If you are relatively new to fundraising, or question how to reset your business development or fundraising priorities given COVID, trying to find the right type of donor-partner to activate your programs may seem daunting. There are so many types of donor-partners to prospect, and it’s unclear what type of donor is best for your program’s needs.
Do you take steps to engage all potential donor-partners, or do you segment?
How do you prioritize?
Hearing these concerns from our community, we often clarify that not every donor-type is right for every organization. Start-ups will require a different type of funding to scale operations than a nonprofit that’s focused on testing solutions for societal problems, or scaling a research pilot. Corporates looking for match funding to advance social impact or sustainability programs are also in a very different scenario than nonprofits, start-ups or social enterprises.
So how does one differentiate? What are the factors to consider?
Below are five different donor-partner types, along with their traditional methods of engagement. Included are recommendations about how to identify whether each donor type is right for your fundraising and business development needs.
1. Family and philanthropic foundations: These more traditional donors represent pooled funds (or family endowments) that are allocated to causes identified as a priority by the family or operators of the foundations. These donors tend to range in size from very small, niche, local donors, to global philanthropic thought leaders that give sizable sums of money (think Rockefeller or Ford Foundation). Consider engaging with family and private foundations if your program or project matches their priorities only. Most foundations do not accept unsolicited proposals, so building relationships is a critical element to getting noticed by these donors. There won't be much opportunity for engagement if your priorities don't overlap. Building a strong partnership with foundations is a great way to stay under their radar when funding becomes available. At times foundations will issue proposal requests, so following as many whose priorities align with yours is important. Keep an eye out for news. These proposal requests are highly competitive, which also makes building a relationship with these potential donor-partners a critical element to successful fundraising.
2. Public/government agency donors: Government funding programs are meant to engage partners for delivering on policy aims, while in the case of international development programs, promote global goodwill. For example in the United States, agencies including the U.S. Agency for International Development (USAID), Millennium Challenge Corporation (MCC) and Development Finance Corporation (DFC) have countless programs in place, and many developing and progressing at once, to work with implementing partners all over the world to deliver support around infrastructure, access to basic necessities like water, housing, medical care, jobs and technology. These programs are large in size and cumbersome to engage in. Also once you receive funding from a government agency, you are locked into their reporting requirements, which can be quite onerous. The dollar values are quite high, however, as is the potential for large-scale collaboration with bigger contracting firms that are used to working with these agencies. These donor-partnership opportunities are often more robust, broad and somewhat flexible in scope. Geographies are often pre-determined. To engage with public agency donors, it's best to find a partner that is used to receiving funding from the agencies. They are well poised to manage the reporting requirements, and have a good sense of how priorities are determined. Government donors often issue requests for proposals, and smaller, more nimble grant programs are becoming more attainable given interest by these agencies to work with social enterprises, smaller private sector actors and smaller nonprofits.
3. Corporate foundations: Corporate foundations are funding programs set up by corporations for social impact and/or sustainability programs that are often in line with a company’s business aims, but that deliver on a more philanthropic set of goals. These programs are often in conjunction with the company’s corporate social responsibility (CSR) priorities. Funding from corporate foundations may come in the form of a request for proposal, or be unsolicited. Similar to private foundations, forming strong relationships and building partnerships with a corporate foundation should be a high priority if your program or projects align with the priorities. These may be around education, environmental sustainability, social issues or employee giving for various causes. As more corporations imbed social impact and sustainability in their business goals, corporate foundations are more limited in their giving potential compared to decades’ past. Finding a way to make your program relevant as a business benefit can help here. Also considering how to engage with a company’s decision makers outside of the foundation may also be worth your partnership-building effort and time given the opportunity for long-term and more targeted impact if geographies and program priorities are in line.
4. Accelerators and innovation programs/awards: Seemingly popping up everywhere, and around every issue, accelerators, innovation programs, awards and challenges offer teams with very specific solutions to ongoing social or sustainability problems an opportunity to test, refine, compete and submit proposals for funding, resources, mentorship, recognition and more. It seems nearly every big company, global agency (i.e. United Nations Development Program, for example) and even governments (see the UK’s TRANSFORM initiative) have developed these targeted funding and/or competition programs for social entrepreneurial ideas/solutions to global problems. Engaging with these programs are pure bilateral plays. In other words you submit a proposal and hope to win the award. Building partnerships or engaging in relationship building may not help your chances as well as in other donor-partner funding opportunities. The competition is high. Funding tends to be on the lower side as well, but the prizes are very attractive, especially for start-ups or nascent program developers. Technology and innovation projects tends to be well suited for these awards/programs.
5. Collective action networks/partnerships for impact: As opportunities to engage in collective action become more standard practice, donors are getting involved as well. Over the last year, collaborative donor programs, like that of Co-Impact, a "global collaborative for systems change", are encouraging out of the box thinking, systems change level solution development, and attaching big dollar values to their funding accordingly. Since building collaborations is in the DNA of these groups, partnership engagement is one element of engaging these groups, but not essential, as requests for proposals pop up every few months. These donor networks/partnerships are most suitable for organizations that have systemic solutions (i.e. widespread, community-led, big picture, global in view or scalable).
Want more guidance on how to find the right partner to advance your Sustainable Development Goals? Join our webinar on this very topic June 16, 17 or 18 to learn more. If you have questions about any of these donor-partner types or approaches to engage, please reach out to us for a chat!
Being a fundraiser or business development professional is challenging enough as it is. A global pandemic makes your job even more complicated,. Now you must adjust your fundraising goals to incorporate urgent, emergent needs for your nonprofit, social enterprise or company. It seems the only funding out there is for COVID-related projects. There’s emergency grants, loans, and countless free resources, short term funds, funds for COVID cures, innovation or equipment.
Where does this scenario leave organizations keen to invest in post-COVID rebuild or continuous resiliency measures? How do you, as a fundraiser, get clear and focused on your fundraising process for the longer-term resiliency of stakeholders?
Here are 4 simple steps you can take to stay intentional around your fundraising objectives and drown out the noise:
1. Review priorities. You likely had your 2020 fundraising strategy developed well before COVID. Now is the time to adjust your priorities. Your funding needs have changed, or will need to evolve as the COVID crisis continues to play out. Start with a simple prioritization exercise. You need to differentiate between what's emergency "fill the gap" priorities versus what your medium or longer term strategic needs are. Clarify your absolute must haves. Those urgent needs should be the focus of your fundraising for the next 3-6 months. Luckily, donors are shifting some of their restricted funding towards more urgent recipient needs given COVID. This will help dramatically ease the way in which organizations implement emergency, stop-gap programs, and the usual burden of reporting or systematizing funding for donors’ needs. Hopefully this trend will continue even beyond COVID.
2. Think next about "nice to haves". Once you have confirmed what your most urgent, short term, “fill the gap” needs are, consider what “nice to haves”, or medium term projects will slowly allow you to rebuild your post-COVID pipeline. I cannot emphasize enough how important it is to be past your state of emergency before thinking about some of the more medium term needs. Otherwise you’ll find yourself playing catch up down the road after some of the emergency funding sources have dried up. Donors may not be as accessible then. Again, these nice to haves will help set the foundation for your longer-term planning which comes next.
3. Begin longer-term planning. After completing your priorities around medium term needs or opportunities, revisit your two, three, five and ten year goals. Go back to your original fundraising plan and eliminate which objectives will not be achievable over the longer term given any changes you’ve made in your organizational structure or approach. Then shift your gaze towards the future. Redevelop the priorities for your organization’s mission and goals (ideally with leadership buy-in). Just like in any strategy process, consider what your time-bound commitments are to your stakeholders, versus what’s more idealistic and forward looking. You’ll need to make assumptions about what the world may look like in two, three or five years, but as a fundraiser, it’s your job to find the resources to position your organization or company in the space to craft part of that future. That’s what the post-COVID environment will depend upon.
4. Consider dollars ONLY after steps 1-3. Only after you have your emergency/short-term needs, medium term operational needs and longer-term needs defined should you start putting dollar values to them. Consider timelines as well. Some donors (i.e. public funders like governments) will have longer timelines than some of the emergency funding sources available for COVID. Make your matches with both funding needs and those differing timelines in mind. Be cognizant of where your objectives truly match what donors are looking for. It’s a waste of your time and the donor’s if you prepare proposal materials and you are simply not the right fit. Make evaluating whether you are a good recipient for the donor’s requirements a key element in your funding process.
Wondering how best to evaluate that fit? We're holding a webinar June 16, 17 and 18 (take your pick of which days) around how to find the right partner to advance your sustainable development goals. The webinar is free. Join us!
If you have heard or seen the terms “cross-sector partnership”, “multi-sector partnership”, “pre-competitive collaboration” or “systems change” and weren’t completely clear what each of these terms meant for your business, you are not alone.
When partnership practitioners talk about each of these concepts, they are talking about ways to encourage businesses to work with each other, in some cases outside of their comfort zone or with competitors, to address a systemic (i.e. widespread) problem that is bigger than the challenges one business faces alone.
Take, for example, access to clean water in areas where water sources are effected by changes in weather patterns, agricultural activity, industrial processes or government regulation. For a company working in this region, or sourcing products or human capital, inconsistent access to water can be devastating. Individuals without consistent access to water suffer health challenges, disease and instability that can lead to violence and even death. This is even more pertinent now, during the time of COVID.
So, how does cross-sector partnership, or pre-competitive collaboration create “systems change” or address systemic problems that threaten to undermine an entire population’s stability?
I’ve often turned to the picture below to explain.
Imagine a community in a semi-arid, somewhat rural location in the foothills of the Andes Mountains. This community benefits from access to water when the rains are predictable. When they aren’t, the water sources dry up. From this community, an international food company sources a special kind of corn that they use in canned vegetable mixes. A globally known retailer works with a small cooperative of women artisans to source jewelry that is sold in their stores. The local government manages the safety of the local water access point, and in partnership with a conservation nonprofit, helps manage downstream water availability and water health from the local mountain range. A regional restaurant sources meat from the livestock farmers nearby. Finally, a seed company works with farmers keen to try new techniques to diversify their land use and hopefully their income. The actors involved in this community are diverse and represent local, regional and global interests.
The point about cross-sector collaboration comes in when we ask whether any of these actors are engaging with EACH OTHER. For example, does the international food company consider how sourcing corn may or may not take away from land suitable for diversification, or grazing by livestock? Does the retailer know if the artisans from whom they are sourcing jewelry also grow corn that is sold to the food company? Do the government actors and seed companies communicate to ensure that regulations don’t impact sustainable land development or that land development doesn’t interfere with safe water usage? Is there an efficient way for each of these actors to engage with each other to support sustainable land development, production AND safe water supply? THAT’s the key behind cross-sector collaboration for systems change.
Communication among actors in a certain geographical region should be consistent, regardless of sector, positioning or interest. Only by coordinating investments, actions, policies and programs can true systems change be effective. This is hard enough as it is when times are good, food is plentiful, water is available and communities are at peace and harmony. When markets are stable, and systems are operating to positively impact communities, businesses, governments and civil society, it is almost easy to get actors to collaborate, listen and engage. Though not always. This effort of collaboration is made even more challenging, and one would argue near impossible, when systems are breaking down. When water isn't available, or incomes are unstable, civil unrest is a concern or markets don't function, collaboration is absolutely essential in order to ensure resources are being used appropriately and for the right reasons.
In certain "shock" scenarios, for example in our diagram, when water is in short supply, actors may act hastily, and make decisions that impact only themselves. The corn sourcing company may pull out of the region entirely, looking for a new place to source that is water abundant. The conservation nonprofit may need new funding to help pump more water in from the mountain communities, without engaging with the government on their plans. The local artisans may decide to focus on a new business around water pump distribution, and leave retailers without their orders. That is NOT systems change collaboration. Instead, if these actors work in partnership, and collaborated with each other to advance systemic solutions that help all of them and the communities too, addressing economic, environmental or social shocks could be made marginally easier. This is no small task, but with the right backbone coordination, whether from the local government or external actors, it's doable.
Finding ways to work together pre-competitively, cross-sector, and to advance systems change, will be especially critical as the global economy tries to work itself back from the current COVID crisis, while keeping all of our people safe and healthy. Providing access to basic necessities will be in urgent demand. As will relying on governments, companies, civil society and individuals to communicate with each other, and work together to advance programs that have positive economic and social outcomes.
Cross-sector collaboration will also be needed more and more as we approach 2030, the year the current UN Sustainable Development Goals (SDGs) will be evaluated. Will we have reached a point where our actions have allowed for greater systemic change by then? If corporate leaders, government actors, civil society decision makers and others engaged in regions where there are complex needs, business interests, markets and resources at play in development contexts, work together in coordination, significant change is not only possible, it’s inevitable.
If you wonder what role you are playing in your system, or how you can better collaborate with those around you (yes, even competitors) to make change lasting and sustainable, contact us today to discuss your partnership paradigm.
My Interview with Steve Schmida, Author of Partner with Purpose: Solving 21st-Century Business Problems Through Cross-Sector Collaboration
Steve Schmida may not have all of the answers to our world’s “wicked” problems, but he certainly has the foundation. As an international development expert leveraging partnerships to address our global challenges, ranging from climate change to food access, Schmida shares his approach to solving our most complex problems in his new book, Partner with Purpose: Solving 21st-Century Business Problems Through Cross-Sector Collaboration.
When I reached out to inquire about an interview for this blog, Steve couldn’t have been more willing to chat partnerships, collaboration, challenges engaging business leaders, and what it takes to combat these “wicked” problems he so aptly identified.
My interview with Steve is below. But first, an introduction:
Steve Schmida is Chief Innovation Officer and Co-Founder of Resonance, a global consulting company headquartered in Burlington, VT, leveraging market-based solutions to the world’s biggest challenges. Before founding Resonance, Schmida spent a number of years working in the former Soviet Union, helping advance entrepreneurship models, promoting democratic development and human rights. During that time, Schmida had many opportunities to learn the ins and outs of bringing public and private actors together to achieve, what we now call, shared value, or a way of engaging in collaboration for mutual benefit and comparative advantage. This model of collaboration helped form the genesis of Resonance, which now after fifteen years, has become a leader in building effective collaborations for scaled impact. Helping donor agencies like the U.S. Agency for International Development (USAID), global nonprofits or private sector organizations partner to accelerate impact, Resonance leverages effective collaboration approaches to make development work better for those who most benefit.
Below is a summary of our conversation.
JS: What are some of the biggest challenges businesses are facing now? Many are of course unique given Coronavirus, but if we were to also consider pre-COVID, and looking into the future, what issues arise? How does cross-sector collaboration help?
SS: If you consider what businesses’ core priorities were during the 20th century, they were focused solely on optimization. Programs around lean manufacturing, six sigma or other methods for minimizing outputs and inputs were top of mind. Moving into the 21st century, business challenges have become more complicated. “Wicked” problems that offer no linear causation or solution, like climate change, human trafficking in supply chains, improving sustainable sourcing in agriculture and so on require a completely different set of tools and approaches. Collaboration is important for tackling these problems, because there is really no way companies can solve them on their own. No one company or civil society actor can make climate change less of a reality without engaging others to create new incentive structures, cultures or methods for evaluating success. Collaboration is the new norm.
JS: Do companies need prodding or encouragement to think this way, or are they moving into this new evolution on their own?
SS: For those companies that see this move as being critical, they are making decisions accordingly. For others, there are a number of forces pushing companies in this direction. These include:
JS: What was it that prompted you to write this book? Which moments over your extensive career working with businesses in collaboration contexts made you think that writing a book was necessary to get this message out?
SS: There’s a lot of great material out there around partnerships produced by many wonderful organizations. Almost all of the information, however, has been written from the perspective of the public sector, or is focused exclusively on civil society. Very little has been written from the business context that allows the sector to act. I’ve worked directly on fifty or more partnerships (which includes building, managing, evaluating, and implementing collaborations). For business professionals, this space is tricky to navigate. I wanted to put something forward for a business professional that provides value and guides them into cross-sector collaboration in a way that’s engaging and readable. Also I wanted it to be less academic. The book is a “how to guide,” but it does not come with exercises. It does, however, include narratives that aim to illustrate a point, by highlighting how peers have engaged around a sustainability agenda. The book is meant to give different perspectives for businesses to use collaboration as a commercially viable tool.
JS: What is an ideal example of cross-sector collaboration through your experience? Something that’s worked well?
SS: There’s a good example that I include in the book, of a Resonance project working with USAID in Ghana. We were working with fisherfolk who found it risky to fish in the open ocean. We identified that insurance would help ameliorate the risk for fisherfolk’s families, so we brought in insurance and financial companies to deploy mobile micro insurance products geared towards these communities. Both the companies and USAID wanted to scale the initial project, so with the help of the Ghanaian government, we expanded what we thought would only be 300 participants into a 3,000 participant program. The companies were thrilled, because their product showed value, and they were able to learn a new market segment. The fisherfolk were relieved, and the government was happy to see such a viable business take off in this local context. USAID also saw value, given the extension of this informal sector into a new geography. The program is scaling and will serve 200,000 paying customers just this year. The insurance and financial companies are extending their services beyond fisherfolk into other sectors. We were thrilled to see a development problem turn into a business opportunity by finding the right collaboration.
JS: What are some of the biggest challenges you have faced in engaging in cross-sector collaboration?
SS: Effective collaboration around sustainability needs to solve a business problem, as well as a social or environmental problem. There must be alignment internally from both the business and corporate social responsibility sides for collaboration to work. At the same time, companies are facing supply side constraints. They are starting to see a pinch in their standard way of operating. In agriculture, for example, climate impacts yield, so when demand goes up, yields are doubly impacted. The internal teams focused on both of these issues need to agree with how to address this challenge. This internal misalignment is not unique to companies, but companies need to agree that there’s value in partnership. Multiple company departments have to be involved in making decisions. Incentives must align. Companies have different cultures and ways of handling these decisions. Internal alignment, and bringing stakeholders along on the journey is something that’s not often talked about, but where there’s a lot of work to still take on.
JS: In the book you share valuable tools for businesses ready to partner, including ways to overcome differences in approaches or methods for measuring impact. What is one of the most important elements of the process you include?
SS: Measurement. At Resonance we have a partnership results chain process that we use. It looks very similar to a logical framework analysis yet incorporates partner goals and motivations. We use it to help companies manage their partnership engagements a bit easier. We’ve also used it as a facilitation tool. The tool allows partners to understand the implicit and explicit outcomes of the partnership. We adapt it to many contexts and I share about it in the book.
JS: What is the one thing you wish you could tell all business leaders before they embark on a partnership journey?
SS: To get clear and crisp on the problem to be solved and determine whether it lends itself to partnership or not. In the book I talk about the simple, complicated and wicked problems framework. First things first, companies must understand what type of problem they are trying to solve. If it’s a simple problem, maybe they don’t need to involve outside actors to solve it. If it’s a complicated or wicked problem, then a business may need to ask itself “who else cares,” “who else has equities in this problem,” or if it’s unique to the company, in which case it makes sense to address the problem on its own. If there are equities elsewhere, the business will need to engage others in collaboration. This becomes the key point of departure in thinking about a partnership.
JS: What do you hope your readers will gain by reading your book?
SS: I hope they walk away excited that there’s an approach for solving problems, or at least trying to tackle them. Collaboration across sectors is not as easy as it sounds. Many of our clients come to Resonance after they’ve had a failed experience with partnership. Certain elements are complicated, especially internally. Yet they can be solved. Effective partnership requires intentionality. I hope business leaders approach partnership with intention and be deliberate after reading this book.
JS: Is there anything else you’d like to add?
SS: Partnerships are an incredible tool but they are not a panacea. The purpose of my book is to help companies see that partnership is a tool they can use, and equip people with the skills to determine whether it’s the right tool. Resonance’s commitment is to operate at the nexus of civil society, the public and private sectors, and to help focus on the important problems to solve.
It was such a joy to talk with Steve about his work and his book. His dedication to partnership building, and effective collaboration to address our wicked problems is inspiring and contagious. I hope you’ll join me in enjoying his book when it comes out June 2nd. Pre-sales are available here.
Joanne Sonenshine is Founder of Connective Impact, an advisory firm developing impactful partnership, funding and collaboration strategies for international, mission-driven, socially-minded and environmentally conscious organizations
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.
Want to track funding trends and engage with donors in a more collaborative way? Join our Funding + Partnerships Online Community and take your fundraising to the next level.