Providing significant, multi-year investment in the capacity and sustainability of a nonprofit can yield social returns by increasing an organization’s services and revenue, a new report says.
In one set of such “philanthropic equity investments,” nonprofits’ services grew 370 percent, while revenue increased 170 percent, says the report from the Nonprofit Finance Fund’s NFF Capital Partners.
NFF Capital defines philanthropic equity investments as “typically significant, multi-year investments that a nonprofit organization uses on the path to sustainable growth or change.”
Unlike for-profit investments, the return on such early-stage investment in a nonprofit is social rather than financial.
“At a time when nonprofits are facing an uphill battle to solve our nation’s social problems, philanthropic equity allows nonprofits to build the businesses required to implement effective business models, scale impact and create lasting change,” Craig Reigel, managing director of NFF Capital, says in a statement.
Since 2006, NFF Capital has supported 18 philanthropic-equity campaigns, which together have raised $326 million in investments.
And among its nine multi-year campaigns, non-philanthropic-equity revenue has increased $63 million over pre-campaign totals, indicating that greater long-term sustainability, the report says.
Revenue for these multi-year campaigns has almost tripled, the report says, with a compound annual growth rate of 32 percent.
The group’s longest running campaign began in 2006 on behalf of GlobalGiving and has posted almost 15-fold growth in the programs it delivers.
With the infusion of this type of investment, the report says, “nonprofit can focus on building their organizations to better address the social problems they seek to solve.”