When Did Scarcity Become a Virtue?

Welcome to Proof of Impact. In this debut episode, host Elizabeth Kitzenberg lays out the case for why this show exists, and why the nonprofit sector is overdue for a different kind of conversation.

After 20 years working alongside cancer researchers, philanthropists, and nonprofit leaders, Elizabeth has watched brilliant people do world-changing work while being trained to make it sound smaller than it is. This episode is her thesis: that the sector has institutionalized scarcity, mistaken martyrdom for mission, and taught its best leaders to apologize for ambition and that it doesn't have to be this way.

In this episode:

• The fundraising legend who banned the word "charity" from her office and why
• The Harvard philanthropist's "loaded rifle" rule that changed how Elizabeth thinks about the big ask
• Why "donors are just generous" is the most damaging myth in the sector
• The Silicon Valley contrast: when a pitch deck raises $50M, and a working pilot can't get $500K
• A preview of the Minnesota leaders joining the season, including Steve Grove (Star Tribune), Maggie Emery (Protect Minnesota), Matthew Ayers (Joyce Uptown Foodshelf), and Steph March (Salt Cure Fund)

This is a show about nonprofit leaders who are done apologizing, done shrinking the ask, and done treating scarcity like a virtue.

🎙️ Recorded at Picnic Linden Hills in southwest Minneapolis.

Transcript

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SPEAKER_00 0:08

Nonprofits underpay their staff, undercharge for their services, and apologize for their ambition. I've spent 20 years inside leading fundraising shops like Harvard and Dana Farber. This show exists to highlight the essential work driven by the nonprofit sector and why those leaders shouldn't be so apologetic. I'm E Kitzenberg. Welcome to Proof of Impact. So why am I starting a podcast? Feels like everybody has a podcast these days. But I've spent 20 years in the nonprofit sector, and when I go to look for a resource or to listen to something interesting about nonprofits, it's terrible. The existing podcasts are academic, they're boring, they're low production, they're selling a tech product. But more importantly, they just are doing a great disservice to the amazing work that's taking place in nonprofits. And as someone who really loves celebrating the work of nonprofit leaders and raising money for it, it drives me crazy that nonprofit leaders apologize for the great work that they're trying to accomplish. And so I'm launching proof of impact because I want to have real conversations that are honest and draw out what it takes to do excellent work, what it truly costs to build something that lasts beyond a founder and why that work is worthy of investment, just like other things you spend your money on are worthy of your investment. So I'm gonna have some great guests on. We're focusing season one on Minnesota-based nonprofits, gonna just have fun chatting with people about what makes their work high impact and how they think about demonstrating that value in a world that has taught them that they should apologize for it, that they should make it smaller, that they should make it more palatable. And I just think that that's wrong. And so I'm going to draw out those conversations and I hope reframe how leaders talk about what they do and why it's of value. So the bulk of my career, I worked at Dana Farber Cancer Institute based in Boston, and had the pleasure of working with amazing physician scientists that were curing diseases and really extending the lifespan for people that got diagnosed that 20 years ago were a death sentence, and now you can live with immune therapies for another 20 plus years. One of the most amazing parts of my time at Dana Farbor was having the opportunity to train in the shop of Sue Perez. So Sue is a living legend. She's, I hope, out in Palm Springs golfing today, but she taught everyone in her shop something really important, and that is that words matter in fundraising. Sue hated the word donation. She hated the word charity, and she wouldn't let us use it in any writing, and it was forbidden in any sort of donor conversation. And the reason why she was so adamant about this, and it stuck with me for so long, is because Sue really understood what that word charity did. It takes the air out of a room, it puts one person in a position of giving a handout to another person. And there's an inequity that is created from the initial positioning of the relationship. And that's not how Sue felt about the work that we all represented in her shop. She was proud to be a part of the amazing cancer research that was happening. And she wanted to instill in us the same pride and confidence that when we talk to people about what it takes to conduct a clinical trial, why you should invest in early stage basic science research, that you will never see the fruits of that labor in your lifetime, but it'll give way to a whole class of drugs 30 years later, that we should not shy away from that. And we shouldn't treat it as if it was a handout. We were representing the best people in the world, including Nobel Prize winners, and what they needed to accomplish their work and how much it would cost. There's nothing charitable about that. They're not looking for a donation. And what really stuck with me about that experience is that people that are sophisticated philanthropists or new philanthropists for that matter, are looking for a partner. They want to fund excellence. They've been successful in whatever their line of work is, but they don't have the tools to solve the problem that they're trying to solve, in this case, a disease. And I've taken that with me throughout the rest of my career. It's so hard for me to sit on the sidelines and watch nonprofit leaders who are trying to raise money for the work that they want to do just undersell what it actually takes to do the work or not ask for the full amount of money that they need to actually do the work effectively. So that's part of why proof of impact exists is to continue that training that Sue instilled in me of being proud of the work that you represent, sharing its value, talking about the importance of it and how it fits into the bigger picture. Sex and religion are out of scope, but not off-limits if we want to talk about them on proof of impact. But we are absolutely going to talk about money. That's the whole point of this show thinking about how nonprofits do a better job of fundraising and generating support for what they do. But the politics piece is tricky because we're at a really interesting moment of recalibration in America, in society, in the world. In scope for this podcast, we're in a moment of recalibration of who pays for what. Nonprofits are a huge part of the U.S. economy. They bring in almost a trillion dollars in revenue every year. And there have historically been some norms, uh, some agreement across party lines around what we paid for, what we considered a public good, what came from tax dollars. A lot of that is just been turned upside down in the last few years. And I'll give a specific example. Funding for science, this has been generally agreed upon as a good thing to do. And I'm not going to spend my time debating with myself on whether or not that's a good thing or not. I'm sure you have your own opinion on it. But what I want to articulate is that we're in a moment of intense recalibration. There was, I think, $1.4 billion that typically flows through the government into scientific grants that just stopped last year. We won't know the impact of that for a long time, but it is extremely, extremely disruptive. And is philanthropy gonna fill the gap? Are billionaires gonna swoop in and do something about it? Are fundraising shops going to have a 10% incremental increase because of these cuts? All those things are possible. And it's not just science. You can look at how public media is funded. Huge sweeping cuts, over a billion dollars, that gutted the corporation for public broadcasting and effectively ended what MPR's operating model had been for I don't know how many years uh they've been in existence. But also, MPR just received the largest gift in their history and brought in over $100 million this year from an anonymous donor and Connie and Steve Ballmer, one of the Microsoft co-founders. So there's an intense recalibration, and there's a few different things that are competing. And the reason why I bring all of this up is that nonprofit ecosystems are complicated, and nonprofit leaders have to manage a lot of different things at once at a baseline, but especially right now. You have the intersection of what private individuals choose to pay for, the for-profit sector. You have what the government has historically paid for, which is still up for debate. Is healthcare a public good or is healthcare a service? There's not national consensus on that. And nonprofits have smoothed the gaps and filled the edges of a lot of these areas of disagreement. We've seen Twin Cities nonprofits step up to fill these gaps. So with Operation Metro Surge, there was so much disruption in the city. And later this season, we're gonna have the chance to hear from Matthew Ayers, who runs the Joyce Uptown Food Shelf that became a hub for food distribution for people that could not leave their homes safely this winter. We're gonna talk with Steph March about the Salt Cure Fund and what she and her crew did to stand up this completely new organization in response to the disruption for small businesses and restaurants with Operation MetroSearch. We're gonna talk to Maggie Emory, who is a dynamo and the executive director of Protect Minnesota, which is one of the state's most important advocacy advocacy organizations fighting for common sense gun laws and how she navigated the days and weeks after the shooting at Annunciation here in South Minneapolis. One of the things that I want to make sure that we tackle in Proof of Impact is that nonprofit leaders are navigating such a complicated ecosystem all at once. So you've got the changing political landscape. You have these unprecedented, or we like to think of them as unprecedented, things that happen like ICE occupying the city. And nonprofits have to spin on a dime to be able to respond to those needs. And they're also doing it while managing their board, managing cash flow, managing HR. And it's a lot. So when I say, you know, nonprofits apologize for their ambition, I believe that. And that's going to be one of the core things we explore through Proof of Impact. But I don't want to put the blame on nonprofit leaders alone to carry that burden because I think a lot of it is structural. It's structural in how we treat nonprofits and we think about how their work fits into the bigger economy and what that means. You know, you have people that don't agree with the goal of your organization if you're representing common sense gun laws or you're representing a food shelf. You have people believe that that should be a government service, or you have people that believe that should not be a government service or isn't important to fund. So you're navigating an area where not everyone agrees with you, and you still need to get the work funded and to be a passionate advocate for it and to keep the lights on every day. So we're gonna talk about how nonprofit leaders balance all of that and how they can continue to do it with the confidence that will enable them to keep doing the work. And it's made scarcity a virtue. You know, there's all of this pride in what's your overhead ratio, and how little do you pay your staff, and how lean are you? As if salary suppression is some sort of proof of commitment. And it drives me crazy. And the sector continues to perpetuate it because you know it gets built into grant proposals. You have dollars that are restricted to a program, but don't pay for the people running it. And it's it's so frustrating because this mindset of scarcity then impacts everything you do. You can't build a high-impact program if you don't have the resources to do it. But if you don't ask for the resources and secure the funds to actually accomplish your work, you're not going to be able to deliver what you said you were going to do. And it's this vicious cycle. I feel like abundance mindset has kind of been co-opted by the self-help folks. But in the context of nonprofits, I really think about it as a financial strategy. And early in my career at Harvard, I had the opportunity to sit in a room with a very committed philanthropist. And he made this analogy that stuck with me now, what, almost 20 years later. And he said, Hunting for a rare, large donor is like hunting for a rare, large rhino. It helps to be holding a loaded rifle when the critter shows up. I think he actually said when the bastard shows up, but I wrote it, I wrote it down as critter. But he wasn't being crass, he was being honest about something that people don't really say out loud or plan for in philanthropy. And that is you have to be ready for the big one. You have to plan and articulate your vision and your mission and your goals in a way that when you have a chance to pitch that $10 million idea, you're holding a loaded gun instead of a BB gun. And I want to use this show and proof of impact to draw that out of nonprofit leaders here in the Twin Cities because I think that there is so much room to unlearn the language and the day-to-day minutiae that bogs you down and help everyone pick their head up and share what's the vision, what's the big idea? How is this going to change the world? How is this going to change one person's life? And why is it worthy of your $100,000? Why is it worthy of your thousand dollars? And why is this work important? So there's a contrast that I keep coming back to. And I've been reading all of the news about how Sam Altman is maybe a sociopath and how he, you know, can can sell an idea. But I bring that up because in Silicon Valley, you have, you know, someone with an idea that has a pitch deck and all the confidence in the world, and it's gonna be the next unicorn and it's gonna get billions of dollars, well, maybe millions to start, in funding. And there's nothing. It's smoke and mirrors, it's an idea, it's a deck, and that gets funded. Meanwhile, you have uh accomplished nonprofit leaders who have already built a pilot program. They have 10 sites that they have data on, that they have impact measures. But when you ask them, when is this launching? What do you need for it? They aren't ready to talk about it because, well, there's 10 more sites that we're gonna launch this year. And there's this apologetic posture of unless it's totally built, you can't talk about it, you can't sell it. And that's something that we need to change because to bring in the dollars that it takes to do this work, we we need a little bit of that Silicon Valley confidence. Maybe not all the way to the point of selling something that doesn't exist, but articulating what is the plan? What is the roadmap? Who are the talented individuals that are going to be doing this work that are better positioned to do it than anyone else? That posture shift, if we can just turn the ship five degrees, would make a huge difference. And that's part of what I would like to accomplish this season. So, one of the things I'm gonna do is ask every guest on Proof of Impact what is a myth that you would like to bust? And it needs to be at least loosely related to the topic at hand. But I'm gonna share some of mine. You could maybe also call them pet peeves. The first one is that nonprofits are inefficient by nature. This frustrates me because the nonprofit status is part of the tax code. It's a it's a tax designation that comes down from the IRS that, you know, just tells you, okay, you are operating and any revenues or surplus revenues you receive need to be reinvested into the organization, into the mission-driven work and not distributed to shareholders. That's that's the most important distinction. But as nonprofits have embraced this idea of that tax designation, people almost understand it as it means you're not profitable. That's not always true. There are plenty of nonprofits that generate profits. There are plenty of mission-driven organizations that generate profits. Think about hospitals. They can have a year in the black, they just are legally obligated to reinvest those revenues into the mission, into the research, into their facilities rather than distribute it to shareholders. But there's this myth that just because you're a nonprofit, you are not capable of generating a profit or managing a balance sheet well. And that's a myth that I'm going to blow up during the season of Proof of Impact. So, one of my other myths or things I hate is the idea that people give just because they're generous, that philanthropists are parting with their money because it's out of the goodness of their hearts. And while that's certainly true, it's just the tip of the iceberg. People give away their money for a lot of different reasons, because it's part of their faith, because they want to have a legacy, grief, fear. There's lots of motivations. And as a nonprofit leader and as a fundraiser, I don't really think it's our job to try and change those motivations. They're deeply personal, and there's not really a lot you're gonna do to move the needle, anyways, to be honest. Um, but what is our job, and I think we as a sector do very poorly, is shh is give people the tools that they need to evaluate why your work and your organization is so excellent that it is worthy of that support. And that for someone who is trying to solve a problem and can't do it on their own, why you are best positioned to be their partner in doing that work and why you are excellent at delivering on what you do. So that's something I really want to explore is how do we do a better job of treating people not as generous benefactors, but as peers and as partners in the work we seek to accomplish and believe is important. So, what to expect? Um, for this season of Proof of Impact, I Get a sit down with 10 different leaders of organizations across the state of Minnesota. Um, you'll get to hear directly from executive directors, CEOs, and board members about the organizations that they lead and what gets them out of bed in the morning to continue coming back to this work, which is hard. One of the guests that will be joining us is Steve Grove, the CEO of the Star Tribune, who just won another Pulitzer Prize this week. And this is gonna be an interesting conversation because the Star Tribune is actually a for-profit. Historically, newspapers made a lot of money, and that is not the case anymore. And we are in a period of intense media shakeup and polarization and politicalization. And the Star Tribune actually spun off a nonprofit arm last year to be able to take in philanthropic gifts. And so that's an example of the type of conversation we're gonna have. Sitting down with Steve and understanding what is the business model for local news today? Why does it matter? And why is it worthy of support when historically this has been something that people have just paid for? And that was the business model. So we're gonna have guests on to explore some of those topics and really to dig into this idea of when did we decide that scarcity was the same as virtue? When did we decide that apologizing for ambition was a good idea? And I hope through the course of this season we will have some fun conversations, some interesting conversations, and ultimately reshape how we think about the role of philanthropy, reshape how we talk about the value of this work that's such an essential part of our state and our economy and how we respond to unprecedented events that impact our communities. So thanks for listening this far. I'm E. Kitzenberg. This is Proof of Impact. See you soon.

SPEAKER_01 24:47

Or you can contact her. The best email is e at the Kitzenberg Group.com. Kitzenberg, by the way, is spelled K-I-T-Z-E-N-B-E-R-G. She also owns a restaurant with her husband in the Linden Hills neighborhood of Minneapolis. It's called Picnic, and I highly recommend it. It has an upscale neighborhood bar vibe. Great place to get a drink and catch up with friends. They also have an iconic hot dog. Thanks for listening, and we'll see you again soon.