Asking more from our Funders

I’ve been running across a lot of thought provoking ideas regarding the relationship between donors and grantees.   I have put together a summary of some of the ideas that stood out.

The following quote is from Bob Giloth’s Blog underNonprofit Leadership. Here he examines donor capacity building.

One contrast of approaches is whether capacity building should focus on individual organizations or on fields — collections of diverse organizations or parts of organizations devoted to spreading specific type of program element or innovation. These approaches represent very different ways of getting to scale. Most attention has focused on the former. Building fields requires grantmakers to realize that they are a part of fields — but not necessarily the leaders of the field.

Bob’s idea made me wonder how donors view themselves in the ecology of the nonprofit/NGO sector.  I’ve spoken with several nonprofits Directors who share stories of their long suffering dedication to educating a donor about how their nonprofit works and how they should be funded.  I often ask the question, ‘How did this change in donor behavior come about, was it advocacy or just simply trust over time?’  Everyone says trust; the donor trusts that we can spend the money wisely so we are given more freedoms.  While that’s well and good it may suggest that donors don’t have a mechanism to begin on the footing of a relationship of trust.  I imagine, they lack the ‘correct’ indicators, innovative models of funding and maybe even types of staff to do the due diligence needed to understand nonprofits business models better.

Another idea I heard from Nonprofit Finance Fund (NFF) is that funder conditionalities or a funders ability to require certain types of documentation should be directly correlated to what they fund.  In simple terms if you are giving money for an existing and established program, your requirements should be less complex than a donor giving a nonprofit/NGO money for a new untested program.  The Nonprofit Finance Funds distinguishes between administrative (existing activities that are a norm) and investment (new areas of growth and development) funding.  If there is a difference between administrative and investment programs one may ask, what are the ‘right’ reporting requirements for each?

Speculation on the ‘right’ reporting requirements dovetails nicely into a discussion on monitoring and evaluation systems.  At the Rapid Results Institute I’ve seen some advocacy for a more active M&E system; one that goes beyond identifying the status quo and moves towards creating systems which identify problems and innovations and then helps the organization react accordinging.  A participant at a recent conference I attended mentioned that both donors and NGO’s need to rethink M&E and the indicators that they track.  She boiled the most important indicators down to three:

  1. Did the NGO reach their numerical target? For example, 100 girls are now going to school.
  2. Did the NGO change the existing context?  Now parents are more inclined to send their girls to school.
  3. Did the NGO make an [unexpected] impact?  Now girls are planning to go to college and but are dropping out at high rates because they get married.

A lot of food for thought.  I’m sure donors and NGOs have found some creative solutions to existing problems once they reach that level of trust.

I can share one innovation that I can remember and it’s Nonprofit Finance Funds (NFF)  Building For the Future.  It happens that some NGO’s/nonprofits do not recieve funding and/or set aside funds for building maintenance.  They avoid the roof until it’s ready to cave in and then they do a ‘desperate’ capital campaign; demonstrating how many sweet innocent children will suffer if the roof falls on top of their heads.  Let’s be honest this strategy works even if it is risky.  NFF has been able to get funders and their nonprofits together to create a mechanism by which money is set aside for building maintenance.  Not a radical thought but very radical to implement.

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