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Lean Impact by Eric Ries, Ann Mei Chang

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Chapter TwelveA Message to Funders

Much of this book has served as a guide for social entrepreneurs, whether at nonprofits, social enterprises, hybrid companies, or corporations. Yet its lessons are equally, if not more, important for the foundations, philanthropists, government agencies, impact investors, corporate social responsibility (CSR) departments, and individual donors who fund them. As described in the first part of Chapter Eleven, perverse funding incentives and restrictions represent the single greatest barrier to the adoption of lean approaches to innovation. Our means are impeding our ends.

We need nothing short of a revolution in how social good is funded. Nicola Galombik, an executive director at investment group Yellowwoods, describes a puzzling disassociation in which the same people are “chasing elephants in the private sector and chasing mice in the social sector.” Rather than adopting an investor’s mindset to take calculated risks in pursuit of growth and impact, philanthropic investments tend to be risk averse and prefer to deploy well‐known interventions over and over again. Alas, most are subscale and do not fully address root causes.

Funders can help achieve radically greater social good by empowering entrepreneurs, nurturing ambition, and approaching their work with a dose of humility. Empowerment requires shifting the frame from implementing a predefined plan to betting on a team and outcome. Ambition engenders a restless will to seek better solutions ...

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