Guest post by Becky Davis, Director of Organizational Social Work, University of Maryland
We need to get more innovative with how we fund the nonprofit sector. It's no surprise that as budgets continue to tighten, we need to get creative about how we infuse dollars into nonprofit programs.
Financial innovation is critically important for 2 reasons:
- New financial models bring new streams of revenue. Take the crowd funding phenomenon - Anyone with a cell phone can have a really good idea about how to fix a social problem; raise money to execute their idea; share their results with the rest of the world.
- Existing financial systems are not up to the challenge. Foundations have been essential for helping nonprofits prove their programs are successful but most traditional funders can't pay for program models expand on a national scale.
These reasons were certainly enough for me to feel the urgency and excitement in what our panel of experts were here to share. But I was still wondering what a shift in fundraising could really mean for community-based organizations? Would the world of golf tournaments and spaghetti dinners be obsolete?
Here are a few implications Lucy Bernholz from Arabella Advisors shared with the session:
- Expertise Gap -- Most nonprofits don't have the in-house expertise for executing new kinds of financial solutions. Lots of organizations have staff skilled in grant writing or event planning but what about new kinds of revenue building like the social impact bonds shared by panelist Laura Callanan from McKinsey and Company. This stuff is new territory and needs fundamentally different kinds of skills to execute!
- Recalibrating our Metrics -- Because sources of funding are becoming more innovative, nonprofits need to re-think how they track, measure, and report on outcomes. Does a community foundation want the same data as a venture fund? Not likely.
- Morphing Partnerships -- New kinds of funders mean new kinds of enterprises. Social change efforts around you, against you, and in partnership with you might not be a nonprofit.
- Rules are Changing -- Taking notice of the recent election and donor disclosure - policy regulations are changing how we use private money for public good.
- Personal Choices -- More and more individuals are asking "how do I use what I control – my time money, expertise - to make an impact on social problems I care about?"
We could have spent an entire day exploring and understanding different models of social investing - concepts like impact investing, mission-based investing, program-related investing and others. But make sure to check out a few of the interesting models presented at the conference:
- Omidyar Network presented by Paula Goldman
- New Schools Venture Fund presented by Julie Mikuta
- Michigan Suburbs Alliance presented by Conan Smith
- Gordan and Betty Moore Foundation presented by Dan Winterson
What ways do you think nonprofits can expand on a traditional funding base?
