Will Bachman: Our guest today is Esther Kim, an independent consultant based in San Francisco, who focuses on serving clients in the social sector, including nonprofits, philanthropies, and social enterprises. After getting her masters degree in environmental engineering from MIT, Esther got her start in consulting at McKinsey, where she worked with energy, industrial, and nonprofit clients. She then spend nine years at REDF, a venture philanthropy firm based in San Francisco. In 2014, Esther set up her own consulting practice, focusing on the social sector.
In our discussion we talk about the similarities and differences between serving for profit and not for profit clients. We discuss what it takes to transition into the social sector. The difference between vocabulary between the for profit sector and the not for profit sector, and how Esther tweaks frameworks such as the business model canvas to apply them in her work. She also shares an inspiring story of a social enterprise that she helped to establish. A staffing agency that has helped hundreds of formerly homeless individuals find stable jobs.
You can find Esther online at EstherKimConsulting.com. That’s E-S-T-H-E-R-K-I-M consulting.com. I had a great time in our conversation, and I hope you enjoy it as well.
Esther, I am so excited to have you on the show today. We’ve known each other for years, and I’m really excited to have this chance to hear about your practice.
Esther Kim: Thanks, Will, for having me.
Will Bachman: I wanted to start by asking you to tell me the story of how you ended up on a national TV commercial.
Esther Kim: That’s actually linked to how I got started in independent consulting. Until two and a half years ago I was at a nonprofit for almost nine years. In this day and age that’s a long time to stay at one place. When I decided to make the leap to independent consulting, when you get started you often don’t have a lot of work lined up right away, as most startups do.
I had a little bit of time, and in that time I just happened to get a notice from a fellow mom. I’m a mom myself. I just had a baby. I got a notice about a mailing list that was looking for survey and focus group participants. A customer market research firm. I thought, “You know what? I’ve always seen these. I’ve always been so curious. But I’ve never had the time or inclination to sign up. Now I have time. Now I’m open to new things. Let’s give it a try”.
I signed myself up, and one of the surveys that I got was about oral care. I thought, “I do that. I brush my teeth twice a day”.
Will Bachman: You’re an expert.
Esther Kim: I’m an expert on oral care. Twice a day, and then every six months. “I’m an expert. I can do this”. I filled in the survey. It was very short. That led to a phone call, which led to a 10 minute interview which was taped, and which I was paid for, about my oral care habits. In particular, about my sensitive teeth. I thought, “Why do they keep asking me about sensitive teeth? I guess I’ll answer my questions very honestly”. That led to, two months later, another interview, which just happened to be longer. They needed four hours of my time. Again, with independent consulting, I became more flexible. I thought, “Why not?”.
The next thing I knew, a black car showed up at my doorstep, whisked me off to a fancy house about 45 minutes away. I showed up to this house. When I opened the door, the whole house had been transformed into a set with lights, and there was a little makeup trailer, and wardrobe. It was crazy. They whisked me off to hair, makeup, wardrobe. I thought, “What kind of interview is this?”. Next thing I knew, I was sitting in front of three cameras, and a guy asking me about my sensitive teeth, for 45 minutes. I thought, “Okay. Well, why not?”. I answered these questions. They paid me a little bit more than the last one.
Then the final phone call I got was from the producer, who decided to inform me that they chose my footage to turn into a national television commercial for a toothpaste brand that’s used for sensitive teeth. Never in my wildest dreams would I have ever thought, on my bucket list, I would have, “Star in my very own national television commercial”. But this is an example of how, when you open yourself up to opportunities and see where life takes you, somehow you wind up with millions of people watching you talk about your sensitive teeth.
That commercial has actually been playing until recently. I’ve thankfully only seen it once, but other people have called me from all over the country saying that they’ve seen me. People I haven’t talked to for years. It’s been really fun.
Will Bachman: I’m impressed that you were able to talk about oral care for 45 minutes. I don’t know … A quite in depth interview.
Esther Kim: It’s not the most interesting topic, and they do tend to ask the same questions over and over in slightly different ways to get you to answer in slightly different ways. But everything that I said is true, and this commercial really actually is a testimonial. It wasn’t scripted. It was just me talking about my sensitive teeth.
Will Bachman: Wow. You never know where it’s going to lead when you have some free time. It’s an interesting question. What do you do when you have some free time when you’re an independent, and how can you use it effectively? It sounds like that whole adventure must have also given you some pretty interesting insight into just customer research, market research, how commercials get made. That’s an interesting view of the world.
Esther Kim: Absolutely. It actually made me a better consultant ironically, because I got to understand how that process works, and how customer insights are gleaned by companies. It was just fascinating, and it was fun.
Will Bachman: That’s really cool. Actually, a few years ago, I didn’t get to star on national TV but I signed up with one of these survey firms where you get some points or something. I think you get 15 cents per question or some silly small amount of money. But I signed up just because I thought, “People putting these together are probably professional survey writers. I’m just going to copy down these questions so I know how to write surveys better myself”. That was kind of just learning how to phrase things. Participating was a cool way to learn.
Esther Kim: Absolutely.
Will Bachman: Let’s turn to your practice a little bit. You have an interesting focus. You’re former McKinsey, and focusing now on nonprofit and philanthropy consulting. I’d just love to hear, maybe an overview of your work, and then we can get into some specific examples.
Esther Kim: I would say that my consulting practice focuses on strategic consulting for nonprofits and philanthropy. Really anybody that has a social mission as their primary goal. I don’t necessarily exclude working with businesses. In fact, for years I worked with social enterprises, which are businesses that have a social purpose. But now, I would say that the type of consulting that I do, from the outside if you don’t look at the clients, really looks like a lot of other independent consultants with a McKinsey background. All the things you would think about strategy, planning, a little bit into operations and performance management.
But really, the twist is that I primarily work with organizations that hope to have some kind of social impact with their work. Whether that be helping children, or helping people get into jobs, or the environment. I’m pretty broad about the types of work that I do. I have a real strong bent towards both environmental issues and social justice, but my clients span a broad range of social missions.
Will Bachman: Can you give us some examples of the types of clients you serve, and the types of projects you do for them?
Esther Kim: I like to actually have a mix of working both with nonprofits of various sizes, and also with philanthropy, so funders of nonprofits. I do think actually one of the values that I bring to both sets of clients is, to nonprofits I bring an understanding of how philanthropy works, and to philanthropy I bring some insight from working with organizations that are doing the work on the ground.
Some examples of types of nonprofits I’ve worked with, I recently did a six month strategic planning project for an organization that provides prison higher education inside California state prisons. They have a very successful program in the Bay Area. They have been going for 15 years very quietly and at a certain scale. Then some regulatory and legislative changes resulted in much more public funding being available to potentially replicate their program at other prisons across the state. They brought me in to help them really figure out how to grow in a strategic way that both responded to this potential opportunity, but that also was mindful of the fact that they are currently a very small and resource constrained organization.
I think that’s one of the things that I find most interesting about working directly with nonprofits. What they’re able to do with very limited resources, and also the fact that they have often multiple stakeholders and goals. Not just about making profit and answering to shareholders.
That’s a nonprofit that I worked with. In fact I would not really call my work strategic planning in the broad sense. I would say really, my focus is business planning. You have a set of goals you want to achieve, and I help them think through different ways to get there, and actually do, I’ll do financial modeling. I’ll do scenario planning. That sort of thing. Market assessment.
For philanthropy it’s a little bit different. But I still bring some of the same skillsets to the table. One example is for two large foundations who were interested in creating a new program to support emerging environmental leaders. They wanted to have some research to understand the landscape of both best practices around leadership development programs, and also best practices in understanding better the landscape of environmental movement in California. Did research on both. I worked with a partner in this case, who read a lot of the thinking around it. But I really supported and worked with this partner in both framing the issue, and presenting potential program design. It really led to something that they might think about investing in.
In both cases, the goal is really to help think through and plan, and do something that is both core to their mission and advancing their mission, but also is really tied into strategy. What works? What doesn’t? What has worked to date? Evidence base. All of the things that are important for running a business. Your track record. Your customer base. Insights and growing. Same principle, but applied to nonprofits and philanthropy.
Will Bachman: When you’re working with nonprofits or philanthropies, the bottom line that you’re solving for might no longer be quite as obvious as saying, “We’re trying to grow EBITDA, grow profitability long term. How do you measure your impact? How do you decide what is the objective function that you’re solving for?
Esther Kim: This is one of the things I find very interesting, and why I’ve decided to work with nonprofits and philanthropy, is that it’s so much more complex, and to me more interesting, than when I was working at McKinsey. Where really, the goal was pretty clear. It was to help companies become more profitable. To grow in order to become more profitable and serve more customers, or sell more product.
In this case, each organization has its own goal around whatever it may be that they define their mission to be. If they have a workforce development goal which is to try to get a certain population, let’s call veterans or people out sitting homelessness, into their first job. Or help them to keep a job for a year. There’s very clear goals. But as you can imagine, it’s complex because, A, these organizations may all define their impact for success slightly differently. Even in the example of veterans, are you talking about just any veterans? Or veterans who come back with PTSD? More disabled veterans? The starting point may be different. What it takes to achieve success is also very different.
There’s also, in the case of trying to achieve social impact, many people and many different stakeholders who all have different vested interests in it. You’re starting to get into politics. Or let’s say you’re trying to solve some educational issue and then you’re now talking about angry parents, and teachers unions, and entrenched school administrations. There’s just an entangled web of stakeholders. When I started doing this work, I was just amazed at how much more complex it was than working with businesses, even large businesses.
Then of course, who’s right? It all depends on what frame you’re coming from. A lot of it is trying to achieve consensus while not watering down impact. That can be very very hard.
Then the third thing that I is I think quite different too is, in the case of nonprofits, the definition of customer is very different depending on what perspective you’re looking for. There’s really two types. There’s whoever is the end beneficiary of whatever service or social good is being provided by the nonprofit. In the case of, it could be veterans, it could be youths. Whatever it may be.
Then there are those who are paying for that good to be done. In the case of nonprofits it’s usually donors. Philanthropy foundations, individual donors, and in many cases the government. As you can imagine, when the funder and their motivations and their interests are not aligned with what the end beneficiary wants, needs, is best fit for them, there can be all sorts of issues. Yet this is how it works here. You have to understand that. Work with it. You can’t get around it. The traditional notion of business planning where you just focus on the customers needs, you have to recognize that that’s different in this case.
Will Bachman: You mentioned funders. Talk to me a little bit about that. The funders, or I suppose in some cases it might be considered investors. Their perspective on, their mindset that you see. Sort of a business minded mindset, investing in nonprofits.
Esther Kim: There was a great article in, and I’m sorry, I’m not remembering exactly which publication. It was either Harvard Business Review or maybe the Stanford Social Innovation Review. It was called Why Donors Are Not Investors. This article talks about the fact that when you have somebody who’s thinking about their investments, say their own personal investments, or if they are a professional investor themselves, look at the investments with a certain eye of profitability or profit potential, track record, benchmarking, etc, and have certain standards for that. These same people may often also sit on the board of a nonprofit. Then they come in with a very different mindset. That’s the charity mindset, and that’s, “Look. It’s doing good. I’m putting my money into doing good. I don’t have the same set of questions or expectations or standards around, what am I getting in terms of bang for buck?”.
It’s really interesting to see when people, it’s the same people in fact who approach one setting with a very investor mindset, and then in another setting would be, “Okay, you know. It’s a kid. Their smiling face on a milk carton. I feel bad for that kid”. It becomes a very emotional connection or personal connection. “I’m going to donate to this cause because this cause speaks to me in some way”. That’s what I call the charity mindset.
Then you don’t necessarily ask the same kinds of questions that you would if you said, “I’m going to invest in this business, even if maybe the business ultimately is serving the same kid on the milk carton”. Individual donors may not always ask about, “Which of these seven programs serving that same kid is the most effective? The most cost effective? Has the best track record? Has the best and strongest leadership? Organizational capability? Ability to execute? Ability to scale?”. When you’re writing your checks at the end of the year, or dropping money into donation buckets, I guarantee most people are not asking those kinds of questions. They’re connecting to what works for them on an emotional personal level. There’s many motivations for giving, but they often tend to be very separate from the things that people look for when they’re investing.
There’s been a lot now done to try to bring those two worlds together. People are not recognizing that those are two different halves of the same brain. That it behooves donors to be a little bit more discerning and ask some of those questions, of course while not overly burdening nonprofits and putting the onus on them. The onus should really be on the investors and the philanthropic sector, to try to build a stronger nonprofit sector overall. That’s my belief. But I also do believe that donors can sometimes do more harm than good by not discerning and being thoughtful about not just the emotional connection and giving money, but where and how is this money having the most impact?
Will Bachman: I think a lot of independent professionals who might be listening to the show might be interested in getting more involved and doing work with nonprofits or in the social sector. Why are some of the guidance you have of what it takes to transition from having served for-profit clients, to working in the social or nonprofit sector?
Esther Kim: I get asked this question quite a bit. There’s no one right path. But I think the fact that I get asked this question often speaks to the fact that many people want to do good, or maybe they want to do more good, but use the skills, knowledge, and experience that they have. It may be in working in corporate America, or as consultants to companies or investors. I do think that there is a lot that people who were working in or for for-profits can bring to the table. But I also do think there’s no notion of the nonprofit sector needing saving by the for-profit. That’s a total misconception.
I think that there’s a lot that you can bring to the table with a sense of humility. That was a huge lesson I learned. After working at McKinsey for four years, I then got a job at an organization called REDF, R-E-D-F, which is a venture philanthropy. They call it a venture philanthropy because it’s an organization that works like a venture capital firm, but instead works with nonprofits on building social enterprises, or businesses with social purpose. It was a nice bridge between the for-profit world and the nonprofit world. In fact, one of the reasons I was hired was because I had business consulting experience, and they were looking for people who had that experience to provide some business planning services, but to nonprofits.
Then right away, I learned that the nonprofit world speaks a very different language. It operates differently. Even the way that they talk about leadership and business, it’s completely alien and different in some ways. Language can really get in the way of bridging those two sectors.
Will Bachman: What are some examples of that? Can you give some examples of difference in vocabulary, or differences in language?
Esther Kim: Sure. For instance, the word equity is a hugely loaded word in both sectors. Depending on whether you’re a nonprofit person or a business person, the first concept that comes to mind is often very different. For business people, usually what comes to mind is share in a company. Private equity, or, “I’m an equity shareholder”.
For a nonprofit person, particularly ones that are working in social justice or community development, the first thing that will come to mind is socioeconomic or racial equity. In fact this is a very hot topic these days, and in fact there’s also an acronym, DEI. I don’t know if you’ve heard of this. Diversity Equity and Inclusion. It’s the idea that inequity is what’s driving a lot of issues, and thinking about equity as an umbrella or a lens can help get to the root cause of a lot of individual problems that an organization might be trying to solve.
Equity, that’s just one example of a word that acts the same across both sectors, but can mean completely different things. If you don’t realize that?
The other word is investing. You can’t actually invest in a nonprofit. There’s no such thing as actually investing in a nonprofit, because it’s a nonprofit. Nobody owns the no-profit. When they talk about investing, it usually means investing time or giving grants to help build a program. But a person who’s on the board of a nonprofit who actually is an investor may get confused by that. “You can’t actually invest in this. What does that mean?”.
Those are some examples of how language can get in the way. I would say the biggest thing too though is that there is a lot of wisdom and understanding of what is going on on the ground. Social issues that honestly people have been spending their entire lives over dozens, hundreds, thousands of years to solve, like poverty. Or conflict in the Middle East. Or race relations in America. Those are very hard problems. No one’s come up with the answer to them, obviously. Yet people coming from the business sector maybe have these assumptions about, “The nonprofit sector isn’t operating as efficiently as it should. I’m just going to come in and save them”. No. That’s not the case.
You can bring a different perspective. You can bring different tools and frameworks. You can maybe bring money. A lot of what they’re looking for is money. But they’re not lower down or worse. They’re in fact very sophisticated knowledge about what’s truly going on and what some of the drivers are of these issues. I think that there’s a lot that can be done to in fact bridge these two sectors. That’s where I’m really the most passionate about working.
To answer your original question, there’s a lot of ways for people with business backgrounds to enter and work with the nonprofit sector. One of the most common is some sort of volunteering. Often times it could be as a board member, or as an advisor. I would recommend that first before at all thinking about working with nonprofits more professionally. Because that’s a great way to just understand and better learn how the nonprofit sector works. What some of those issues are. The complexity of it. Also just internally how nonprofit organizations work.
For folks that are looking to actually transition and get either a job or become consultants to nonprofits, the best way I found is to stick with either your vertical or your function that you already know. An example might be marketing. If you already are some sort of an expert, or knowledgeable about corporate marketing, then you can perhaps make the case that a lot of that is the same. You’re just now doing it in the context of getting more nonprofit donors, or target participants, or raising the profile in other ways. The tools might be similar. Just the purpose is different. That’s another way to make that bridge.
The other might be, if you have a particular issue area, and this works really well if you’re in an industry area that can be considered somewhat social. Like say you’re working in energy and renewable energy and environmental issues. Then you might be bringing some of that subject matter knowledge to a nonprofit that’s working to deploy renewable energy in developing countries, for instance. That’s another way to get in. As somebody who’s got those tools and skillsets, I would still approach it with a lot of humility, and ask a lot of questions to just make sure that you understand what you’re getting into.
One thing I will say too is, the pay scale is different between sectors. That can often be a shock. I’ve seen a trend of more and more people who are looking to switch sectors. Especially full time or as employees. To do so later in life, maybe once they’ve built both a lot of experience and some financial cushion. They’re doing it more because they’re really committed to the mission and were wanting to do something very different in the latter half of their career, for instance.
Will Bachman: On that point, roughly how would you compare it? For independent consulting, and I’m sure you know peers of yours who are kind of similar tenure levels as you and similar degrees of experience. If someone’s earning 100 dollars in the for-profit sector as an independent consultant, what would sort of that equivalent person be getting in the not for profit sector, typically? How much of a discount would there be?
Esther Kim: I think there’s a wide range. I can’t actually give you numbers, because within the nonprofit sector there are some pockets where you can actually make probably close, as an independent consultant mind you, to what somebody working for maybe a smaller business would. Those are perhaps nonprofits that are large nationally recognized networked nonprofits, pockets of philanthropy, or working with nonprofits that are supported by large philanthropy, who have worked with business consultants in the past and understand what competitive pay looks like there.
On the flip side, if you’re working with a very small grassroots community based nonprofit, especially if they don’t have a lot of funding reserves. I’ve actually worked with one or two of those organizations recently. I would call it low-bono. It’s almost pro-bono.
Will Bachman: Low-bono.
Esther Kim: Low-bono, exactly. Yes. It’s part of my charitable contribution for the year.
Will Bachman: How does the business development process work differently in this sector? Obviously in the for-profit clients there’s a range. Sometimes there will be an RFP. Sometimes it’s a small beauty contest between a couple firms. Sometimes it’s purely relationship based. But in the nonprofit sector, could you talk a little bit about generating leads and generating opportunities? Then the process of pitching and closing opportunities, and how that works.
Esther Kim: In many ways, the techniques are very similar. I actually listened to your podcast with David Fields. A lot of what he said resonated with me. Either, “I need to do that”, or, “Oh, I am doing that. That’s great”. I’ll tell you what I do. It’s a combination of a lot of relations, and calling on the relationships that I’ve built over the years of working both in the nonprofit and frankly the for-profit sector. Keeping myself in their brain as they are thinking about friends of theirs, or others who are working in the nonprofit sector.
I’ll say I’ve gotten several calls from people who, after I had coffee with them a year ago, they say all of a sudden, “I have a friend who’s on the board of XYZ Organization. They really need somebody to come and help them with their strategy. I immediately thought of you, because you’re the only person I know who’s doing this kind of work but with nonprofits”. I’ve become kind of the go to for nonprofit strategy amongst at least my closer network. I’d say a lot of that’s pretty similar.
In terms of RFPs and other more formal ways of finding clients, there’s a few that are pretty specific to the nonprofit sector. A lot of local government RFPs are specifically looking for folks that have worked with nonprofits, or are looking for folks to work with nonprofits. I’ve in fact gotten myself certified as a local woman owned minority owned micro business enterprise with the city and county of San Francisco. That qualifies me to work on a lot of projects, and in fact makes me more competitive. Also, people want to bring me in as a sub on larger contracts because often they’ll need somebody to fulfill their 10 percent or whatever local business sub-contracting requirement.
Although I tend to not do a lot of that kind of work, because it doesn’t quite fit with what I’m doing. But it’s nice to know I’m qualified, and I have done larger projects that way.
Another is to form relationship with funders. Particularly funders that have a portfolio of nonprofits that they’re helping to build their capacity to do strategy to make them stronger. In this world it’s called organizational capacity building. These funders often have groups of independent consultants that they’ve worked with, vetted, etc, over the years, and that they call on whenever one of their grantees needs some help or support in that particular area. Whether it’s strategy, marketing, finance, etc.
I’ve formed some relationships, and in fact I’ve gotten a couple of projects through one particular funder who has a formalized program of doing this. Pairing nonprofits with consultants to help them with planning.
The other way that is similar to Umbrex is, nonprofit consultants are now also forming businesses where they pull together teams of other independents to work on strategy or other types of projects where teams are necessary. I’ve gotten a number of projects through several people who are doing this kind of work. Similar to Umbrex, but specific to the nonprofits or philanthropy space.
Will Bachman: Fascinating. Talk to me about some of the methods and frameworks that you use. I’m curious to what degree they’re very similar to for-profit clients. Or maybe there are some that are particular to this sector.
Esther Kim: It’s been interesting to bring some business frameworks to working with nonprofits. Some of them love it, and others are like, “What is this?”. The organization that I used to work with, they now laugh every time they see me without a waterfall chart, which at McKinsey was our bread and butter. They’re like, “There’s Esther with a waterfall again”.
One of the frameworks I’ve started using more with nonprofits, which is interesting to figure out how to adapt it to a nonprofit use, is the business model canvas. I’m sure a number of independent consultants have either used this framework or are familiar with it for business planning. But what’s different as I mentioned about applying this framework to nonprofit business planning is that, two things. The goals are different. It’s not just about making profit. Then two, your customers are, the people who are paying are not the people who are necessarily the ones benefiting. With those in mind it’s still a powerful framework, I think. Particularly for the fact that it’s very easy to use, and you can summarize it on one page.
Will Bachman: Just on that one before we move on, can you talk us through what the business model canvas includes? Maybe give an example of how you might use that with a particular client? You could certainly sanitize it, but maybe walk us through a real case example.
Esther Kim: Sure. The business model canvas came from a book called, I think it was Business Model Generation. It’s a one page framework that has a number of boxes. The middle box is the value proposition. Then the left hand side if I recall is focused more on the back end and costs, and what it takes an organization to achieve that value. Then the right hand side is more on the outward facing side. Who are the customers, the channel, partners, etc. Then on the bottom you have, what are the costs to support it and then what are the revenue sources on the customer side?
The way that I’ve used it with more social sector organizations is that I’ll often have two copies. One is for the target beneficiary or beneficiaries. Start with the customer and say, “The customer is youth living in rural agricultural communities, ages 14 to 18, with limited access to technology”. This is actually one of the clients I’m working with currently, to use this framework. That’s a focus area. That’s the customer that they want to serve. What are they doing to serve that customer, working backwards, is providing access to technology in a safe space through a digital learning center, and providing training, and how they’re doing it. Then what’s their key value proposition? That they’re the only ones in this community. Not many others are investing in technology training in rural communities.
It’s very easy to map this out and have a very focused and targeted conversation about what should be in each of those boxes. Often times it’s a great way to see if people disagree. One way to use this, the book recommends this, is each person has sticky tabs or sticky notes and writes down what they think should be in each box, and then populate the large version on the wall. Then they can see where there’s alignment, where there’s disagreement. Then as I mentioned, I would have two versions. One for the target beneficiaries, and then the other would be for whoever else they see as their customer. Usually it’s either some sort of funder, or the main supporters of that mission.
It may be that it’s, “Funders interested in XYZ. How do we serve them?”. Or businesses. “Our main partner is our businesses, and we’re actually about economic development”. The youth are actually the ones to work in these businesses, but it’s actually a separate goal. How do we then build a business model to support the goal of local businesses in this rural agricultural community who need a trained technology workforce? It’s more complicated than the way you might normally use it for a business, but I found it’s still a great framework for keeping people disciplined and focused.
Will Bachman: It sounds very useful. I wanted to ask you about social enterprises, which we haven’t really spoken about much yet. For-profit businesses, but that have a dual bottom line. Could you talk to me a little bit about that sector? What trends you see, and what it’s like serving social enterprises?
Esther Kim: Social enterprise is something that kind of came onto the scene as a term maybe 10, 15 years ago. But in fact, they’ve been around for a long time. If you think of social enterprise as, from a concept, a business. It actually doesn’t even matter the legal structure. A business participating in the economy somehow, selling or providing some goods or services to paying customers, but who also have some sort of social mission. That has been around for a long time.
One example is Good Will, or the Salvation Army. For 100 years plus, they’ve been operating thrift stores. Another example might be, and one would call this maybe more earned revenue rather than social income, but any time you go to the ballet or the opera or symphony, or anything like that. They’re all nonprofits, but they’re selling tickets. That’s the source of earned revenue. That’s contrasted with donations.
Any time you’re selling a good or service, but you also have some sort of social mission, I would define that as a social enterprise. But as I said, the legal structure and how that’s done can vary widely depending on the social mission and how hard it is to achieve. Also, the balance between profitability and the mission focus. It is a balance. The thing that’s hard about social enterprise is that you kind of do both at the same time. Often times you have to sacrifice one in order to really achieve the other.
I’ll give you an example. One of the social enterprises that I worked with at REDF prior to becoming an independent consultant is an organization that provides housing and supports services to formerly homeless individuals. It’s permanent housing. They build housing. They manage housing. They provide a lot of different support services to keep people housed. They were interested in starting a social enterprise because they found that the next step beyond housing is income. Getting a job. A lot of the folks that they were housing didn’t have a lot of work experience. Or if they did, they had other barriers to employment, like history of homelessness or history of substance abuse, or maybe having been involved in the criminal justice system.
Working with folks who come in with those kinds of barriers to employment is a very different ballgame than employing people off the regular job market. But they wanted to build a business that, A, could provide both support and meaningful job skills and income specifically for the tenants of their housing. But also that was a good or service that was needed in the marketplace. I worked with them pretty extensively to understand both the market needs, and what kind of job skills would be best fit. It was like a multi-sided Rubik’s Cube of a lot of different things to solve for. It also had to be a reasonably good paying job with some career advancement opportunities, but also with some support.
What we landed on together was a business to basically almost be a temp staffing agency for other affordable housing service providers. In San Francisco in particular, any multi-unit building of affordable housing needs to have front desk staffing 24/7, and they actually have to have a certain set of skills around being a front desk clerk. The business they started was to provide temporary staffing services for these front desks. It has now, after 10 years, it’s grown into a multi-million dollar business employing hundreds of people a year. I’m so proud.
Will Bachman: That is awesome.
Esther Kim: Yes, and these are all formerly homeless individuals. In fact, they built a training program specifically to get people ready to be employed in this social enterprise. I’ll tell you, it was hard. For years in the beginning it wasn’t profitable in the sense of, it was covering 100 percent of its costs. But it shouldn’t have to. Because they’re employing people who were formerly homeless, and there’s a lot more support and a lot more supervision and other aspects of going out of your way specifically to employ folks who come in with these sorts of barriers, and to help them be successful, that a normal temp staffing agency would not necessarily pay for or even deal with. But they’re doing that because of their social mission.
Over time they managed to actually make it a successful business on the business side as well, because they really tapped into a customer need, and delivered really good service. All those things that you want to do as a good business, you have to do those things too. You have to price it properly. You have to be awesome at customer service. You have to really take care of your employees. You have to fill a market need. This is not charity, this is business. But it’s also fulfilling a social mission.
Will Bachman: Wow. What an incredible story. Even from a purely financial standpoint, I imagine that the investments that a philanthropist made in helping folks get a job saved money on the back end in terms of social services for people who might have otherwise been unemployed.
Esther Kim: Absolutely. There is a strong business case for social enterprise. The thing that’s hard for me to understand is why this sector has not taken off more. Having worked in it for a while, it actually is not yet at the scale that it should be. I think it could be a really powerful mechanism, harnessing the power of the market. But also providing a needed good or service.
I think what’s hard about it is what I talked about earlier in the call. Really, doing social enterprise properly requires people to marry their donor hats and their investor hats. Their business hats and their social mission hats. You can’t expect these social enterprises to be immediately and competitively profitable if you’re also asking them to employ people coming straight out of prison, for instance. But they are earning income, and they are less expensive than a straight social service program where 100 percent of it has to be funded by donors.
Will Bachman: That’s such an incredibly story. I’m curious, what are either the blogs or the websites or the sources of news, or how do you stay up to date on what’s going on in your sector of nonprofits and philanthropy, and social enterprise?
Esther Kim: There’s a huge world out there. There’s a lot to learn and absorb, just even understanding the terminology for somebody coming into this new. But I keep up with, for instance, as I mentioned early the Stanford Social Innovation Review. It’s like the Harvard Business Review, but focused on all aspects of social innovation. Nonprofits, philanthropy, etc.
There’s a number of blogs. Beth Cantor is a person who’s a real expert on nonprofits and nonprofit functions. I just keep up with my peers. I have to say, the one great thing about working with other nonprofit independent consultants is, they’re so collegial. There’s no sense of competition. We are all just throwing work at each other, sharing best practices and tips, with no real sense of, “This might take away business from me”. No. We’re all in it together to help each other achieve a common good, which has been really fantastic.
Specific to social enterprise, I am a member of the social enterprise alliance. In fact I’m going to the conference in September. I do try to keep up on the industry side of things as well.
Others include the Grant Makers For Effective Organizations. There’s increasingly more networks too around nonprofit consultants, like the Alliance For Non-Profit Management, the National Network of Consultants To Grant Makers, etc.
Will Bachman: Those sound like really helpful resources for people to check out.
Esther Kim: Yeah.
Will Bachman: Can I ask you this? Not to diminish any of your current existing clients, but what would maybe one of your one or two dream clients be to serve? What would be the golden opportunity, the nonprofit that would be at the top of your Mount Everest list?
Esther Kim: I have to say, I’ve been lucky in that I’ve really enjoyed all of my nonprofits and philanthropy clients. I’ve really had so much fun working with each one of them, and they’ve just been wonderful people. One of the great things as you know about independent consulting is that, you can pick and choose who you work with, and choose to work with great people. That’s really important to me.
Having said that, gosh. One of the things I’ve fantasized about is, if somebody comes to me with a lot of money and not a lot of ideas about how to spend that money, but really wanting to … Don’t we all, right? Spend it on me, how about that? No. But wanting to have some sort of social impact. Especially one of the things that I would love to do more of is both on the environmental side and on the international development side of things. If somebody said, “Gosh, I have some really rough ideas of how I think impact might look, or ways in which I can be most impactful with this money, but I need somebody to help put some strategy and shape around that”, that would be amazing.
My background is environmental engineering and renewable energy, so I’d love to get a little bit more back into that. I know that there’s more opportunities out there. I’ve been doing independent consulting for almost three years, so I feel like I’m still getting started in a sense. I’m definitely committed to this longer term, as you are.
Will Bachman: Fantastic. Esther, how can people find you best and reach out to you online? Do you want to give out a website or a Twitter handle? What’s the best way for folks to find you?
Esther Kim: My website is EstherKimConsulting, E-S-T-H-E-R-K-I-M consulting.com. My email address is firstname.lastname@example.org. I’m not that active on Twitter, but every so often I’ll tweet something. It’s @ekimconsulting.
Will Bachman: Fantastic. To the listeners out there who have just made a successful exit and are trying to figure out how to make an impact on the world, reach out to Esther and she’ll help you figure out how to invest, and how to make an impact. Esther, this has been fantastic. Thank-you so much for joining and for sharing.
Esther Kim: Thanks so much for having me.
Will Bachman: Yeah, sharing perspective on this space. It’s so awesome, the work that you’re doing, and the example that you gave of creating this multi-million dollar business helping formerly homeless people find jobs is just awesome.
Esther Kim: Thanks so much for having me, Will. I do feel privileged for being able to apply my McKinsey knowledge and experience to really have a meaningful impact in the world in this way. It’s been really fun.