Why Nonprofits Can’t Do it Themselves
By Peter Brach, Grantmaker, Funders 2025 Fund
If you have not read our Donor’s Digest, we recommend that you review it for a quick, 10-minute lay-of-the-land. If you have, hopefully, you will agree that it provides a representative summary of the “Invest in nonprofit growth space.” In this article, I present a strong case as an advocate for supporting nonprofit staffing. That is, once the organization and the specific funding situation has been well-vetted.
If you read our Donor’s Digest, I am addressing the first category here regarding funders’ perspectives on capacity-building. As you can guess, I strongly disagree with the belief that funders are sufficiently supplied or should be able to use other resources for growing their organizations. The clear answer is that if they could have, they would have done so a long time ago. I believe we have long been in a nonprofit funding crisis due to a deficit in capacity-support. From my experience, there is a pronounced silent cry within the nonprofit sector. As research and conversations with quite a number of nonprofits reveal, the cry remains silent because these nonprofits fear losing funding. Secondly, it is embarrassing to look weak even though capacity-shortage is a sector-wide problem and more often not an indication of weakness.
Stanford Social Innovation Review published an article in 2016 titled “Pay What it Takes Philanthropy.” The article states that nonprofits reviewed report that indirect costs of grants are between 21-89 percent of grants given. While it can be argued that this article is dated, testimonials on this site are current and speak to the immediate and substantial needs nonprofits face.
There may be times when nonprofits could do more to raise capacity-building funding. As some suggest, entrepreneurial models could be used. If integrating a business revenue model is a solid strategy for advancing the mission of a nonprofit, then adopting such models could be a good choice. However, I will state strongly that running an additional business is a huge undertaking and often detracts from the goal of the nonprofit.
Building a New and Positive Narrative About Investing in People in Nonprofits
Some funders view providing capacity-support as a burden to bear. Speaking for myself, I am very excited about the impact our foundation achieved resulting from the capacity-building funding provided. So far, the outcomes of grants written to support nonprofit staff have been enormous. You are invited to read “The Power of Investing in People” to learn more.
Discussion on Risk Mitigation
We all have cause to be grateful to the countless philanthropists who were willing to take risks with their giving. Before an innovation can positively impact higher proportions of people, one or more funders need to provide seed funding. It is well-known that philanthropy is necessary to take initial risks to pilot programs that, if successful, governments can scale. Likewise, unless people are willing to take at least small, calculated risks to enable nonprofits to grow, very little progress will take place.
The operative words are “small, calculated risks.” I have taken numbers of such risks as a grant writer. In Kenya, I provided funding to hire an assistant to a high-powered leader coordinating development at the national and sub-national levels. Today, I am thrilled to be a part of the cogwheel that accomplished an enormous amount of progress. But if the leader did not continue on, for whatever reasons, the results could have been compromised considerably. However, the giving could be classified as a small, calculated risk because the size of the grant was not substantial in comparison to the size of our foundation’s portfolio.
If you are very risk adverse, you may want to begin in a similar manner with small amounts of money relative to your personal or institutional portfolio. You can begin conservatively and gradually increase as you continue learning. You can retain a philanthropic advisor, hopefully one who is on board with helping nonprofits grow – many are. You can also look for the sweet spot, that is, nonprofits that have strong fundamentals but can benefit greatly with small additions of staffing, or training of staff.
Consider pooling funds with others. If two or more people share the cost, then the individual outlay for each person is less. Also, if the total amount provided is larger than would otherwise be the case, then the outcomes may be significantly larger. For example, hiring a development person for one year is considerably less likely to achieve full success than hiring them for two years. Using this example, if you cover the cost for year one, and someone else covers the cost for year two, you have a better chance of achieving greater impact.
As the Invest in People Hub grows, we hope to cite more and more examples where funding to support hiring and strengthening staff impacted the trajectory of organizations. There is a great need to help nonprofits provide assistants to their leaders, hire experts, provide leadership and skills training and much more. While it may be easier to simply support programs, at least some reading this piece will agree, it does not allow organizations to grow. In fact, without additional funding, some nonprofits will fold. Working to build the nonprofit workforce is in my opinion a much more systemic and impactful approach to achieving greater good across many thematic areas: Helping children and the elderly, increasing educational opportunities, providing relevant employment training, combating climate change, and much more.
Disclaimer: The information provided below is for general information purposes only and should not be taken as professional advice. Readers should retain a professional philanthropic consultant when considering making substantial contributions.