A Study in Social Entrepreneurship

Richard Hugo House is a two-year old literary arts center in Seattle named after the Seattle-born poet and creative writing teacher Richard Hugo who wrote squarely and poignantly about people and places often overlooked. Hugo House offers classes, workshops, events, performances, meetings, as well as simply the time and space to read and write. Programs include writing classes for adults, after-school and summer creative writing workshops for youth, resource libraries and a writers' room, an annual new play competition, a monthly program that sends writers to work with inmates in a nearby prison, a library of independently-produced magazines (or "zines"), writers-in-residence, a variety of reading series, a youth open mike founded and run by youth, and an open program fund for anyone with a good idea to produce a literary arts event. Hugo House also sponsors an annual weekend arts and cultural symposium on a broad cultural theme — last year “place,” this year “shelter.” “To live good, keep your life and the scene,” Hugo wrote in his poem, Montgomery Hollow.

Passion meets idea
It was in 1996 that Hugo House cofounder Linda Jaech first got the idea for a writers' house. She'd heard a story on the radio about a writers' house in San Francisco, and wondered if something similar couldn't happen in Seattle. A writer well accustomed to long stretches of isolation, she was struck by the lack of a welcoming community place in Seattle where she could go to meet other writers and artists to share work, generate ideas, and learn. She posed the idea to Frances McCue, her friend and an award-winning poet, creative writing teacher, and education reformer; and soon after they brought in Andrea Lewis, an original Microsoft employee turned creative writer who was also Linda's close friend. Entrepreneurial in spirit, the women began to think in terms of potential audience: Did other writers in the community feel a similar need for a community place to call their own? Would they be willing to pay for it? And if so, what kind of place would best fill their needs?

In October 1997 Richard Hugo House opened its doors to the public before its new home was complete. A rambling three-story Victorian in one of Seattle's most diverse urban neighborhoods — once a funeral parlor and, more recently, a theater — it had windowless rooms, a doorless bathroom, chipped paint, and just one office space. But a year after a difficult search for locations for a vibrant community center for writers, Hugo House's founders were anxious to get started.

Much like the high-tech entrepreneurs launching start-ups around them, they'd spent more than a year hashing out their vision, researching their market, and refining their goals. There seemed little reason to cordon off their dreams. So they posted signs pointing to hazardous construction areas, and asked visitors to bear with the hammering, drilling, and sawing noise. Their dream was, after all, to create a vital learning community for writers, with room (and rooms) for all kinds of stories to unfold. That meant opening its doors before writing the whole story, asking community members to add their words to the page. In much the way that writing is an act of seeing, imagining, taking risks, and making choices, so too is starting a new venture. And it was in that entrepreneurial spirit that Richard Hugo House's founders set up shop.

Defining social entrepreneurship
While the Pacific Northwest has come to be associated with entrepreneurship, it is usually in connection with the computer industry. But a new term — “social entrepreneurship” — has been gaining currency here and elsewhere throughout the United States. Social entrepreneurship combines the creative, fast-paced, market-responsive, and risk-taking qualities of for-profit start-ups with the social mission characteristic of non-profits. J. Gregory Dees, a Stanford University professor and Entrepreneur-in-Residence at the Kauffman Center for Entrepreneurial Leadership describes social entrepreneurs as people who mix ”...the passion of a social mission with an image of business-like discipline, innovation, and determination commonly associated with “the high-tech pioneers of Silicon Valley.” While not a new phenomenon, he states, (pointing to the Rockefellers, Fords, and Carnegies), Dees emphasizes that the new language is significant “in that it implies a blurring of sector boundaries.” The term can refer to non-profits that start for-profit ventures (e.g., Children's Television Workshop, The Manchester Craftsmen's Guild, Goodwill Industries), and for-profit companies with an explicit commitment to social responsibility (e.g., Putamayo World Music, Tom's of Maine, Patagonia).

So what does it mean for an arts organization to be a social entrepreneur? What does it mean to take a venture capital approach to non-profit funding? What are the advantages? The risks?

Hugo House co-founder and executive director Frances McCue calls social entrepreneurship “The practice of using venture-minded, passion-fueled, formative and outcome-oriented strategies to create accountable organizations that benefit the community.” That means spotting a need, being innovative, taking risks, having high expectations, and ever learning about and responding to your community. It also means looking to funders in much the way that entrepreneurial initiatives look to venture capitalists: as partners, shareholders, and supporters who help launch projects. Co-founder and Board president Linda Jaech emphasizes the importance of identifying a need when defining entrepreneurship, and then proactively setting out to fill it. Anne Stadler, a Hugo House consultant and consulting faculty member at Antioch University in Seattle, adds “flexibility,” “inventiveness,”and “ongoing inquiry” to that mix. The difference between any good nonprofit and an entrepreneurial one lies in the entrepreneurial organization's “explicit commitment to learning guided by inquiry,” she says. “What I'm so struck with about Hugo House is its continual engagement and reengagement with the community.”

Venture-mindedness
Hugo House's founders had a vision, a mission, and goals. Their mission was to build a vital learning community that develops and sustains practicing writers doing essential work. To do that, they set out: to create a place where people could gather to celebrate, learn about, and practice reading and writing; to design and offer innovative, high-impact writing education programs to people of all ages and backgrounds; to create new audiences for the literary and performing arts; to make creative writing a meaningful part of the city's cultural and community life; and to develop programs that would blend their passions for the arts, education, and public service. But they also had something else: high expectations of themselves as social entrepreneurs. Drawing on the entrepreneurial spirit of the high-tech startups flourishing around them (at which two of the three founders, Linda Jaech and Andrea Lewis, worked as technical writers for many years), the women positioned Hugo House as “A smart, young organization responding to some social and artistic dilemmas in a way that software entrepreneurs are responding to the computer market,” says Frances. In other words, they looked carefully at the community in which they lived and worked, and saw spaces for opportunity. Like profit-minded entrepreneurs, their questions ran toward success: “What's out there?” “How can we do things better?” “How can we sustain ourselves and how can we offer a product, in a sense, to a set of clients that really improves the artistic economy of the country in some way?” As Frances puts it, “We didn't approach the situation as a great charity. It wasn't driven by a desperate sense of ‘give money to this charity for this dire, dire cause’” — a traditional appeal that doesn't hold up among venture philanthropists.

In the world of for-profit start-ups, making money is the ultimate goal. Entrepreneurs forge partnerships with venture capitalists, and draw investors with IPOs (initial public offerings of stock). In the non-profit sector, the goals are less tangible, more subtly woven into the fabric of particular communities. How could a center for writers generate the kind of excitement among donors usually equated with the financial returns of hot IPOs? Using the language of entrepreneurs, the Hugo House founders started by throwing a Founders' Circle Dinner for a group of “potential investors” drawn mostly from Seattle's high-tech community. “We began to think of philanthropists as investors,” recalls Frances. “We said, ‘Here is your window to invest money in this organization and be considered a founder. And this is something you want — not because you're going to take a fiscal profit out of it — but because you're going to help yield some profit for the community.’” The dinner generated a lot of excitement, and $30,000 in cash. Fifteen guests became part of the Founders Circle (at a minimum of $500 each), and a number of them committed to donating more than 100 hours of their time. Hugo House had taken a creative leap by adapting the business model of initial investors to a non-profit literary center and, says Frances, “People wanted to put their name on it.”

Long-term, outcome-oriented investments
Perhaps most significant to Hugo House's early vitality was the philanthropic generosity and entrepreneurial savvy of co-founder and Board president Linda Jaech. With money from the two successful software companies that her husband, Jeremy, co-founded (Aldus and Visio), she was able to contribute almost 100% of Hugo House's start-up resources. But while it would be easy to say that Hugo House's success rests on the unusual gift of so much seed money, Frances points to Linda and Jeremy's giving style in making the difference. It was never their plan to just endow Hugo House, or to lay down money from a distance year after year. As seasoned entrepreneurs they had high, outcome-oriented expectations for Hugo House, and in addition to contributing money, Linda intended to be intimately involved with all aspects of Hugo House's immediate and long-term plans.

In the venture capital model, seed money is provided as a means to get a company off the ground, and non-cash resources (such as contacts and expertise) are given over many years to enable the start-up to put into place its own mechanisms for sustaining itself. Likewise, Linda's giving has always been deliberate, with success over the long term at the front of her mind. “I'm trying to establish a framework where we can make sure we have funds rolling in from all over the community,” says Linda. “I see myself as a sort of ambassador. I meet a lot of people and explain what we're trying to do and make connections in the community, with other organizations and individuals who can help us survive.” Adds Frances: “It would have been so easy for Linda to say, ‘Oh, you don't have enough money for that, let me just throw you the cash.’ But she withholds that impulse towards using her money to solve problems that the organization needs to solve.” In less than two years, the percentage of the Jaech's giving has dropped from almost 100% to 26%. Now, Hugo House's income comes from a combination of sources, with a five-year plan for funding that breaks down like this: foundations (38%); individual donors (22%); corporate sponsorships (8%); memberships (2%); and earned income from tuition-based classes, theater rentals, office space rentals, and ticket and merchandise sales (30%). Volunteers and in-kind contributions also figure sizably in the mix. In 1998, volunteers contributed nearly 7,500 hours to Hugo House. In five years, Hugo House projects volunteer hours, coupled with in-kind donations, to match 22% of its total budget.

The Jaechs' strategic approach to giving is one a small number of entrepreneurial foundations have begun to take. As one such foundation, echoing green, states in its mission: “We provide seed money and technical support to social entrepreneurs who want to start new public service ventures...and look for others to invest once the organization has grown beyond start-up. It means we don't just give out grants and require reports, we also spend a large part of our resources supporting our investments in our fellows.” (Frances received an echoing green fellowship in 1997 for her work at Hugo House.) While Linda concedes that it's highly advantageous to be in her position — part of a start-up and the funding community — she's emphatic in stressing that every non-profit should have a core of people with her level of passion, commitment, and access to funds if they intend to be successful over time. “You have to create a Board of people who will be passionate about what you're doing, and their major work should be about forging relationships with funders — relationships that are as long-term as possible. The Board has to be engaged in your mission, and they need to have financial resources. Otherwise I don't know how you'd make it...you'd get so exhausted swimming upstream.”

Researching the market
In their first year, the three Hugo House founders devoted themselves to asking lots of questions, gathering information, and formulating and reformulating ideas. They talked to friends, colleagues, and friends of friends. They conducted surveys and did extensive market research in Seattle. They met with others running literary centers across the country, and attended national literary and education conferences and events. In an entrepreneurial spirit, they asked the Loft in Minnesota (the largest literary center in the U.S.) to become a mentor to Hugo House. The Loft agreed, and offered guidance and wisdom throughout Hugo House's planning. The founders analyzed their findings, checked and shaped their assumptions, stretched their imaginations, and kept seeking out new ways to learn. They found that the community was hungry for and eager to support a place for writers, but different people wanted different things. Some focused on business practices, voicing concern about how to make a writers' house self-sustaining. Others were interested in inclusion — how to ensure that the place would draw and be open to people from all walks of life. For Frances, one of the biggest challenges took the form of balancing her own vision and intuition with what she was learning from the business community. “Much like a group of venture capitalists, we looked for demand and found it,” says Frances. But, she acknowledges, “Taking research into practice is often like carrying eggs over rocky terrain: many obstacles prevent their safe arrival.”

Staying open and responsive
To ensure that their new literary center would stay open and responsive to the community's interests and needs, the founders developed a mission and vision statement that, like the writing process itself, is roomy with invitation and possibility. “One of our responsibilities is to create a space where creativity thrives,” the vision statement reads. “We want people at Hugo House to receive guidance from us, but also to make their own selections from the opportunities we provide. We try to keep rules, prerequisites and hierarchies to a minimum, while helping people feel comfortable finding their own ways. We believe roles can change and evolve. Individuals can become leaders by taking responsibility for a task, gathering others to help, and then on another task become a helper.”
That attitude applies not only to Hugo House's relationship with the community, but inside the organization itself. Top-down leadership is virtually non-existent among Hugo House's staff, consultants, and volunteers. In early 1999, Hugo House added a half-time program coordinator and full-time receptionist to a team that now includes an executive director, administrative assistant, and facilities manager. Hugo House is also supported by an active group of regular paid consultants — some of whom attend weekly staff meetings — including a volunteer coordinator, education consultant, development consultant, groundskeeper, bookkeeper, and writer-in-residence. “It seems like a very flat organization, with people having reasonably defined areas of work,” says consultant Anne Stadler. “Staff and consultants seem to have two radars: one toward their own work, and the other toward the whole. People move back and forth between doing work according to their own high standards, while keeping an eye on the whole, looking to help each other out. No one's micromanaging anyone else.”

Many of Hugo House's board members are actively involved in Hugo House's activities, too, participating in everything from designing event invitations to overseeing Hugo House's resource library. “Staff members have direct relationships with relevant board members,” notes Anne. “There isn't someone they have to go through. It's quite unusual. A board is often there to provide credibility, fundraising clout, and policy direction, but they're pretty much divorced from ongoing operations. It's quite a rarity to see board members chosen for their passion for an organization.”

So how does Hugo House stay responsive to its community? From the start, the writing center looked to the community to help formulate its goals, programs, and policies. Soon after moving into its new home in the summer of 1997, the founders sent invitations to a cross-section of community members to participate in an “Open Space” community meeting. Open Space is a type of meeting that gives people opportunities to voice their interests and concerns, and take responsibility for the things they care about. Run as a sort of “marketplace for ideas” and based on a particular question or topic, the 1997 Open Space meeting asked participants to address the question: “How do I belong to Richard Hugo House?” Community members were asked to weigh in on such concerns as membership and the layout, use, and function of the new Hugo House building.

The 1997 Open Space was one of four such community meetings Hugo House has held since its inception. The first invited community members to generate ideas and proposals for Hugo House programs and community partnerships. Others have drawn on the community to dream about and plan Hugo House's annual inquiry weekend symposia, during which writers, artists, community activists, musicians, scholars, business people and others from the community explore a relevant cultural issue that arises in the arts, media, and politics. “In the entrepreneurial sense, [Open Space] is a way of bringing people into your market and letting them tell you what they want from it,” says Frances.

In addition to garnering community input through Open Space meetings, Hugo House looks to a Program Committee composed of community volunteers to evaluate all new program proposals. Any individual or organization can apply to run or collaborate on a program. Hugo House also uses committees made up of community volunteers to interview and make recommendations for all staff hires. Says Linda: “We have lots of plans and ideas, but when it comes down to specific ways that we are going to meet our mission, we invite the community in and they tell us. It's a very conscious decision to do it that way and some people may think we're crazy.” Frances adds: “Other arts organizations don't operate this way, but it's a process that most imitates the artistic process. That makes sense to us, and it's deeply inclusive.”

A learning community
At the center of all that Hugo House does is the commitment to learning, flexibility, and responsiveness, and a willingness to make mistakes. Everyone who works at and takes classes at Hugo House is encouraged to create portfolios of their work. Portfolios are assembled for Hugo House programs and events, too. Part artist's portfolio, part family scrap book, they contain photos, news clippings, letters, memos, evaluations, and rough drafts and final versions of schedules, activities, brochures, and activities. “One of the big ingredients here is the foregrounding of learning as one of the enterprises that you insist upon, so that ‘you allow for' a constellation of small mistakes,” says Frances. “We are making predictions about our ability to generate funds over the long term, and about the abilities of writers and community activists to thrive on the reciprocity that a healthy community demands.”

When so much is left to the community to decide, there must be space for surprises, and ease with unpredicted results. Such an approach can lead to wonderful gifts. Take, for instance, the eclectic hand-made coffee tables in Hugo House's cabaret. A high school student asked if she could design them for her senior project in art. And too, the 93 attached seats in the Hugo House theater: in perfectly good condition, they were put into a city storage unit when a major theater in town was renovating their space. Hugo House found out and paid $175 for the nuts, bolts, seats and all.

As for the risks of such an approach? There must be a tolerance for discomfort, a calm in accepting that you won't always know what lies ahead. “Sometimes it can look like you're just too lazy to make a plan or that you don't know what you want to do,” says Linda. But that's part of being in start-up mode, part of what enables you to “turn on a dime.” “The successful entrepreneurs I know have been able to realize when they need to change the path they're on,” Linda says. And as with writing, “the best thing to do is to not ever resist the need to change.”

As Linda sees it, “Creating Richard Hugo House has been like working on a communal book. Writers, readers, audiences, and teachers join us all the time and add their word, paragraph or chapter.” Two years in, there are pages and pages of first drafts. Some will be tossed, others will get revised, and still others will lead somewhere unexpected, become part of something else. In the words of Hugo House's namesake, Richard Hugo, “It is much like the ocean the way it opens / and rolls.”

Laura Hirschfield is an education and development consultant at Richard Hugo House. She has worked as an editor and curriculum designer for over ten years. She designed children's educational software for Microsoft and interdisciplinary arts curricula for the Galef Institute, a nonprofit educational organization dedicated to promoting creativity and public school reform. She received a Masters in Language & Literacy from the Harvard Graduate School of Education.

Bibliography
-Dees, J. Gregory. “The Meaning of ‘Social Entrepreneurship.'” Ewing Marion Kauffman Foundation, Oct. 1998.
-Dees, J. Gregory. “Enterprising Nonprofits.” Harvard Business Review. Reprint 98105, Jan.-Feb. 1998.
-Eisenberg, Pablo. “The ‘New Philanthropy’ Isn't New — or Better.” The Chronicle of Philanthropy. January 28, 1999.
-Emerson, Jed, Melinda Tuan, Lauren Dutton, and Daniel Kessler. “The Roberts Enterprise Development Fund: Implementing a Social Venture Capital Approach to Philanthropy.“ Graduate School of Business, Stanford University, May 1998.
-Letts, Christine W., Allen Grossman, and William Ryan. “Virtuous Capital: What Foundations Can Learn from Venture Capitalists.” Harvard Business Review, March/April 1997.
-McCue, Frances. The Poet in the Warehouse. Teachers College, Columbia University. Project submitted in partial fulfillment of the Ed.M in Interdisciplinary Studies and the Klingenstein Fellows Program.
-Sievers, Bruce. “If Pigs Had Wings.“ Grantmakers in the Arts Newsletter. Autumn 1997.

Foundations that apply a venture capital approach to philanthropy
echoing green foundation
The Entrepreneurs Foundation
REDF
Social Venture Partners

Resources and training for social entrepreneurs
The Center for What Works (CW2)
The Denali Initiative
Initiative on Social Enterprise, Harvard Business School
Social Venture Network (SVN)

Online journals
Philanthropy Journal Online