Funders drive focus and outcomes
In days gone by, many companies and generous individuals contributed money to various good causes in the community as part of their role of community leader and good neighbor. While giving is very much alive—and in many instances, almost back to pre-Great Recession levels—many corporate leaders and individual donors view their philanthropic giving more like an investment. They often seek a particular focus and explicit outcomes before making large financial commitments. The focus might be tied to their industry, the issues their employees most care about, or an image they want to project in the community.
Individuals too increasingly seek to make a particular mark on the community. Research shows that entrepreneurs are often eager to come up with new and occasionally very different approaches to addressing community needs. After all, that’s how they succeed in the marketplace.
While this focused, directed approach is a smart way to make investments, it does have consequences, some likely unintended. Historically, many organizations have channeled as much money as possible into their hands-on services and haven’t invested hard-to-come-by unrestricted dollars in data systems or evaluation mechanisms that could demonstrate the outcomes funders increasingly seek. Organizations with strong services often find themselves scrambling to track their results and market them to donors while at the same time trying to meet increasing community needs and deal with funding cutbacks. When funders today make targeted investments without supporting data systems or general operating costs, it can perpetuate the challenges facing many capable nonprofits. In addition, most funders value partnerships in the nonprofit community—just as they do in business. These take time to create and are usually created in large part by senior staff, whose salaries come from general operating costs, since they are not on the front lines of service delivery. A degree of flexibility for the nonprofits to make the less “sexy” investments, ones that may not readily sell but that are nonetheless critical to delivering their mission, is necessary.
Last and certainly not least, most funders ask hard questions about the sustainability of the enterprise they are supporting. These hard questions are part of their duty as investors, yet in an era of declining government funds and burgeoning nonprofits, smart nonprofit leaders don’t always have compelling answers. If the leader promises too much, it may sound (and be) too good to be true. Conversely, if the leader makes conservative projections, funders might deem the impact too modest to merit an investment of their hard-earned dollars. Multiple, varied fund sources and partnerships are indeed positive, yet they take time, resources and strategy to develop and nurture. Thoughtful funders will appreciate this, especially as they often concurrently expect more services to be provided with the same or frequently smaller contribution.
In conclusion, funders, whether corporate or individual, can have the most positive impact when they seek a balance between demanding specific results and offering flexibility to nonprofits. Part of United Way’s role is communicating with both donors and service providers about the impact of their choices. Understanding the unintended consequences as well as the desired impact makes for stronger partnerships—and the kinds of partnerships that will have the most positive impact in addressing community needs in the current environment.