Continuing the theme on nonprofit and startup innovation, and resources needed for success… Both create non-linear solutions to solve big problems and scale impact. But their funding couldn’t be more different.
Startup investors embrace risk, and one of the biggest factors they value is the team. Yet 75% of foundations won’t make a majority of their grants “unrestricted” for non-program-related expenses like, er, the leadership team.
There are four simple, high-impact actions that every foundation can take to attract and keep innovators in the nonprofit sector.
How can funders help keep fabulously talented people in the nonprofit sector? The same way a nonprofit attracts donors. Acknowledge the challenges. Encourage communication and collaboration. Respect knowledge and individual interests. Value their contributions.
Foundations are in an ideal position to fund talent. It can look like this:
Fund risk. Solving difficult problems demands trial and error.
Fund collaboration. Creativity blooms when smart people work together.
Share measurement tools. Funders are natural conveners and facilitators of issue-focused data. Stop asking nonprofits to provide it.
Make grants unrestricted. Support the people behind a nonprofit’s success.
In nonprofits and startups, funding drives how talent is nurtured and grows.
1. Fund risk.
Nonprofits rarely hear that they can make mistakes in solving tough problems. Funders must affirm that bright ideas can fail. And some do.
Omidyar Network recognizes “the best way to make a difference is to support and mobilize people and organizations to forge new power, test emergent ideas, and pursue just causes.” After all, their model for funding nonprofits and social enterprise for-profits came from an innovator who created a new kind of market: eBay.
Ashoka invests in transformative ideas and the people behind them by funding individual changemakers. Echoing Green solves “the world's biggest problems by raising up transformational leaders who challenge the status quo.” Both also provide a network of support with and for fellows.
DRK Foundation, like it’s VC founders, supports early stage, high impact social enterprises (nonprofit and for-profit) through multiyear funding. With each innovation grant, DRK also provides a staff member to volunteer on the nonprofit’s board. As a board member, I saw the brilliance of this model! The DRK talent brought corporate finance experience, and got to learn about the nonprofit’s issue area; the nonprofit’s talent had deep issue expertise, and got access to top financial knowledge. DRK’s board appointee asked simple questions that became game-changers for stable cash flow and innovation planning.
2. Fund collaboration.
When funders encourage and facilitate collaboration, creativity grows. Staff are engaged. Solutions emerge.
Yet how do most foundation grant proposals work? They offer a highly competitive application for a relatively small number of grants. This encourages individual nonprofits to differentiate, not join forces. And getting hundreds of grant application is really not something that any funder should brag about.
Why would a nonprofit take the time to partner on an already time-consuming, competitive grant proposal? It’s much more work, and may introduce another organization that gets “your” funding.
Collaborative grants are worthy of another Folly. And if you know any you’d like to recommend, please…
3. Share measurement tools.
Back to my friend who inspired these posts. While discussing nonprofit fundraising for innovation, we realized it sounds nothing like a typical donor conversation. It’s not about track record and past wins. It requires a candid assessment of the enormity of the problem. It demands out-of-the-box thinking and new ways of solving problems. It requests funding for things that are not yet being done.
Isn’t it a bit backwards that foundation proposals ask nonprofits to provide all the data and measurement? Funders gather issue-specific resources. They could provide tremendous support in building measurement tools – especially for innovation that nonprofits haven’t yet created.
Horizon 2045 Foresight Radar was born of collaboration between a nonprofit, an issue-focused funder, and a school of design. This online interactive tool allows you to explore 500 drivers of change and divergent scenarios between now and 2045. Their “forecast planning” offers context, language and solutions for nonprofits.
4. Make grants unrestricted.
The discouraging data on this front is why I make this plea in just about every Folly.
Nonprofit innovators are square pegs who must fit into the mostly-round holes approved by funders – or they just seek work elsewhere. When people are not rewarded (with funding) for creating new ways of solving problems, then … they can’t.
And isn’t that contrary to everyone’s philanthropic intent?