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Funders: Want Real Impact? Make Real Investments

When it comes to making a collective impact initiative work, many funders focus on the ground-breaking programs and activities, and ignore administrative necessities that make them possible. This is the equivalent of a cake with all frosting and no flour – interesting but not substantive. Without an investment in staff time and infrastructure, the programs and activities you’re excited to fund can never come to fruition, or will flame out after some initial flash like a 4th of July sparkler.

Funders

Partial Funding Gets Partial Results

The activities and profile of collective impact work is different than most other nonprofit programmatic work. The very focus and purpose of the work is about systems, facilitation, sharing, learning, coordination, and communication. It is about group process and collaboration to reach paradigm shifts, rather than an emphasis on the most efficient delivery of current direct services. This dynamic leads to three major problems with restricted funding. First, in collective impact work it’s hard to define and separate out programmatic costs, thereby making it more difficult to request and track grant funding. Because a collective impact initiative’s work often centers on project management and administration, the programmatic costs and the overhead costs tend to be one and the same. Things like paying for staff time to facilitate and prepare for meetings, planning agendas, creating communications, and funding the Initiative Director’s salary, are all instances of programmatic costs that look like overhead costs. This can make it difficult to paint a compelling picture of funding need to grantmakers. Plus, it also makes the act of asking for a grant more challenging in and of itself.

Second, individual donors want to see the impact that their dollars are having, and it is already difficult enough for them to visualize how their contribution will advance a collective impact initiative where results may not be apparent for 10 plus years and the context is continually shifting. If foundations allocate money only for the sexy stuff such as programs, then you’re left trying to sell the administrative and overhead costs like meeting supplies and staff salaries to sometimes already skeptical individual donors.

Restricted funding can also lead to chronic underinvestment in an organization, a decision that inhibits long-term impact. Grantmakers who give only restricted program grants don’t cover associated or indirect costs such as administration, infrastructure and overhead. This leaves the initiative with plentiful program funding, but often underpaid staff and a gross under-investment in technology and systems to support the work. When foundations give unrestricted operating dollars, on the other hand, collective impact initiatives can make sure that they can invest in the infrastructure to support effective work over the long haul.

Perception

Aside from the lack of impact due to one-dimensional funding, the greater risk may be negative perception. When you fund the fun stuff, but not the nuts-and-bolts administrative infrastructure propping up the programs, you run the risk of looking like a hobbyist.

When investors have one foot in and one foot out, they are not encouraging growth in the field and organizational reinvestment. In addition, other investors who do provide unrestricted funding may feel like they’re giving you a free ride – and you’re not serious about what it really takes to accomplish complicated systems-changing work.

One factor that can contribute to the success of a collective impact initiative is a financial model funded by diverse investors through multi-year grants. The backbone organization assumes increased risk and responsibility when it takes on the burdens of infrastructure and administration. If the other funders are only contributing toward programs, they get the glory of the initiative’s inspiring results without shouldering the infrastructure that really gets that work done.

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The Ripple Effect

If you are interested in real leverage for your investment, build in unrestricted funds AND multi-year funding. Chances are you are interested in supporting a collective impact initiative because you already know there is no quick fix for the problem being addressed – so own it and back the idea for multiple years. By providing unrestricted dollars, the salary of the Initiative Director is funded in advance for example, so he or she can focus on getting the real work done and not on securing his or her next month’s salary.

The type and length of funding you put up is your leverage and your bargaining chip. When you provide the overhead and commit to long-term funding for long-term solutions, you demonstrate that you have real skin in the game. Not only does this give you genuine influence, but when other funders see the pull you have by going all in, they’ll want to follow suit. This leadership stance can make unrestricted grants and multi-year commitments — which can be put toward any important organizational investment — the new normal.

Emily Hall

Emily Hall

Emily Hall, Olive Grove’s Founder & CEO, has provided strategic consulting services to thousands of community leaders, social entrepreneurs, nonprofits, board members, corporations, governments and philanthropists over two decades. She has enhanced the impact of organizations of every size, sector, stage of development, and mission focus, and helped individuals focusing their giving for maximum impact.