Imagine this scenario: you have one hundred dollars to spend at your favorite store. You can buy anything you like, as long as the total doesn't exceed one hundred dollars. In another scenario, you are mandated to buy specific items under the hundred dollar budget at your favorite store, plus you must furnish your receipt to confirm you followed the rules. In both scenarios you receive the hundred dollars, but the items you buy may be very different. On one hand you are restricted to certain formalities. On the other hand you have full freedom to be creative and exploratory with your purchasing decisions.
Now imagine you are a cause-based organization, looking for ways to advance your mission, amplify your social impact, or accelerate your sustainability program. Your search for funding covers the public sector (i.e. governments), corporate donors, philanthropies and impact investors. As is usually the case, these donors have pre-determined programmatic goals, and/or geographical priorities, that they must fund. So you can apply for funding as long as your program fits within the donor's criteria. Each of these programs comes with reporting requirements, timelines, due dates and delivery expectations.
In another scenario, where a donor organization provides unrestricted funding (funding to help cause-based organizations, nonprofits or mission-oriented companies fill in gaps in programming, address needs of constituents, or invest in impact programs, without the added criteria of programmatic deliverables, geographic specifics, timelines in some instances or specific goals), it’s akin to being given a one hundred dollar bill at your favorite store without the requirements of purchasing specific items and furnishing a receipt. With unrestricted funding, your organization can use funds however you see fit, but with the intent to deliver on your cause, mission or impact program using creative methods, innovative approaches and trying different models.
Unrestricted funding is truly the panacea of all funding.
Let me give you an example as to why this is the case. When I was a nonprofit program director before launching Connective Impact, I managed several programs that had similar deliverables, but in three different geographies. Our primary donor funded our program on a three-year timeline, and it was my job to ensure that all of the objectives were met, our program teams in each geography were tracking their deliverables, budgets were in order, and our work was following the donor’s output expectations to a tee. It was challenging to deliver under our tight timeline, especially as issues beyond our control took time to manage, and our budget never budged when we had unexpected shifts in community needs due to a weather disaster in one of the geographies.
To fill in programmatic gaps, we had to seek unrestricted funding from a different donor, essentially to ensure we were delivering on our primary donor’s requirements. Unrestricted funding gave us a bit more wiggle room in terms of how we carried out the program, how we used our budgets to support the stakeholders involved and the timeline under which we were operating. The unrestricted funding became our stop-gap measure. Had our original donor allowed our funding to be unrestricted, we would have had a much easier time delivering on our programmatic goals, because we wouldn’t have been as tied to timelines and specificities. We may have had more flexibility to deliver, and thus wouldn’t have needed to find additional funding to complete the program.
Unrestricted funding allows for a much more goal-oriented and community based method of program delivery, without so much effort tied to specifics that get cause-oriented organizations tripped up.
It’s something that should be considered by all donors as a critical element to philanthropy.
So why is unrestricted funding so critical, especially now, during this global pandemic?
First of all, timelines have become completely unrealistic, given the uncertainty of what lies before us. We really have no idea how long this pandemic will last, what it means for our work, our institutions and our communities. Given the millions of people under quarantine, it's impossible to deliver on programmatic priorities that require in person engagement, training, or other activities that are measured in groups. In some situations a virtual substitute is possible, but the timelines would still be out of sync. Donors must shift to unrestricted funding to account for timeline discrepancies at a minimum.
Second, programmatic priorities are shifting — quickly. It goes without saying that when an entire planet of people is struggling to maintain health and economic wellbeing, priorities will change. Donors must be flexible with programs that now have very different deliverables and expectations than before this crisis.
Finally, unrestricted funding allows nonprofits, mission-driven companies and other social cause programs to keep people employed, programs running, and the economic engine of growth intact. In some cases programs are already underfunded outside of a pandemic. Now, more than ever, social causes need opportunities to propel their missions and reach those who have the greatest needs. This is true whether the entity is public or private. Unrestricted funding simply gives organizations the wiggle room to test new ideas, keep the lights on or ensure programs are still running in this difficult and challenging time.
There have been positive developments in the funding community around this issue as of late. Some of the largest philanthropies in the United States have indicated that during the course of COVID-19, they will switch all of their grantees toward an unrestricted model, which means fewer reporting requirements, more flexible timelines, and broader programmatic parameters.
While having fewer restrictions will be so critical during the current pandemic, my hope is the move towards more unrestricted funding will stay here for good. Heading into the next ten years, as we do our best to advance the UN Sustainable Development Goals (SDGs), businesses, nonprofits, governments and entrepreneurs alike will need more flexibility to try new programs, test new ideas and be innovative. Flexible and unrestricted funding, with fewer reporting restrictions, will allow for that on a much broader scale.
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By: Stefanie Kruglik, Senior Director of Impact + Strategy
The Coronavirus has arrived in the United States, and even if we do our best to avoid getting infected, our daily lives and work will be (and already are) impacted.
However, not all is lost!
Partnerships and collaboration can still thrive without face-to-face interaction. Our online partnership community is a testament to that! Think of the carbon savings, too, when virtual meetings replace ones you must travel thousands of miles to attend! With some strategy and a few little tweaks to how you work, your partnerships can continue to thrive even during this uncertain time.
What can you do In the wake of Coronavirus to ensure your business keeps its partnership dialogues moving despite limited in-person time?
Don’t have a partnership strategy yet? Now is a great time to build one. Take a look at our free resources online and get in touch.
By: Joanne Sonenshine, Founder + CEO
According to the U.S. Agency for International Development (USAID), resilience is all of those things, and likely more. Resilience is about systems change, and multi-sector engagement on the ground, especially in communities where conflict, development deceleration and economic loss is most prevalent.
In a panel discussion hosted by the Society for International Development (SID) here in Washington, and populated with leaders from USAID, the Center for Strategic and International Studies (CSIS), Mercy Corps, and Opportunity International, USAID shared an update on its Bureau creation, whereby the existing Bureau for Food Security (BFS) will merge with the water teams currently housed within the Bureau for Economic Growth, Energy and Environment (EEE), and Center for Nutrition, to become the new Bureau for Resilience and Food Security.
The proposed Bureau aims to improve the way the agency helps communities and countries "enhance their well-being, improve water security and reduce hunger, poverty and malnutrition." But what does that really mean? For the new Center, focusing on resiliency doesn't mean an entirely new approach to distribution of U.S. Government aid. It simply means that USAID can better target countries and communities most in need of humanitarian assistance, while eventually saving on U.S. Government costs, by building systems and capacity that allow for the countries to take on their own development in the future.
The three sources of programmatic activity aim to be:
The U.S. Government is right to focus on how its dollars are utilized in countries like Ethiopia, for example, where more than $5 billion has gone to address challenges around drought, food insecurity, and income inequality over the last decade. While Ethiopia has made great gains in its development trajectory, when new challenges come into play (for example the current devastation brought on by locusts or floods, etc.) the country should ideally be able to help itself bounce back over time. The Bureau's aim is to help build local infrastructure, market systems, technical capacity and local collaborations to help countries and communities mitigate, and ultimately adapt, to these crises, without the continuous need of the U.S. Government.
During the panel discussion, a panelist raised this simple, yet provocative question: "We are we still focused on resilience after all of these years?" The answer: We have no choice until we get better at it. USAID will be taking lessons from the successful Feed the Future program, and continue promoting the long term benefit of adoption of farming best practices, climate smart agriculture, better use of soil, income diversification and gender equity to propel resilience measures in places where it invests.
There was much talk about collaboration, and how hard it can be, especially when there are so many different systems, terminologies and approaches used in field contexts. I asked how the U.S. Government is considering its role in managing irresponsible governments and crumbling infrastructure, like bridges and roads, given how much it touts its interest in working with the private sector, and the need for these basics to be in place for effective market-based systems to thrive. Thriving market-based systems lend themselves to longer term development, and resilience, all else being equal. The private sector grows impatient with USAID at times when the urgent need is better governance to promote market-based systems. From the response I got, it sounds like USAID recognizes its importance in facilitating strong government dialogue, and helping governments commit to long term market stabilization, thus encouraging private sector engagement. As an aside, this is also the role the Millennium Challenge Corporation is trying to play alongside USAID.
I was encouraged by the repeated mentions of multi-sector approaches, since to address resiliency in many communities (particularly those in agricultural centers), the community must be at the center of investment, and one sector alone, or commodity, or investor type, or government even, can not solve all challenges without effective collaboration, built from the community up.
In summary, it remains to be seen how effective the new Bureau for Resilience and Food Security will be in truly moving the needle on development challenges in places of highest need, conflict and humanitarian crises. Measuring results around resiliency has gotten easier, but is still incredibly difficult AND takes a lot of time.
In the meantime, our role here at Connective Impact will be to bring together actors that have a vested interest in seeing economic improvements over time, and are patient for results, but believe deeply in the power of markets and private sector-led collaboration to make change.
By: Stefanie Kruglik, Sr. Director Impact + Strategy
The "S" represents human rights, and the farmer and other supplier community elements with whom we work to acheive sustainability. It is also the hardest piece of ESG to track. In recent weeks, a number of brands have made large commitments pertaining to the “E” within ESG, including goals for reducing plastic use, reducing or zeroing out deforestation, and sourcing more sustainable materials. While these are important and groundbreaking commitments, people and communities must be included in order to ensure success.
For instance, how can we address deforestation without addressing poverty and the need for living income for farmers?
People and planet cannot be separated when we set ESG goals.
Many tools exist to provide brands insight into their supply chains. But if they are not paired with oversight and holistic solutions aimed at the people in their supply chains, the tools only allow brands to see risks and problems—without the ability to fix them. This often leads to “cut and run” sourcing.
We must realize that transparency is not enough. We must go beyond risk identification and avoidance, and begin to address the human rights of people and communities within supply chains in “risky” areas.
How can we do this?
Reach out if you want to discuss these calls to action, and specific recommendations around how to include the "S" in your ESG goals.
By Joanne Sonenshine, Founder + CEO
I appreciated the urgency articulated by all panelists, realizing that to address our 17 Sustainable Development Goals (SDGs), feed a growing population, and ensure international development doesn’t leave agriculture behind, we must figure out how to combine forces and collaborate for greater efficiencies and effectiveness in agricultural communities (particularly with smallholders).
I asked a question about infrastructure, and who bears the brunt of the challenges imposed by crumbling roads, disintegrating bridges, limited connectivity and other challenges that smallholders face when trying to sell more of their products into markets, domestic or foreign. An interesting conversation ensued, which I share below generalized and without attribution.
Keep in mind that to make a mark in a developing country, company investments are not without risk, and the returns, both social and financial, do not always compensate for that risk. Partnering with public entities, be they donors or service providers, is a critical and often forgotten element in international development, and one that has evolved as the definition of an economic ‘externality’ shifts. Goods and services once thought of as externalities, where price can’t easily incorporate the true costs and benefit of usability, were often covered by public investment. Think utilities or telecom. Nowadays we may define an externality in relation to climate change, or other factors that cannot easily be valued positively or negatively. As externalities shift, private sector entities are taking on more risk, and relying upon other actors to serve as conduits or to pass-through that risk. The benefits of these partnerships can exceed the cost, and often lead to positive externalities (increased rates of education, better health, more powerful labor force, empowered women and girls, etc.) Roles between public and private entities in development are not always clear, however.
Generally the messages I heard in today’s conversation were the following:
The answers to all of these questions are of course context specific. As one panelist said, it’s not about finding A partnership….It’s about finding the RIGHT partnership to advance the needs of communities they serve. That’s exactly what we need. We need the RIGHT partners working on the RIGHT projects together to advance the needs of all constituencies (private, public, civil, community) based on information from the communities themselves.
The conversation today, informative, refreshing and invigorating, is the kind we need to keep us thinking strategically and systematically about solving our world’s most pressing problems. I thank the panelists and hosts for the inspiration.
Joanne Sonenshine is Founder + CEO of Connective Impact, an advisory firm working with mission-driven enterprises to address our greatest social and environmental challenges through effective partnership development.