There is much discussion lately about the financial doom that this pandemic is unleashing on nonprofits. Cancelled galas, shrinking corporate donations, fearful foundation donors, disappearing government coffers. It seems that the entire way nonprofits and social change are funded might be crumbling before our eyes.
It’s about time!
That’s because how money flows to the nonprofit sector is horribly broken. Essentially the nonprofit sector has been taught for decades to beg with a tin cup and be eternally grateful for the scraps left over from an extractive financial system.
The broken way we have funded the nonprofit sector includes elements like:
- Lavish fundraising galas that exhaust nonprofit staff and take them away from their mission work, while often netting little actual net income.
- Restricted, cumbersome, and small foundation grants.
- Corporate donations that require excessive, costly, and distracting promotion and recognition.
- Government funding that rarely covers the full costs of the services they are supposedly buying.
- Nonprofit leaders who are made to feel unequal to the person or organization who holds the purse strings.
I’m not going to sugar coat it, folks. The way we fund social change is not working.
In this broken system, nonprofit leaders are forced to employ inefficient and exhausting methods for getting people to release pennies and nickels when the problems these leaders are attempting to solve actually require many millions of dollars.
Very few nonprofits achieve the holy grail of sustainable social change simply because — for the most part — money has been concentrated in a small, elite number of people and organizations. And a growing number of nonprofit organizations compete on bended knee for whatever scraps those elite feel willing to part with.
Nonprofit leaders and organizations that are legitimately working to create a healthier, more connected, equitable world should not have to operate under such an antiquated, disempowering system.
So do we want to direct our future attention and energy to shoring up this dysfunctional system? Or should we instead focus on creating a new, more effective system aimed at actually creating sustainable social change?
This would be a social change funding ecosystem where nonprofit leaders confidently and courageously articulate the solutions they envision and exactly how much money it will take to create those solutions. Once articulated, these leaders would form fully equal partnerships with funders, receiving all the money they need to implement and scale the solutions they offer.
In this new reality, nonprofit leaders no longer feel small, exhausted, under-appreciated, disempowered, sidelined and impoverished. Rather, they enjoy an abundance of people, networks, power, influence, and money that easily flow to them and the solutions they offer.
I firmly believe that this pandemic offers us a crossroads in funding social change. A crossroads at which we can finally say a hearty goodbye to the broken business as usual of the nonprofit funding ecosystem. And instead start creating a more effective, sustainable future for true social change.
Photo Credit: Diem Nhi Nguyen
I am in full agreement with you. And yet, as a nonprofit leader, how can I just ‘decide’ all that on my own? “fully equal partnerships with funders, receiving all the money they need to implement and scale the solutions they offer.” – that of course is my dream, but what is the pathway to that? If the funders all decided this, we’d have a different world, here. But how do NFP leaders make that happen?
Vanessa, thanks so much for your great question, one that will make an excellent future follow-up post, so thanks for the inspiration! But in the meantime, let me give you some thoughts. And, I am actually writing a book on this very pathway you are asking for, which will be out early next year. The “pathway” has several steps. First, is for nonprofit leaders (and funders) to understand how broken the system is. We all need to pull back the curtain and agree that the status quo simply won’t work anymore. Then, nonprofit leaders need to step into their own power. You see hints of this in your question. You write “If the funders all decided this, we’d have a different world.” In that very declaration you are giving away your power to funders. Instead, I counsel my clients to educate and demand more from their funders. Understand and articulate exactly what it will cost to achieve what you want to achieve, then confidently ask funders for that. You have to believe, first and foremost, that you and your mission and organization are worthy of real, significant investment, and then you have to clearly articulate exactly what that investment is and what it will achieve. Central to believing in your and your organization’s worthiness is a willingness to kiss the scarcity mindset goodbye. Nonprofit leaders can free themselves from the shackles of believing that there will never be enough, and instead embrace the idea of abundance. Again, this is something I coach my clients about all the time, to magical effect. So, the short answer is, there is a pathway, but it starts by owning your own power to change the situation. I’ll say more in a future blog post. Thanks again for the great question!