As published via LinkedIn
It wasn't the first time I heard this, and I know it's not the last. During a standard prospecting call with a well-known impact fund (i.e. nonprofit) based in Europe, a potential client emphasized his need for investors, not just donors. "We are trying to transform lives here, not just put a bandaid on them" he indicated, ensuring I got the point. Not only did I get the point, but this notion of transformation, investment, impact and long-term change is rearing its head in virtually every call I have with potential and existing clients.
"We are not a nonprofit, we are an impact fund." "We don't just implement projects, we change lives."
He continued to share with me the rationale for investment, why a rate of return on this fund's projects is better than putting money into a similar European government fund, and why the projects this fund is leading are poised to systemically transform communities in several parts of East Africa. He sent me prospectuses, investor profiles and testimonials.
I kept thinking, but you are a nonprofit, not a stock or debt instrument.
He repeated one more time, before we ended our call, why corporate donors in particular would want to invest in his fund. "We offer a higher ROI than most impact funds in our area of expertise. We can guarantee measurable impact within 5-years."
Guarantee impact? Definitely music to a corporate social impact investor's ears.
Catch the drift here?
The .org is effectively dead. What is growing in its place is the impact fund.
Whether it's due to declining donor engagement, mission creep, donor fatigue or something else, the role of the nonprofit is slowly declining. Nonprofits are rebranding themselves, or coming up with new models to engage more innovative sources of funding and longer-term investment. Donors want a return, they want to show shareholders that valuable dollars go towards true impact, not just into another nonprofit-led, 3-year project. Gone are the days of bilateral philanthropic money handovers by corporate philanthropists to special causes or charities. Employee engagement is the new volunteerism, and you better believe that this engagement program deliver on business aims at the same time. Impact, purpose, mission, cause. The words are all jumbling together but the aim is the same. Organizations want to make a difference and they want to see their money spent wisely.
What does this mean for nonprofits? It means funds are harder to come by. It means being more direct with messaging and prospecting. It means figuring out how partnerships with companies, governments and foundations can be game-changing and not just about a tax write-off.
We have seen an insurgence of social enterprises popping up in developing communities, identifying ways to create lasting change and market-led programming. My company is getting inundated with requests from small social entrepreneurs in every corner of the world, wondering how to tap into the evolving funding pools from USAID, MCC, OPIC, corporates or foundations that are keen to turn a dollar into two. Economics are driving a sea change whereby "market-led" is a priority. Traditional .orgs that simply provide handouts must evolve.
Harsh? Maybe. But it's true.
To my .org friends out there, don't lose sight of what your work is doing to change the world. Figure out how to shift gears and focus on the long-term gains. Make sure your messaging is resonant with the changing winds of donors and keep in mind that these donors also want to be investors.
They want to see a changing world... One where they make money too.