Special to the Philanthropy Journal
By Priscilla Boiardi and Lisa Hehenberger
Impact is high on the agenda for non-profits. But how do you ensure that a concern with social impact drives real changes in the way your organisation works, rather than just being about pleasing a donor or investor? How do you make sure to receive the support you really need and that it deliver the value it promises? As a non-profit, is it really worth it to get non-financial support from a funder?
This is the subject of a key report that the European network for social (impact) investors and venture philanthropists – EVPA– launched late last year. It recommends the best ways to accelerate progress towards societal outcomes and showing how non-profit, managers and their funders can get and offer more effective non-financial support.
The report was motivated by both the importance of non-financial support and the lack of comprehensive guidance on the topic. It is also helps social sector organizations understand the reasoning and the cost behind the non-financial support and how it can add value to their work.
The report is the product of a year-long research study by EVPA including discussions with a 24-member working group of practitioners, social purpose organisations, academics and service providers.
A note on Venture Philanthropy and Non-Financial Support
Venture Philanthropy works to build stronger social purpose organisations (SPOs) – social enterprises but also NGOs or non-profits – by providing both tailored financing (using the whole spectrum of financing instruments, from grants to debt, equity and hybrid financing) and non-financial support.
This non-financial support is intended to help each SPO strengthen on three dimensions:
- social impact: the social change on the target population resulting from its actions;
- financial sustainability: to have sufficient resources to continue pursuing its social mission, whether they come from other funders or from own revenue-generating activities, and;
- organisational resilience, i.e.the degree of development of the management team and organisation governance, fund-raising capacity and other organisational issues.
Figure 1: The three areas of development of the SPO
Below we share some of the learnings we developed in this report:
- Define the support you need
Your Theory of Change (the social change you want to achieve as a non-profit) should guide you in assessing what types of non-financial support you need to ask for, defining what the gaps are in the skillset of your team, your contacts and business strategy.
- Finding a compromise on needs
There might be a difference between what your funder or grantor says you need and what you believe you need. It is crucial therefore that you take the time to come to an agreement with your investor on the specific intervention/ delivery model. Make sure `you indicate clearly what non-financial support you need, so your investor can select the right partners to deliver that support, but also stay open to take their advice.
- Set terms, milestones and objectives
Clearly co-define with your investor the terms and conditions, roles and responsibilities, delivery mechanisms, and scope of the non-financial support – this will help manage expectations on both sides and ensure an efficient delivery of support.\
- Consider the importance of networks
Consider the importance of access to networks to learn, network and find additional funding. Your funder/grantor can be a key partner to provide such access.
Peer to peer mentoring, investee meetings at global portfolio level and regional level, getting access to thematic networks or workshops and conferences are just some of the ways we’ve found you can get help.
It is also useful to look for a funder with a strong local network , as local partners can deliver non-financial support in a way that is aligned with your culture and that of your beneficiaries or users.
- Measurement and feedback loops
Monitoring and assessing the non-financial support you receive periodically, is key in helping funders offer qualitative non-financial support to you. In this way, mistakes can be quickly amended and most impact can be achieved. By providing information and data on what works and what doesn’t work, your learnings can inform the funder’s future non-financial support cycles, but also allow you to understand better how to manage your organisation towards greater impact.
- Be transparent
Transparency and good communication are of crucial importance throughout the whole process. Whether it is being transparent as to gaps in your skills or services, measurement or which support you value less, make sure you always keep an open and honest dialogue with your investor.
The European Venture Philanthropy Association is made of organizations interested or practicing venture philanthropy and social investment across Europe. Dr. Lisa Henhenberger is the Research and Policy Director of EVPA. She runs the Knowledge Centre, which conducts and publishes research, workshops and more. Priscilla Boiardi is EVPA’s Research Manager with more than 6 years of research experience and is responsible for the Global Competitiveness Report of the World Economic Forum for Belgium.