The Danger of Fiscal Sponsorship

I am stunned by the number of organizations I encounter that operate under the umbrella of another organization. Beware! This arrangement will strip your branding and will leave you at square one to restart your organization if you ever do break free. This excerpt from page 39 of Defying Poverty with Bicycles shows why you should avoid fiscal sponsorship:

“...In the U.S. and some other countries, the leaders of a new organization can choose to avoid incorporating by asking an incorporated nonprofit to become their ‘fiscal sponsor.’ This can look very enticing to new leaders who are already overwhelmed by all the tasks required to found an organization.

But don’t be deceived! Fiscal sponsorship becomes a cozy arrangement that is very difficult to escape. The most harmful problem with fiscal sponsorship is that the ‘mother’ organization must be mentioned in all communications. Also, all checks and credit card payments that go to your organization must be made payable to the mother organization, not yours. This means that all of your donors, grantors and customers will relate their experience with your program to the fiscal sponsor. If you and your fellow leaders eventually manage to break free of this fiscal sponsorship (and that’s a big if), none of these important people will have any connection to your organization. In other words, once you break free and incorporate your organization independently, it will be as if you are starting from day number one.

The other danger of fiscal sponsorship is that the fiscal sponsor, or mother organization, does all the administrative work, including taking the credit for your organization, and simply charges a fee such as ten percent of all income that comes to your organization. This is of course fair because otherwise an established nonprofit could not justify taking on the burden of being a fiscal sponsor. Also, because of the high level of responsibility they have for your organization, you and your team will have to hand over some leadership of your organization to them.

Once you and your team have settled into this arrangement, most of you will be tempted to remain there in order to avoid the responsibility of learning how to do tax returns and sending reports to your funders. I know of some nonprofits that have operated under fiscal sponsorship for more than a decade and I can easily bet they will never break free. They will also remain small—the ones I know of are either run by volunteers or have just one, underpaid staff member.

The most important danger of fiscal sponsorship in regards to Social Bike Business is that it will not allow the full implementation of the program. No fiscal sponsor would take on the responsibility and administration of such a complex program. Then consider that everything that includes the name of your organization must also show the name of the fiscal sponsor in order to give full disclosure. Imagine the sign you’ll hang on the front of your bicycle community center... with two names. Imagine your brochures, business cards and custom price tags, all with two names of the organizations that run the program. Would you shop at a place with such a suspicious dual personality?

My recommendation regarding fiscal sponsorship is: Don’t do it! And if you’ve unfortunately slipped into this cozy yet dangerous situation: Get out as soon as you can!”

Do We Need a Third Bike Industry?

Even the most casual observer will recognize two distinct bike industries: one enticing with the latest and greatest, the other enticing with the lowest prices. The first is the one I featured in my December post, Planned Obsolescence in the Bike Industry. This is the bike industry that has most blatantly forgotten people who live in or near poverty. Their obsession with high-tech, high-priced, fragile, disposable bikes and parts has segregated bicycling from the vast majority of the world’s inhabitants.

The other bike industry does not consider itself a bike industry. These mass merchants make and sell appliances, yard equipment, plastic swimming pools, exercise equipment, electronics and toys right alongside their bikes. In fact, if you want to find a bike in one of their stores, check the toy aisle. Their bikes and parts are just as fragile and disposable as those from the other bike industry. The main difference, besides missing those few months of noteworthy performance before they break, is the price. While I have to say this second, mass merchant bike industry does indeed recognize low-income patrons as their main customers, all they care about is wresting those few dollars from their wallets. Providing bicycles and parts designed for their needs isn’t part of their equation.

When I first began discussing Social Bike Business with our founding board, we assumed that every element would eventually become part of the first bike industry I describe above. Social bike shops would simply be another sort of niche shop along with those serving road racers or mountain bikers or triathletes. Social bike business career training programs would welcome those aspiring to serve high-end riders right along with those wanting to serve their low-income neighbors. The bikes and parts designed and manufactured through the program would be sold alongside the fragile jewelry-like parts in wholesale catalogs and bike shops.

I’m still holding out for this vision. Our Bike Shift Lever will hopefully be the first of many such bike parts to find its place in these channels.

Even so, as I watch this first bike industry veer even farther into elitism I have to wonder if a third bike industry is needed or would even work. A social bike industry focused entirely on the needs of impoverished customers would require its own channels just as the other two bike industries have created for their products. At first this seems a gargantuan task until we look at other socially designed productions such as for irrigation, medical supplies, wheelchairs and drinking water. Even some of the social bike programs in place have created their own supply channels already, out of necessity. Connecting a few dots with like-minded partners would result in local manufacturing and supply channels that would reach most areas of the world.

What are your thoughts on this issue? Should we give up on our wayward bike industry and focus on partners who truly want to serve the 80% of the world’s population living in or near poverty? Is our time better spent working with people who already have these ideals or trying to convince those in the established bike industry to add this new customer base along with products that serve their needs? In other words, do we need a third bike industry?

Handouts for Rich and Poor

This video takes on many of the uncomfortable reactions toward poverty programs such as free food, monetary assistance and other handouts. Interestingly, it shows completely opposite reactions when massive corporations receive handouts many times larger than those going to struggling people. The complete lack of any stigma over corporate handouts is very disturbing.

While social bike business programs are not at all about handouts, I still find it an important discussion because social businesses are not yet understood to be different from these programs. We often have to face similar, though misguided reactions from people tired of charity handouts.

Unfortunately, the video doesn't move much past revealing this disturbing situation. Take a look, see what you think and if you have further thoughts please offer them in the comments section.

The Contest Trap

Contests and competitions for social business ventures seem to be multiplying along with fast-pitch TV shows like Cupcake Wars, Shark Tank and American Idol here in the U.S. After an arduous application process, entrepreneurs tap dance a lightning-fast show for a panel of judges who declare whether they move on or lose. Over one hundred social venture contests serving North America are listed here. Hundreds more serve other continents. Each offers tantalizing funding and support to captivate any social entrepreneur with visions of a triumphant win. The numbers prove their effective marketing. Each boasts thousands of applicants each year.

These contests used to not bother me. The few I’ve investigated did not warrant the amount of work compared to the potential of winning; easy enough to ignore. But troubling accounts from contestants keep coming my way, many from social bike business ventures. Most tell of months of work only to be rejected. Others tell of hopeful climbs to the brink of winning, including time-consuming and expensive trips to pitch their idea again and again, only to be dropped from the final group.

The worst stories come from young entrepreneurs in developing countries who have stopped their work in order to join the “contest circuit.” Such entrepreneurs fit the profile of the ideal contestant and because they have a good chance of winning, find that their time spent generally nets a good income. The problem is they have no time left for their projects.

These contests bring all the disturbing elements of most charitable grant proposals including arduous application processes, unwieldy demands from the funders, disrespectful communication barricades, and cold rejections. On top of all this, they add this song and dance element.

This audition process is absolutely appropriate for Hollywood roles, American Idol and pitching nonessential products. Such industries depend on talent to increase sales. Like any for-profit venture, the bottom line requires that mediocre stars be jettisoned. This is sad for these talented folks, but such industries can only handle so many stars. There is no comparison to the flood of talent we need to combat poverty and suffering.

This win/lose game is no way to treat social entrepreneurs who have pledged their lives to helping our world. Rejection takes a heavy toll on passionate people and sends many away from the sector forever. There are too many problems yet to solve for us to rely on the most talented at pitching a project. Shy, awkward and introspective social entrepreneurs are just as likely to make an impact as those with an appealing stage presence.

The movie Moneyball offers some inspiration. It tells how the Oakland As baseball team shook the scouting world one season when they skipped over the most talented players and spent their budget instead on mediocre players. Each of these players had a particular gift that complimented the team as a whole. Their investment paid off and other teams soon followed.

Social business holds a far more important role than entertainment, cupcake sales or sports. Instead of punishing many thousands of social entrepreneurs each year or worse, distracting them away from their good work with promises of stardom, we need to reshape our support systems. We need to value the special gifts of every committed social entrepreneur and help them find their best role within the tremendous efforts ahead.

With so few social bike businesses underway, none of us can afford the distraction of such time-wasters. Have you taken part in a social venture contest? What was your experience like? Do you have ideas for creating a better system that offers assistance without disgrace? Even gentle ways of redirecting this contest fervor could go a long way. Please leave any comments that spring to mind.

Highlighting Successful Program Models

This is a topic I plan to return to regularly because there is nothing like a visit to a successful model to show how a program element can work. Social bike businesses rely on sustainable business practices in order to serve disadvantaged people with bicycles for the long term. Today I’ve chosen two program elements important to this principle—normal business hours and bicycle careers—along with programs that are doing a particularly good job with each.

NORMAL BUSINESS HOURS:

Normal business hours establish a social bike business as reputable in their community. While many bike programs survive with hours convenient only to their volunteers, those that commit to opening at least six days a week during the day like most bike shops will draw customers and significant income beyond their small circle of friends and enthusiasts.

This requires hiring employees, because volunteers should never be expected to perform duties that are critical to the success of the program. This would put undue stress on volunteers who are justified in prioritizing personal problems over the bike program’s needs. On the other hand, an employee is expected to solve personal problems outside of work hours if they expect to keep their job. Once normal business hours are set, employees will have to open and close the shop on time to build trust in the community.

Today, I would like to highlight Bikes Not Bombs in Boston as a nice example of a social bike program that has found that balance of good works through bicycles while maintaining a professional and reliable bike shop.

CAREER TRAINING, JOBS & BUSINESSES

Comprehensive social bike programs always include career training, job opportunities and guidance for disadvantaged people who want to open their own business using bicycles.

Today I want to highlight Bicycling Empowerment Network Namibia for doing all of that and more. BENN works with partners all over the world to bring bikes and parts into Namibia that become the start up capital for Namibians to launch their own bike shop. To date BENN has helped these local business folks open and succeed with 32 bike shops throughout the country.

They also work with the unique dreams of each entrepreneur. Some prefer to open other sorts of businesses that can be transported with a bicycle, perhaps a mobile fruit vendor or even a farmer desiring to transport harvests to farther, better markets. BENN also offers ongoing bicycle mechanic training so that graduates can either open their own bike shop, become a mobile mechanic or find a job in an established bike shop. All of these program elements combine to lift BENN to the top of the success stories we’ve learned about, especially regarding career training and support of new bike businesses.

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Have you benefited from the program services of either of these or similar programs? Do you know of other programs that I should consider highlighting in later posts? Please offer your thoughts in the comments section.

Prescott Teen Center Sheds Light on Starting a Social Bike Business Program

Last week I met with Courtney, one of the founders of The Launch Pad, a new teen center here in Prescott, Arizona. Barbara, a One Street volunteer who suggested the meeting, joined us. The three of us sat in the back corner of the center’s small low-ceilinged room in soft, homey chairs around a warm lamp centered on a kid-sized table. More comfy chairs, a few game tables and a kitchenette filled the rest of the space.

Bikes need a lot of space!

As I had steered my bicycle onto the back street and spotted the tiny bright orange building of the teen center, my heart had sunk with the realization that there was no room for any sort of bicycle program there. But as Courtney described their upcoming plans, my hope returned. She showed how their current location, while affordable was not serving the needs of even the dozen or so teens that attended each afternoon. Their mission revolves around creating a place where young people collaborate to create career opportunities and projects that benefit the community. Courtney noted that Social Bike Business fits perfectly. But in order to reach that high, they have to draw dozens if not hundreds of teens to engage in the center’s activities. Their tiny, bright orange building is just a stepping stone to much grander plans.

Courtney explained that all the partners they had approached so far, from school districts to business owners to city officials had expressed even more support than they had expected. These partners blurted out grand dreams of a massive building where multiple projects and classes could take place simultaneously. While Courtney and her fellow board members have been careful to take reasonable steps toward success, their partners seem ready to charge ahead full steam.

This brink between the frustrating first steps of starting an organization and its first leap into successful results can be a tantalizing yet dangerous mirage that swirls and shifts just out of reach. After a year of these partner discussions, the teen center has not received any significant funding or any commitment from a building owner yet. Without that larger space, they cannot approach any more schools and bring in the young folks they need to drive their programs, including bike programs.

Over the past six years since One Street launched our Social Bike Business program I have answered countless calls and emails from bike program leaders at this same frustrating stage of launching their program. The guidance I give is to not be dazzled by promises that do not include commitments and to only take the steps ahead that are certain. This doesn’t mean avoiding risks. Even the steps that seem certain bring risk. Rather, the leadership team’s job is to assess the sincerity of every offer, whether it be a donated building, a contribution of funding or an endorsement from city officials before focusing their limited time or resources in that direction.

With such a deluge of support as this new teen center is receiving there will certainly be substantive offers among the many vaporous offers to help. Courtney and her team are sorting them out and focusing their energy on developing relationships with those partners who are truly ready to help lift their vision into reality. The tough part will be showing appreciation to and keeping those other excited yet uncommitted folks under their wing so they can help later on. I hope to highlight some big leaps forward from Courtney and her team in later blog posts.

Are you at this frustrating stage of starting a bike program that provides appropriate bikes and careers to disadvantaged people? If so or if you’ve experienced similar frustration, please leave a comment with further tips for readers to get through it and onto the fun of results.

DIY Bike Gift Ideas

Are you having trouble finding last minute gifts for some of your bike friends? Maybe all you need is some stealth DIY creativity to dress up their ride before Christmas morning. Take a look at these two sites for inspiration:

Bike Hacks where you will find handy ideas like bike rack extensions using coat hangers:

And this list of 24 DIY bike projects on Trend Hunter. My favorite is the insta snow tires using zip ties--could be a winning gift if you're buried under a white Christmas: