors with a 12% return. The issue was 4 times oversubscribed. Sally suggested that the trend in moving away from grant funding to outcomes based funding can only lead to innovation.

It was acknowledged by Kristy and Sally that SBB’s are not the best structure to fund most programs. They can be complex and difficult to implement. Kristy provided some advice to follow when reviewing SSB’s:

  1. Purpose – What is the purpose of the program?
  2. Fit – Is it a good fit? – would SBB be the best approach? What outcomes are you targeting and can they be measured to the satisfaction of you and the government?
  3. Readiness – Do you have the capability to arrange and structure the SBB? If not can you engage an intermediary such as Social Ventures Australia and if so at what costs?
  4. Risk – what can go wrong? What happens if it doesn’t deliver on outcomes to the program and your organisation’s reputation?

Jessica Roth mentioned that NAB and now Philanthropy Australia have provided funds (separately) to assist organisations in getting ready for impact investments. These two funds will support organisations in preparing for impact investment by funding expertise to assist in the process. Jessica also mentioned the NSW Government has an “Expert Advice Exchange”, where professional services organisations are listed.

Danny Almagor from Small Giants provided a few pointers to NGO’s or social enterprises seeking funding: Give a simple pitch and keep to the point. Funder’s hear 100’s of pitches and don’t want the detail in the first instance. They look for purpose and passion.

There were a few other sessions that provided great insights into marketing innovation. A couple of points in that panel included: “be audacious with your ideas as they will always seem much bigger to you than your audience” and “don’t use technology for technology sake”

Good2Give and the Lord Mayors Foundation provided some thoughts on funding from such organisations. Interestingly, The Lord Mayors Foundation which has $220M corpus and gifts $10M p.a. is becoming more innovative in the way they fund organisations. They are increasingly tapping into the corpus fund to provide debt and equity capital to seed social enterprises. They see this corpus as having huge leverage for such funding. Catherine Brown, CEO, fittingly said, “Foundations are the powerhouses of creative thinking for modern society” which ties in nicely with David Crosbie’s movement at CCA around the sector actively creating the Australia we want. With the 3rd sector employing 1.1M people and having income of $122B or 8% of GDP, it is a significant voice that should speak and be heard.

Lucy Perry

Lucy Perry via @thirdsectormag

Lisa Grinham at Good2Give gave some examples of where corporate funders are looking for more innovative ways to create shared value and to engage their employees. If charities can come up with some of these ideas, it may help with funding programs.

The conference held a couple of lighter, more entertaining sessions. Lucy Perry shared her trials, tribulations, and innovative approached to fundraising and organisational change – often through sheer self-belief and determination. A character with bright crimson hair who surprised and delighted with anecdotes of her journey. During the Olympic week, her Brazilian story was quite topical.

Gonski - Lucy Turnbull Photo

Mr Gonski and Mrs Turnbull via @thirdsectormag

Finally, the celebrities of the event were David Gonski and Lucy Turnbull. Mr Gonski interviewed Mrs Turnbull on the topics of her work with Not for Profits at the board level and the ones she currently supports. It was an entertaining interview done with a touch of Gonski humour. He did not ask Mrs Turnbull “did she give a Gonski”? but somehow stumbled onto the topic of sleeping with Brad Pitt, which the first lady respectfully dodged. As you would!

In summary, the topic of innovation was covered from many angles. Innovation in service delivery and how we can be more agile in developing and pivoting through the use of data and measurement. Innovation in the way programs are funded, through providing better evidenced based information to funders, and an increased willingness from funders to provide capital via debt / equity from corpus funds or through innovative structures such as Social Benefit Bonds. And perhaps just as important – innovation in the way we collectively advocate as a sector and push for the Australia we want.

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