My first “career” was in Organisational Development in the Hi-Tech sector. This was during the latter part of the last century, the bubble had not yet burst and we were living the high life.

The high life, or Hi-Life as it may well be termed, included good food, great perks, and the freedom to fail. All of this was due to the fact that money was fairly easy to find.

The third sector has never been quite so easy a taskmaster – salaries have always been low, there are few perks (for some reason we are supposed to see the very fact that we work in the third, “social”, sector as a perk in and of itself), and there is absolutely no freedom to fail – if you do, something very bad happens to somebody for whom you are there to care.

So why bring up the past? What parallel could possibly exist?

The story goes like this:

Many hi-tech initiatives were spawned by extremely gifted techies. These genii did not have to go too far out of their way to find those blessed with wads of cash who were eager to lap up the vision of how said invention was to change the world as we know it, and, more to the point, looking to earn for themselves even larger wads of cash both to reinvest and to underwrite their own, overly extravagant, lifestyles. That many of these initiatives did not reach fruition was a risk they were willing to take, in light of the payoff to be expected from the few that did. Many became rich, others became richer. The entrepreneurs themselves were encouraged, if and when they failed, to take their lessons on to their next start-up, for which it would be even easier to raise capital. Wow, what a world it was!

… and then it wasn’t.

When the bubble bust, it was shocking – very fast, devastating to many, positively paradigm changing to all.

So what happened?

Without pretending to be an expert in macro-economics, it appears that some well-intentioned folk had bitten off a little bit more than they could chew, and the whole world choked.

There were a few underlying themes:

¦The techies were not business people
¦The VCs/angels/underwriters were not tech-literate
¦There were no rules to the game – a good idea alone could raise capital
¦There existed no history by which to gauge potential for success or failure
¦The techies were not asked to accept upon themselves standards of behaviour, and those who were willing did not know how or what
When the apparent risk overran the illusion that everything would turn out OK, the bubble burst.

Hi-tech did not die, innovation did not stop and VC funding is still very much available, and quite profitable for those who do it well – so what changed?

At the end of the day, all of the changes come down to spin-off effects of the fact that capital was much harder to come by.

¦Initially there were huge layoffs
¦Many unstable companies went under, mainly due to decisions made by their funders, not necessarily due to failure
¦Perks and benefits became much more modest
¦Start-up initiatives have to prove their case for investment, including projections of profit and impact
¦Mergers and acquisitions became a theme of growth and survival, as opposed to the flags of “independent” and “unique” flown by the techies of the ’90s
There are three major lessons that the industry had to learn to move on:

1.You do have a great initiative that could really bring about change, but you have to invest in how to manage the business of creating it as much as you invest in the creation itself
2.The days of deep pocketed funding for broad fields of interest are over – look for funders whose specific fields of interest are satisfied by your activities. Look closer to home.
3.Invest much more effort in bringing in, and showing appreciation for, smaller amounts of capital, and leverage them wisely.
Like it or not, we in the third sector are funded through many of the same channels. When they succeed, we have it good; when they suffer, so do we. When their paradigms change, ours eventually have to adapt.

For many years, though on a smaller scale, our sector has adopted certain underlying themes:

¦The social entrepreneurs were not literate in the business of operation
¦The donors and funders were not SROI-literate
¦There were no rules to the game – a good idea alone could raise funds
¦There existed no history by which to gauge potential for success or failure
¦The social activists were not asked to accept upon themselves standards of behaviour, and those who were willing did not know how or what
2008 was a major blow. The bottom falling out of the market, the shock and horror of the Ponsi scheme(s) that came to light, etc, etc. We tried to fight it, then we went into shock, then we had all sorts of gut reactions, and now we are starting to ask smart questions and to open our eyes as the smoke seems to be starting to clear.

Apparently, our paradigm has had to change.

Pre-2008, or to be more exact pre-5769, I remember looking at a capital campaign that I was leading for an astronomical amount of money, and being concerned about what I was going to do when it had all been raised. I gave it about 3-5 years, and then I would have to look for something else to do. Well, over the space of one week, we saw the world fall apart.

I cannot compare it to a tsunami, earthquake or volcanic eruption, but I did see the value of an eight-figure gift (many tens of millions of dollars, at 4.65 Shekels to the $!), and the benefactor who had pledged it pre-Rosh HaShana, disintegrate in front of my eyes. The man was not to be pitied, indeed he is well back on his feet again, but the gift disappeared – never to return…. and by the way, so have the CEO, the project, and the campaign.

Three years on, our professional conversation has grown beyond the scaremongering, mostly. We now find ourselves in a new reality that is quite shockingly similar to that of early 21st century Hi-tech:

¦Jobs have been cut
¦NGOs have closed or downsized
¦Start-up initiatives have to work that much harder to get themselves off the ground
¦Merging, or at least cooperation, is a necessary tactic
You may notice that I left out perks and benefits – they never really existed in the first place. In fact, the very nature of the third sector, and the double standard by which we are judged, is not only unfair, it is both unrealistic and counter-productive.

I do agree with many of the points made by Dr. Elana Maryles Sztokman in her recent submission to eJP, The Challenge of Fundraising in Israel, but I do not subscribe to her apparent pessimism.
She is correct, Israel does not have a developed culture of philanthropy.
She is correct, we have relied upon US funding for too many programs for too long.
She is correct, the Israeli third sector and its organisations are not having an easy time at all.

I do feel that we should be working to promote a culture of philanthropy in Israel. I would offer, as a suggestion, the article I submitted to eJP a couple of weeks ago – So Long and Thanks for All the Fish: a Suggestion for Israeli Philanthropy.
I do feel that we should promote cooperation between groups with similar aims and activities.
I do feel that we should use assessment and measurement as tools.
I do feel that we should talk more about double bottom lines and SROI, and bring those terms into the lexicon of everyday conversation.

I do feel that we should learn three major lessons, so that our industry can move on:

1.You do have a great initiative that could really bring about change, but you have to invest in how to manage the business of creating it as much as you invest in the creation itself.
2.The days of deep pocketed funding for broad fields of interest are over – look for funders with whose specific fields of interest are satisfied by your activities. Look closer to home.
3.Invest much more effort in bringing in, and showing appreciation for, smaller amounts of capital, and leverage them wisely.
Sound familiar?

http://ejewishphilanthropy.com/the-time-has-come-get-over-it-learn-the-lessons-and-move-on/