Modern media is full of articles, blogs, research papers and enthusiastic descriptions of new ways of engaging in philanthropy. Often described as ‘social impact investing’ or ‘social venture capital’ the focus has moved from individual or foundation philanthropy to groups of entrepreneurs making a collective investment in a cause, sometimes expecting a return on that investment. Much of this change in perspective comes from young, successful business entrepreneurs entering the philanthropic space and bringing with them the governing principles and language used by successful startups.
Four pillars are often seen in this modern view. They are not new, they have been part of the philanthropic landscape for decades, but they have risen more firmly to the top of the conditions and expectations for giving. The first is a documented need, not just one that tugs the heart, but a clearly documented threat that is, or could be, damaging to a population or environment. Next, measurable outcomes are expected to be identified as goals at the outset of the initiative with ongoing research to confirm them. Third is an organization’s ability to scale their efforts to address larger populations over time. Finally, nonprofits seeking funding are increasingly expected to have earned revenue as a component of their model and not be entirely dependent on contributed income. Sometimes this revenue expands the effort, sometimes it may reimburse the funders for all or part of their initial investment.
In most cases, these expectations are value added to the sector, bringing discipline and clarity to the work and creating pillars to measure and prove impact. To illustrate, a global health nonprofit will quantify the need for vaccinations in a country by showing the percent of the population suffering from communicable diseases for which vaccines are available. They will then calculate their timeline to scale the delivery of their services, for example providing vaccinations first to one village, then five, then a region or even a nation. The nonprofit will predict the anticipated outcomes in the reduction of disease and document the actual outcomes to prove success. Finally, the organization will seek revenue from those who are able to pay, for example governments or hospitals, to insure the initiative can reach those too poor to pay, the underserved individuals and villages.
A caution is that modern philanthropy will increasingly be focused on initiatives that inherently conform to this Four Pillars model, while leaving behind needs that are too desperate, small, messy or difficult to attract funding. We hope the next generation of successful innovators and entrepreneurs will help us solve these problems as well.
Rodman & Associates is pleased to be a partner in these efforts, large and small.