From the Chronicle of Philanthropy (February 24, 2016)
Big Data Is Next Priority for Veteran Conservationist’s New Charity
By Marc Gunther
Steve McCormick has enjoyed a long career in conservation, much of it devoted to protecting America’s wild places at two big, well-established organizations. Mr. McCormick led the Nature Conservancy, America’s largest environmental group, through a period of rapid growth but also controversy over its operations. He stepped aside from that job in 2007 and in 2008, he became president of the Gordon and Betty Moore Foundation, one of America’s wealthiest grant makers. He left abruptly from the foundation in 2014.
Now Mr. McCormick is starting over, going small and big at the same time. He is co-founder of a start-up nonprofit called the Earth Genome that takes a new approach to conservation, using massive amounts of data to reshape market forces, in part because of his frustration with traditional approaches to conservation. He talked with The Chronicle of Philanthropy about the evolution of the conservation movement, the limits of philanthropy, the potential impact of big business, and why he hopes his start-up will eventually make a profit.
Q: What is the Earth Genome?
Steve McCormick: There’s a radical notion behind the Earth Genome. We would like in the long run — and I hope the long run isn’t too long — to change decision making, principally in big global natural-resource-using corporations. If we are going to have conservation at a scale that’s going to be meaningful — systemic change — it won’t happen by creating protected areas alone. It will have to come by changing how we use natural resources. Until we incorporate the true costs of using natural resources, then we will have a distortion in the market.
Our intention is to enable decision making by corporations, and by government and NGOs, for that matter, to take into account true environmental costs. There are massive data sets, lots of which have been created by government and many of which have come out of universities or NGOs, all about natural systems. They’re open source. But they are impenetrable. It’s like having the Internet without a search engine. An infrastructure can be created to make that data much more understandable and accessible. We’re building a set of initial tools around a handful of really high-priority or critical natural-resource issues and finding a set of users.
Q: How’s that coming along?
Steve McCormick: Our first users include multiple companies in the WBCSD, most notably Dow Chemical. They have a huge petrochemical facility at the mouth of the Brazos River. They use significant freshwater. Water is a key issue there, probably because of climate change, flood peaks are greater and more frequent and drought periods are deeper and longer. They want to figure out a way they can have more reliable water during dry periods and capture more water during wet periods.
They can do that by building out existing reservoirs. That’s called gray infrastructure. Or they can invest in restoration of natural habitat. Our first tool, a green-infrastructure support tool, called GIST, mashes together a bunch of data sets and analytics to create a mechanism whereby Dow can look at the entire Brazos River watershed and see where restoration is possible.
We’d like to go on to build five or six tools, on forest systems, energy production, agricultural supply chains.
Q: Who’s supporting the Earth Genome?
Steve McCormick: When I left the Moore Foundation, we got a $1.2 million grant to incubate the idea. We got $1 million commitment from Bill Bowes, one of the early venture capitalists in California who has his own foundation. Similarly, we got a $300,000 commitment from the Draper Richards Kaplan Foundation. They’re very forward thinking. We have two or three other foundations that are likely to make contributions.
Q: How was this new venture shaped by your earlier work?
Steve McCormick: I’ve worked in the conservation not-for-profit world since going the Nature Conservancy in 1977. I loved creating protected areas. I did a lot of transactions that resulted in great protected areas. In the end, that may be my most tangible legacy. They’re an essential contribution.
And yet always I had questions. The first project I did was a 40-acre parcel for the desert tortoise. I thought, even a slow tortoise is going to walk across this in a day. It’s not big enough.
We kept trying to do bigger projects, and they were great. But look at the mission of the Nature Conservancy — to preserve plants, animals, and natural communities that represent the diversity of life on earth. By that as a standard, we weren’t succeeding. Global rates of endangered species were going up. Major natural systems like grasslands and forests were declining. When I was president of the conservancy, I tried, not terribly successfully, to position it to address the drivers of loss as well as creating fenced-in areas that would protect nature.
Q: Why was that hard to do?
Steve McCormick: The Nature Conservancy is a big organization. It had incredible momentum and a deeply embedded successful program in the United States. It was hard to shift that. The nonprofit world doesn’t change easily. It’s very consensus driven. You can see why. People are devoted to a cause. Their hearts are in it.
Also, nonprofit organizations by their very nature are dependent on what donors want. Nonprofit can try to convince donors what ought to be done, but it’s hard. It’s also hard to have a true long-range strategy at a nonprofit organization because you just don’t know if a donor is going to stay with you or if new donors will come in. Donors really like to be the first in. Very few donors say they want to be the third or fourth round donor of something some other person started.
Q: Should foundations use their investments as well as their grants to achieve those goals?
Steve McCormick: I don’t think foundations are having the impact they could, in part because 95 percent of their assets are off-limits. If you think about an enterprise in terms of how it allocates its resources, you’d almost have to say that foundations are investment enterprises with a small sideline of supporting nonprofit organizations.
Foundations could be more imaginative and influential if they use their investment assets in a number of ways. They could be looking for new opportunities to invest in clean energy or sustainable forest practices. They could put muscle behind organizations like the Sustainability Accounting Standards Board. They could support B Corps — social-benefit corporations — that have influence. I’ve become a big believer in for-profits and these emerging hybrids, like B Corps, that are going to be successful and will drive change in some ways more than nonprofit organizations.
Q: So why start another nonprofit?
Steve McCormick: We seriously considered being a for-profit. We still hold out the possibility.
But we set up the Earth Genome as a nonprofit for a number of reasons. One is that I don’t know how to raise venture money. I know how to raise contributions. Two, we had an idea that was totally unproven, and that makes it hard to attract investment.
If we stay as a nonprofit organization, we want it to be a revenue-driven nonprofit. I want it to have the character and the ethos of a for-profit. Where we make decisions quickly. Where we are responsive to the needs of users. If it doesn’t respond to the needs of users and therefore generate revenues, then it’s not providing something of value and we’ll go out of business. We want to put it to a market test.
I have to say one of our risks is that we’re in this at such at early stage. Can the clear financial benefits to our users be demonstrated? It remains to be seen.
Used with permission of The Chronicle of Philanthropy Copyright© 2016. All rights reserved.