In the Washington Post Peter Orszag argues that this past recession was a small business recession. Others have been saying basically the same thing but what Orszag was really pointing to was that 1) it was a small business recession and 2) it has been a big business recovery. Indeed, I would take it a step further than Orszag and say that these small businesses continue to operate like they are in a recessionary period.
Using experimental data from the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS), Peter shows that big firms - those bigger than 5,000 employees - expanded their workforces at a rate of 0.4 percent per month from January 2011 to February 2012. The similar rate for under 50 employee businesses was 0.1 percent.
As Orszag points to in his piece, this data is experimental. Since this data has been in testing for more than a year, I suspect that BLS is feeling pretty good about it or they would have made some significant revisions or retractions by now. It's great to see experimentation at BLS on this topic, and I would just challenge them to work harder to think about how other relevant indicators like business age can be worked into their overall structure. Also, leaders of the different statistical agencies and policy leaders like Mr. Orszag should still be concerned with some of the differing trends I pointed to last year in the underlying series/records which BLS and Census and using to examine businesses in the U.S.
But the administrators of JOLTS needs to be recognized for creating innovative, timely products which meet user needs. It is one data product that I have not heard come up in the budget cutting battles that are beginning to engulf the statistical offices.
In 2011, the Kauffman Foundation presented a proposal of ideas we called the Startup Act that offered policy reforms to make it easier for new firms to start and grow. Some of these ideas informed the development of the Startup Act legislation brought forth by Senators Jerry Moran (R-Kan.) and Mark Warner (D-Va.) in December 2011.
Today, Moran and Warner, along with Senators Marco Rubio (R-Fla.) and Chris Coons (D-Del.), unveiled the Startup Act 2.0. A press release from the Kauffman Foundation is available here. More information about the legislation is available on Moran's website (press release; interactive media).
**Update: Video from the press conference embedded below.
Excerpt from Moran's release describing provisions in the legislation:
Wendy Baird
Earlier this month I commented in my newsletter and wrote a blog post about how nonprofits should not be afraid of the “what ifs” out there, prompted by a recent Virginia ruling that liking a Facebook page did not count as protected free speech. The newsletter article and blog post sparked some discussion about what else nonprofits are afraid of. Today Wendy Baird shares her tips on a common fear: calling potential grant funders on the phone.
~Kivi
Guest Post by Wendy Baird of Wendy Baird ConsultingIn my fundraising work with smaller nonprofit organizations, the number one thing I see hindering our grantwriting projects is staff members’ fear of calling potential foundation funders to introduce the organization and to inquire about the possible fit of project(s) with the funder’s interests. The cultivation phase. Hands down, if they were given a choice, they would skip the phone call– the chance to start building a relationship–and submit the proposal blind.
In deciding, consciously or not, to skip the cultivation phase, you lose incredible opportunities to connect with people who can facilitate the funding you need to educate young children, house the homeless, or preserve the environment. The sad reality is that though things are slowly improving, most grant proposals will not be funded. Not because the projects are not worthy, but because it’s an extremely competitive environment and without a relationship, it can be hard to make your organization stand out among the many quality applicants.
By conquering your fear of calling potential funders you increase your chances of submitting successful proposals immeasurably. Most funders recognize that a short phone call benefits both parties and welcome phone calls. They recognize that by helping to quickly determine if there’s a potential fit, a brief conversation can save them from reading through proposals they can’t fund, and you from writing unsuccessful proposals. Many a foundation officer has shared with me that they are happy to help time-strapped staff determine if a proposal might be worth the effort. A phone call also allows for a richer introduction to the organization’s work. Especially in the case of more nuanced programs that are harder to understand, a conversation can highlight an opportunity that might not be apparent on paper.
I know it’s intimidating to get started. An introvert myself, I used to hate this part of my job. I’d sit in my tiny office, staring at the phone, and come up with every excuse imaginable to put the task off. But, with each call I made, my confidence grew.
A funder approved a project a bit outside their normal jurisdiction when she understood the limited funding opportunities available in the organization’s rural setting. Another shared that the project wasn’t a fit, which allowed me the freedom to pursue other opportunities. Yet another couldn’t fund the project himself, but recommended me to another one who could. These are all successes.
If you, like so many capable nonprofit professionals, start sweating at the thought of calling a potential foundation funder, I recommend the following:
Wendy Baird started Wendy Baird Consulting after spending 15+ years doing fundraising and communications work for social service and community development organizations and seeing the need for quality, affordable consultants who understand what it’s like to work in a (very!) small development shop.
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The Kauffman Foundation released today a new study by Martin Kenney, Don Patton, and Jay Ritter on the employment and revenue growth of all companies that have made initial public offerings over the past 14 years. The report and press release are available here.
The slump in IPOs, also shown in this study, has already been documented elsewhere, for example in previous work by Ritter. The new contributions from this study pertain to post-IPO revenue and jobs. As expected, after the IPO, firms experience significant increases in revenue and employment, especially if they are younger firms, classified in the report as Emerging Growth Companies.1 The widely cited figure that 92 percent of employment growth comes after the IPO is not corroborated. This report finds that 10 years after IPOs from 1996-2000, 37 percent of jobs come after the IPO. Ritter has authored a post at Forbes.com about this finding. It’s not clear to me if the NVCA figure should be compared to all IPOs, or some sort of filter by company age. Even so, it appears as though the 92 percent figure is overstated. 62 percent of jobs at EGCs have come after the IPO. For non-EGC firms, this figure is only 27 percent, unsurprising since older firms would presumably have less room for growth.
Post-IPO, EGCs also experience greater revenue growth than non-EGC firms. Figures 2 and 6 from the report visualize the growth trend for EGCs:
Note that different IPO cohorts show different performance trends for these EGCs. We see here immediate gains in employment and revenue that slowly taper off for 1990s cohorts. The 2000s cohorts don't display such jumps (except for 2004—remember that Google and Salesforce.com went public in 2004). Read the report for further information.
If you want to take the numbers from the report to calculate what would have happened to our economy if the slowdown in IPO activity did not occur, keep in mind that arguments about the causality of the IPO on growth are still relevant. It’s worth noting that acquisition-fueled growth likely overstates the employment and revenue growth figures to some degree. I urge you to read this section of the report in full and recognize the huge assumptions needed to make such a calculation:
One can use our numbers, in a mechanical sense, to calculate the lost jobs from the slowdown in IPO activity. If the volume of IPOs per year during 1980–2000 had been maintained during 2001–2011, i.e., 298 domestic operating company IPOs per year rather than ninety per year, and if each of the 208 additional IPOs per year had created 822 jobs, the 2,288 additional IPOs would have created 1.881 million more jobs, a far smaller number than the 22.7 million figure that has been repeatedly cited.
There are some strong assumptions that go into the above calculation. First, since the number of years in which to grow would have been shorter than for the firms that went public in the late 1990s, the jobs created through 2010 probably would be lower. Second, there is an assumption that the average quality of firms going public would remain the same as those that actually did go public. In other words, that there would have been additional eBays, Amazon.coms, and Googles if there had just been more IPOs. Third, that the people that would have been hired would not have been doing something else. In other words, there is an implicit assumption that a mass army of would-be engineers, scientists, and marketing experts is sitting at home watching television. And fourth, that the capital invested when a company raises funds in an IPO would not otherwise have been invested in job-creating activities. The average company that conducted an IPO during our sample period raised $162 million in inflation-adjusted dollars, and if there were 2,288 more IPOs of the same average size, $370 billion of capital would have been pulled from other uses.
There are many other interesting findings in the report. For example, I read this as further evidence of the tremendous effects superstar/outlier firms have on our economy. The biomedical industry did not consolidate as many analysts projected, with firms in this industry actually having the highest survival rate post-IPO. And I think this serves as a reminder that ratings of ‘business friendliness’ need to be taken with a grain of salt—IPOs disproportionately come from California, Massachusetts, and D.C. on a per capita basis, despite these jurisdictions considered to be less business friendly.
1 EGCs are defined as firms less than 30 years old that are not spinoffs, rollups, buyouts, or demutualizations. The purpose of the cutoff is to exclude firms such as UPS, which was founded in 1907 but did not go public until 1999.
Happy Friday, everyone! Here are your Mixed Links…
Messaging
Nancy Schwartz needs your input. She is conducting a brief survey to help her identify the messaging and marketing topics you want to master and the skills you’d like to strengthen. It closes June 7th so share your ideas and take the survey now.
Even though I found myself using “capacity building” to describe a concept this week — and it worked, by the way — I still encourage you to keep your eyes and ears open for vague jargon to eliminate so check out 24 Lazy Corporate Verbs You Need to Fire.
Social Media
Last month I highlighted some key findings about how nonprofits are using social media. NTEN has taken those findings and tailored them specifically to smaller nonprofits in Social Media Benchmarks for Smaller Organizations.
For those small nonprofits who haven’t gotten into social media yet, Joanne Fritz shares how even small nonprofits can get started.
And another great point on using social media comes from John Haydon in a very short post How to “Get” Social Media.
Mobile Marketing
Today is the last day to enter the AtlanticBT “Gives Back” mobile grant contest. Twelve nonprofits will be awarded complementary Atlantic BT mobile strategy sessions to better guide where time, technology and resources will be best spent.
In Nonprofits and Their Mobile Strategies, Joe Waters shares that nonprofits are not coming close to tapping the mobile market.
Joanne Fritz (again) reminds us that we need to watch our copy in today’s smartphone dominated world with Get Skinny (With Your Content) for Mobile.
Nonprofit Marketing Training
Blogging for Nonprofits E-Clinic (June 4 – 14)
Webinars:
For Pass Holders – May 23: What they Don’t Teach You in Fundraising 101: Mastering the “Soft Skills” of a Fundraiser (Featuring Gail Perry)
FREE for everyone – June 6: Getting Your Nonprofit Grant Ready (Featuring Betsy Baker)
For Pass Holders – June 14: Email Marketing and Fundraising Part I: Getting Started
For Pass Holders – June 21: Email Marketing and Fundraising Part II: The Makeovers
Have a great weekend!
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Brad DeLong relays a piece in the National Journal that reproduces a TED talk from Nick Hanauer. Hanauer is an entrepreneur and venture capitalist from Seattle who offers some pointed thoughts on job creation, taxes, and inequality.
Hanauer’s speech is brief, so do read it to judge for yourself. He seems to imply we incorrectly deify entrepreneurs as job creators. I say imply because Hanauer doesn’t actually use the word entrepreneur—instead he uses the terms “businesses” and “capitalists,” and it’s unclear to me if he’s primarily targeting his remarks at rich investors or at entrepreneurs, or both. Regardless, he is not in favor of the current tax system. I think his argument boils down to our tax system containing too many tax breaks for wealthy investors generally, and casting too great a gulf between capital gains and income tax rates. And that these tax breaks for the wealthy are justified by waving the flag of “job creation” inappropriately, because in truth the middle class provides the majority of consumption in our economy, not the wealthy, and businesses are dependent on this consumption and create jobs only to match middle class consumption demands.
As Hanauer states (bold is my emphasis):
I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated.
That's why I can say with confidence that rich people don't create jobs, nor do businesses, large or small. What does lead to more employment is a "circle of life" like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary middle-class consumer is far more of a job creator than a capitalist like me.
So when businesspeople take credit for creating jobs, it's a little like squirrels taking credit for creating evolution. In fact, it's the other way around.
Anyone who's ever run a business knows that hiring more people is a capitalist’s course of last resort, something we do only when increasing customer demand requires it. In this sense, calling ourselves job creators isn't just inaccurate, it's disingenuous.
Hanauer’s main point surely is correct—that you need consumers to pay for services and products in order for businesses to justify the hiring of more people. And business only hire when they are confident of meeting consumer demand, not just automatically or out of the goodness of their hearts. But it’s also true that you need entrepreneurs to come forth with new innovations for consumers to consume. You can’t have one without the other.
Where I think Hanauer errs is stating that only consumers can get the cycle started. Does demand create supply, or does supply create demand, or somewhere in the middle? (by the way, to my knowledge this is an undecided debate in economics). When I think about the relationship between consumers and entrepreneurs, I find myself asking: is it easier to purchase something, or create something new and fantastic that people want to buy? Henry Ford and Steve Jobs are famous for telling their customers what they wanted without their knowing it first. Neither one of them used focus groups or market research firms.
I won’t offer much commentary on the larger point about tax policy and the increase in income inequality in the U.S. This topic was serviced by an interesting discussion at the Economics Bloggers Forum (watch the Panel 3 video here).
What I will say in regards to entrepreneurship and tax policy is that it’s a tough cookie to crack. My rough take on it though is there is a point at which marginal income tax rates do significantly discourage entrepreneurial activity. It is true that the U.S. prospered in the 1950s and early 1960s when the top marginal rate was as high as 90%, and both Bill Gates and Steve Jobs got their starts in the 1970s when the top marginal rate was 70%. But when marginal rates were this high we don’t know how many other potentially successful entrepreneurs were deterred from launching or growing their ventures. My hunch, and I admit that is all that is, is that the number was not insignificant.
Along the same vein, I believe tax policy can significantly influence whether those who finance entrepreneurs are willing to do so. The difference in after-tax returns when the capital gains rate is 15% or 0% can be a determining factor whether investors in early-stage companies—notably angel investors—take the plunge, especially if as now, they are risk averse. I’d rather use tax policy get these investors off the sidelines by making permanent the Obama proposal to exempt equity investments in startups held for at least five years (as opposed to having the government directly take equity stakes in or even guarantee the loans of new ventures).
That’s the subject line in the email I received two days ago from Charity: Water.
How clear and direct is that? And take a look at what was inside:
Here is the whole thing since this capture only grabbed the top.
It reminds me about a gift from several months ago (year-end, for no particular purpose) and then tells me exactly what they did with the money. Awesome. If you can do something like this — or anywhere close to this — DO IT.
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We failed to mention here on growthology the release of Solomon's Knot by Robert D. Cooter and Hans-Bernd Schäfer back in January.
The book is part of the Kauffman Foundation Series on Innovation and Entrepreneurship imprint in the Princeton University Press. Alex Tabarrok reminds us about what this book has to offer and provides some commentary.
Last week, the Center for an Urban Future published a terrifically interesting report on the technology startup scene in New York City. (Disclosure: the Kauffman Foundation has supported CUF's work, but not this report.)
The CUF team exhaustively catalogued the location and growth of tech startups in NYC, as well as venture and angel investing. The report, and a supplemental index, contains a wealth of information, including this great map:
This report puts hard numbers on what has been mostly chronicled anecdotally, albeit interestingly, through the lens of things like TechStars. Those are useful, but it is enlightening to see the breadth of the entrepreneurial community in New York. Kudos to CUF them for excellent work.
Last month, I highlighted some benchmarks in both social media and email marketing that were released in recent reports so that you could see how your nonprofit stacked up. Today, we are going to look at online fundraising.
Using the 2012 Online Marketing Nonprofit Benchmark Index Study by Convio and the 2012 eNonprofit Benchmarks Study published by M+R and NTEN, we see that online fundraising continues to grow in importance, especially to smaller nonprofits.
Here are the key findings from each report:
2012 Online Marketing Nonprofit Benchmark Index Study (Convio, which includes orgs of all sizes in the study)In addition, Network for Good has released first quarter stats for 2012 on their Quarterly Digital Giving Index. Here are some highlights from that:
Other sources for online fundraising trends:
Netwits Think Tank by Blackbaud
The Blackbaud Index
April 2012 Nonprofit Blog Carnival: Social Fundraising Tips and Best Practices
Get all of our webinars and e-books for one price with the All-Access Pass! Get a full year for $465, or 90 days for $145.
Extending technology out to the field requires a balance of cost versus connectivity. In this foundational session, we’ll explore a variety of land-line, wireless (including cellular) and satellite connectivity options.
Event Details:Extending technology out to the field requires a balance of cost versus connectivity. In this foundational session, we’ll explore a variety of land-line, wireless (including cellular) and satellite connectivity options. Each will be presented with the pros and cons, along with a neutral observation of costs, reliability, usability, and connectivity. Keith Robertory of the American Red Cross approaches this from an experienced practitioner's perspective and will share his insights and lessons. Hear about his experiences as well as his perspective on some of the vendors he has worked with. For anyone needing to keep staff in the field connected, this will be an invaluable session.
In this webinar, participants will
About the Presenter
Keith Robertory
As the Disaster Services Technology Manager for the American Red Cross, Keith Robertory oversees all the technology that the Red Cross deploys to support disaster relief operations in the United States. His team supervises the hundreds of volunteers deployed each year with the specific tasks of setting up the infrastructure the Red Cross needs to provide relief to victims of disasters. It includes all the hardware, such as satellite earth stations, communication response trucks, servers, laptops, cell phones, IP phones, satellite phones, two-way radios, and everything needed to connect it all together. Mr. Robertory has been with the Red Cross in a number of positions since 1997, and has been in the technology industry since the mid-80s. He serves as an Adjunct Professor with the George Washington University, Institute for Crisis, Disaster and Risk Management.
Registration Key: https://www.ntenonline.org/EWEB/DynamicPage.aspx?WebCode=CSCEventsRegM&evt_key=1b4b40df-1c1b-44f0-8d1c-fbca1e43c792&egp_evt_key=1b4b40df-1c1b-44f0-8d1c-fbca1e43c792&ParentObject=CentralizedOrderEntry&ParentDataObject=Registrant&DoNotSave=yes&action=Add&evt_title=Nonprofit%20Field%20Work%20Connectivity%20Options&Site=ntenFrom a commencement address the Kauffman Foundation's president and CEO, Benno Schimdt, delivered two weeks ago (copy released today), an amusing quip:
Chris Whittle and I were once criticized by our Board for having no strategy beyond survival. Chris had a great response: “First of all, I’m not sure survival is such a bad plan.…”
The speech is entitled "Benno's Bromides" and I had to confess I had to search for a definition. It contains some other pieces of advice recent college graduates and young entrepreneurs might find useful.
Tonia Zampieri
Tonia Zampieri is back with some more advice on how to get your nonprofit’s mobile marketing strategy in place. Also, she shares how you could have the chance to win a mobile marketing strategy session with Atlantic Business Technologies.
Guest Post by Tonia Zampieri of Atlantic Business Technologies.I love nonprofits, well heart them actually. I love the idea behind why they exist, the feeling I get when I witness people doing loving acts, helping others in need — the whole sha-bang.
But I’m concerned.
Most US nonprofits are not addressing mobile technology adoption by creating a clear strategy to meet demand. Mobile devices today are an extension of our desktop computers, whatever can be done there is heading to their purses and back pockets. This is not a fad. This is our new reality. Websites will be built to suit mobile screens before computer screens sooner than later – mark my words.
Whether donor or client focused in your marketing efforts – each and every nonprofit needs a mobile integration strategy to achieve desired results, making the most of limited budgets.
Here’s some tips on how to get started:
1. Build a mobile matrix.
Include every distinct audience you talk to – donors and clients, if applicable.
For one nonprofit your list might include: teens, single professionals, stay at home moms, health care professionals and hispanics. Reaching these groups may require different mobile channels – texting vs. mobile web content, vs. mobile-rendered forms, vs. apps – and how they receive your information may be different too. Creating an easy spreadsheet where matching up different groups with their respective channel of choice will help understand where to focus.
2. Do your homework and pick your most pressing need.
To avoid being overwhelmed pick the audiences that you need to engage with most and work on developing a mobile strategy for them. For example, if your 2012 mandate has been to reach and educate a certain number of people on how to decrease incidence of diabetes, you know your younger audiences and discover they are buying/using smartphones at growing rates. Funding for this would go under programing not operations so could open up more funding.
3. Write copy easily consumed via mobile.
In our above example, will your new pamphlet be read right there on the phone or is it best to have it sent via email as a mobile download? Matching content to how it will be best received is key to achieving desired results.
Every organization has different audiences requiring different priorities and needs.
But every organization has one thing in common – they all must ACT on mobile to stay relevant, continuing to serve their mission most effectively.
The AtlanticBT “Gives Back” mobile grant contest is a perfect opportunity to start. Fill out a short form sharing a bit more about your cause and how mobile MIGHT help on or before Friday May 18th. Twelve nonprofits will be awarded complementary Atlantic BT mobile strategy sessions to better guide where time, technology and resources will be best spent.
There’s also a brief video of yours truly explaining a bit more.
Need inspiration for ideas? Check out last week’s featured entry on getting behind cancer or our sample ideas at Inspiration Station.
Good luck!
Tonia Zampieri is the Mobile Strategist for Atlantic Business Technologies. She has nearly 10 years of digital fundraising and marketing experience and launched one of the very first nonprofit iPhone apps, Tap-n-Give on iTunes in 2009. She tweets regularly via @iheartcharity and can be reached directly at tonia.zampier [at] atlanticbt.com.
Love the daily blogging? Great! If not so much, switch to Kivi’s weekly email newsletter with blog highlights and then unsubscribe from the blog’s emails.