Investment Shift

October 13, 2009 Leave a comment

I had dinner with one of my closest friends the other night, he has become extremely successful in the world of finance, but he is not your traditional investment banker.  He works for a relatively small boutique shop that specializes in buying (not selling!) other investment groups.  Now, I’m not one of those nonprofit consultants that think our sector should behave more like the business world – by now we all know where that gets us!  But I do think there are many lessons to be learned, especially from those who are successful in business by carving out their own rules.

When my friend is about to buy a firm their main focus is on the culture of that firm:

  • Is it a culture that successfully unlocks the talent and self-motivation of its people?
  • What is the leadership like and what do they really want?

Firms tend to enter this conversation with loads and loads of data about profits and outcomes only to be immediately stunned as my friend’s group tells them to put it all away.  The buyer wants to invest in the assets that matter most.

No one is naïve in this process, and of course the numbers matter, but my friend’s group will look at that with an independent eye, they will not rely on the firm to get the hard data they need.  Once they have identified alignment, they will become one of the least intrusive investors in the field – they will become authentic partners.  If the culture works, and leadership works, and both parties want the same thing, then my friend’s group will provide the financing for these firms to thrive in the field.  And of course, they all make profit.

What if more foundations worked this way?  What if outcomes were measured independently?  If your organization claims to have a name in your community, then let the foundation ask the community how true this is.  What if foundations invested in cultures that thrive – places that unlock the self-motivation of change agents?  Couldn’t your employees be independently interviewed?  What if funds went to leaders who are focused on their purpose and not on the next funding fad?  What if smaller foundations funded less groups? And became their authentic partners? And stuck with them for the long haul?  And realized their common dreams?

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  • Curtis says:

    This notion of channeling resources into organizations and efforts that unlock potential is great! There is another kind of waste out there that is not purely financial that entails the inefficient use of employees’ energy and the inability to free people up to take action. What if foundations accounted for this? Interesting question.

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