CR Leaders Corner: Carol Atwood, Spartacus Media Enterprises

It was through Dees’ efforts at HBS where Marcy Murninghan first met Carol Atwood (they collaborated on the project, “Investing in Media That Matters: A Gathering at Sundance Village"), whose career embodies this convergence: use the private sector to create social change.  Her chosen strategy: use business, finance, and media to leverage opportunities for making a positive difference.  Atwood also contributes to new, sustainable models of capital markets and business management through her current board membership with King Arthur Flour, the Calvert Foundation and Calvert’s Community Investment Partners, and IW Financial.

 

Carol Atwood founded Spartacus Media Enterprises to increase the flow of capital to media and education for social change.  More recently, she is working to establish new norms in the extractive industry / mining sector—particularly through consumer education about “eco-gold” and the value of recycled gold.  Africa has caught her attention as she supports organizations working to eradicate HIV/AIDS, empower women, reduce poverty, and provide access to education.

 

Over the years, she has advised a host of groups – the Social Investment Forum, the Initiative for Responsible Investment at Harvard’s Kennedy School, The CSR Group, and more – which informs her sense of what works and what doesn’t, and where the opportunity gaps reside. AccountAbility Senior Research Fellows Marcy Murninghan and Bill Baue posed the following 10 Questions to Carol Atwood.

 

 

Carol Atwood: We are living in a world in which cross-sector and public-private partnerships have become essential to all stakeholders’ core missions.  Whether on a global, country or local level, the world has transformed in such a way that the old boundaries of ‘siloed sectors’ have become blurred.  In fact, many discrete sectors are converging with others and are in the process of re-forming in ways that have not yet been determined.  Plus, we now live in a world where perhaps we may never truly reform in any permanent sense. The new rules appear to be that change is iterative, requiring flexibility to adapt with every new seismic shift in world populations (such as the current so called Arab Spring) or technology (the latest kind of social media tools). As change presents itself, we need to be open to viewing our world with open eyes that are not framed by the lens of previous views of what reality is.

I know this all sounds quite esoteric at best and difficult to imagine as a framework for guiding one’s actions going forward, yet the current and future status quo suggests that in the long term, there will be no status quo!

 

 

Carol Atwood: Here’s a well-known illustration, from the silver screen, on the need for cross-sector partnerships.  It requires you to suspend disbelief that my sense of the framework within which we are all now working and living is accurate.

 

I have been focusing so much of  my time lately on the levers that allow better stakeholder  engagement, to ensure marginalized people and environments of the world are empowered to build  sustainable communities (financially, socially and environmentally). That’s why I would like to frame my thoughts using the struggles, opportunities, and lessons portrayed in the movie Avatar. 

 

Avatar is a powerful movie, and not just from an entertainment or technical standpoint.  More significantly (for me at least), the film is a metaphor for the changing landscape I described, and how it affects:

 

Carol Atwood: Well, in the film, you have a classic struggle of those who live on the land, love the land, and assume that they will forever be formally or informally deeded that land. They are the blue-skinned humanoids that represent all indigenous people in our world.  Their world is called Pandora.

 

You also have other actors: the mining corporation, called RDA, which is extracting a valuable mineral called “unobutanium”, and is shown as not acknowledging the interests of anyone but the shareholders.  So they represent, in our world, all corporations, and their perception (in a traditional sense) as beholden only to those who have provided funding.  RDS doesn’t question whether its fiduciary obligations are beyond that shareholder group, or should encompass all stakeholders who are affected by corporate actions. 

 

Then you have the government’s military, which in Avatar upholds the corporation’s view of the world—meaning it listens only to the shareholder.  In our real world, governments often play this role, too, as the US has with its oil interests in the Middle East.  Politicians see their positions jeopardized if their constituents’ consumption desires are threatened.  

 

So, in Avatar, on Pandora, you have the consumers of unobutanium helping to drive the support that the government provides to the company, RDA, and its worldview of who are the primary stakeholders whose needs should be represented.

 

Then you have the advocates.  In the movie, a character named Grace Augustine heads up the “Avatar Program”.  It’s similar, in our world, to the not-for-profit and advocacy sectors that support local lands and indigenous peoples affected by corporate interests. 

 

To return to your question:  In this classic worldview, the possible multi-stakeholder problems you refer to play out in Avatar. This world view of capitalism has been on shaky ground for some time, and the efficacy of it – with the deep recession and the acceleration of social media, smart phones and other world forces resulting from these two factors – has left us in a place of troubled uncertainty. 

 

 

Carol Atwood: In a different world than we live in now, a new world, shareholders are not the only stakeholder or partner.  In the new world order, corporations, governments, not-for-profits, indigenous people—they all need each other for their core mission to work.  And those who don’t have powerful voices in the mix in any substantive way—well, those are the people who are now suddenly front and center, bringing down governments in a week.  They’re demanding to be part of the process, of building products, creating their own goods and services and trading amongst themselves, thus leaving the traditional capitalist frameworks behind. 

 

In the new world order, the themes that played out in Avatar – with the struggles among the rights of indigenous people, the corporations, the government, the military, and those who consume the corporation’s  products – acknowledge that all of the players are stakeholders. It suggests that for stakeholders to achieve ultimate success, engagement amongst them must take place.  Each of them plays a critical role in the ultimate success of all who are at the table. 

 

 

Carol Atwood: I think so. Let’s say, in the real world, that Pandora was some country in Africa, with copper beneath an indigenous person’s land.  Let’s say that copper could help provide clean water to underserved communities, that it would come out of a tap in their village.  This means they wouldn’t have to send their children to a well that’s ten miles from home every day, causing them to miss school.  

 

In that instance, the corporation could play a facilitating role in determining the rights and fairness of mining that copper in ways that also provided them the resource that the consumer needed.  The government could play a role in regulating the rights of the stakeholders, as could the not-for-profits. 

 

 

Carol Atwood: The best way to choose the right partners is to build a visual map of the stakeholders that all “touch” your business in the critical ways that I describe in this Avatar example. Then look for partnerships that provide value for each stakeholder involved.

 

 

Carol Atwood: On the business front, King Arthur Flour is in a unique position to provide families and communities with alternatives to isolated activities in the home, and provide healthy, cross-generational connections around baking. The challenge that we face is that technology is both a blessing and a curse. We find that we are more efficient, better informed, and able to access people and ideas more readily than ever before. But it can be isolating, too. And unplugging and coming back to real interactions with family and community are of growing importance to Americans.  King Arthur Flour provides healthful products that can provide that opportunity. Americans also have the feeling that corporations are not always authentic in their connections to them. They are sometimes suspicious of corporate motives. King Arthur Flour is an employee-owned company that is committed to the B Corporation principles and those values are important to Americans.  An antidote, if you will, to concerns of manipulation. 

 

As for finance, Calvert Foundation provides financing to organizations committed to alleviating poverty around the world, helping people to help themselves become sustainable through their economic enterprises. The challenge today is that more and more people are falling into poverty, both globally and at home, so increasing lending capacity is ever more urgent. Organizations like Calvert Foundation – which were pioneers in making investment in micro-finance and CDFIs [Community Development Financial Institutions] available to all investors – can provide platforms for that growth. They also have a proven history of low defaults, strengthened capacity, and institutional knowledge of the “impact” industry's evolution.

 

Regarding media: Embrace Disruption is a project founded by Tim Freundlich and Spartacus Media Enterprises, to help those in the media sector who are interested in leveraging media for social change.  It’s a project aimed at all those who depend on media to help them maneuver the turbulent waters of change that we’re experiencing right now.  

Because traditional funding sources for independent media are falling away, the impact of traditional formats such as hard copy newspapers is diminishing. Technology has transformed options for media viewing and participation, so consumer expectations are fundamentally different than even two years ago.

 

 

Carol Atwood: Yes, that’s right. Embrace Disruption provides a platform for discussing this changing media landscape.  It’s embedding itself in different stakeholder events to hold dialogues about the media. For example, during the last two years, Embrace Disruption has sponsored a micro-conference at Social Capital Markets (SOCAP), a very dynamic catalytic event in San Francisco that attracts 1,400-plus attendees each year who come together to discuss the intersection of money and meaning. 

 

In my view, these three sectors – business, finance and media – are a powerful triad that enables social and environmental change.  Together they can generate the best solutions to the challenges we face in this decade. 

 

 

Carol Atwood: It is always difficult to accept failure. Yet, as an entrepreneur I am well aware that the statistical chance that a new venture will succeed is 1 in 10. And when you add to that, attempting to pioneer new industries or concepts, the failure rate is beyond 1 in 20. So you cannot go into incubating a new pathway without accepting right up front that the enterprise may not succeed.

 

In fact, it is best to have the attitude that the overriding goals – which, in my case, are social and environmental change that provides underserved communities with sustainable solutions – are more important that the current platforms that are being attempted. 

 

That isn’t to say that I don’t want any enterprise that I create, incubate, manage, lead, guide or invest in to succeed. I do.  It’s about maintaining awareness that even a failed enterprise can become a stepping stone to a better approach. And that if I and those who partnered with me on an endeavor are willing to accept that, in some cases, failure will occur – but that we will commit to learning from what did work and what needs to be changed for next time – then we have still contributed valuable insights into a better path for achieving social and environmental value through business, finance, and media. 

 

My most difficult experience with failure was a hedge fund that a colleague and I founded and launched just prior to this past recession. We decided to be the first hedge fund in the world to commit in our by-laws and charter to giving 50 percent of our carry (commission) away to philanthropy.  Obviously, with such giants as George Soros, hedge funds and philanthropy have been done before. But we were specifically making a statement by the legal commitment we undertook and the scale of our earnings that we were willing to give back to society. 

 

Our first year was tremendous, with a 28 percent internal rate of return (well into top quartile returns) and with the satisfaction that many not-for-profits benefited well from our efforts. But in year two we were not so lucky. The recession was just beginning and we had decided to invest in the troubled financial sector. The laws that governed finance since the 1930s suddenly gave way, as we all know too well, and companies that at any other time would have ultimately bounced back, such as Lehman, vanished from the face of the earth. 

 

And with that our fund had to make the terrible decision to shut our doors as one of the early victims of the recession. We were a bellwether for what was to come. It was very difficult to go through, in particular because individuals I knew well had invested in us and trusted us with their capital. And of course, the dream of sharing with the hedge fund world this concept – that when you have enough, you should share the rest – never did come to pass. 

 

Yet, our investors were, for the most part, surprisingly understanding. They recognized that it was not for lack of expertise, knowledge, concern, and sincere effort on our parts, but more being caught in a perfect storm, that we had to shutter our doors. I learned a lot from that experience about myself, about the fact that the unthinkable can happen, and does happen. But I also recognized that I still wanted to follow this dream that a financial company can make money while doing good, so I have continued to iterate and expand upon that fund’s vision in my current work today. 

 

 

Carol Atwood: Social Venture Partners is very pioneering because they believe in utilizing a venture capital investor model for giving. This means that you analyze the “gaps” of need and conduct due diligence to ascertain which organizations can best fill that need.  You also look for leverage for your invested grant, in terms of scalability, sustainability of the organization, and the idea. And finally, you measure the outcomes of your grant invested dollars to ensure that the intended result was realized. 

 

 

Also, I feel the trend towards providing grants in the form of PRIs is gaining momentum as more organizations feel that sustainable models often require a grant recipient to either have earned income as part of their revenue or that the organization is a for-profit social enterprise, and therefore can utilize a grant in the form of a PRI for more long-term sustainable capacity.

^[1] [Note: Paul Ylvisaker, a giant in philanthropy and later Dean of Harvard’s Graduate School of Education, and The Ford Foundation, developed the program-related investment model in the late1960s.  It was a precursor to socially responsible investing. The Ford Foundation provides a bit of context on its website.]