Kim Syman has lofty ideas about how New Profit, a social-impact funding organization that she helped get off the ground 20 years ago this week, can do better work. Much of it involves changing perceptions around the role of business in social enterprises, which can be a daunting task. Case in point: New Profit’s mission to finance nonprofits in an unconventional way — that is, with venture capital funding. But venture capital is usually designed to make the rich even richer, while social-innovation organizations tend to address systems of inequality and oppression — systems that can be exacerbated by those very same investments.
Yet Syman is a firm believer that the tools of business can and should be used to propel people toward social and financial stability. So when New Profit founder and CEO Vanessa Kirsch proposed the idea of the organization to her, as a way to bridge the gap between investments and impactful nonprofits, Syman jumped onboard.
Part of the problem is that investing for social good is still a relatively new idea. “Venture capital, as a concept, wasn’t known in the philanthropy world, especially 20 years ago,” says Syman, New Profit’s managing partner overseeing field leadership. She also helps with the nonprofit’s annual Gathering of Leaders, taking place this week in Boston. “The idea of venture capital for nonprofits still sounds kind of crazy for a lot of people.”
Syman’s ambitious goals include getting nonprofits to refocus how they deploy their funding. Syman worked in media before transitioning into a role at the education nonprofit City Year, so she knows firsthand how hard it is for fledgling social-impact companies to create capital (spoiler alert: it’s not easy).
“There was this mind-set that the best way [traditional funders and philanthropists] managed risk and made sure their dollars were well used was to support direct service provision instead of, say, building internal capacity to grow and achieve more impact,” Syman, a NationSwell Council member, says. “Overlooking the latter can be a huge barrier to success on the former, but capacity-building is still an under-leveraged and underfunded approach in philanthropy.”
Typically, nonprofits have relied on creating their own endowments — be it from fundraising or donors — that amass principal over a number of years and help finance the organization for the long term.
But even with endowments and other grants, there are often restrictions imposed by donors, such as only being able to spend the principal or only spending specific amounts on certain programs.
The problem with that, Syman says, is that the conventional wisdom where philanthropists double down on funding specific programs doesn’t help solve problems on a larger scale.
The reality New Profit found was that nonprofit organizations — just like their peers in the for-profit business world — needed to scale their brand and operations in order to be effective, but that requires lots of money, with fewer restrictions than what is typical with grants.
Besides challenging traditional funding models, Syman is focused on increasing diversity in the social-impact space. And she is doing this in part by formally recognizing her own organization’s lack of diversity.
“We saw that implicit biases come from within our sector and we needed to begin to tackle them, which meant holding a mirror up to ourselves and really asking the question of how much are we paying attention to this, each of us?” she tells NationSwell. “It’s clearly a work in progress on every level, but I will say that we have changed every aspect of how we work to prioritize diversity, equity and inclusion, and we’re working to make continued progress.”
To that end, New Profit is making a concerted effort to partner with organizations that are actively engaged in the communities they serve; they’re also taking into account gender and racial diversity with almost everything they do, says Syman.
But a lack of diversity is hardly unique to New Profit. Studies show that despite overwhelming representation of women in the nonprofit workspace — which bodes well for general gender equality — the majority of executives in those companies are white men, with minimal representation of black or Hispanic men and women in top roles.
Syman says there are ways to fix that, even for organizations that have little capital to invest in diversity action plans. One idea is to partner with other organizations to help provide mentorship on hiring or training — a concept inspired, in part, by a NationSwell Council event — or use firms that specialize in helping companies achieve more diversity.
Syman says her biggest lessons haven’t come from New Profit’s numerous challenges, but rather from the joy of the work she does, and from the connections she’s made with other people in the field. “It wasn’t a total surprise, but how deep and consistent those relationships have been with our [organizations] is the engine that really drives our work. It’s always a little bit surprising. But it’s always very real.”