Capital critical for nonprofits

By Todd Cohen

With escalating social ills and increasing competition, nonprofits need more investment capital.

But a new study says the availability of capital trails the need for it, creating serious problems for nonprofits.

In the core areas of human services, community development and the arts, says the study by Johns Hopkins University researchers, nonprofits need significant investment to develop programs, staff and strategic plans.

Yet nonprofits find it tough to tap the big pools of U.S. investment capital like insurers and pension fund, or know little about them, or both, the study says.

It also can be hard to get investment capital from sources like banks and charitable funders, which limited what they will fund.

Foundations and individual donors are most accessible sources, but neither can fund the full range of nonprofits’ investment capital needs, the study says.

While they fund program development and strategic planning, foundations give less for facilities, technology and staff development, the study says, reinforcing criticism they shun support for core organizational needs.

The study calls for educating nonprofits and investment sources, fostering intermediaries to connect nonprofits and big pools of investment capital, and a tax credit to spur nonprofit investment.

Social progress depends on that investment.

Todd Cohen is the Editor and Publisher of the Philanthropy Journal.

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