When organizations consider merging, the first question is always about purpose: do we share the same mission? But the more urgent question, the one that determines whether a merger actually happens, is why now?

In the cases of our organizations and the mergers we were recently involved in, we had two very different answers. For Resolution Project and Enactus, global nonprofits that merged in January 2025, the urgency was organizational: Enactus faced an existential financial threat that could have ended the organization entirely. For Girl Rising and She’s the First, which also merged in 2025, other challenges were on the horizon: preparing one organization for transition out of founder leadership and, for both, navigating an increasingly unstable sector. The long-term collateral damage from the defunding of USAID and other major international development agencies, as well as the growing headwinds for work focused on women and girls globally, demanded new strategies.

These look like different stories—financial collapse versus a leadership transition and geopolitics—but they share a structure. In neither case did mission alignment alone cause the merger; a visible existential question did. It didn’t have to be immediate, and it didn’t have to be financial. It just had to be enough that leadership could no longer treat the future as something that would sort itself out.

This distinction matters because the nonprofit sector tends to recognize only one type of merger: the last-minute rescue, the handshake deal when the lights are about to go out. But some of the most strategic mergers happen when organizations are still healthy—when founders can see around the corner and choose to act before crisis hits.

Between 2023 and 2025, we led two very different nonprofit mergers. The contexts were different. The execution challenges were different. But the core principles that made both mergers work? Those were universal. And the mistakes we made? Those cut across both experiences too.

Here’s what we learned about what comes after “yes.”

What Aligned: The Non-Negotiables

Mission came first, but complementary assets made it viable.

In both cases, we started with deep alignment on purpose. Resolution Project and Enactus shared a commitment to youth social entrepreneurship. Girl Rising and She’s the First both existed to advance girls’ education and empowerment globally. But mission alignment alone doesn't create a compelling merger—plenty of organizations share a North Star without needing to join forces.

What made these mergers attractive was complementarity, not redundancy. Resolution Project and Enactus met young people at different points on the same journey. Enactus introduces students to social entrepreneurship through university teams that build projects and compete on national and world stages. Resolution Project picks up from there: Our fellowships give emerging leaders seed funding and sustained mentorship to launch a venture, and the Accelerating Impact Challenge helps those ventures become revenue-ready. Girl Rising and She’s the First overlapped in geographic focus but worked in different parts of a girl’s ecosystem to transform communities—one focused within the school system, the other on mentorship settings outside it. The result: We did not have to make painful decisions about which programs to keep or discontinue. Instead, we could offer participants an expanded continuum of support.

We also filled each other’s operational gaps. Girl Rising brought sophisticated monitoring and evaluation infrastructure that She’s the First—operating on a $1.5 million budget—had never been able to afford. She’s the First brought best-in-class practices for involving girls directly in governance, including two board seats for program participants. Resolution Project and Enactus each brought funding relationships the other lacked, creating better diversification on the other side of the deal; both worked with university students but Enactus was embedded on campuses while Resolution Project orbited through partnerships with scholarship programs and leadership summits.

Leadership humility unlocked the deal.

In both mergers, ego could have killed the conversation before it started. Instead, leaders put mission above organizational identity. For Resolution Project and Enactus, that meant George and the Enactus leadership acknowledging that survival required letting go of independence. For Girl Rising and She’s the First, it meant Tammy stepping aside as CEO while her co-CEO transitioned into a VP role within the larger organization—a significant shift, but one that created a sustainable path forward.

It also meant being honest about power dynamics. In Enactus’ case, Resolution Project was clearly the acquirer, but what we were acquiring was not a single organization so much as a federation. Enactus Global supported 30+ country offices, all of them independently governed and funded, along with the faculty advisors, corporate partners, and alumni who had sustained the network for decades. Each of those constituencies had to decide for themselves whether to trust a smaller, younger organization from New York. And the risk on our side was real but hard to size: We were inheriting a global brand with a mixed financial history, a long-standing World Cup event with significant fixed costs, and obligations to country affiliates whose own health varied widely. In Girl Rising and She’s the First’s case, the power dynamic was intentionally balanced—50/50 board representation, co-branding that blended each organization’s primary brand colors, a revised mission statement that integrated She’s the First’s cherished words “educated, respected, and heard.” Neither organization went "under" the other; rather, they built something new together.

Boards championed the vision.

None of this would have been possible without board members who understood mergers, trusted the process, and weren’t intimidated by diligence. Girl Rising’s board had witnessed a successful merger seven years earlier and had a board chair who came from that previous organization’s board. She’s the First’s board chair had formerly worked for Girl Rising in its days as a film production company, and even inspired the initial merger conversation. All of our boards had members with for-profit and nonprofit M&A experience who could see past the risks to the long-term gains.

Our board chairs believed in collaboration over competition. They championed merger exploration from the first spark, and they stayed committed through 18 months of uncertainty (in Resolution Project’s case) and nine months of integration planning (for Girl Rising and She’s the First).

The driver isn’t always financial.

Enactus’s existential question was loud: a cash shortfall serious enough to threaten the organization’s survival. She’s the First’s was quieter, but no less consequential. Tammy had been thinking about succession since 2022. In January 2025, the organization brought on a co-CEO, intentionally building toward a future in which leadership would pass to someone else. A merger wasn’t on anyone’s radar before that point—it simply hadn’t been modeled as a path. But once it entered the conversation, it offered something a straightforward leadership transition couldn’t: a way to honor a succession plan already underway while building a stronger organization for the next leader to inherit.

This is the pattern we want the sector to see. Mission alignment is necessary, but it doesn’t explain why a merger happens when it happens. Something has to put the status quo in question. For Enactus, that something was a budget crisis. For She’s the First, it was the recognition that leadership can't stay static forever, and that good succession planning means building toward a transition deliberately, rather than waiting for circumstance to force one.

What We Underestimated: The Hard Truths

Internal communications were harder than we expected—in different ways.

For Resolution Project, the challenge was duration. Given Enactus’ financial duress, we sprinted eight weeks to a term sheet, but then came 18 months of “when is it final?” Staff turnover was significant. Donor anxiety was palpable. The “not-so-secret secret” phase helped for a while—people knew something was happening, which paradoxically made internal and external communications easier—but once the announcement was made, the long road to formal closure tested everyone’s patience.

For Girl Rising and She’s the First, the challenge was a period of high confidentiality in a culture that values transparency. As CEO, you can see the long-term vision a merger is solving for. But for staff who don’t have that vantage point, or who are simply thinking about their day-to-day lives, such a major change can create disruptive anxiety. Believing we were acting in our team’s best interest, we kept early merger exploration confidential and stayed upbeat once the merger was announced. We didn't make space for grief or nerves.

Months later, at a Girl Rising in-person retreat, facilitators led a “Stinky Fish” exercise: Staff wrote their anxieties on Post-its and placed them on a whiteboard over a cartoon fish. It was eye-opening. Concerns surfaced that hadn’t been on leadership’s radar—worries about job security, questions about organizational culture, fears about losing the intimacy of a smaller team. Had we created space for those feelings earlier, we could have addressed them proactively and avoided the time and strain of later course corrections.

The math doesn’t always add up the way you expect.

Here’s a truth the sector doesn’t talk about enough: Mergers often mean contraction, not growth, at least for a period of time.

Resolution Project had a $3 million annual budget. Enactus had an $8-10 million budget. The joint entity? $6.5-7 million. That’s a reduction of roughly 36 percent from the combined total. Some of that was intentional—eliminating redundancies and focusing resources. Some of it was inevitable—donor goodwill lost and funders who didn’t follow us through the transition.

Girl Rising and She’s the First had combined budgets of approximately $4.7 million in 2024. The merged entity is budgeted at $3.5 million this year, a reduction of 25 percent. Even in the best-case scenario, mergers don’t guarantee explosive growth. They create a stronger, more sustainable organization with better infrastructure and a more compelling funding case. But the path there often runs through contraction first.

Financing mechanisms are woefully inadequate.

Both mergers required significant investment just to make the deal viable. Resolution Project needed $2.5 million in catalytic funding—for legal costs, integration planning, staff transitions, and operational continuity during the merger period. Girl Rising and She's the First needed, at minimum, $100,000 in merger costs and were fortunate to secure pro bono legal support (valued at nearly $700,000) and additional gifts from existing donors specifically for this purpose.

Without that capital, neither merger happens.

And yet, there is almost no funding infrastructure for nonprofit mergers. Foundations love to talk about efficiency and impact at scale. But when two aligned organizations try to actually consolidate for greater effectiveness? The money isn’t there. Or it’s available in amounts too small to make complex mergers viable across the sector.

We got lucky. We had trust-based donors willing to take a bet on us and we both received investment from the SeaChange-Lodestar Fund for Nonprofit Collaboration, which solely funds formal partnerships like mergers and joint ventures.

Eliminating all uncertainty in advance is impossible.

In both mergers, we had to navigate through a common trap: trying to eliminate all uncertainty before moving forward. What will the new org chart look like? Which programs stay? Which staff roles change? What’s the three-year budget model?

These are important questions. But the desire to answer all of them perfectly before signing the agreement can kill momentum. Trying to mitigate every risk in the due diligence process—on both sides, in both mergers—was one of the biggest hurdles we had to clear, even with supportive boards. For example, with limited multi-year grant commitments, we couldn’t promise what the financial picture would look like in year two or three. At some point, you just have to move forward with incomplete information. Choose a merger partner whose values align closely enough that you trust you’ll handle unexpected issues responsibly together.

What the Field Must Change

Funders need to step up with money for merger costs.

If the sector is serious about sustainability and impact at scale, we need a financing infrastructure for nonprofit M&A. $50,000 planning grants and pro bono legal support (which only the more well-connected nonprofits can access) are useful but they don’t move the needle on their own. We need flexible grants—in the range of $1-3 million for complex mergers—to cover legal costs, integration planning, communications, staff transitions, and operational continuity.

This is investment in long-term impact. According to La Piana Consulting, 92 percent of organizations that pursue strategic partnerships with intention consider them a success. The ROI is there, but the capital isn’t. This is a huge missed opportunity.

Recent developments suggest the landscape may be shifting. In March 2026, the Sorenson Impact Institute launched a Collaboration Fund backed by the Ford Foundation and MacArthur Foundation—$1 million specifically for mergers, acquisitions, and strategic collaboration among impact investing nonprofits. The fund covers integration costs, legal fees, and staff transitions—exactly what's needed. But $1 million pooled across an ecosystem is still a fraction of what complex mergers require.

Foundations that fund capacity building should view merger financing as core to that work. Trust-based donors who believe in organizational sustainability should treat merger costs as a legitimate use of unrestricted funds. Intermediaries should create dedicated funds specifically for M&A in the social sector—and size those funds to match the actual complexity and cost of doing this work well.

We need new mental models about what consolidation means.

The sector treats mergers as signs of failure—organizations that couldn’t make it on their own, forced into shotgun marriages to avoid collapse. That narrative serves no one.

Yes, some mergers are crisis-driven. But others are strategic bets on greater impact. Some solve leadership transitions that would otherwise leave strong organizations adrift. Some create the infrastructure smaller organizations need to attract larger grants and sustain long-term programming.

It’s also very hard work to launch and build organizations. Founders don’t have infinite reserves of energy. The sector and funders lionize founders, but one of the best ways to honor their hard-earned impact is to support pathways that can give them a break and bring them back to the sector again.

We need to normalize merger exploration as a tool in the strategic toolkit—a proactive choice leaders make when the conditions are right. That means talking openly about the benefits (stronger organizations, better funding cases, expanded programmatic reach) and the costs (staff turnover, donor anxiety, the emotional toll of organizational change).

It also means being honest about what mergers require: mission alignment, complementary assets, leadership humility, board champions, adequate financing, and a tolerance for uncertainty that most nonprofits aren’t structured to handle.

Tolerance for uncertainty has to increase—on all sides.

Merger timelines are long. Resolution Project’s deal took 18 months from term sheet to closure. Girl Rising and She’s the First’s took seven months from public announcement to closure. During that time, staff are anxious. Donors are watching. Stakeholders are waiting for clarity you can't yet provide.

The sector—funders, board members, staff, beneficiaries—needs to accept that this is part of the process. You can’t answer every question up front. You can't eliminate every risk. You can build trust, communicate transparently about what you know and what you don’t, and create structures to navigate uncertainty together.

A Different Story

Twenty-one months after Resolution Project and Enactus signed their term sheet, the merged organization is operating at scale with greater programmatic reach and a more diversified funding base. Eleven months after Girl Rising and She’s the First announced their merger, the joint entity is impacting more girls’ lives across the globe and meeting needs in more innovative ways. Our integrated programming has drawn attention and support from catalytic new funders.

The nonprofit sector is facing an increasingly uncertain future—political volatility, funding constraints, rising operational costs, leadership transitions in organizations built around charismatic founders. Mergers won’t solve all of those problems. But for organizations with genuine mission alignment, complementary assets, and leaders willing to put ego aside, they offer a path forward.

What develops a student’s capacity for systems leadership?

In 2023, a team of Wesleyan University first-year students placed first out of nine hundred entries worldwide in the University of Oxford’s Map the System (an international competition that asks students to research a complex social or environmental issue). The following year, another team of Wesleyan first-years won again, against more than 130 teams from 17 countries. Wesleyan is the first institution in the competition’s history to win twice, both times through the Patricelli Center for Entrepreneurship, which I direct.

Universities have often measured entrepreneurial success by the number of venture-backed companies their students create. PitchBook’s annual university rankings, for example, measure programs by the number of venture-backed founders they produce (which tends to favor schools like UC Berkeley, Stanford, MIT, and Harvard, with large graduate programs and proximity to venture capital). But none of the Wesleyan students I advised pitched a startup. None of them raised capital. None of them built an app. They produced systems analyses and were judged by panels of practitioners and academics to have done it better than teams from hundreds of other universities worldwide, many competing at the graduate level.

There is, of course, nothing wrong with a venture-backed startup. Many of our students will build companies, some at significant scale, and the Center invests seriously in those who do. The Patricelli Center for Entrepreneurship changed its name from the Patricelli Center for Social Entrepreneurship, an expansion of our mandate, because, as Bob Patricelli put it at our rededication, “The scale of change on all fronts now demands that we prepare constructive leaders and institution builders in all sectors—business, nonprofits, government, and beyond.”

We believe, however, that if the measure of success for an undergraduate entrepreneurship center is the production of unicorns, then it will be an ecosystem optimized for that specific output, not primarily an undergraduate entrepreneurship program. Instead, we seek to form leaders who can examine their own positionality, deeply understand the systems they want to change, and engage with power (and not just critique it). By the unicorn measure, a student who never starts a company but goes on to reshape a public agency, lead a community organization, or change how a corporation treats its workers is invisible. The frame we use to measure entrepreneurial success must be broader.

Teaching Power

As one of the highest expressions of personal agency, entrepreneurship is inextricable from power. It has always been about power. The work is to teach our students to engage it. In Power for All, Julie Battilana and Tiziana Casciaro argue that power is not under the unique ownership of a few, but rather a dynamic that anyone can learn to identify, navigate, and build. But while entrepreneurship education teaches students to generate ideas, test them, and pitch the results, it has rarely prepared them to understand the distribution of power that may impact the ventures they hope to build (much less how they define their relationship to it).

That is a core deficit. Students receiving an entrepreneurial education should be well versed in how power manifests, persists, who holds it, and how it evolves. They must be equally capable of defining their own relationship to it: whether engaging it from the outside, building it from within, or both at once.

Three practices make that possible: exposure, experimentation, and activation. Exposure features direct, sustained encounters with leaders who have engaged power across sectors, disciplines, and life circumstances, often beyond the conventional entrepreneurial path. Then, students must have real resources and structured space to experiment with their leadership capacity, asking tough questions like, how does power manifest in my daily life? My career plan? Finally, students can choose how or whether they want to activate this capacity. In this way, the pitch deck and business plan become tools for this process, rather than the goal from the beginning.

Three years ago, we launched a course around this process, with a simple premise: 18 case studies—built for the course from tens of hours of interviews—paired with weekly exercises around power, storytelling, and leadership. Each week students study a leader’s lived experience, and then they interview that leader as a collective.

Nearly half of the 27 leaders who have visited the course are Wesleyan alumni, creating a multigenerational network of practitioners, who have led in unconventional ways, brought into direct contact with students still figuring out what their own leadership might look like. I have worked to connect students with visionaries in a variety of sectors like UN global communications, network television, refugee resettlement, venture capital, climate investing, hip-hop and ballet, museum curation, and diplomacy, among others. Power operates across all these spaces, and learning to engage with it requires encounters across contexts. The leaders are a constellation of the many ways a person can identify a problem and wield and mobilize power to find its solution. For example, Rashida Jones, former president of MSNBC and the first Black woman to lead a major cable news network, modeled what it looks like to build trust inside a complex system, and to set records doing it. Melissa Fleming, the UN’s Under-Secretary-General for Global Communications, showed students what it means to shape public narrative around the largest refugee crisis since World War II. The late Marc Pachter, former director of the National Portrait Gallery, shared how he saved one of the most important artworks in American history—the Lansdowne Portrait of George Washington—from being sold. Each case study is a different roadmap for students to engage with power, push back against it, or incorporate it into their lives.

The exposure, experimentation, and activation doesn’t always offer a clear route to attracting venture funding. But at their best, they produce something harder to measure: a student who knows which problem is theirs, why it is theirs, and what they are prepared to do about it.

The Path Forward

When the 2025 team began their project on the water crisis in Jakarta, the obvious frame was scarcity: a megacity sinking, millions without clean water. Through months of conversation with residents, researchers, and policy leaders, they discovered that it was a dual crisis: subsidence driven by groundwater extraction (by those who could afford private wells) was experienced simultaneously with infrastructural failure that left poorer residents dependent on that same extraction. That insight only emerged from sustained engagement with a problem that, from a distance, looked like one thing, but was in fact two things in tension and contradiction.

The problem was never water scarcity as a single challenge; it was all about how water was distributed and produced, and the power structures which kept the inequality in place across centuries.

The 2023 team’s analysis of child marriage did the same kind of entrepreneurial work: the kind that requires deep systems understanding, honest engagement with power, and the standing to make a claim about what is actually happening.

Priyanshu Pokhrel ’26 arrived at Wesleyan, for example, already knowing which problem was hers—menstrual stigma in Nepal, where cultural restrictions on women during menstruation shape daily life. The most extreme form of those restrictions, chaupadi, confines girls to outdoor huts during their periods.

In the summer of 2023, Pokhrel and her co-founder spent more than a week conducting field interviews with teachers, local health workers, and government officials in the Syangja district. They found that the Nepalese government had already mandated free menstrual pads for every public school in the country, but also that the policy lacked proper implementation, such that pads sat in back rooms, unused and deteriorating. Years earlier, the national curriculum had been stripped of health education entirely.

Pyari, the company Pokhrel built from that experience—works to address this gap, designed from the specific context of the community it enters: from the language and the relationships that already exist to the local power dynamics. These dynamics are often complicated by competing stakeholders, so Pokhrel and her team studied power structures in place, building trust by incorporating local expertise into programming.

Pokhrel often speaks of a boy in one of her workshops who wrote a poem about his mother and about the worry he carried every time her period meant she had to leave the house. In its first seven months, Pyari reached more than 1,700 people directly and 60 million online. Pokhrel received a $10,000 Davis Projects for Peace Prize and a $6,000 New Venture Award from the Patricelli Center. She graduated this year.

Last year, Hatch Africa’s chickens produced 4.5 billion eggs across six countries. What began in 2010 as a single poultry farm in northern Ethiopia has since put supplemental income in the pockets of thousands of smallholder farmers, improved nutrition for children, and built a new market for affordable protein. And it did all of this as a profitable company.

By any measure of what impact investing exists to do, Hatch is a remarkable success. But the simple rubric of “is it a unicorn?”—a company with a $1 billion valuation—misses all of the above. For Hatch was designed to be something we don’t yet have a name for but that matters greatly if we are to build a world that puts people and planet, not just profit, at the center.

I started Acumen 25 years ago, before the impact investing sector had a name, on the conviction that markets and capital, used with patience and moral imagination, could solve some of the hardest problems of poverty. Over the years, my colleagues and I have been asked repeatedly how many unicorns we’ve produced—at investor conferences, in due diligence meetings, by journalists looking for a hook. Fund managers increasingly get benchmarked against venture-style return multiples, even when their mandates are built around patient, concessionary capital. The honest answer is humbling. Of more than 240 companies we’ve backed, exactly one—Esusu, which is dismantling barriers to housing and helping close the racial wealth gap—has reached a billion-dollar valuation. We are deeply proud of Esusu. But the prevalence of the question itself points to how much the impact sector has given way to Silicon Valley’s definition of what it means to succeed.

The Unicorn and Its Discontents

By borrowing the unicorn, the impact world also inherited much of the incentive architecture of Silicon Valley. As impact investing matured and went looking for legitimacy, a billion-dollar valuation became shorthand for ambition, proof of scale—the sector’s evidence that it belonged at the grown-ups’ table.

But with the unicorn, it imported more than a metric. It imported scale thinking and a culture. Move fast and break things. Burn capital to capture market share. Treat your earliest customers as experiments. That operating philosophy can work well enough when you’re building software in a developed market with consumer protections and customers who can absorb the cost of your mistakes. It can do real harm when you’re building off-grid solar or delivering agricultural inputs to people living on $3 a day. This is not hypothetical: The Andhra Pradesh microfinance crisis of 2010 and the collapse of several off-grid solar companies in the 2020s offer cautionary lessons in what happens when growth-at-all-costs logic meets fragile communities.

A billion-dollar valuation is a single metric. It is forward-looking, purely financial, and blind to almost everything else a company—or a society—might value. Valuation tells us a great deal about what investors expect to gain. It tells us nothing about whether the world is meaningfully different because that company exists. The economist Mariana Mazzucato argues that we've lost sight of what value really means; a price is not the same as worth.

Consider what the unicorn metric renders invisible. Acumen’s portfolio has reached nearly 800 million low-income people, created hundreds of thousands of jobs, built entirely new markets, and reshaped systems for people the global economy had long overlooked. None of that registers if your scoreboard only counts valuation.

Our sector has felt this dissonance for some time and has reached for alternatives. “Impact unicorn” tried to marry mission to valuation. The zebra, too, emerged as a counterframe—a company that is both profitable and purpose-driven, mutualistic rather than winner-take-all. These were thoughtful attempts to solve a real problem. None has yet given the field what it most needs: a rigorous and resonant way to recognize the organizations that actually change the world, and to connect them with the investors who would back them.

What a Better Framework Might Look Like

If valuation is the wrong measure, what’s the right one? I’d start with a single question: Is the world meaningfully different because this organization exists?

From there, I can imagine at least five dimensions worth measuring. Reach—how many lives are touched. Depth—how fundamentally those lives are changed. Durability—whether the model can sustain itself without permanent subsidy. System effects—whether norms, markets, or structures have shifted in ways that outlast and outrun the organization itself. And financial resilience—whether the enterprise can endure and grow on its own terms.

I’ve also been thinking about what we might call an organization that meets those criteria. A butterfly. Not a mythical creature in an enchanted forest, but a real-world process of change. The best social impact work looks like a chrysalis: slow, unglamorous, often invisible—and then suddenly the world looks different. In chaos theory, the butterfly effect describes how a small change in one part of a system can produce enormous consequences far away, which is precisely what happens when an organization shifts a norm, rewrites a law, or rebuilds a market. The change travels far beyond the reach of the organization’s own wingspan. Think of Sun King and d.light, the solar pioneers who together have brought electricity to more than 300 million people. Or Hatch, and Esusu, and BURN, a clean cookstove company that has saved millions of trees and improved the health of millions of people who relied on dirty cooking fuel. Each, by this measure, is a butterfly.

There are other measures worth considering: Replication fidelity—does the model travel without its founder? Generativity—does it create conditions that independent actors can build on without the original organization in the room? And balance over extraction—does it take only what it needs, the way a butterfly feeds on nectar without harming the flower?

The organizations that create the most durable social impact often grow deliberately, rebuild rather than disrupt, and serve markets that don’t scale at the same rate as software. That’s a feature. Maybe social enterprises in general are fated to be smaller. So the question isn’t why the impact sector has so few unicorns; it’s whether unicorn was ever the right measure. Companies that prove it’s possible to deliver audacious social change and long-term financial sustainability deserve a language, a metric, and a measure of success worthy of what they’ve built.

Labels Matter

When I entered business school in the late 1980s, Bill Drayton of Ashoka had begun to popularize “social entrepreneurship,” but terms like impact investing and patient capital didn’t yet exist as things a young person might aspire to. If you wanted to pursue that path of using business in service of social change, you needed to walk on uncharted territory. There were no guideposts, and there was no language for what some of us dreamed of doing.

Names matter more than we think. They give shape and legibility to ideas, and help direct society’s talent and ambition toward what we’ve decided is worth labeling and pursuing.

“Entrepreneur” spent centuries as a specialized economic term, but it wasn’t until the 1980s that it became a global cultural identity that millions now aspire to. Microcredit and microfinance described a practice that had existed in various forms for generations before Muhammad Yunus systematized it and carried the name across the world—and in doing so helped create a global financial inclusion movement. Closer to home, “impact investing” was coined in 2007. Within a decade it had an industry association, university curricula, and billions of dollars in dedicated capital flowing toward it. “Patient capital”—a term we at Acumen helped popularize—gave funders permission to think differently about time horizons and return. In 2007, Thomas Friedman devoted a New York Times column to patient capital, helping carry the idea beyond our sector and into the mainstream.

Each of these naming moments did more than describe something that already existed. They made the thing easier to see, easier to fund, easier to pursue. (In some cases, the definitions of terms like social entrepreneurship and impact investing became so popular and inclusive as to lose some meaning.)

What We Celebrate Shapes What Gets Built

There is a logic here that we ignore at our peril. Metrics shape incentives. Incentives shape funding. Funding shapes what gets built, and who gets to build it. If the next generation of entrepreneurs and investors takes its cues from the success stories our field chooses to hold up, then we had better make sure those are the right stories.

For as long as I can remember, the world has held up a damaging binary, one that lingers even within the impact world: Maximize returns over here, give money away over there. Charity on one side, capitalism on the other. Under that framework, the poor remain permanently dependent on someone else’s goodwill. But our experience shows another way forward, one of impact-driven enterprises delivering both audacious social change and long-term financial sustainability. We don’t have to choose between the two. The companies that prove it’s possible deserve a language worthy of what they’ve built.

The performing arts sector is paradoxical: deeply innovative yet structurally resistant to change. While endlessly inventive onstage and behind the curtain, the organizational structures that support the creative work are notoriously slow to adapt, relying on legacy models ill-suited for today’s complex funding challenges.

According to the 2022 Arts and Economic Prosperity report, over 80 percent of Americans believe the arts to be important to their local economy and their community’s livability. But in May 2025, calls by the Trump Administration to close the National Endowment for the Arts (NEA) led the agency to abruptly withdraw or cancel hundreds of grants awarded to arts organizations across the United States. Organizations of all sizes reacted by cutting expenses and seeking more earned and contributed revenue, with some dipping into their endowments and using working capital to fill the gaps. This response illustrates what the field has known but not fully addressed: Years of persistent underfunding have made for deeper, structural frailties in the financial well-being of the performing arts.

As current and former performing artists, leaders, and consultants in the nonprofit performing arts industry—and as people who care deeply about coming together to reimagine the future of the field—we believe there is an underexplored economic lever available to the industry: the intentional building of strategic partnerships. Those who can take advantage of the range of possibilities partnerships offer will set the stage for more agile organizations and greater innovation across the field.

Challenges in the Performing Arts Industry

Performing arts organizations face two significant barriers to long-term sustainability. First, the cost of doing business has rapidly grown beyond what can be reliably covered by contributed and earned revenue. This phenomenon, known as the Baumol effect, was documented by economists William J. Baumol and William G. Bowen in their 1965 article, “The Performing Arts: The Anatomy of their Economic Problems.” They observed that the performing arts, like other labor-intensive sectors such as healthcare and education, will see cost growth that consistently outpaces sectors that can be automated. Translation: A week of symphonic music cannot become “more efficient.” Not only is it more expensive to produce art today than it was a decade ago, but the cost is rising faster than before.

Exacerbating the Baumol effect is “institutional exceptionalism.” Performing arts organizations often take a “go it alone” approach, positioning themselves as incomparably unique while simultaneously competing with their peers at the regional and national level. Rather than galvanizing public interest and demand for their art form, they focus on boosting their own brand. This exceptionalism reinforces competition for limited resources at the expense of the sector as a whole.

In this article, we discuss two antidotes to these historical stressors and then a mix of strategic partnerships to pursue to strengthen organizations. While the Baumol effect cannot be fully eliminated, its economic impact and the field’s entrenched institutional exceptionalism can be mitigated with new and strategic approaches to scaling. Capturing economic and organizational efficiencies requires two critical conditions: clarity of organizational purpose and a well-defined business model.

Antidote #1: Clarify Organizational Purpose

To partner with others, an organization must first understand what makes it special and, second, the role it plays in the larger ecosystem. Most performing arts organizations can articulate clear missions, visions, and values, yet many lack a clear purpose statement, which we define as the unique combination of an organization’s identity and its desired impact.

In her 2021 SSIR article, “The Four Principles of Purpose-Driven Board Leadership,” former BoardSource CEO and President Anne Wallestad urged boards to think about “purpose before organization” when considering how to allocate resources in service of their intended impact.

AXIS Dance Company offers a compelling example. Dedicated to creating a “radically inclusive dance sector and world by removing barriers and showcasing the beauty of difference,” AXIS has long collaborated with renowned choreographers to create works for its company of disabled and non-disabled dancers. Recognizing that it could not achieve its mission through performance alone, AXIS developed a comprehensive accessibility resource for the industry. Its Access Guide for Presenting and Touring the Performing Arts helps venues move beyond basic ADA compliance to design truly welcoming and accessible spaces. By leveraging its identity, AXIS expanded its impact beyond the stage to advance its purpose.

Performing arts organizations that clearly define their purpose are better positioned to make strategic decisions about how to operate within the field. This foundational work allows them to leverage their unique strengths, maximizing their impact both individually and collectively.

Antidote #2: Map the Business Model

If purpose defines identity and impact, the business model shows how that purpose is put into practice. Opera Philadelphia offers a tangible illustration. When Anthony Roth Costanzo assumed the role of general director and president, he did so with a commitment to “bring opera to more people, and bring more people to the opera.” He also inherited a company in deep financial crisis with a looming $4 million debt and an upcoming season with only 30 percent of tickets sold.

Understanding that earned revenue alone would not fully sustain Opera Philadelphia, Costanzo implemented a radical pay-what-you-can pricing strategy designed to create audience accessibility while building community relevance. Starting at $11, the “Pick Your Price” initiative was an immediate success, selling out the entire season in a few weeks.

Yet Costanzo knew financial sustainability would also depend on cultivating partners, generating philanthropic support, and increasing the company’s civic value. To achieve this, Opera Philadelphia launched partnerships across the city’s civic and cultural sectors, including with the Rodin Museum, Temple University, Jean-Georges Philadelphia, and the famed Wanamaker Building.

The results were significant: Costanzo’s first season ended with a $1.5 million surplus, allowing Opera Philadelphia to double the number of performances for its next season. Building on their initial ticketing strategy, the company introduced the Opera Pass program, with an impressive 40 percent of its members subscribing to the entire season. Though often viewed by the field as mere pricing innovation, Costanzo’s business model proved to be the mobilization of a clear purpose built and sustained through the ecosystem of community partnerships.

Building Together What We Can’t Build Alone

Aligning purpose and business model provides the foundation that performing arts organizations need to pursue strategic partnerships successfully. The matrix below illustrates a range of approaches spanning short- and long-term partnerships, from loosely coupled collaborations to tightly integrated alliances.

Organizations pursue partnerships for many reasons: to achieve marketing, artistic, or fundraising goals; amplify common causes; expand geographic reach; leverage resources and capabilities; reduce costs; or merge operations. The appropriate partnership structure depends on the purpose it is intended to serve. This matrix provides a framework for organizations to seek and execute realistic, meaningful, and cost-effective partnerships that align with their capacities and strategic priorities.

Coordinated Partnerships: Short-Term and Loosely Coupled

Coordinated partnerships are typically one-offs or time-bound initiatives designed to promote a shared goal or collaborate around a shared initiative. They capitalize on flashes of innovation that benefit all organizations involved. Coordinated partnerships can also mobilize resources to benefit the field as a whole, whether through a new production with a clear purpose, the generation of emergency funds, or the building of political capital. And even with limited integration, they generate more value than going it alone.

One example is the recent production of “Firebird” presented jointly by Dance Theater of Harlem and Gateways Music Festival, which operates in association with Eastman School of Music. Both organizations are dedicated to empowering multicultural and Black artists, not only showcasing their talent, but helping to redefine the cultural and aesthetic narrative in ballet and symphonic arts. Dance Theater of Harlem, a well-established organization in New York City, helped to elevate the brand of the non-local Gateways Music Festival by broadening its exposure around a shared purpose.

COVID brought many performing arts organizations together for short-term, loosely coupled initiatives. Chicago Acts Together gathered over 100 performing arts organizations for a joint fundraising initiative. Elsewhere, arts organizations banned together for advocacy purposes. In San Diego, 28 local theaters started One Theater, One Story, a collaborative campaign to survey audiences and advocate for artists’ relevance and survival needs. Similarly, more than 200 arts leaders in New York City had a daily “Culture @ 3” call to discuss ways to advocate for government support through collective action.

Interlocking Initiatives: Short-Term and Tightly Held

Interlocking initiatives involve dedicated resource sharing to support a specific goal over a defined period. Co-commissions are an increasingly common form of interlocking initiatives, bringing together geographically dispersed organizations to share the costs, risks, and administrative complexity of creating a shared new work for multiple stages. This is increasingly common in the co-commissioning of new operas, where the cost and complexity of new productions is especially high.

Recently, a first-of-its-kind collaboration between two pillar arts organizations in New York City, the Metropolitan Opera and Museum of Modern Art (MoMA), highlighted the life and art of Frida Kahlo and Diego Riviera. The Met’s production, “El Último Sueño de Frida y Diego” (“The Last Dream of Frida and Diego”), was coupled with MoMA’s exhibition “Frida and Diego: The Last Dream,” which presented their art in an installation designed by Jon Bauser, the opera’s set designer. This interlocking initiative showed that interdisciplinary collaboration not only elevates the audience experience but also generates revenue for both organizations.

Shared Orbits: Long-Term and Loosely Coupled

In shared orbits, organizations partner over a longer time horizon but remain loosely coupled to maintain ownership over programming and other strategic priorities. This allows for ongoing partnership possibilities while retaining organizational autonomy. The benefits of shared orbits are the deduplication of resources and their attendant cost savings, as well as the possibilities of expanded audience reach through cross promotion.

To coordinate this type of partnership, groups might create or designate an umbrella organization to provide back-end operational support for multiple arts organizations. For example, The Woodruff Arts Center (WAC) in Atlanta coordinates venue scheduling and provides centralized human resources and finance functions for its constituent organizations: Atlanta Symphony Orchestra, High Museum of Art, and Alliance Theater. This organizational structure generates significant cost savings while preserving the artistic freedom of each constituent institution.

Mergers and Alliances: Long-Term and Tightly Held

Mergers and alliances are the most complex form of partnership. When successful, however, the payoffs can mean the difference between organizational survival, continuing financial instability, or closure. They demonstrate how economies of scale at both the artistic and administrative levels can help organizations respond to Baumol-driven cost pressures while preserving and strengthening the cultural ecosystem they collectively serve.

In 2019, the Toledo Symphony Orchestra and Toledo Ballet (and, in 2024, the Toledo Jazz Orchestra) merged to form the new multi-disciplinary Toledo Alliance for the Performing Arts (TAPA). In integrating into one organization, the groups combined operations, unified their donor base, and aligned around a shared educational mission, thus leveraging economies of scale. The merger enabled TAPA to open a 56,000-square-foot facility that houses all administrative functions and education programs and expands available performance spaces in Toledo.

Alliances in performing arts are prevalent as smaller theater companies continue to rebound from the pandemic. They help mitigate cost pressures while preserving artistic identities. Philadelphia alone has produced two notable alliances built around shared artistic leadership. KC MacMillan is the artistic director for both the Inis Nua Theatre Company and Tiny Dynamite, while Allison Heishman has the same role across the Azuka Theatre and Simpatico Theatre. The impact of these alliances goes far beyond the cost savings of a split salary. By sharing artistic direction, the theater companies also coordinate artistic planning so that their individual productions draw continuous interest from the Philadelphia audience.

Where Do We Go From Here?

Strategic partnerships across the four archetypes of the matrix offer a pathway to a thriving, mutually reinforcing performing arts ecosystem. Beyond reducing duplication, sharing resources, and expanding reach, these models catalyze knowledge exchange, spur innovation, and fortify the cultural relevance and social impact of the field.

With clarity of purpose and well-defined business models, performing arts organizations can proactively identify and pursue an array of strategic partnerships. But to do this requires intentionality, effort, and organization design. One idea is for organizations to create a formal, cross-functional team that brings together artistic, development, marketing, and operations to identify, evaluate, and implement partnership opportunities. This team can assess potential collaborations, guide integration, and plan for ways to demonstrate impact. It’s important for individual organizations to build their own partnership muscles across silos in order to partner well with others.

While the performing arts will always strive for artistic excellence, the future of the sector increasingly hinges on the field’s capacity for collaborative intelligence, both within and across organizations.

More and more people in the social sector seem to believe that the government is the best or even only way to scale. In arguing that “Scale Really Matters,” for instance, Kevin Starr recently argued that government is “the only realistic doer at exponential scale,” and “the only realistic payer at scale.” But a variety of others take this approach, from “Accompanying Governments to Scale” to “Scale That Lasts” (on moving from government partnership to full country ownership); especially in a time of aid contraction, it’s common to see the argument that NGOs should take a “low-ego, low-logo approach and let the government both lead and shine.”

If government is one very important pathway to scale, however, the private sector—for-profit and not-for-profit alike—is another. And because there is more than one road to scale, it would be unwise to over-index on a single solution. It’s worth remembering, after all, that some of the most consequential anti-poverty technologies of the last thirty years—for example, mobile money, micro-insurance, pay-as-you-go solar, and digitally enabled pest detection—were neither developed nor scaled by a government.

In short, the pathway to scale depends on the nature of the problem, the context, and the actors involved.

From Mines to Cell Phones

In 2003, the Aga Khan Fund for Economic Development (AKFED) made a bet that few governments or aid agencies would: that a private national telecommunications network would be foundational to a modern economy, and that the private sector, not Big Aid and not a cash-strapped finance ministry, would be the one to build it.

That bet paid off. An AKFED project company, Roshan, cleared land mines to build cell towers (and rebuilt them repeatedly after insurgents blew them up), in a country where 99 percent of people lacked a phone. In the years that followed, Roshan would become the largest taxpayer in the country, employing 40,000 Afghans directly and indirectly, and providing opportunities to women who had few opportunities to work outside the home. It was a transformative investment by a private company committed to the long-term development of the country. Roshan went on to launch a national payments platform, M-Paisa, Afghanistan’s adaptation of Kenya’s mobile-money breakthrough, M-Pesa, facilitating person-to-person payments, commerce, and micro-insurance. Its Malomat service delivered real-time crop prices to farmers and its telemedicine program linked rural people to Afghan doctors and specialists outside the country.

Within only a decade, more than 90 percent of Afghans had access to a mobile phone. And equally importantly, a reliable and affordable network. None of this required big investments from a cash-strapped government or overstretched donors. What was required was government trust in a responsible private partner that was willing to take risks in a frontier market and use the power of markets to invest in economic, social, and human development.

Crucially, this had to be a private actor willing to deploy patient capital, take on risk, work with government and civil society, and invest in a long-term vision to build a world-class telecommunications network. This enabled thousands of other micro and medium-sized enterprises to build businesses on the network. What emerged were the conditions for broad-based economic development. In the years that followed, millions of Afghans had connectivity and access to health and education services, a payment platform, and multiple forms of media.

Finding the Balance

A responsible private sector can co-create with governments to do what the public sector cannot do alone. For example, government institutions generally do not outperform the private sector in payments, hardware and software development, and innovation at speed and scale. Of course, governments are vital in developing enabling conditions for businesses to start, grow, and scale, and drafting regulations that keep them honest. They must also ensure businesses pay taxes so infrastructure and public goods can serve a broader population.

But the task is to find the right mix between what governments do well directly, how to enable the private sector and civil society to thrive, and how to build institutions that survive regime change. Governments need to develop the muscle to govern, build legitimacy with their own people, and develop a domestic tax base; if they do not, they will over-rely on external assistance and become vulnerable to collapse. Afghanistan, for example, is a cautionary tale of over-reliance on international funding, overreach of foreign actors, and under-investment in the institutions of the state.

I suggest three questions to determine the appropriate role for government and private institutions in solving for large-scale economic and social challenges.

Is the good a public good, or is it rivalrous and excludable? Primary education, immunization, road safety, water, and sanitation have weak private markets because beneficiaries cannot easily pay or be excluded. Government is the natural payer and often the natural doer. When it comes to goods like handsets, solar lanterns, mobile payments, or a crop-insurance policy, each has a willing buyer at the right price. Markets are a powerful engine to create access and enable competition and distribution at scale.

Does the solution depend on a network, a platform, or competition between providers? If the answer is yes, the private sector almost always scales better and faster. Android did not need a state-owned operating system; what it needed was entrepreneurs competing to build cheaper handsets and better apps. The same applies to M-Pesa, micro-leasing, and last-mile logistics. Governments regulate platforms well; they rarely build them efficiently and effectively.

Where does state capacity actually exist, and where does it not? Starr and others press this point vigorously, and with good reason. But it cuts both ways. Where states are weak, fragmented, or hostile to their own people, designing exclusively for a government doer is not pragmatic; it is wishful thinking at best. In Afghanistan in 2002, no plausible reading of the state suggested it would build a national telecoms network in five years or that the government would lead girls’ education or enable women-owned enterprises. AKFED, as a leading private sector actor embedded in the country, believed it could build something transformational, economically and socially. It could and it did. Not-for-profit schools committed to girls education, alongside microfinance institutions supporting entrepreneurship, which created pathways for women to participate in the economy after decades of exclusion.

While we often think of NGOs as depending entirely on philanthropy, many are private, not-for-profit enterprises responding to market needs and generating revenues but not profits. Aravind Eye Care, Jaipur Foot, and the Bangladesh Rural Advancement Committee (BRAC) operate schools and clinics, for example, at massive scale serving segments of the population that neither markets nor the state reliably reach. They often provide essential services at a fraction of what governments spend due to specialized knowledge, technology, access to volunteers, and economies of scope and scale. Aravind performs more than half a million eye surgeries a year, mostly free or heavily subsidized, cross-financed by paying patients. No ministry built that. It was built with relentless emphasis on quality and inclusion, a deliberate design choice and a delivery-model innovation that deserves to be called out.

None of this is an argument against “the Big Shift” away from “Big Aid” and towards strengthening government capacity and efficiency in providing public goods. But before we decide government is the scaler of choice, we need to be clear about the problem we’re trying to solve. In many instances, government is the natural scaler. But where governments are weak, corrupt, or ineffective—or when the nature of the good is better provided by non-governmental, private institutions—we should not force-fit a solution. One size does not fit all: problems, actors, and context all matter.

It is important that we don’t replace one orthodoxy with another. We want to invest in robust governments that can and must do more with the resources they have and create space for private institutions to provide public goods and services when governments cannot or do not. Low-cost private schools in South Asia and Africa emerged to fill a vacuum where public schools were absent or where public education left students unable to read after five years of school. They were not designed to compete with quality public schools; they emerged to fill a void.

Private institutions can be exemplars. They can innovate and develop new business models cost-effectively that stimulate the public sector to do better. They can work as partners to public institutions and develop new ways to build teacher capacity and deploy new technologies to reach more students in less time. They can do this profitably and create new ways of educating girls or reaching rural patients using telehealth or mobile learning. Underserved people are not served by orthodoxies. They are served by whoever can deliver a good or service of value, affordably and durably, at the scale of the need. Sometimes that is a minister. Sometimes it is a business with a cell tower, and sometimes it’s an investor willing to build what a country has not or will not do on its own.

The 20-year-old debate around microfinance is in the spotlight yet again, sparked by a Wall Street Journal article that recycles familiar criticisms of the sector without considering the damaging implications of its oversimplification. For years, critics have raised concerns about customer over-indebtedness and have called into question microfinance’s real impact. But while it’s important to critically examine any intervention, sweeping claims of failure not only unfairly undermine the entire sector, but also miss a fundamental point: Access to capital remains an essential building block of economic mobility.

I recently returned from Malawi, where I spent time with women running small businesses, most of them renting stalls at their local market to sell produce, phone accessories, and clothing. When they described how they survived week to week, they didn’t talk about “capital.” They talked about having enough cash to restock perishable inventory after a slow week, pay a medical bill without shutting their stalls, or keep their children in school when income fell short.

These women, and many of the 3.4 billion people living on the margins, are entrepreneurs out of necessity. Running their own business is the only way for them to earn any income. Without access to responsible finance, a single setback forces impossible tradeoffs, including selling assets and turning to predatory moneylenders. With access, people can absorb shocks and plan ahead. For millions of people, inclusive financial services aren’t only about growing a business; they’re what make stability, and any path to mobility, possible. For them, the value of microfinance isn’t an academic debate, and the field simply cannot afford to reduce the conversation to headlines.

Challenges of the Microfinance Model

Part of the answer to why so many people consider microfinance a failure lies in how the sector evolved. As many are aware, Muhammed Yunus pioneered microfinance 50 years ago on the notion that all people have agency to shape their financial futures, and several founders, including FINCA’s, figured out how to sustainably provide capital to people who were excluded from traditional financial systems. The model rapidly gained traction, and there was immediate high demand for microloans.

However, to increase outreach, many providers in the sector prioritized scaling and generating returns over deep customer understanding. While this can be an effective strategy for providers operating in high-density markets or serving customers with existing business, it doesn’t work well for institutions aiming to provide solutions to people living on the margins.

For those focused on serving low-income customers, the issue is structural: Even the best models will struggle to deliver impact if the cost of capital is too high. At its best, microfinance blends philanthropic capital and impact investment to build institutions that responsibly serve marginalized customers. Providers borrow from development finance institutions, social impact lenders, and commercial funders to then on-lend to their customers. But it’s a knife’s edge exercise. A provider that doesn’t make enough money can’t attract and retain commercial funders. A provider that focuses too much on profit can’t generate the impact it set out to deliver in the first place. Subsidy and donor support are essential to meeting the needs of inherently harder to reach—and therefore more expensive to serve—customers.

Over the last 40 years, for example, FINCA has used more than $500 million in donated capital to distribute more than $16 billion in loans. Yet the cost of borrowing still exceeds 20 percent in many markets, as capital flows toward lower-risk opportunities. While concessional funding helps, the field needs broader solutions to deliver affordable capital at meaningful scale.

At the same time, resources are clearly shrinking. Global development assistance has fallen for two consecutive years, including a record 23 percent decline in 2025. The result is fewer safety nets and fewer opportunities for people living in or on the fringes of poverty. This shift is making it even harder for poverty-focused organizations to serve the hundreds of millions of people who already rely on microfinance for their daily survival, let alone to extend their reach.

As with any business, to operate, institutions must at least break even. To grow and improve, they must generate returns. Yet the work is inherently complex; providers must serve clients with volatile incomes, operate in fragile economies, and deliver both financial and social impact, while also safeguarding against over-indebtedness and abuse. The underlying issue isn’t just capital scarcity but the nature of capital and the incentives behind it.

Credit Is Essential to Economic Mobility

Most people living in poverty are self-employed, relying on subsistence farming or small, informal businesses. In Africa alone, nearly 83 percent of employment is estimated to come from informal work. And with growing youth unemployment on the continent, self-employment will only become more important to survival.

Small, well-structured loans—whether to build a business, plant crops, or even for consumption in an emergency—can help people break the cycle of poverty. Data from ATLAS, a financial inclusion data platform referenced in the Wall Street Journal article, confirms that, between 2023 and 2025, 66 percent of the global microfinance portfolio across multiple institutions and geographies went toward income-generating activities, including trade, services, and agriculture. During this same period, the median share of both women and rural borrowers was just over half (54 percent).

In addition, contrary to the critique that microloans are ballooning, inflation-adjusted data shows the opposite. According to ATLAS, while nominal loan sizes increased 64 percent over 5 years, inflation rose 116 percent, meaning real loan sizes have in fact declined. Many FINCA borrowers say their loans are too small, leaving them undercapitalized.

Randomized evaluations show that credit truly works when it’s designed well. More flexible, customer-centered approaches can perform substantially better than traditional one-size-fits-all solutions. Studies have found that giving borrowers greater flexibility in when and how they repay reduces financial stress and, in some cases, increases business investment and household income. Other evidence shows that pairing access to finance with skills training, savings, productive assets, and sustained support can generate more durable gains in livelihoods. These approaches guide FINCA’s work and, each year, FINCA surveys its customers to understand the challenges they face and measure the impact—positive and negative—of microlending services. Earlier this year, FINCA polled nearly 8,000 customers, of whom 73 percent reported that FINCA’s services improved their financial wellbeing, while only 3 percent said they were worse off.

The Real Debate: How to Align Capital and Purpose

Microfinance isn’t a silver bullet, but dismissing it won’t help solve global poverty. Instead, the field needs to adopt better ways of working to align capital and purpose. This means inclusive finance providers need longer-term investments, more flexible financing structures, and greater access to funding at the country level.

Social investors like Acumen and Oikocredit have shown that mission-driven organizations benefit more from funding with longer timelines and higher risk tolerance than they do from funding from lenders who demand quick repayment. Opportunity International has successfully combined donor funding with private investment, demonstrating how philanthropic funding can make it less risky and more attractive for commercial funders to enter markets or sectors they wouldn’t normally serve. And Aceli Africa provides incentives to local lenders to serve agribusinesses, helping banks look beyond the traditional risk perceptions and lack of collateral that often leave agricultural enterprises wanting.

Reaching the most vulnerable populations will always require some level of subsidy, because it costs more to meet the needs of non-traditional borrowers. Philanthropic capital is what allows organizations like FINCA to serve high-risk populations. It enables providers to test new approaches that can permanently change perceptions and to focus on impact.

At the same time, financial institutions need to evolve their business models, design better products, and deliver lower costs to customers. Data analysis and technologies like artificial intelligence—which may help organizations listen to customers at scale, analyze what people need, and adapt solutions in near real time—can help. For example, FINCA recently launched a product innovation lab that uses human-centered design to rapidly design, test, and scale new solutions that address the underlying causes of poverty. Additionally, FINCA is partnering with institutions like Amazon Web Services, Thought Machine, and Ikigai to develop a new technology platform that brings affordable, banking-grade technology to microfinance institutions so that providers can finally tailor loan terms to meet individuals’ unique cash flows, speed up the disbursement process, and increase efficiency to lower costs.

These and other approaches are already supporting economic mobility among people living in poverty, and they have the potential to create even greater impact. Rather than choosing between blind optimism and wholesale dismissal, microfinance providers and funders must recognize the value of responsible financial services, while continuing to refine and improve the model so that it genuinely serves the people who need it.

Consider a number: In 2025, the average American nonprofit retained slightly more than 43 percent of its donors from the previous year.

This figure has hovered near or below 45 percent for more than a decade and has resisted every tactical fix the sector has deployed. That persistence is, itself, diagnostic: When a problem resists tactical solutions across an entire industry, for more than a decade, it is not a tactical problem. It is a philosophical one.

The problem is that the sector keeps asking how we retain more donors, when the more useful question is: What kind of relationship are we trying to build? The former is business as usual; the latter requires actual transformational philanthropy. After all, organizations that genuinely understand transformational philanthropy do not experience the same attrition crisis, because they have not merely acquired donors. They have cultivated partners.

What follows is therefore not a tactics guide. It is an argument, grounded in fundraising science, developmental psychology, behavioral economics, and organizational culture, about what transformational philanthropy requires, and why so few organizations achieve it. The principles are neither new nor complicated. They are simply, persistently, under-implemented.

Putting Identity at the Center

Behavioral science has established that the most reliable predictor of transformational giving is not wealth, not affinity metrics, but identity. For one thing, brain-imaging research shows that when donors contemplate a charitable bequest, the neural reward pathways activated are the same ones associated with personal financial security and transcendence. At sufficient depth, giving and being merge: The donor is not merely supporting a cause; they are becoming something new through that act of support.

Moreover, donors who hold a strong philanthropic self-concept—which is to say, they experience generosity as core to who they are, not something they do periodically—give significantly more, give more consistently, and are far more likely to make stretch gifts, multi-year commitments, or estate provisions. They are, in short, the kind of givers whose philanthropy creates true, deep, and lasting change.

Findings like these overturn one of fundraising’s most durable assumptions, which is that gift size is primarily a function of wealth. It is not. It is determined largely by the depth of a donor’s philanthropic identity, and by whether the organizations they support help them see giving as an act of self-expression. When organizations ask donors to “invest in our mission,” they are making identity invitations, whether they know it or not. The question every fundraiser must therefore answer honestly is: Are we inviting genuine self-expression, or a transaction dressed up as one?

Donors know the difference, and the attrition data proves they act on it. Donors do not give to organizations: They give to expressions of their own values—through organizations.

In his research on major donors, Paul Schervish uses the concept of moral biography: the accumulated experiences, losses, and convictions that shape a donor’s deepest motivations. His interviews with high-net-worth donors reveal that the largest gifts are almost never primarily about tax efficiency. They are about completion, about acting on convictions held for decades, honoring a loss, or building something that will outlast the donor. The Indiana University Lilly Family School of Philanthropy’s Generosity for Life research confirms this at scale: donors with a clearly articulated personal philanthropic philosophy give, on average, 4.2 times more than demographically similar donors who lack one.

For this reason, helping donors clarify their own values is itself a transformational act. The most important conversation a major gifts officer can have is not about naming opportunities. It is about what the donor believes, what they have lost, and what they hope to leave behind. The Coutts Million Dollar Donors Report consistently finds that ultra-high-net-worth donors describe their largest gifts in existential rather than financial terms: the gift gave their life meaning, connected them to legacy, or let them act on a long-held conviction

Building Organizational Meaning

No transformational gift is made to an organization a donor does not trust. Why, then, is the sector’s investment in trust-building so chronically underweighted relative to its investment in prospect research and digital acquisition? Nonprofits pour growing budgets into finding and acquiring donors because that spend is easy to measure and defend, but trust-building pays off on a multi-year timeline that no board report can capture. The proof is in the mismatch: acquisition and screening spend keeps climbing while retention sits near 32 percent and only 14 percent of first-time donors ever give a second gift.

However, trust cannot be engineered through communications strategy. It must be earned through organizational character. But this raises an uncomfortable question for nonprofit leaders: Is our organization trustworthy? Not merely transparent by legal standards, but genuinely coherent? Does leadership model the values it asks donors to support? Even more importantly, transformational giving requires meaning: Impact data matters, but alone it does not move a donor to transformational engagement. It must be paired with narrative resonance, the experience of recognizing oneself in the story the organization tells.

For this reason, donors need both the head (evidence of impact, credibility, stewardship) and the heart (connection to purpose, belonging). Organizations that speak to only one register will reliably underperform those that speak to both.

The sector spends five to ten times more to acquire a donor than to retain one—and then wonders why transformation is so rare. But transformational philanthropy cannot be compressed into a campaign cycle. Donors who give consistently for five or more years are exponentially more likely to make a major or planned gift, and each retained year compounds a donor’s lifetime value in ways no acquisition investment can match. Donor retention is therefore the temporal precondition for transformation, the real goal: A donor churned after eighteen months of transactional engagement will never become a transformational partner. And the organization that loses that donor may have foreclosed the largest gift in its history. The sector spends five to ten times more per dollar to acquire a new donor than to retain an existing one: an industry claiming to value long-term impact while undermining the relational conditions that produce it.

In transformational fundraising, the ask is not a campaign event, but the culmination of a relationship already moving the donor toward readiness. Capacity to give and readiness to give are not the same thing; conflating them accounts for many solicitations that damage rather than deepen relationships. Premature solicitations damage relationships and reduce lifetime value. Gift readiness not as a function of wealth screening but of relational maturity, based on the stages of engagement, conviction, and trust a donor has moved through.

Making Culture Is the Precondition

Perhaps the most underappreciated finding in philanthropic research is that transformational fundraising cannot be practiced by a development staff alone. The entire organizational culture—from board leadership to program delivery to how a receptionist answers the phone—shapes whether a major donor deepens their commitment or quietly withdraws.

As Board Source’s 2023 Leading with Intent research documents, prospective major donors regularly conduct informal due diligence on board governance and CEO character before committing to transformational gifts. A development program housed in an organization with a dysfunctional board or a culture of internal mistrust cannot produce transformational philanthropy at scale, regardless of how skilled its frontline fundraisers are. And Penelope Burk’s longitudinal donor survey research, replicated across thousands of respondents over two decades, persistently identifies the same three factors when donors explain both their largest gifts and their most significant departures: organizational trustworthiness, leadership transparency, and the quality of stewardship following a previous gift.

Sargeant and Woodliffe’s research establishes that stewardship quality is the single strongest predictor of donor upgrade and long-term retention, more powerful than mission affinity, recognition programming, or even a donor’s relationship with a specific staff member.¹⁶ The moment of greatest return is not the solicitation. It is everything that happens between gifts.

The word stewardship derives from a tradition of sacred care—the faithful tending of something entrusted by another—but when fundraising practice reduces it to acknowledgment letters and annual reports, it abandons its own most generative possibility. Transformational stewardship communicates something more essential: you are known here; your gift changed something real; you belong to this story.

It is covenantal rather than contractual.

From First Gift to Final Gift

The fullest expression of transformational philanthropy is the planned gift—extending one’s values beyond one’s own life. Planned giving conversations are categorically different from major gift solicitations because they are invitations into life review, not financial transactions.

Giving USA 2026 estimates charitable bequests in the United States reached $54.9 billion in 2025, roughly 10 percent of all US charitable giving. Perhaps the most important finding from bequest research, though, is that the size of a donor's annual gift does not reliably predict planned giving propensity. Bequest donors routinely make modest annual gifts, sometimes under $1,000, yet leave six- or seven-figure estate commitments. The predictors are relational: depth of engagement, shared values, institutional trust, and belonging to something worth perpetuating.

This convergence of research—donor identity, moral biography, trust, stewardship, community belonging, and planned giving motivation—points toward a synthetic understanding of donor engagement. A donor fully engaged across mission alignment, values resonance, personal connection, visionary alignment, community identity, and emotional investment is not merely satisfied. They are transformed: they experience the organization as an extension of who they are. Their giving is not a charitable act. It is an act of self-authorship.

For this reason, emotional engagement and personal agency outperform financial incentives as drivers of giving escalation. The most sophisticated fundraising tools available are not data analytics. They are listening, curiosity, and disciplined cultivation of genuine human connection. Social identity research adds another dimension: donors respond powerfully to knowing that peers who share their identity are giving at a certain level, increasing average gift amounts by as much as 29 percent. Organizations that build genuine communities of belonging do not simply “improve retention.” They create the social conditions in which transformational generosity becomes culturally normative.

The Imperative

The sector faces a choice, and it is not primarily a strategic one. It is philosophical.

One path leads deeper into the logic of acquisition: more data, more segmentation, more optimization of the transaction. This path produces a predictable result—the 43 percent retention rate, the acquisition cost premium, and an industry that perpetually replaces donors it cannot retain while wondering why the largest gifts go elsewhere.

The other path demands something harder: a fundamental reconsideration of what a donor relationship is for. It requires organizations to ask whether their culture deserves the trust of a transformational donor, whether their stewardship communicates belonging or mere compliance, whether their fundraisers understand moral biography as well as they understand wealth screening.

The research is unambiguous about which path produces transformation. Donors who experience deep relational engagement, genuine values resonance, and authentic community belonging give more, give longer, and ultimately give in ways that change institutions—and themselves. The fundraiser who understands this does not ask How do I close this gift? They ask How do I help this person become who they most want to be?

That question is not a technique. It is a vocation. And the sector that takes it seriously will discover that transformational philanthropy is available to any organization willing to do the harder, slower, more profoundly human work of building a relationship worthy of trust.

When I was a child, like many children, the street was where I learned how to live in the world. Playing was not just playing. We gathered every evening, first to decide what to play, then making our way through intense debates about how: the rules to follow, the boundary conditions to honor, the alliances that would dictate team formation, and heated discussions over strategies to win. In that one hour, we practiced negotiating, disagreeing, and finding a middle ground. We learned how power shifted, all while retaining our sense of play and wonder. In this shifting social drama, everyone was simultaneously an actor, an audience, a rule-maker, and a student.

When was the last time you saw children playing on the streets? When was the last time this was how you learned?

Today, for children and adults alike, learning can often begin somewhere very different: in search bars, recommendation feeds, and AI-generated summaries. But while conversations about artificial intelligence increasingly revolve around productivity and efficiency, what is lost when the environments that once cultivated social and embodied learning get replaced by systems optimized for speed, convenience, and certainty? Who do we become when our theaters of social learning are outsourced, and when imagination is supplied on demand instead of cultivated through practice? How do these new technological changes reshape the conditions through which people learn, connect, and participate in the world? How do they make meaning of the various social developments happening around them? Are there capacities and skills that must stay stubbornly human even when AI can automate them and do them more efficiently?

Finally: What might this mean for a social sector whose work depends upon precisely these capacities?

For much of human history, what can be called the “developmental commons” were the streets, forests, playgrounds, libraries, and classrooms, shared social spaces where attention was exercised, imagination was stretched, relationships were formed, and, most importantly, knowledge was situated within lived experience. Today, as digital platforms are becoming some of the primary environments in which young people (and many others) learn to relate to themselves and others, we need to explore how the environments in which we spend our time shape the capacities we develop. A growing body of research shows that cognition does not occur solely within the brain, but emerges through interactions with bodies, physical environments, movement, objects, and other people. More than just receiving information, learning is also about the conditions in which knowledge is encountered and made meaningful.

So: What kind of world of learning are we creating?

1. A frictionless world has a cost.

In conservation and environment-related work, restoring the connection between humans and nature is central to a people- and planet-friendly society. Much depends on encountering the living world directly, exploring the wild, and holding its many contradictions and uncertainties. Sometimes this means rigorous scientific observations; other times, using anecdotal insights to bridge the gap between knowledge and practice. In both cases, it means experiencing friction as a feature through real-world engagement.

Can technology deepen connection with nature without becoming a substitute for it, or do we lose our sense of play and wonder when learning becomes frictionless?

Nature is part of the cognitive environment through which learning happens, not outside of it. And this insight has important implications for how we think about technology in the social sector. A community practitioner reviewing an AI-generated summary may gain access to information, but a practitioner spending time in a village, listening to stories and observing relationships, develops contextual judgement and holds local nuance that grounds that information. In many cases, the process through which knowledge is acquired is inseparable from the quality of the knowledge itself.

The challenge, therefore, is how technology can be designed and deployed in ways that strengthen, rather than displace, embodied forms of learning and engagement. Even when technology can create efficiencies and quick wins, sometimes choosing not to use it can help retain productive friction and be the more helpful choice.

For example, the Nature Conservation Foundation programs connecting people to birds have expanded from field-based learning and printed resources to include online courses, digital platforms, and tools that make bird identification more accessible to the public. These efforts have broadened participation significantly, but NCF remains guided by a simple principle: The value of technology lies in its ability to draw people back into a relationship with the natural world. There are innovations that have been able to do this successfully: Tools like Merlin, an AI-powered bird identification app developed by the Cornell Lab of Ornithology, demonstrate a different possibility for technology. But the key is that rather than replacing the experience of being outdoors, Merlin helps people identify birds they see or hear in real time, turning a moment of curiosity into a deeper encounter with the natural world.

2. AI slop is an attention problem before it is an information problem.

We are entering an era where information can be generated faster than it can be verified or meaningfully interpreted. This information abundance obviously magnifies challenges around misinformation, but also around how our attention can be used as a currency. And while the distortion of facts is an important challenge, we also need to look at which facts are being made visible to begin with.

Cognitive neuroscientist Maryanne Wolf argues that the shift toward digitally mediated reading environments may be reshaping cognitive processes associated with what she calls "deep reading," typically associated with the capacity for reflection, for cultivating empathy and critical analysis, and for encouraging inference and imaginative engagement. As information arrives in rapid, broken streams, attention itself becomes fragmented. The consequence is a diminished capacity to stay with complexity long enough for understanding to emerge.

We see the consequences of this shift emerging in different forms. Organizations working on gender equity are dealing with the growing influence of the manosphere, a loose ecosystem of influencers and online communities that rigidly frame masculinity and often promote hostile ideas about it. Generative AI and recommendation systems can accelerate the spread of such narratives, creating feedback loops in which misinformation and polarization travel faster than nuance and dialogue.

A different but equally significant concern is invisibility. Large language models learn from what is documented, digitized, and visible online, focusing on places that receive extensive media coverage, have well-documented institutional histories, and digital footprints. Information on smaller cities, local citizen movements, oral histories, and everyday governance realities often remain underrepresented. This representation inequality makes entire places, communities, and forms of knowledge invisible and absent from the systems through which people learn and make sense of the world.

This is particularly relevant for the social sector. What happens to public trust when attention, not accuracy or representation, becomes the primary currency of the digital age?

3. Social change depends on situational intelligence.

We also need to talk about recovering judgment: Once information is visible, the harder task is deciding what it means, where it belongs, and how it should shape action.

AI's power is its ability to identify patterns across enormous volumes of information. But social change sometimes requires the opposite move. For example, a conservation practitioner deciding how to restore a watershed must understand the particular history of that landscape, the relationships between communities, the local political economy, and forms of ecological knowledge that may never appear in a dataset. Beyond commonalities, it is equally important to stay with the differences.

To this end, Tech4good Community anchors a conservation coalition program that is working with several NGOs to build shared infrastructure for ecological intelligence. They highlight that while interest in AI, analytics, and digital tools is growing rapidly across the social sector, the work they have done with many grassroots conservation organizations demonstrates that organizations today are not just demanding better technology but using that technology in a place-based and locally intelligent manner.

Generalized intelligence needs to be made useful through situational and grounded judgement, with the ability to interpret signals within specific social, ecological, and cultural realities, and to understand when a recommendation should be adapted or ignored. Most importantly, it is important to recognize what is absent from the data as much as what is present.

Learning Capacity to Be Human

This is the paradox of the moment: As intelligence becomes increasingly available on demand, the capacities that may matter are deeply human, not computational. In that sense, the vanishing developmental commons is a story about the environment and experiences we choose to lean into as a society. AI will become more capable. But can we remain intentional about preserving conditions through which people learn to pay attention, make sense of complexity, remain open to wonder, and build coherence between different ways of knowing?

For philanthropy, this may require thinking beyond technology adoption and toward capacity preservation. Supporting institutions, spaces, and practices that cultivate civic trust and value the process as much as the outcome. Perhaps choosing to preserve this inner theater could be one of the most important acts of stewardship we could undertake at this time.

Many organizations claim to value people who “think differently.” Innovation, independent thinking, and challenging assumptions are celebrated in mission statements and leadership rhetoric. Yet the systems these organizations rely on to hire, evaluate, and promote employees often systematically filter out the very people most likely to think differently. Nowhere is this contradiction clearer than in how workplaces treat autistic individuals.

We write as a father-and-son research team that has firsthand experience confronting this persistent contradiction in modern workplaces. One of us a behavioral scientist, the other a neuroscientist; one neurotypical, the other autistic. Our collaboration has changed how we think about organizations, competence, and human potential.

Hiring processes tend to reward social fluency over competence. Performance evaluations often privilege style over substance. Workplace norms frequently equate professionalism with eye contact, conversational ease, rapid interpersonal responsiveness, and conformity to unwritten social expectations. Inclusion efforts, even well-intentioned ones, for neurodivergent employees often focus on helping them appear more like typical employees rather than on redesigning environments so that they and their divergent cognitive styles can genuinely thrive.

These practices reflect a deeper problem in how organizations understand neurodiversity. Autism is still commonly framed primarily in terms of deficit, accommodation, or social impairment. Yet a growing body of research in psychology, organizational behavior, and neuroscience suggests a more complicated and potentially more hopeful story. Some of the same cognitive and neurological differences associated with autism may also confer important organizational advantages, including greater resistance to cognitive bias, reduced susceptibility to conformity pressures, and a tendency to prioritize evidence over social consensus.

These are not marginal capabilities. They are increasingly central to organizational survival. Modern organizations operate in environments saturated with complexity, uncertainty, and information overload. Under these conditions, human judgment becomes especially vulnerable to distortion. Decades of research in behavioral economics and psychology have shown that people routinely rely on cognitive shortcuts that lead to systematic errors in thinking. Confirmation bias, motivated reasoning, overconfidence, groupthink, and moral rationalization all shape organizational decision-making in ways leaders often underestimate.

These distortions are not merely abstract psychological phenomena—they have real-world consequences. They undermine hiring decisions, generate ethical failures, and encourage excessive financial risk-taking, strategic blind spots, and cultures of silence. Entire industries have experienced catastrophic failures because people ignored contradictory evidence, deferred to social consensus, or failed to challenge flawed assumptions. To mitigate this risk, organizations invest enormous resources trying to improve critical thinking, reduce bias, strengthen ethics, and encourage candor.

Many autistic employees possess aptitudes that support these goals. Our own research, along with work by others, suggests that autistic individuals may be less susceptible to several forms of cognitive and social bias. In experimental studies, autistic participants have shown lower susceptibility to the bystander effect, meaning they may be more likely to intervene or speak up when something appears wrong. Other research suggests reduced moral disengagement, indicating a lower tendency to rationalize unethical behavior. Autistic individuals may also be less vulnerable to the inflated self-confidence associated with the Dunning–Kruger effect—the tendency of people with limited knowledge of a domain to overestimate their competence.

These findings should not be interpreted romantically or simplistically. Autism is not a superpower, nor do all autistic individuals share identical traits or experiences. Neurodiversity is diversity. But the broader pattern matters because it challenges long-standing assumptions about what constitutes valuable workplace cognition.

Failures of Organizational Design

Autistic individuals often appear to rely more heavily on principles and external evidence than on social inference when making judgments. In group settings, they may be less influenced by peer inaction, status hierarchies, or pressures for consensus. As a result, they may identify problems, inconsistencies, or ethical concerns that others overlook or avoid discussing.

Neuroscience research may help explain why some of these patterns emerge. Studies examining large-scale brain networks suggest atypical relationships among systems involved in social reasoning, external attention, and cognitive control. In neurotypical individuals, these systems often work together in ways that allow social information to fluidly shape attention and judgment. In autism, these relationships may be organized differently, producing greater emphasis on externally grounded information when social cues conflict with observable evidence.

These tendencies, when translated into organizational life, can produce a distinctive cognitive profile: greater focus on accuracy over impression management, reduced concern with how things appear socially, and stronger attention to how things actually are. Yet most organizations are not designed to recognize and incorporate these tendencies as strengths.

The barriers autistic employees face are often framed as individual limitations, but many are more accurately understood as failures of organizational design. Traditional hiring systems remain heavily dependent on unstructured interviews that reward charisma, improvisational social interaction, and familiarity with implicit norms. These characteristics have surprisingly weak relationships with actual job performance in many roles, yet they strongly shape employment outcomes.

Similarly, organizational cultures frequently reward interpersonal smoothness over principled dissent. Employees who question assumptions, point out inconsistencies, or communicate too directly may be perceived as difficult, inflexible, or insufficiently collaborative, even when their observations are accurate and valuable. In these environments, autistic employees often learn to mask their natural communication styles to appear more socially acceptable. Such masking can help individuals navigate workplace expectations, but at the psychological and cognitive toll of lost energy that could otherwise be directed toward performance, creativity, or problem-solving.

The result is not only inequitable for neurodivergent employees but strategically shortsighted for employers. When organizations systematically privilege conformity, impression management, and social sameness, they narrow the range of perspectives available during decision-making. They increase vulnerability to groupthink and reduce the likelihood that flawed assumptions will be challenged early. Diversity initiatives often focus heavily on demographic representation while overlooking cognitive diversity, even though organizations depend fundamentally on how people perceive problems, process information, and make judgments.

Designing for Neurodiversity

Designing for neurodiversity, therefore, requires more than accommodation. It requires rethinking how organizations define professionalism, competence, communication, and collaboration.

This begins with hiring. Organizations should rely less on socially performative interviews and more on work-sample tests, structured assessments, and evaluations tied directly to job-relevant competencies. Many autistic candidates perform exceptionally well when given opportunities to demonstrate actual skills rather than navigate ambiguous interpersonal rituals.

It also requires making organizational expectations more explicit. Many workplace norms operate through implication and social inference, creating hidden rules that advantage employees already fluent in dominant communication styles. Clarifying expectations around communication, feedback, meetings, and performance standards improves functioning for everyone, not just neurodivergent employees.

Leaders must also distinguish between professionalism and stylistic conformity. Differences in eye contact, conversational pacing, tone, or social interaction should not automatically be interpreted as disengagement, disrespect, or incompetence. Organizations committed to inclusion must create environments where employees can contribute effectively without constantly suppressing their natural cognitive styles.

Most importantly, organizations need cultures that genuinely reward evidence-based thinking. Teams function better when disagreement is not penalized, contradictory information is surfaced early, and employees are encouraged to challenge assumptions constructively. Neurodiverse employees often thrive in precisely these environments, but so do organizations more broadly.

The implications extend beyond autism. Designing organizations that accommodate different cognitive styles ultimately strengthens decision-making quality for entire teams. Systems that reduce ambiguity, clarify expectations, minimize bias, and reward principled dissent improve organizational functioning across the board.

Organizations today are facing increasingly complex social, technological, and ethical challenges. They cannot afford to rely on narrow models of competence or professionalism. Only those capable of integrating different ways of thinking—especially ways that challenge consensus, resist bias, and remain anchored in evidence rather than social comfort—are prepared to confront these difficulties and succeed.

There’s arguably no group more in need of free AI tools and expert staff embedded to deploy them than the nonprofit sector. While the dissolution of USAID and other funding cuts exacerbate growing global demands to address public health, economic opportunity, and climate-related challenges, NGOs and social impact organizations are underwater, triaging widespread and complex needs against limited capacity.

Sensing that strain, AI juggernauts such as Anthropic and OpenAI, among others, are creating a range of grants and free staffing solutions worth hundreds of millions of dollars to help fill the gaps.

Anthropic's recent announcement of Claude Corps—a $150 million initiative that will provide AI-trained fellows, grants, and AI tools to nonprofit organizations—is one example. In June, OpenAI’s foundation arm announced a new $50 million commitment to its two-year-old People-First AI Fund, which aims to support nonprofits and other public service organizations using AI. And Salesforce and Google.org offer AI accelerators for social impact organizations that include months of training, pro bono access to experts, and funding.

The social sector is getting an incredible offer that almost never happens. But the need for careful assessment is real. The rise of nonprofit-targeted philanthropy from the AI industry raises difficult questions about the risks of long-term organizational dependency on free (at least for now) tools, data stewardship, market influence, and the extent to which a small number of technology providers may shape how the sector adopts and integrates AI over time. How nonprofit organizations respond now can shape both their short-term operational capabilities and their long-term financial sustainability.

The Hidden Risks of AI Industry Philanthropy for Nonprofits

Before AI tools and staffing are deployed across social impact organizations, a deep risk assessment across three categories of inquiry can help to mitigate potential adverse and unexpected outcomes of “AI for good” offerings:

1. Who sets the rules around data stewardship? Nonprofits are uniquely tasked with storing some of the most sensitive data sets across sectors. From health records including data around rape and abuse, disabilities, and homelessness, this information offers a vulnerable and comprehensive accounting of issues that don’t necessarily show up on the open web. When it comes to AI industry support for the social sector, beneficiary organizations should play an equal, if not dominant, role in setting guidelines for how AI companies' tools read and store their data, and whether that data can be used to train AI models.

2. How can we prevent long-term organizational dependencies? Despite advances in technology, many nonprofits know the experience of being stuck with ill-fit or costly systems, such as constituent relationship management (CRM) tools, because of the significant labor and financial investment required to change or update them. AI industry funding offers a potential solution to this problem, but some may rightly worry about finding themselves in the same sticky position a few years down the road. To avoid similar challenges with AI tools, as nonprofits begin to receive gifted technology from a single provider, staff should decide in advance whether and how they can eventually switch platforms more easily and cheaply if needed. Other questions to consider: How can they objectively determine which AI tools and companies work best for their needs? What happens after the free tools and staffing provided to these organizations are no longer available? Proactive planning to address these scenarios is needed to ensure nonprofits can effectively take advantage of these gifts while moving on to other tech solutions, if needed, in the future.

3. Are nonprofits leaving money on the table? What could nonprofits stand to gain by coming to the AI industry table as partners rather than beneficiaries? Does the value of the social sector’s inner workings and data—which AI companies will ultimately benefit from—exceed the value of these gifts? What are alternative options to the ones presented for nonprofits that accept AI gifts, or for the sector at large? Approaching AI industry philanthropy with such questions could result in additional long-term benefits, operationally and financially.

Building Guardrails Before Adverse Effects Take Root

The most comprehensive way to mitigate these risks is to establish federal and sector-wide policies, standards, and best practices for gifting AI tools, infrastructure, and staffing, as well as their use by beneficiary organizations. Any such standards should be informed by people in the nonprofit sector and in the communities they serve. Before writing policies, the sector should convene to address these opportunities strategically.

Some of this is starting to happen. Independent Sector recently announced the creation of a panel of experts to develop an ethical framework for the nonprofit sector’s adoption of AI. And resources such as NTEN’s AI for Nonprofits Resource Hub, developed in partnership with the National Council of Nonprofits and Maryland Nonprofits, offer sample AI governance templates that organizations can use as a starting point.

However, to date, nonprofits have little comprehensive guidance on whether and how to accept AI industry gifts, how to set parameters to avoid being locked into a single provider, and when to negotiate the terms of acceptance. Creating such a framework now for nonprofits can prevent a host of issues in the future.

From AI Access to Financial Sustainability

Given the long-term implications of these new AI industry philanthropic models, it may be time for nonprofit leaders to look beyond what’s offered in these gifts. If AI companies stand to continue their meteoric financial gains, and their donations of tools, time, and expertise are offered to the social sector—for which it may receive data, knowledge capture, and research that couldn’t be gained otherwise—then there’s an argument to be made that nonprofits should also see some of the economic gains. Indeed, approaching these gifts as a starting point rather than a final offer could ultimately help expand the sector’s funding and capacity and sustain its impact at a time when its long-term existence is more precarious than ever.

Expanding the terms of these donations could include options such as:

Equity, stock, and capacity grants: Nonprofits accepting tools and staffing from AI companies might also receive financial assets from the company as part of the philanthropic gift, giving them a stake in the future upside of AI development and contributing to the sector’s overall financial sustainability.

Subsidized nonprofit AI staff: Embedded staff from fellowships such as Claude Corps and similar programs could be converted to permanent hires, continuing their work within an assigned nonprofit after successfully completing their fellowship and allowing the organization to retain that institutional knowledge. Salaries could be subsidized by the host AI company.

Community benefit and mitigation funds: Nonprofits partnering with the AI industry could advocate for ongoing payments to civic institutions working towards proactive efforts to build AI literacy and skills for the community at large, and for those whose jobs might be displaced by AI. Funds can also be used to address any potential harms caused by AI data centers, including potential adverse environmental, physical, and medical impacts on individuals living near them.

This moment represents more than a technological and operational shift for nonprofits. Approaching AI industry gifts cautiously, with an eye toward long-term benefits yet to be realized, could give the sector the opportunity to sustain itself financially and give communities a voice in how AI technology develops and proliferates for social good.

A few years ago, I argued in this SSIR article that strategic capacity building and trust-based philanthropy are not opposing ideas. Funders do not have to choose between being responsive, relationship-centered partners and offering hands-on support that helps nonprofits strengthen as organizations.

But as capacity building has become a more common part of philanthropy, another question has become harder to avoid: How do we know whether it works?

Too often, funders answer this question with the easiest data to collect, which offers surface-level insight into whether grantees were satisfied with the support they received. Satisfaction is important. It can tell funders whether a consultant was responsive, whether an engagement felt relevant, and whether the process was a productive use of time, but it fails to tell us whether the work impacted organizational practice, improved performance, or helped an organization make progress toward the outcomes they seek.

This distinction matters because capacity building is never free for nonprofits, even when funders pay for it. It requires staff time, leadership attention, and organizational bandwidth. At a moment when many nonprofits face acute resource constraints, funders should be able to answer a basic question before encouraging partners to take on additional work: Will this time investment be worth it?

Capacity building has matured as a philanthropic practice. Its measurement has not. If funders believe support beyond the grant is a strategy for impact, then we need to move beyond asking whether grantees appreciated the support and toward asking whether it led to desired and durable change.

Why Satisfaction Is Not Enough

Funders’ reluctance to robustly measure capacity-building is understandable. The work is complex, long-term, and nonlinear. Outcomes are often indirect and context dependent. A strategic planning process, revenue model project, data system redesign, or executive coaching engagement may not produce measurable results for months, or even years. Attribution is difficult, and additional measurement activities can easily become another burden placed on grantees.

These concerns are real. But the absence of measurement also has costs.

Without better evidence of impact, funders risk repeating activities that feel useful in the moment but do not lead to sustained change. We may continue recommending providers and projects because grantees liked them, not because their support improved organizational practice. We may invest in offerings that absorb nonprofit time without helping leaders make progress on mission-critical activities. And we may miss opportunities to learn which supports are best positioned to help organizations at different life stages, and why.

Satisfaction data matters, but it offers an incomplete picture. A capacity-building project can be well-run and well-liked but still fail to lead to lasting and desired change. Conversely, support that feels challenging in the moment may lead to important shifts in decision-making that can improve financial sustainability, program quality, or organizational focus.

An Improved Measurement Approach: What Changed?

There’s no single formula for measuring the impact of capacity building. But funders can start by organizing around simple logic: Capacity-building support should be assessed across time, with different questions at each stage.

At Overdeck Family Foundation, we have been building and refining this approach since launching our capacity-building model in 2020. Since then, we have invested nearly $6 million in more than 200 capacity-building projects with over 80 grantee partners. Our work has spanned areas such as revenue sustainability, cost-effectiveness, evidence-building, strategic planning, leadership development, and scaling strategies.

Across that work, we have found it useful to measure capacity-building support across three time horizons: short-, medium-, and long-term outcomes.

First, at the end of a capacity-building engagement, funders should ask: Did the support meet an immediate need?

This is the moment to assess satisfaction. Post-engagement surveys or debrief conversations can help funders understand whether the support was relevant, timely, well-delivered, and respectful of the grantee’s goals and constraints. This data is especially useful for assessing provider quality and grantee experience. But this should be treated as the beginning of the measurement process, not the end.

Second, six to 12 months later, funders should ask: Did anything change in organizational behavior or practice?

This is the stage many funders skip. It is also where some of the most useful learning happens.

A follow-up survey, check-in conversation, or revisiting a pre-engagement diagnostic can help determine whether the organization is applying new skills, making different decisions, or using new tools. For example, is a team using a new financial model to guide planning or pricing decisions? Are staff using data differently to inform program design? Has a revenue strategy moved from an Excel spreadsheet to regular operating practice?

These medium-term indicators show whether capacity-building outputs are becoming part of the organization’s workflow rather than remaining a one-time project.

Third, at least a year after an engagement, funders should ask: Did the support contribute to improved organizational performance?

At this stage, the focus shifts from whether the support was useful to whether it plausibly contributed to measurable progress. Depending on the goals of the engagement, this might include changes in program reach, cost per participant, earned revenue, financial sustainability, evidence-building, or progress toward grant goals.

Importantly, these measures do not always require a new reporting system. Much of this information may already be available in grant reports, renewal conversations, annual data collection, or other existing touchpoints in the grantmaking process. The goal should be to use existing data more intentionally, not to create new measurement burdens.

This three-horizon approach helps funders distinguish among three different questions that are often collapsed into one. Did grantees like the support? Did they use it? And did it contribute to measurable progress?

What Measurement Can Reveal

When funders consistently measure capacity building over time, they begin to see patterns that satisfaction surveys alone would miss. Across our own portfolio, internal measurement has shown that capacity-building efforts are associated with meaningful organizational gains, including an average 18 percent reduction in program cost, 114 percent increase in earned revenue, and 125 percent increase in reach. These outcomes cannot be attributed to capacity building alone, but the data helps us understand whether the support correlated with the kinds of organizational changes it was designed to advance.

Consider DiscoverE, a nonprofit organization that promotes student engagement in science, technology, engineering, and math (STEM). Since becoming an Overdeck Family Foundation grantee in 2021, DiscoverE has intentionally sequenced grant funding and capacity-building supports toward goals related to scale, sustainability, and impact.

DiscoverE’s first challenge was developing a more diverse and sustainable revenue model. After participating in a workshop series, the organization was able to identify mission-aligned earned revenue opportunities that informed an updated revenue strategy with a new fee structure for its high school STEM program. With a strategic revenue model in place, DiscoverE was in a position to gain deeper understanding of its programmatic cost, which uncovered pathways to cost-effective scale. The team also received funding to complete a cost analysis exercise, which helped identify areas where programs can earn revenue to cover operational costs and where contributed revenue can ensure continued participation for students and classrooms in need of financial support. Lastly, DiscoverE received support to utilize lean testing methodology to explore potential solutions to address educator retention—a key barrier to growth.

Over this period of funding and capacity-building support, the organization saw 12 percent growth in total revenue, 65 percent growth in earned revenue, and a 24 percent increase in reach in its most recent year of operation. It also saw an increase in regions with greater than 40 percent educator retention.

It’s unlikely that capacity building alone caused these results. Rather, this example shows how funders and nonprofits can use measurement to better understand whether a series of supports is contributing to the organizational conditions that make growth and sustainability more likely.

Measurement is just as valuable when it shows us what doesn’t work. 

In some cases, we found that projects with high satisfaction scores at the end of the engagement did not lead to sustained changes in organizational behavior six to 12 months later. Grantees appreciated the support, but the work did not translate into the longer-term shifts they hoped to see. That finding led us to phase out certain providers and offerings. Without medium-term measurement, we likely would have kept funding support that grantees experienced positively but ultimately did not use.

Measurement Strengthens Trust

One reason funders may hesitate to evaluate capacity-building support is concern that measurement will feel punitive. That risk is amplified if funders use data to evaluate grantees rather than improve their own support of grantee work.

Done well, measurement builds trust rather than erodes it. The key is to be clear about what is being evaluated. The purpose is not to grade a nonprofit’s performance or determine whether a grantee “used” the designated support correctly. It’s to understand whether the support was well-designed, well-matched, and useful enough to justify the time and resources it required.

That distinction should shape the entire impact measurement approach. Funders should be explicit with grantees that feedback will be used to improve or discontinue offerings, not to penalize organizations. They should right-size data collection, using existing information whenever possible, and reserve new data requests for questions that will actually inform decisions.

Funders should also be disciplined about what different data can and cannot answer. Quantitative measures can help identify patterns across a portfolio, but they may not explain why change happened or why it stalled. Qualitative insights, case studies, and conversations are often essential for understanding context, testing hypotheses, and improving support.

In our experience, this kind of measurement has not come at the expense of trust. Our foundation’s most recent Grantee Perception Report from the Center for Effective Philanthropy put us in the 92nd percentile among funders providing capacity-building support. The report also found that grantees who received capacity-building support rated us higher on trust and impact than those who did not.

The broader point is not about any foundation’s scores. It is that accountability and trust are not opposites. When funders are transparent about why they are collecting data and how they will use it, measurement can become part of a learning relationship rather than a dreaded compliance exercise.

What Funders Can Do

If the field wants capacity building to be more than a well-intentioned investment, funders need a more practical measurement standard. Three shifts would help.

• Move beyond measuring only satisfaction. Post-engagement feedback is useful, but it should not be the endpoint. Funders should define what change they expect a capacity-building engagement to support and revisit that expectation after enough time has passed for those behaviors or practice to take hold.
• Use existing data whenever possible. Capacity-building measurement should not create a second reporting framework. Funders can often learn from grant reports, renewal conversations, financial data, program metrics, and regular check-ins. More data is not the goal.
• Act on what you learn. Measurement only matters if it changes decisions. Funders should use data to adapt their recommendations, refine scopes of work, and discontinue offerings that do not lead to meaningful change. Some investments won’t pay off; that is not failure if the lesson improves future decision-making.

Capacity building remains one of the most promising ways funders can help nonprofits strengthen their organizations beyond the grant. But good intentions are not enough. If funders ask nonprofit partners to invest time and attention in capacity-building support, we should be prepared to examine whether that support changes practice, improves performance, and contributes to goals. A stronger evidence standard will help funders make sure capacity building is worthy of the organizations we serve.

I joined Inspirit Foundation as its director of finance and impact investment back in 2015. Based in Toronto, Inspirit is a public foundation that advances racial, social, and economic justice in Canada. At the time, Inspirit was dabbling in its first impact investments. A short time after in 2016, we committed to a 100 percent impact portfolio—a pledge to allocate all our assets to investments that generate positive environmental and social outcomes.

I was the driver behind Inspirit’s complete overhaul of its portfolio, shifting from a traditional approach invested broadly across the stock market to one entirely composed of impact investments across public and private asset classes. I designed the portfolio’s transition strategy and was tasked with implementing the commitment. I won’t pretend the path ever felt certain: My doubts were strong. I suspect that those same doubts hold back many who are drawn to this approach. I believed this was the right decision for the organization, but I was privately concerned we might sacrifice returns in the name of impact and validate the skeptics.

In the end, we proved the skeptics wrong: Our impact portfolio outperformed traditional investing over a 10-year span. To my knowledge, Inspirit became the first institutional portfolio to achieve a decade of outperformance while maintaining a 100 percent impact mandate. Its success should inspire bolder experimentation and commitment to impact investing as a strategy compatible with investing for returns.

Portfolio Overhaul

When I first joined Inspirit, it was immediately evident to me that the portfolio needed a complete overhaul.

First, the foundation’s grant-making dollars advanced social progress while its investment capital worked against it. Grants funded efforts to build a better future, while the investment capital bought shares in businesses contributing to the very problems the foundation was trying to solve. While reconciliation with Indigenous peoples was one of Inspirit’s strategic priorities, some of the foundation’s assets were invested in energy companies with a history of illegal appropriation and exploitation of Indigenous land and resources. That had to change.

Second, I believed in the business case for investing with an eye toward positive social and environmental outcomes. My view wasn’t simply that impact investing would outperform, but that businesses solving long-term societal challenges would be better positioned for long-term financial success than companies creating or ignoring those challenges.

That belief naturally led us toward investment areas such as healthcare innovation for an aging population, the energy transition, and financial inclusion, while avoiding industries we believed faced increasing structural headwinds, like tobacco, firearms, and fossil fuels. I believed that investment hypothesis would eventually prove true. What I wasn’t sure about was how long the proof would take. The reality was that there was no contingency plan, no turning back. The foundation set out to honor its commitment, regardless of time horizon.

I first heard about the concept of a 100 percent impact portfolio from a consultant’s research report published in 2012 that an investment advisor shared with me. The report referenced Heron Foundation, a private foundation based in New York City focused on community economic development. Under the leadership of then CEO Clara Miller, Heron in 2012 committed to invest the entirety of its assets to further its mission. Its bold approach captured my attention, and I followed its progress closely. I took my first work trip after joining Inspirit to meet Miller at the Heron office in Manhattan.

Our conversation framed the whole project for me: Increasing the impact of every dollar and earning strong financial returns did not have to be competing goals. And so, this idea became the crux of Inspirit’s new investment policy statement that embedded social and environmental outcomes into its investment strategy. We redefined fiduciary duty as optimizing for both risk-adjusted financial returns and risk-adjusted positive impact.

The policy also laid out why we believed this approach would succeed over the long term: “Our expectation, based on historical and simulated data, is that companies focused on industries that provide solutions to our world’s most pressing problems will be better positioned for long-term financial success than companies that have neutral or negative effects.” In other words, the portfolio was built for where we believed the economy was heading, not where the market happened to be rewarding capital at any given moment. That sentence became the lens through which every investment decision was made.

From there, the real test began: building the portfolio. On the private markets side, the foundation invested primarily through debt, private equity, and pay-for-performance instruments. Over the following decade, Inspirit made 30 private impact investments, with no losses or impairments to date. That record is itself an argument.

Inspirit became known for its willingness to be the first investor in a fund or project. It was the initial investor in Raven Indigenous Impact Fund, Canada’s first Indigenous venture capital fund supporting Indigenous ventures generating value for their communities. The foundation was the first investor in Windmill Microlending, a loan fund providing financing to new immigrants pursuing professional accreditation that has since raised more than $60 million and also a fund managed by BKR Capital, Canada’s first institutional Black-led venture capital firm funding Black-led businesses meeting the unmet needs of marginalized communities.

The public markets posed a harder problem because Canadian asset managers were not prepared to meet Inspirit’s unusual goal of marrying financial returns and positive impact. So the foundation partnered with asset managers to create new mandates that could satisfy its more holistic investment goals. In every public asset class, Inspirit’s investment was the first money in, teaming up with managers to become the first investor in new investment vehicles built specifically to meet the foundation’s financial and impact requirements. That’s what happened with Addenda Capital’s new impact fixed income fund, and the early results were so strong that others joined us. Addenda’s public fixed-income mandate now has over $700 million CAD ($497 million US) in assets under management—quite the leap from Inspirit’s initial $8 million CAD commitment.

Even cash had the opportunity to work toward our impact objectives: The foundation moved its bank account to a credit union that leverages deposits to finance affordable housing, clean energy, and social enterprises.

One of our most important decisions was to benchmark the portfolio against traditional market indexes, such as S&P/TSX Composite for Canadian equities, MSCI World for global equities, and FTSE Canada Universe Bond for the fixed income allocation. If we were going to claim impact investing worked as desired, the portfolio needed to be measured against the most common investment indexes with broad exposure to the stock market.

Ups and Downs

For the first four years, the portfolio added about 2 percent of excess performance relative to the benchmark—solid success. Then in 2020, when the COVID-19 pandemic caused enormous social and economic hardship, the portfolio outperformed by more than 7 percent.

What surprised me wasn’t that the portfolio outperformed, but that it succeeded so quickly. I honestly thought we’d still be waiting decades before we’d have any real indication whether we were right. More money in the portfolio meant more resources available to advance Inspirit’s mission. But this was also the first sign of something I hadn’t fully anticipated: a much higher degree of volatility than expected relative to the broad stock market. I knew our portfolio would behave differently from conventional benchmarks. I just didn’t expect it to produce outperformance of 7 percentage points in a single year.

The good feeling didn’t last long. The following year, the portfolio underperformed by nearly 4 percent. That degree of difference caused me some discomfort, but the portfolio was still ahead overall.

The next two years helped, adding approximately 6 percent of relative outperformance. Eight years into the journey, the portfolio had accumulated nearly 11 percent of excess performance relative to its benchmark.

Then the tide turned. Geopolitical developments, including US President Donald Trump’s rollback of clean energy commitments and ongoing global conflicts created a challenging environment for many impact-oriented strategies. Over the past two years, relative outperformance declined by more than 10 percent.

A full decade into the initial commitment to a 100 percent impact portfolio, Inspirit finished ahead of its benchmark by approximately 0.7 percent. The margin is slim, but its meaning is not. The financial outperformance contradicts the naysayers, refuting the assumption that impact investing inevitably leads to lower returns. It quelled some doubt, too.

A Meaningful Milestone

These past two years have admittedly tested my conviction, yet the commitment remains firm. Our fundamental premise—that investments that create value for society are more likely to create value for investors over the long term—remains sound. The portfolio is now aligned with the foundation’s mission in a way that would have been difficult to imagine a decade ago.

The last two years also reinforced another lesson: While our underlying premise hasn’t changed, our understanding of specific investments has shifted. That’s how long-term investing should work. Steadfastness isn’t about stubbornly holding the same companies forever; it’s about remaining committed to the investment thesis while continually reassessing whether individual investments still support it. Ten years doesn’t settle the debate, but it is a meaningful milestone. It suggests that a portfolio intentionally constructed around long-term societal and economic trends can remain competitive with conventional investing over a significant investment horizon, even through periods when markets reward very different parts of the economy. For me, that’s the real takeaway, not whether we finished 0.7 percent ahead of a benchmark.

After more than a decade of learnings with Inspirit, I felt it was time to branch out on my own and launch an impact-investing consultancy to work with a wider group of values-driven investors and their portfolios. With my next step comes my next question: How do we use what we have learned to reshape a system presumed to almost always reward the opposite? I do not intend to watch that from the sidelines. I intend to help build it. I hope you will join me.

Nonprofits are racing to adopt AI, with a recent report showing 92 percent already using the technology to support their work. Many early adopters have focused on direct-to-user applications like AI tutors that help students learn, AI coaches that offer guidance at scale, and AI navigators that help people find benefits or services. These tools hold real promise, especially in a sector where demand often exceeds capacity. But for organizations whose work depends on empathy and human connection, automation can also feel at odds with care. The Center for Effective Philanthropy has noted that social change leaders are increasingly concerned about AI’s risks, including the loss of human connection when it matters most.

Empower Work feels that tension directly. While we use technology to scale, our core service, which offers free, confidential, text-based coaching for people navigating tough work challenges, relies on deep human connectivity. When someone texts into the line, they connect with a trained peer counselor ready to provide personalized support for difficult situations such as underemployment, poor management, and job loss.

Human relationship isn’t just at the center of our theory of change; it’s something our help seekers actively seek out. They frequently ask our peer counselors, “Are you human or AI?” because they want reassurance that there’s an actual person on the other end of the line. At the same time, demand for worker support is growing. Empower Work faced a challenging question: How could we maintain the human connection and empathy that make these conversations impactful, while incorporating AI in a way that helped us serve more people?

In this article, we outline some of the choices Empower Work made when integrating AI and what we learned, so other teams seeking to scale their people-centered services can adapt and integrate AI without sacrificing human empathy.

Start With a Problem Statement

Empower Work’s text-based coaching model supports help seekers (typically lower-wage workers and those from historically marginalized communities) gain clarity, confidence, and agency. Someone might text us after workplace bullying has affected their sense of safety or when they’ve lost confidence after a monthslong job search or when they know they need to leave a job but feel stuck by burnout and uncertainty. In a session with Empower Work, they receive emotional support from a trained peer counselor and leave with clear, immediate next steps.

With rising economic and political uncertainty, the demand for our text line was growing. To ensure our peer counselors could meet this increased need, we asked, “Where do we lose time or consistency that reduces the quality of human support we provide?”

This question is familiar to people working across service-based nonprofits. Staff need to respond quickly and consistently, but the work also requires judgment, trust, and care that cannot simply be automated. Through user experience research and workflow analysis, Empower Work found key constraints for our peer counselors:

• First were manual, time-intensive but repetitive tasks: writing end-of-session summaries, catching up on prior messages from help seekers during handoffs, and finding resources in a complex template library.

• Second was their cognitive load while having conversations with multiple help seekers at once. Uncertainty about how to best support the help seeker and respond in a timely manner increased feelings of stress.

The North Star became clear: preserve human empathy and judgment in interactions with help seekers and use AI to support our counselors behind the scenes so they can spend even more time deepening the connection that is at the heart of their job and our service. The choice reflected both what our help seekers directly told us they wanted and growing research on AI’s empathy gap showing AI can only perform one of the three components of empathy—it can understand another’s state, but it can’t actively feel what another is feeling or invest in them. Because of that, human responses in emotional contexts are often more likely to build trust, create positive immediate emotional impact, and provide the motivation to help people take action.

Building Trust

The next challenge was implementation: how to introduce AI in ways that strengthened interactions with help seekers rather than diluted them. We built an AI assistant plug-in that showed up in the peer counselor workflow environment where they were talking to help seekers. It could read the live text conversation of the counseling session and offer support in three areas: ideas for suggested next responses, relevant resources from Empower Work’s vetted library, and summaries for handoffs or end-of-session documentation. Building the assistant wasn’t the end, but the beginning of a learning process for integrating AI into our work. The steps below walk through our process and how service-centered organizations can test AI carefully, learn quickly, and set guardrails before expanding further.

Start with low-risk, high-friction work

As we explained above, a useful place to begin is with tasks that consume staff time but do not require AI to make consequential decisions. Across nonprofits, this often includes retrieving context, surfacing vetted information, and drafting internal documentation. When using Empower Work’s AI assistant, counselors always reviewed, edited, and decided what to share before any messages were sent. Starting with this kind of human-in-the-loop support allows organizations to reduce friction without handing off sensitive judgment to the model.

Embed AI into staff training at the right time

Training is where organizations can build comfort, reduce confusion, and make clear that AI is there to support human judgment rather than replace it. But timing matters. At Empower Work, we initially waited to introduce the AI assistant in the final week of peer counselor training through a homework reading. Counselors were told the tool existed, but they did not practice using it during live training sessions. When AI assistant adoption numbers were lower than expected, follow-up surveys revealed that the issue was not lack of interest, but rather that many counselors were simply not aware of the assistant, did not remember it was available during live shifts, or were unsure how to use it in the moment.

Based on this awareness gap, we decided to move the AI introduction from the end of training to the middle of training, after counselors had built a foundation in Empower Work’s core counseling skills and added live practice using the assistant with supervisors. After making this change, we saw a significant increase in usage and positive feedback from counselors.

Build feedback loops into the technology

Staff and volunteers closest to the work need simple ways to flag when an AI feature is helpful, off base, or creating friction, and teams need a clear process for turning that feedback into improvements. At Empower Work, that meant creating a volunteer AI advisory council of peer counselors who could respond quickly to product changes and help test prompt variations. The team also built feedback directly into the assistant through five-star ratings and open-response comments on outputs. Each week, the UX lead reviewed that feedback, identified recurring themes, translated them into prompt refinements, and tested those changes again with the advisory council.

Because the advisory council could directly see how their feedback shaped the assistant, they developed a sense of ownership over the tool rather than feeling that new technology was being imposed on them. We also did not make the assistant mandatory. Counselors were invited to try it at their own pace, with light nudges and social proof showing examples of how other counselors were benefiting from it.

Scale with values-aligned partnerships

The strongest AI partnerships do more than add funding or technical skills; they reinforce the values of the core service itself. For nonprofits, that can mean saying no to attractive AI use cases that are more appealing to funders than they are helpful to constituents. At Empower Work, some donors were most interested in direct-to-help-seeker AI counseling, such as a chatbot that could respond to workers without a human counselor involved. That kind of tool might have produced higher immediate projections for “total reach” numbers in grant proposals, but we knew the community wanted human support in high-emotion moments. PagerDuty, one of our philanthropic and technology partners, proved to be the right collaborator because it aligned with our philosophy of starting with internal AI tools behind the scenes that support scale.

Design Lessons

In high-trust services, small design choices can have outsized effects on trust, usability, and adoption. Imagine a counselor is having a conversation with a help seeker who feels safe and understood. The counselor wants help thinking through the next response, so they write a prompt to AI such as, “Should my response focus more on emotional support or practical next steps?" If that prompt were accidentally sent to the help seeker, the trust and rapport built in the conversation could be damaged. Or imagine a newer counselor who is still building confidence. If the AI suggests a single definitive-sounding response option, they may assume that that response is the answer and copy and paste it without fully considering whether it fits the moment or their own voice/instinct. Risks like these helped guide our design priorities and safeguard strategies:

1. In fast-paced settings, more flexibility is not always better.

Nonprofits may assume that giving staff an open-ended AI interface will create flexibility, but in live service environments it can also increase cognitive burden and introduce avoidable risks. In Empower Work’s early prototypes, counselors had both an open-response chat box and prompt buttons for next response guidance, relevant resources, and summary. In practice, the open field proved less helpful: It slowed replies, increased mental load, and created the possibility that an AI prompt could accidentally be sent to a help seeker. Removing it made the tool simpler, faster, and safer to use.

2. AI should support judgment, not replace it.

In human-centered services, the goal is rarely to produce a single, best answer. More often, staff need support that sharpens their discernment. At Empower Work, that meant offering counselors a small set of suggested next responses rather than one definitive recommendation. Over time, the team found that a limited range of plausible options preserved human choice while avoiding the overload that comes with too many possibilities.

We also collaborated with our top AI assistant peer counselor users to create best practices for using the assistant thoughtfully. We gave counselors sample scenarios, AI-generated responses, and asked them to rewrite the responses as they would actually send them and then organized these into principles with example scenarios showing the side-by-side AI response before and after a counselor made changes.

One thing that stood out was how useful the AI could be when the counselor needed help finding the next general direction in a complicated conversation, but it also highlighted how necessary it was for the counselor to adjust the response in their own voice. In one example, a help seeker was trying to decide whether to stay in a difficult job for five more years to keep retirement medical benefits, or risk moving to another job with the potential to be just as bad. The assistant offered a focusing question, but our counselor did the human part—slowing it down, making it collaborative, and writing it in her own tone and voice.

3. Model choice is an ongoing design decision.

In social sector settings, performance must be judged in context. A slightly stronger model on paper may be the worse choice if it adds latency to real-time interactions. When we initially launched the AI assistant the larger models produced modest gains in output quality but introduced delays of up to a minute per prompt, which was too costly in a service where counselors aim to respond to people quickly.

Six months later, we revisited the comparison and found that newer models had significantly improved the quality of more emotionally complex outputs, especially next response guidance, without introducing the same level of latency. We shared side-by-side examples with counselors, and they strongly preferred the newer model even if it meant a bit more latency, so we updated.

The lesson is that model selection is not a one-time decision. As models, costs, latency, and use cases change, organizations need to regularly re-examine the tradeoffs and choose the model that best balances quality, speed, and cost within the realities of live support.

Time Back Where It Matters

After six months, roughly 65 percent of Empower Work counselors used the assistant at least once per shift, and a year later, usage had grown to nearly all active counselors. The assistant helped counselors manage more simultaneous conversations, from about two to nearly three, and counselors saved time and responded to help seekers faster: The average time to share resources dropped by 41 percent, and the average time to write session summaries dropped by 60 percent. And throughout, we maintained trust with our help-seeker community by ensuring that a human counselor was always present in moments of need, supported by AI but still using their own judgment, empathy, and voice.

When someone is anxious about losing their job or facing a hard conversation with a manager, they do not want an AI chatbot; they want a person with shared experience who can listen and feel with them. That belief shaped our guiding principle when integrating AI: AI does not counsel help seekers directly in highly emotional moments. Instead, it supports the people providing care so they can stay more present with the people seeking help. The lesson for peers and philanthropy is simple: For deeply human, empathy-based services, use AI to strengthen human support rather than replace it. That is where trust is built, and where deeper impact happens.

Two decades ago, I joined a group of Malians and Americans partnering with communities on the edge of Mali’s capital city. We aimed to bring care quickly to patients’ doorsteps, with no out-of-pocket fees. Volunteering our time, working out of a converted storage closet, we saw tremendous preventable suffering. When our neighbors struggled and failed to get care in time, we watched a toddler die from malaria. We mourned a young mother who died from an untreated cavity.

It is difficult to describe how excited we were when a leader in a large global health financing institution told us that her institution could finance our first healthcare system, fully, for the first few years. However, she had one condition: Her institution would fund us only if we kept out-of-pocket fees in place. No fees, no funding for any portion of our work: In her opinion, the cost per patient served, even though less than $1 per month, was not scale-able.

We turned her down.

At that time, I was traveling back and forth between our work in Mali and my training at Harvard Medical School in the United States, where we spend one thousand times more per person on average for healthcare, where we would not hesitate to spend more than $100,000 on a single patient’s hospital admission. The argument that $12 per person annually was not affordable at scale, for people facing extreme poverty, strained credulity.

More importantly, community recommendations and rigorous research showed us that user fee removal was necessary if we were to solve the problem of equitable, timely access to healthcare. We devoted months to trying to persuade this potential funder, bringing forward the research of Nobel Laureate economists and the expertise of community members. When she remained unconvinced, we made the difficult decision. In the years that followed, we struggled to raise necessary funds from month to month. But when the results came in from our first research study, done in partnership with the Malian government, we found that the communities we serve had increased patient visits tenfold, and had achieved, to our knowledge, the largest and fastest improvement in child survival on record.

The Trouble With Scaling Cheap

Social entrepreneurs have often faced pressure to lower standards, to scale what is cheap, and to work where it is easy. The pressure comes not only from contracting official development assistance agencies; it comes from philanthropy. But despite good intentions, these recommendations endanger the lives of those we serve, and the moral foundations of our field. They would set us on a path toward a world of greater inequity and injustice.

This argument is not new. In 1978, representatives from 134 nations converged in Kazakhstan, in the city of Alma Ata. Together these nations made a historic declaration—and committed to pursue healthcare for all. Soon after, however, global north-based institutions pressured global south governments to cut healthcare spending and to charge sick people fees for healthcare. Now 40 years later, an extensive body of research has shown us the consequences of these fees: delayed and reduced access; widening inequity; the deaths of millions of children; and one billion people pushed annually into or further into poverty by healthcare costs.

It has been argued that as official development assistance contracts, social entrepreneurs should determine what funding government has available to pay, and then design solutions that are cheap enough to match that price point at scale.

The recommendation to design solutions with and for the public sector, that the public sector can finance, is long overdue. The cost needs to align with what the government can and will pay for.

However, the cost of a solution is not set; the amount of money a government can pay for a solution is not fixed. Paul Farmer described the myth of insufficient resources as the socialization of scarcity, a dangerous belief that poor people deserve lower standards because we’ve accepted artificial scarcity as normal. We know that giving people a lower standard of healthcare because they are poor is wrong. But we convince ourselves that our abundant world lacks the resources to pay for what is needed, and that we must accordingly lower our standards.

Sometimes there are pots of money sitting untouched in government coffers, already allocated to solve the injustices of poverty, just waiting for social innovators to partner with government, to unlock and deploy them. Indus Action, one of this year’s Skoll Awardees, is a great example of this kind of social innovation: They create tools that make it easier for the poor to access government benefits in India, work that is urgently needed and worthy of support.

Far more frequently, however, the magic pot of funding does not (yet) exist. The inequities we seek to solve persist, in part, because of the lack of a financing pathway. Standard-setting work creates future ability to pay (rather than waiting on it to magically appear).

In short: Social innovation can change both the price point and ability to pay, as partners work together to create a financing pathway that did not exist before.

New Financing Pathways

Antiretroviral treatment for patients living with HIV shows us what this can look like.

When highly active antiretroviral treatment (HAART) emerged at the turn of the century, this combination therapy proved capable of stopping the progression of HIV in its tracks. At the time, however, antiretrovirals cost $10,000 to treat a single person for one year. The broad consensus in global health at the time (among institutions based in the global north) was therefore that patients living in poverty in the global south would not and could not access treatment. Prevention and palliative care to ease the deaths of those infected were concluded to be the only viable, scale-able solutions.

However, a small group of social innovators decided to challenge this prevailing conclusion. A study in The Lancet by researchers at Partners in Health showed that it was possible to treat patients in Haiti with equitable outcomes, comparable to patients living in the United States; negotiations with pharmaceutical manufacturers and bulk procurement, driven by CHAI and others, brought the cost of treating a patient with AIDS down by 99 percent, from $10,000 to $90 in less than a decade; the Global Fund and PEPFAR were born, creating a financing pipeline, mobilizing resources from both global north and the global south governments to save 70 million lives.

The same pattern played out for the community health workforce itself. A decade ago, the idea of supporting Community Health Workers as professionals, not volunteers, was dismissed as the Cadillac of community health: too expensive, too difficult. A World Health Organization guideline, major financing, and 50 national policies later, it turns out it was just the car.

These social innovators did not lower their standards to meet the predefined price point and the status quo readiness to pay. Instead, they were able to:

1. Prove that equitable outcomes were possible
2. Lower the price point without lowering standards
3. Build a financing pathway where none existed, raising the ability to pay.

This is the blueprint for social innovation we need now. Instead of assuming that the ability to pay is constant and dropping the standard of care to meet it, they kept the standard of care high, and made the price point and ability to pay converge.

And it is a playbook that can be used in many different places. In 2025, my colleagues at Muso supported our government partners in Cote d’Ivoire to use this same playbook for change. The Ivorian government sought universal access to healthcare and launched an ambitious universal health coverage program. Muso supported them to test solutions that would accelerate access to healthcare. Our team also tested ways to make the system more efficient without compromising quality. Over the course of two years, we found ways to reduce cost per person served by 20 percent per year without compromising standards or impact. Based on the results of joint research, the Ivorian prime minister directed nearly 3,000 rural public clinics to open care without fees for more than 13 million eligible people nationwide in 2025. World Bank financing covered the first few months, and then government funding took over. In a year when millions of people elsewhere in the world lost access to care amid official development assistance cuts, millions of Ivorians gained access to healthcare thanks to this initiative.

Here as elsewhere, cost-effectiveness and efficiency proved essential: Together we found ways to better steward resources to get more impact out of every dollar for patients, and to create a solution that government partners can pay for nationally. Lower costs without lower standards. Much more work remains to be done: to renew domestic financing, to ensure quality delivery.

Foreign assistance contracted dangerously, but it did not die in 2025. It derisked the first months of a historic national healthcare reform, that was then picked up by domestic financing.

The Trouble With Scaling Easy

Social innovators don’t only face pressure to go for cheap solutions; they also face simultaneous pressure to work in easier contexts.

Over the past months, I spoke with multiple other social entrepreneurs whose teams work in conflict zones and fragile states, who shared with me that they have faced pressure, not from global financing institutions but from private philanthropists, to abandon their partnerships in these contexts, and to focus on working where resources were more abundant and the winds of stability would be at their backs. Their logic is clear: For solutions to scale with government, the public sector needs to be ready and able to deliver that solution. Even in the best of conditions, achieving meaningful change in the lives of millions of people is a steep climb. It is therefore understandable why some recommend focusing on places where the path to scale is well-paved.

Does this mean, however, that attempts to scale equitable solutions in fragile and conflict states are misguided, or even delusional? Like the cheap enough argument, the easy enough argument breaks down because of three faulty assumptions: that need is universal, that potential to scale is fixed, and that governments in fragile contexts do not have that potential.

While some would counsel that “need is everywhere,” urging social entrepreneurs to go where the potential to scale would be easiest, need is not everywhere. Look at the global distribution of under-five child mortality. Our world faces more armed conflict than at any point since World War II, and half of all child deaths occur in fragile states and armed conflict zones (where child death rates are three-fold higher than in peaceful areas).

Going where the need is does not mean doing less. Our public sector partners in Mali, in the face of protracted armed conflict, have scaled up evidence-based interventions to more than six million Malians within the national health system: professional community health workers delivering high-quality care deep in conflict-affected areas, in line with WHO-recommended standards and decades of evidence.

I used to believe that the best that we could strive for in conflict settings is relief: cushioning the blow, palliating the atrocities of war.

Our community and public sector partners in fragile settings have since proven that “relief” is the wrong standard: Communities at our joint operational research sites in Mali have achieved child survival rates on par with the United States.

Any leader who has scaled a business or social innovation can tell you that potential to scale potential is not born. It is built. And fragile states are also building: Between 2003 and 2021, in the face of worsening armed conflict, Burkina Faso reduced child deaths by 74 percent, by scaling up multiple evidence-based interventions, removing fees for children under five, and pregnant women at public facilities nationwide.

If we choose only to fund and work in stable, well-resourced contexts, inequity gaps will widen, and millions of children will needlessly die. To build a more equitable world, we must be ready to work, to fund, to cultivate scale capacity, and to scale solutions in the most difficult circumstances, to give these contexts priority.

Certain partners have committed further in the face of conflict. In late 2025, for example, the Board of Gavi, the Vaccine Alliance, announced a 15 percent increase in financing for fragile and conflict settings, even as ODA cuts contracted their budget. We have also seen some of our partners in philanthropy change, to prioritize fragile states and conflict zones; settings where philanthropy is scarce and inequity is great. Our partners at the Patchwork Collective have prioritized grants in what they call philanthropic deserts. And the Dovetail Foundation launched a strategy to prioritize grants where inequities are greater and partners have been fewer, while supporting their partners to set the bar higher, to do work “worthy of those we serve.”

Scaling Right

Nelson Mandela once wrote, “It is always impossible until it is done.” Social innovation requires this kind of moral imagination, the capacity to articulate a future fundamentally different from the status quo, and to build a path to that future before it exists.

We do not need to choose between equity and scale. We do not need to choose between efficiency and equity.

We can scale right:

1. Do and fund work that raises the bar, solves the problem, and pursues equity. As Kevin Starr has put it, if the solution is not good enough, it should not scale.
2. Create solutions with the public sector, from the design phase, as innovation labs, and at every step on the path to scale.
3. Build and fund credible plans to make the price point and ability to pay converge, mobilizing new financing pathways, pursuing efficiency and cost-effectiveness without sacrificing quality and equity.
4. Work and fund in challenging places. Prioritize where inequities are greatest. Do not look for tailwinds. Charge into the headwinds. And create tailwinds together.

This approach does not guarantee success. In communities facing extreme poverty, the shocks of climate change, political fragility, and armed conflict, those we serve find systems rigged against them. They deserve better than wishful thinking: Progress will require the hard work of changing the rules of those systems. The Mulago Foundation shares a menu of tools that our team has found useful for what they call the big shift, to support the public sector to change those rules, to deliver and finance change at scale: collective action, policy change, and tech. With the right tools, partners, and policies, the price point and capacity to pay can converge on an equitable, just solution.

This path will require enduring commitment, not over months, but for decades to come.

A cocoa farmer once told me how she almost died in childbirth: “I was hemorrhaging, and the nurse said to me, ‘You don’t have enough money to pay for all the medicines we need to stop you from bleeding to death. Which one do you want to buy?’”

And these are the stakes. We can choose to reject the socialization of scarcity, to reject the premise that some people’s lives are worth less than others because of where they are born or how much money they have. We are here to do what has not been done before, to create the solution that did not exist, to build the financing pathway that did not exist, to scale right. That is how we deliver on the promise of Alma Ata, toward healthcare for all.

For much of their history, historically Black colleges and universities (HBCUs) have been profoundly underfunded. Charged with educating generations of Black leaders while navigating segregation, disinvestment, and chronic inequities in access to capital, these institutions learned to survive with far fewer resources than their predominantly white peers.

Recently, however, that reality has slowly started to shift through unprecedented philanthropic commitments. MacKenzie Scott has donated more than $1 billion in unrestricted gifts to a range of institutions. The Moody Foundation’s $150 million investment in Huston–Tillotson University marked one of the largest single gifts ever made to an HBCU. The Arthur M. Blank Family Foundation’s $50 million commitment to Atlanta-area HBCUs further underscored a growing recognition of their importance. These gifts have stabilized fragile balance sheets, strengthened endowments, relieved student debt burdens, and even enabled long-delayed investments in facilities and academic programs. The impact has been real and immediate, ensuring the survival of the institutions to serve another day.

These gifts, however, have not yet rewritten the deeper terms of power, capital, and autonomy that continue to constrain Black higher education and knowledge production both within the United States and across the global African diaspora. At a moment of demographic contraction in American higher education, growing uncertainty in federal financing, and intensifying global competition for talent, HBCUs still face an existential threat.

If philanthropy continues conducting one rescue mission after another, treating bold imagination as a risk, and waiting for greater certainty about which social justice approach will allow them to fly under the radar in the current policy environment, an opportunity will be missed. If, instead, efforts shift from generosity to fearless strategy, the next wave of gifts could midwife true sovereignty and a reimagined role for HBCUs as the beating hearts of local communities; engines of Black wealth; anchors of a global, pan-African knowledge economy; and co-authors of a global labor future that includes Black and diaspora talent, capital, and institutions at its center.

To realize that vision, philanthropy and impact capital should take three decisive actions, based on proven interventions.

1. Use Catalytic Capital to Stabilize Enrollment Through Fair Student Financing

The first and most urgent opportunity is to deploy philanthropic capital not only as grants but as catalytic guarantees that expand access to fair student financing, thereby strengthening enrollment as the core economic engine of HBCUs.

Each year in the United States, more than $50 billion in student loan applications are denied, primarily due to the absence of a creditworthy co-signer. As a result, roughly three million students stop out or drop out annually for lack of modest “last gap” financing—often under $7,500—that is not covered by Pell Grants, institutional aid, work-study, or federal loans.

At a graduate school level, the recent elimination of Graduate PLUS loans will further constrain the graduate study options of students who most rely on federal credit. These challenges disproportionately affect low-income and first-generation students, including African American students and the HBCUs that serve them. At a time when demographic shifts are shrinking the overall pool of traditional college-age students, the inability to finance enrollment threatens institutional sustainability.

The challenge extends beyond domestic students. Each year, academically prepared African students receive offers of admission from colleges in the United States—including HBCUs—but are unable to enroll. Household income is insufficient, scholarships cannot meet demand, and without US credit histories or co-signers, these students are excluded from nearly all private lending options. As the world’s largest and fastest-growing college-age population, globally mobile African students face a financing gap estimated at $8 billion annually in the United States and more than $50 billion worldwide. The result is a missed opportunity on multiple fronts: for students, for institutions, for knowledge production, for home countries, and for the broader economy.

HBCUs are uniquely positioned to serve these students. They already educate a disproportionate share of Black immigrants and their children, and they maintain deep cultural, historical, and intellectual ties to the African continent. With appropriate financing mechanisms, HBCUs could become natural magnets for diaspora students at precisely the moment when many US institutions are struggling to meet enrollment targets and when African universities are struggling to provide enough seats for qualified students.

Against this backdrop, traditional philanthropy, however generous, cannot fill the gap. Instead, impact capital must be deliberately structured as leverage. By pooling first-loss or guarantee capital through credible intermediaries, including the United Negro College Fund, the Thurgood Marshall College Fund, or specialized diaspora lenders and organizations, philanthropy can unlock several multiples of private and bank capital for student lending without requiring lenders, including Black-owned banks, to absorb disproportionate default risk.

This approach already works with both FundingU for domestic students and 8b.finance for international students, organizations run by two authors of this article. Structured properly, a dollar of philanthropic capital can catalyze two to five dollars of private lending.

Importantly, this is not about expanding predatory debt. Guardrails matter. Any guarantee structure must include transparent underwriting, capped interest rates, financial literacy requirements, and repayment contingencies tied to income and impact. Imagine, for example, financing structures that reduce repayment obligations for graduates who serve underserved communities and countries; who work in high-need sectors such as energy systems, education, health, or climate resilience; or who are affected by changes in visa regimes.

Done well, catalytic student finance can provide a durable cushion against future funding shocks by ensuring HBCUs can continue to enroll low-income students at both undergraduate and graduate levels. More than that, it can turn the historical disadvantage of being associated with Africa into a competitive advantage in a shrinking student market.

2. Build Pan-African Research and Digital Infrastructure

Enrollment stability alone is not enough. The second transformative opportunity lies in positioning HBCUs as anchors of a pan-African intellectual economy—a 21st-century Alexandria for Black and diasporic thought. Despite their outsized role in producing Black professionals and leaders, HBCUs remain structurally disadvantaged in research funding, laboratory facilities, computing infrastructure, and endowed faculty positions. Historical underinvestment has left many institutions competing for the same federal grants as far wealthier research universities—often with little chance of success.

Philanthropy can change this dynamic. Rather than forcing HBCUs to chase scarce domestic research dollars, donors can support transnational research ecosystems that link HBCUs with African universities and global partners. Joint degree pathways, co-located research institutes, shared faculty appointments, and coordinated exchange programs would allow institutions to operate as nodes in a global knowledge network rather than isolated campuses.

Related investments in collective HBCU digital exchange could further multiply impact. By pooling procurement for learning management systems, cybersecurity, cloud computing, research platforms, and student services, institutions could reduce costs through economies of scale. Shared infrastructure could also support joint recruitment, visa navigation, and cross-border internship and career placement for students.

Moreover, targeted philanthropic investment in endowed chairs, career-connected learning experiments for students, research centers of excellence, and digital platforms would allow HBCUs to develop distinctive strengths in fields such as artificial intelligence, climate science, health equity, agriculture, fintech, and advanced manufacturing, as well as other areas where global demand is rising and Black and diaspora talent remains underrepresented. Grant capital can be structured with provisions for repayment or revenue participation if research leads to commercialized outcomes, allowing philanthropic dollars to recycle and compound rather than disappear.

3. Catalyze Community Economic Engines Around HBCUs

The third opportunity extends beyond campus boundaries, where philanthropy can enable the creation of a self-reinforcing economic engine.

Many HBCUs sit in historically Black neighborhoods that have endured decades of disinvestment. Students often confront housing shortages, limited childcare, inadequate broadband, and underdeveloped local economies—all of which affect persistence, the possibility of internships while in school, and graduation rates.

Philanthropy and impact capital should play a catalytic role by seeding revenue-generating structures around campuses that strengthen both institutions and surrounding communities. Importantly, these investments, including student-led ventures and social enterprises, should be structured in partnership with HBCUs so that lease income, revenue participation, or equity flows back into endowments and scholarship funds. Examples of efforts that can be expanded under this pillar include public charter school authorizing and operating capacity at HBCUs like Voorhees and Stillman, respectively; the HBCU Wealth-Building Initiative piloted by the United Negro College Fund; and the HBCU Brilliance Initiative which expands access to flexible capital.

Over time, returns from community assets can cushion institutions against future state or federal funding shocks while simultaneously creating jobs, wealth-building opportunities, and improved quality of life for local residents. Capital can be layered across grants, recoverable grants, concessionary debt, and market-rate investments. Where possible, Black-owned financial institutions should be engaged as partners in structuring and managing this capital—ensuring that financial intermediation itself becomes part of the wealth-building ecosystem.

In this model, HBCUs transform from institutions waiting on annual fundraising cycles to anchors of place-based development with recurring revenue streams tied directly to student success and community vitality.

Now Is the Time to Rewrite the Rules

For generations, HBCUs have been praised for doing “more with less,” even as they have been tasked with delivering social transformation with insufficient tools. Today, those institutions are not simply under-resourced; they have little self-determination, and many may not survive the current crisis hitting higher education in general and Black institutions in particular.

At this juncture, the impulse of philanthropy cannot be the comfortable one of delivering salvation, or worse yet, fiddling on the sidelines, hosting another conference, waiting for a new theory of change to emerge, or expecting someone else to take the lead. The moment calls for funders to midwife sovereignty in at least three ways: stand with HBCUs even when the path is not fully mapped; underwrite experimentation and iteration rather than only proven models; and stay in the relationship long enough for new approaches to become institutional norms, not just short-lived pilots that look good in annual reports but leave power untouched.

Foundationally, the moment demands that funders back their professed belief in Black agency and self-determination with action, by ceding control and trusting Black-led institutions and HBCU-based builders as thinkers, architects, and decision makers. That trust should extend to the global role HBCUs can play—building knowledge, leadership, and solutions in solidarity with marginalized communities in Africa and the wider Global South, where their experience can help unlock new approaches to shared challenges.

The number of registered non-governmental organizations (NGOs) worldwide has never been higher. Philanthropic giving has grown for more than two decades. Donors everywhere demand ever more rigorous impact measurement. And yet the sector’s collective results—the degree to which it actually bends the curve on poverty, education, health, or climate—remain stubbornly difficult to see from altitude.

Scholarly literature helps explain why, though in an inverted way: Its assessment of the field tilts conspicuously positive. The most comprehensive review of the field, a systematic analysis of 3,336 peer-reviewed articles spanning 35 years, found that case studies dominated the literature, with pronounced geographic and sectoral gaps, and generally reporting favorable effects of NGO interventions on health and governance outcomes. The authors of that review, Jennifer N. Brass and colleagues, qualify the result, noting that only about 60 percent of health articles and 16 percent of governance articles used a clearly measured outcome indicator, and that NGO studies rarely include a counterfactual. A separate review of three leading nonprofit journals across four decades reached a related finding: Only about four percent of articles took a critical stance, and critical work had, if anything, diminished rather than grown.

The minority of scholars who have looked critically reach a stable and uncomfortable verdict. Two decades after academics Michael Edwards and David Hulme first argued that NGOs had grown “too close for comfort” to the donors and states that fund them, they, along with researcher Nicola Banks, revisited the question and concluded that the problem had not lessened. Rather, they argued that weak roots in civil society, political restrictions, and over-professionalization continued to undermine NGO legitimacy, and that most NGOs remained poorly placed to influence what actually drives social change. Their broader diagnosis was not that NGOs have failed to deliver services (many demonstrably have), but that the sector as a whole tends to relieve symptoms of poverty rather than alter the structures that produce it.

NGOs rarely fall short because their missions are unworthy. More often, they underperform because their management systems are poorly matched to the complexity of the problems they are trying to solve. Research increasingly suggests that mission-driven organizations do better when they are designed to learn, collaborate, and adapt, not just fundraise, report, and grow.

A more useful way to see these failures is as a set of organizational burdens that repeatedly pull NGOs away from impact. With apologies to the classicists, these seven labors of the modern NGO—recognizable to many people working in the field—include structure, inertia, communication, redundancy, longevity, outcomes, and community involvement. These aren’t nonprofit weaknesses but recurring management pressures that distort how NGOs allocate resources, make decisions, define success, and relate to the communities they serve. Examining the seven burdens and their interlinkages provides a framework for understanding how they limit organizational impact and how the field might overcome them to solve problems more effectively.

The seven labors framework draws on more than 25 years of fieldwork, including entrepreneurship programs at the Academy for Creating Enterprise in the Philippines and Mexico, commerce ministry analysis in Tonga, studies of Shenzhen’s Overseas Chinese Town parks, education-outcomes analysis at Food for Life Vrindavan in India and in schools in Fiji, and research on NGO effectiveness in Ghana. Across those settings, management pressures such as fragmented funding, competitive pressures, short grant cycles, and the expectation of continuous expansion appeared repeatedly. Like Hercules’s labors, these create recurring trials that NGOs must confront one by one.

The levers that stand to unmake these labors sit not only with NGO executives, but also with corporate partners shaping environmental, social, governance and philanthropic commitments; foundation boards setting grantmaking terms; impact investors pricing time horizons; and directors who serve on nonprofit boards. Each person’s daily decisions either sustain the seven labors or lighten them.

Labor One: Structure

Many NGOs function like small federations, with a headquarters, one or more national offices, local affiliates, and often fiscal sponsors or intermediaries. Each layer may require a level of oversight, local knowledge, or risk control, and thereby add cost. And branches of the same organization may compete, openly or tacitly, for donors, staff, and media attention.

Research on nonprofit capacity frames performance as a function of the resources an organization can raise, as well as the capabilities and practices that convert those resources into results. Work on international-local NGO collaboration points the same way; collaborative engagement is linked to stronger project performance, while its effects on local capability are less consistent and depend heavily on pressures coming from outside the partnership (donors, governments, and media). The implication is clear: Structure either supports mission execution or drains it.

Consider the Academy for Creating Enterprise. In 1999, Steve and Bette Gibson sold their business, moved to Cebu in the Philippines, and wrote a five-week curriculum to teach microenterprise skills to people starting businesses out of necessity. They built a curriculum, taught it, and let graduates open alumni chapters. The Academy now reports more than 150,000 graduates in 16 countries and more than 1,000 local chapters, and illustrates how a codified program can expand without a full administrative office in every location.

When expanding an organization’s scope of service, senior NGO leaders should ask whether a new affiliate is the best vehicle or whether an existing partner could deliver the same outcome with less drag. For funders, corporate giving officers, and foundation program leads, the operative question before any grant isn’t only whether the idea is sound, but how many hands a grant passes through before it reaches the intended target, and whether each pass-through adds enough value to justify its cost.

Labor Two: Inertia

The second labor is the paralysis of the starting line. Under pressure to appear credible, NGOs often overinvest in formal infrastructure, branding, and internal systems before establishing a repeatable path to value creation. Offices, procedures, and reporting structures can create the appearance of readiness while delaying work that actually builds trust and evidence.

NGO capacity literature is useful here. Capability helps when it enables execution and learning, but distracts when it substitutes for them. For leaders, that means distinguishing between infrastructure that enables performance and infrastructure that mainly reassures outsiders. Every month a new NGO spends on building apparatus before delivering services is a month its intended beneficiaries go unserved. Every founder who abandons a project because the administrative burden of getting started proved greater than the mission itself represents lost human capital the sector cannot afford.

Consider Food for Life Vrindavan. In 1991, founder Rupa Raghunath Das began distributing food in Vrindavan, India. When the organization concluded that food alone could not break the cycle of poverty, it expanded its focus to education, eventually establishing three schools. And in 2022, it received recognition at The Indian Corporate Social Responsibility Awards event. Rather than waiting for legitimacy, Das got started, and scaled later. Another example is the Local Coalition Accelerator, a group of local organizations in Bangladesh, Ethiopia, Nigeria, and Uganda that have shared governance and peer-to-peer capacity and created joint action plans since 2020, thanks in part to three-to-five-year funder support.

The antidote to inertia is less celebrated than it should be. In the early years, NGOs can share back-office infrastructure (including finance, human resources, and legal services) with organizations in related fields. This works when arrangements are secure and appropriate, and when NGOs treat administrative minimalism as a feature, not a shortcoming. Funders can support this approach by financing shared services rather than requiring every grantee to duplicate them.

Labor Three: Communication

NGOs generate large amounts of local knowledge through implementation, partnership, and community engagement. Yet much of that knowledge remains trapped inside teams, projects, or individual staff members.

Knowledge-management research suggests that structured knowledge-sharing can help organizations spread experience, reduce repeated mistakes, and align action with mission. OECD guidance on locally led development similarly concludes that the system still does too little to value and share local knowledge in ways that improve effectiveness and sustainability. Brass and colleagues document the fragmentation empirically, noting that NGO scholarship is scattered across some 950 journals, with more than half of those journals publishing only a single article on NGOs during the 35-year period they studied. Researcher Alexandra Gheciu meanwhile documented how military forces, government bodies, and NGOs involved in peacebuilding draw on material resources, knowledge and expertise, and institutional prestige, not simply to foster collaboration or improve practice, but to secure leadership roles so that they can shape the rules of post-conflict reconstruction.

Still, some organizations are highly focused on knowledge exchange. Ashoka has spent more than 40 years building infrastructure, including stipends and communication platforms, to support a global peer-learning community of social entrepreneurs. And smaller organizations like the Active Learning Network for Accountability and Performance in Humanitarian Action (ALNAP) convene network members through meetings, webinars, communities of practice, and other forums where they exchange evidence, experience, and practical ideas. ALNAP also maintains a public library of more than 23,000 humanitarian resources to help circulate lessons from individual programs across the sector.

Quarterly peer convenings, published post-mortems of failed programs, and shared measurement frameworks aren’t glamorous, but leaders who want to differentiate their organizations and ease the burden of learning the same thing over and over again need to invest in communities of practice.

Labor Four: Redundancy

Whereas the first labor, structure, describes layering within organizations, redundancy describes layering across them. Some redundancy is healthy. Competition can produce innovation, and a pluralism of approaches is genuinely valuable when the best answer is unknown. But redundancy is often a byproduct of everyone wanting to be a founder, rather than a strategy for experimentation. A cluster of organizations tackling the same community problem with roughly the same model isn’t necessarily pluralism. Each new initiative may be defensible on its own terms, but taken together, the result can be duplication of administrative effort, fragmentation of expertise, and competition where collaboration would create more value. OECD analysis describes the same pattern from the receiving end, where funders regularly ask local partners to participate in capacity-strengthening activities (such as building skills, knowledge, and competencies) without coordination.

Uganda’s health sector offers a vivid illustration. By 2012, donor-funded organizations had launched so many overlapping mobile-health pilots, often running incompatible systems in the same districts, that researchers referred to it as an affliction of “pilotitis.” The Ministry of Health declared a moratorium on new projects until they could demonstrate interoperability and sustainability, and subsequently approved only a handful of initiatives to scale nationwide. The green-lighted solutions, such as the mTrac health-reporting system, reached all of Uganda’s districts within a year.

The most useful question a funder can ask before issuing a new grant isn’t “Is this a good idea?” but “Who else is doing this, and why is another entrant the right answer?” The most useful question an aspiring founder can ask is whether partnership with an established organization would be more effective than launching a new one. The choice not to start and instead find new ways to support existing organizations should be a legitimate option.

Labor Five: Longevity

Recent OECD work on locally led development argues that sustainable outcomes depend on long-term, equitable partnerships and tailored capacity sharing, not just project delivery. Short grant cycles can disrupt employment continuity, force programs to end before organizations earn beneficiaries’ trust, and leave little room for endowments or recurring-revenue models that could help organizations weather changes in donor priorities.

BRAC, founded in Bangladesh in 1972 to address poverty and inequality, is a classic example of an organization that uses a diversified operating model of grant-funded programs, microfinance, and social enterprises to support its longevity. Another example is Fundación Paraguaya, founded in 1985. The foundation’s agricultural schools operate as working farms and businesses; students learn by running enterprises like an on-campus hotel, whose sales cover operating costs. According to its 2024 institutional report, 59 educational institutions in 28 countries have adopted this self-sustaining model.

These examples show that organizations can design for longevity rather than just hope for future funding. NGO leaders can build revenue models that don’t depend entirely on annual fundraising, even when that path is harder than chasing the next grant. Funders can move at least one well-justified grant from 12 or 24 months to five years (making sure to establish milestones, safeguards, and clear exit conditions) and replace one innovation requirement with a continuation-and-depth requirement.

Labor Six: Outcomes

Researcher Adil Najam’s classic NGO accountability framework helps explain why so many measurement systems are designed to reassure donors rather than improve decisions. Najam’s tentative assessment of the three accountabilities NGOs face is unusually blunt for a framework paper. He rates accountability to patrons as high on functional measures (and medium on strategic ones), accountability to beneficiaries as low to nil, and accountability to an NGO’s stated mission as low. His summary is that upward accountability dominates because it’s tied directly to funding and legitimacy, but at the cost of clients and mission. The result is a familiar distortion. Reporting systems are fine-tuned to demonstrate compliance but fail to surface difficult truths about program performance that might help improve them.

The work of researchers Talata Sawadogo-Lewis and colleagues reflects this. During interviews, the monitoring and evaluation staff at 11 NGOs with maternal and child health projects described donor reporting as the primary motivation and audience for evaluation. Participants also described rigid reporting requirements, as well as limited capacity to use evaluation findings to determine whether programs reached their intended populations and met their needs, or to guide improvements. Researchers Tracey M. Coule and colleagues found an analogous pattern in nonprofit scholarship, where 23 of the 72 critical articles they reviewed exposed problems without advancing a normative course of action.

Yet some organizations deliberately expose problems with the aim of changing the systems that produce them. Engineers Without Borders Canada, which models this practice through public “failure reports,” and Nigeria’s Women Inspiration Development Center, which documented how community resistance changed its approach, are just two examples.

The prescription here is cultural before it is technical. Senior leaders should publish losses, not just wins; fund independent evaluation; and reward organizations that disclose what didn’t work, because without that disclosure the sector cannot learn.

Labor Seven: Community Involvement

Community participation in the development and implementation of NGO initiatives can make solutions more relevant, trusted, and sustainable. But, as a systematic review of 49 health-service studies by Victoria Haldane and colleagues suggests, strong organizational and community processes must be in place to navigate inherent social and cultural complexities. In the same paper on funder-NGO power dynamics mentioned earlier, Banks, Hulme, and Edwards argued that the difference between communities that NGOs consult and communities that govern interventions parallels the difference between NGOs (typically intermediary, professionally staffed, and donor-funded) and membership-based organizations (led by and accountable to the people they exist to serve). They contended that the most durable examples of community-led development emerge tend to emerge from well-resourced, membership-based organizations.

Slum Dwellers International (SDI), a transnational network founded in 1996, connects community savings groups through settlement, city, national, and international federations. These groups collect settlement data for negotiations with municipal, state, or national public bodies that control relevant land or projects. By 2002, the World Bank-supported Mumbai Urban Transport Project—which was jointly implemented by the Government of Maharashtra, Indian Railways, and other public agencies—had resulted in the relocation of thousands of railway-side households. With technical and organizational support from the Mumbai-based Society for the Promotion of Area Resource Centres, residents in affected areas (organized through the Railway Slum Dwellers Federation and linked to the National Slum Dwellers Federation) numbered homes, registered households, and mapped their settlements. The state agency responsible for resettlement, the Mumbai Metropolitan Region Development Authority, gave community organizations authority to decide which families qualified for resettlement housing and which available homes they would receive. SDI’s durable federation structure, savings networks, and technical partnerships gave residents the organization and credible information they needed to negotiate access to land, infrastructure, and housing entitlements with public authorities.

NGOs should embed community members in not only advisory but also governance capacities; measure beneficiary satisfaction with the same seriousness as funder satisfaction; and treat staff continuity in the field as a strategic asset, not a human resources line item. Foundation trustees and impact investors can accelerate this shift by asking a single question of every grantee, every cycle, “Where in your governance do the people you exist to serve actually hold a vote?”

A Labor, Not a Fate

Taken together, the seven labors show that NGO underperformance is rarely the result of one isolated weakness. Structure fuels duplication. Inertia delays action. Poor communication traps knowledge. Redundancy wastes scarce resources. Short-termism undermines sustainability. Donor-centered accountability distorts learning. Weak community involvement erodes trust. Each labor compounds the others. That is the diagnostic value of the framework. It lets senior leaders, boards, and funders ask not whether a program is well-intentioned or well-funded, but whether these seven burdens are quietly weakening the organization’s ability to create and sustain results.

Across seven countries and more than 25 years of fieldwork, the most common mistake we see senior NGO leaders make is attributing their organization’s obstacles to local context, such as the donor environment in one country, the political climate in another, or the cultural dynamics of a particular community. Those obstacles are real, but the seven labors are not purely local. And while they don’t manifest in universal or identical ways, we have seen them recur across diverse settings, and they are a reminder that impact depends not just on what an NGO aims to do, but on what it’s built to carry.

There is a quiet crisis unfolding inside the development offices of nonprofits across this country. It doesn’t make the front page and won’t generate the kind of urgency that a budget shortfall or a federal funding cut triggers. But it might be the most consequential threat to the long-term health of the philanthropic sector that I’ve witnessed in four decades of this work.

Senior fundraisers—the relationship architects, legacy builders, and mission storytellers who have spent careers learning the art of transformational giving—are retiring. Not only are we not replacing them, but we are failing to attract young professionals into the field. And as the pipeline narrows from both ends, the transactional, quota-driven, relentlessly metrics-obsessed culture we have built is accelerating the exodus of those still in the middle.

Without a fundamental cultural transformation in how we practice, recruit, and sustain fundraising as a vocation, the trend will only continue.

The Numbers Are Not Ambiguous

The average tenure of a development professional today is less than eighteen months. In a profession built on relationship-building, in which a major donor relationship can take three to five years to mature into a transformative gift, our people leave before they hit their stride.

Why? For one thing, 84 percent of fundraisers feel “tremendous pressure to succeed” in their roles, and 55 percent feel “often unappreciated” in their work. Half of chief development officers surveyed by CompassPoint planned to leave their positions within two years; 40 percent were not even sure they would remain in the fundraising profession at all.

The financial cost of this churn is staggering. Because it takes an average of four years for a fundraiser to reach full potential in a role, the departure of a development professional with four or more years of tenure can cost the organization as much as five times that person’s annual salary in lost revenue. And this internal crisis connects directly to the crisis facing donors: the Fundraising Effectiveness Project’s 2024 report shows a 4.5 percent decline in total donors, the fourth consecutive year of decline, while first-time donor retention hit its lowest recorded rate, only 19 percent. As I have written, just 3 percent of donors now account for 78 percent of total charitable dollars given: We are narrowing at the top while hemorrhaging at the base. We have too few experienced relationship builders left to reverse that trend.

Our Workforce Problem Is a Culture Problem.

The reasons why gifted, mission-driven professionals leave, but talented young people do not enter, go much deeper than compensation and career pathways. Those things matter, of course. But the core issue is the pervasive, stubborn, and ultimately self-defeating transactional culture that has taken root in too many development offices across this country.

When organizations treat their fundraisers as quota machines rather than relationship architects, they tell the fundraiser and donor simultaneously that the gift matters more than the giver. When we judge development professionals solely by dollars raised and calls made and asks completed, we strip the work of its humanity. Then we wonder why the best people leave. The real drivers of fundraiser departure are unrealistic expectations set without adequate resources, unengaged leadership, lack of investment in tools and systems, and, most telling, a poor culture of philanthropy within the organization itself. No amount of salary adjustment will fix a culture that treats fundraising as extraction rather than transformation.

The connection to donor outcomes is equally direct: when donors feel they are only contacted for monetary transactions, they do not stay. Transactional cultures produce transactional donor relationships. Transactional donor relationships produce declining retention and declining revenue. The result is burned-out fundraisers operating in rote, transactional mode pass that fatigue directly to their donors. You cannot fake genuine connection, and you cannot manufacture the kind of authentic relationship that transforms a one-time gift into a decades-long partnership (when you are simultaneously grinding through unrealistic prospect lists with the clock ticking on a job you already know you are about to leave).

Learning From Other Professions

Ours is not the first profession to face this double squeeze of aging senior practitioners and a failing recruitment pipeline. Nursing offers a particularly instructive case study, with experienced nurses retiring in large numbers, insufficient new nurses entering the pipeline, unsustainable workloads driving mid-career burnout. Sound familiar?

Rather than waiting for the problem to resolve itself, leading healthcare systems invested aggressively in new pipeline architecture. The American Hospital Association documented approaches including earn-while-you-learn apprenticeship models, high school pipeline programs (Grady Health in Atlanta launched a Teen Experience and Leadership Program so oversubscribed it had to turn hundreds of applicants away), simulation-based training centers shared across multiple institutions, and upskilling investments like UC Health’s $50 million Ascend leadership program. They also invested in reconnecting clinicians to purpose, explicitly calling for ways to reconnect clinicians to purpose and provide the support, training and technology they need to thrive.

Purpose, not just pipeline. The core insight is that talent development is not a passive HR function, but a strategic mission imperative: build intentional pipelines, invest in the culture people will be entering, and connect the work to purpose, not just performance.

What would it look like if the fundraising profession took these lessons seriously?

1. Anchor fundraising apprenticeships in relationship work. We need formal, paid apprenticeship models that pair emerging fundraisers with senior practitioners in real cultivation and stewardship, not data entry and event logistics. The apprentice should be in the room, at the lunch, witnessing what transformational giving actually looks and feels like.

2. Build high school and community college pipeline programs. The nursing field learned that you need to introduce the profession early and make it tangible. Nonprofit organizations partnered with community colleges could develop “Philanthropy Explorer” programs that introduce mission-driven fundraising careers before students choose their path, the same way healthcare systems now send professionals into high schools to recruit the next generation of nurses.

3. Create purposeful retention models for senior practitioners. Rather than simply watching experienced fundraisers retire, organizations should build intentional phased-retirement structures that keep senior wisdom in the building. Part-time mentoring roles, Emeritus Fundraiser designations, project-based consulting arrangements: these create structured ways to harvest and transfer the relational capital that walks out the door when a 25-year major gifts officer retires.

4. Conduct culture audits before hiring. If transactional culture drives talented people out, every organization preparing to hire a development professional should first conduct an honest culture audit. Are expectations realistic? Does leadership understand the relationship cultivation cycle? Does the organization invest in its team’s professional growth? (If the answers are no, hiring is not the solution. Culture repair is).

5. Tell the profession’s story compellingly. Fundraising is routinely portrayed as asking people for money, which is to say, as awkward, transactional, mercenary. We must tell a different story: the planned gift that funded a cancer research center, the scholarship that changed a first-generation family’s trajectory, the donor whose giving became the fullest expression of a life well-lived. This is what we actually do. We need to say so loudly, and often, and in the places where the next generation is listening.

6. Build university-nonprofit practicum partnerships for lived learning. Schools with nonprofit management and public administration programs should be creating structured partnerships with local fundraising organizations, not internships where students stuff envelopes, but genuine co-creations where emerging professionals lead donor stewardship projects, develop case statements, and sit across the table from real philanthropists. This is where vocation is formed.

7. Create a Transformational Culture Certification for nonprofits. A recognized standard, think of the “Best Places to Work” model applied specifically to philanthropic culture, that recognizes organizations committed to transformational fundraising practices would signal to job seekers that this organization values relationships over transactions, invests in its people, and practices the kind of philanthropy that both donors and fundraisers want to be part of. The talent market would respond.

The Transformational Imperative

The greatest threat to the future of fundraising is not the economy, not demographic change, not even declining donor participation, as alarming as those trends are. The greatest threat is the failure of imagination about what this profession is and who it is for.

When we build cultures that grind fundraisers down with unrealistic goals and by treating them as revenue-generating units rather than relationship stewards, we send a message to young people that this is not a profession worthy of their gifts. We also send a message to donors: you are a means to our ends, not a partner in a shared vision.

The professions that have navigated this crisis most successfully did not simply recruit more aggressively. They asked deeper questions: Why are people leaving? What would make young people want to enter? What kind of culture would make talented professionals choose to build their careers and legacies here?

The answer, in every case, was the same. Purpose. Belonging. The sense that the work matters and that the organization sees the whole person, not just the performance metric.

That is the transformational argument. Not just for how we treat donors. For how we treat each other.

The chair left empty by the retiring major gifts officer, who spent 30 years building relationships with your community’s most generous families, will not be filled by better job postings. It will be filled by organizations that have built the kind of culture that makes a gifted young professional say: I want to spend my career here. I want to learn from these people. I want to be part of something that takes both the donor and the fundraiser seriously as full human beings.

Billions in donor-advised funds (DAFs) sit like honey crystallizing in forgotten jars—sweet but inert—while urgent social needs multiply beyond the glass. According to a recent report from the Donor Advised Fund Research Collaborative, DAF assets in the United States reached $326 billion in 2024, up more than 27 percent in a single year. The pile grows faster than the giving. Most of these billions are not on their way to anywhere.

A donor-advised fund works like a charitable holding account. A donor contributes cash or assets, takes the full tax deduction in that moment, and then recommends grants for nonprofits on whatever timeline they choose. The accounts are housed by sponsors, think community foundations or the charitable arms of financial firms like Schwab and Fidelity. The deduction is immediate, but the giving is optional and sometimes never occurs. That gap is the problem.

I have spent 20 years assembling capital for the populations and problems the market won’t reach on its own, from a $2.1 billion urban infill program in São Paulo to refugee entrepreneurs and a women’s loan fund built across CDFIs, commercial banks, and community foundations. The capital is rarely unwilling. It just needs a catalyst, someone to move first, de-risk the thing, and prove it works. That is exactly what idle DAF dollars could be, and exactly what they are not when they sit still.

In an average year, more than a third of DAF accounts make no grants at all, according to the 2024 National Study on Donor Advised Funds. The imbalance sharpened in 2024 rather than evening out: Contributions to DAFs increased 37 percent or nearly $90 billion over 2023, but only about a quarter of total assets reached working charities. The donors filling these accounts are disproportionately high-income households, the same households that capture the largest tax benefit the moment they contribute. As federal spending contracts, more of the nation’s charitable safety net leans on those dollars, and more of those dollars are sitting still. Philanthropy faces its moment of truth. Will we deploy these resources effectively, or watch them calcify?

My solution is radically simple: Establish a national ranking of DAF sponsors based on a single metric—the percentage of total assets deployed annually. Every sponsor with assets over $500 million would self-report one calculation: dollars deployed to charitable causes divided by total assets under management. No complex impact measurements, no elaborate theories of change—just one number that cuts to the heart of philanthropy’s purpose.

A Simple Metric

The disclosure would do the one thing the current system never forces: make stillness visible. Right now, a sponsor that deploys 4 percent of its assets and one that deploys 40 percent look identical from the outside. Both advertise their charitable mission. Both collect their fees. The difference, the only one that matters to the nonprofits waiting on the other end, is invisible to donors choosing where to park their giving. A published ranking could end that. It converts deployment from a private virtue into a public scoreboard, and scoreboards change behavior precisely because they are monitored.

This pressure works through the donor, not around them. A donor choosing between two sponsors can now see which one moves money and which one hoards it, and no reputation-conscious sponsor wants to sit at the bottom of a list every prospective client, journalist, and board member can read. That flips the incentive. Today a DAF sponsor profits by growing assets under management, because management fees scale with the pile, so the rational move is to gather and hold.

This ranking rewards the opposite. It pays to deploy, which means it pays to go find the deployment worth bragging about. The best sponsors stop being passive custodians and start scouring the landscape for the deals that change things: the early housing model, the unproven intervention, the breakthrough no one else will fund yet. None of this requires a new law or mandated minimum payout. It requires only that the number exist, in public, where it cannot be ignored.

Moving Resources

Critics will argue this oversimplifies the nuanced work of philanthropy. They’re right, but that’s the point. A single ratio cannot capture a theory of change or weigh the patience some causes genuinely require. But it answers the one question every other metric lets sponsors avoid: whether resources are actually moving to meet society’s needs.

The resistance to ranking DAFs is rarely about nuance. It stems from a culture of deference to engaged donors and a quiet fear of losing business. That fear points exactly the wrong way because intervention is already underway. In November 2023, the US Treasury and the IRS proposed the first regulations on DAFs in nearly two decades, the opening move under a 2006 law that had sat unimplemented ever since. The proposed rules are largely definitional. They define what a DAF is and which distributions are taxable. What they pointedly leave untouched is the question that matters most: How fast the money must move. But the direction is set. Regulators have shown they will act, and the deployment question is the obvious next frontier. The only choice left for the industry is whether it shapes that standard or waits to have one imposed.

Bringing Light to DAFs

Here’s the opportunity: A single metric ranking system that brings sunlight to the DAF industry. The concept is up for grabs, free for any organization with the courage to implement it. Will a community foundation step up? A national research organization? A consortium of progressive DAF sponsors? The idea belongs to whoever seizes it first.

This pressure to deploy isn’t just about moving money—it’s about catalyzing the kind of innovative, high-risk investments that philanthropy was built for. Philanthropy’s real advantage isn’t scale; governments and markets dwarf it. It’s the tolerance for risk and failure. It can fund the unproven idea, the early idea, the bet no agency could defend on a ballot, and no seed investor could defend to her partners. That’s precisely the capacity that goes dormant when funding sits idle in donor-advised funds. Imagine DAF sponsors competing to fund pilot universal basic income programs that governments can scale or backing breakthrough clean energy technologies too early-stage for federal grants. Picture them seeding community-based mental health interventions that could reshape public health policy or testing new models of affordable housing that state agencies can adopt. This is what philanthropy should be doing—taking the smart risks that government can’t, proving what works, and creating templates for public policy. Not sitting on billions while waiting for regulation to force our hand.

One number. Published annually. No excuses. The time for action is now, before these resources become bones in an ancient riverbed—a monument to what could have been, while the world moves on without us.

In a classroom in Uganda, a teacher writes a short paragraph on the blackboard: Nagawa ali ku ssomero ne banne. Abaana babuuka omuguwa. Omuguwa gwe babuuka gukutuka. Abaana basigala mu nnaku. Translation: “Nagawa is at school with her classmates. The children skip rope. The rope breaks. The children feel sad.” The teacher reads it aloud. The students repeat it in chorus. Again. And again. Twenty-three times. By the end, most students can recite the passage perfectly, but none can actually read and comprehend it.

This is the tragedy of educational systems focused on rote instruction. Children who learn only how to repeat familiar passages are not equipped with the skills they need to decode new words or read with understanding. Yet this approach to teaching is dominant across many low- and middle-income countries, and it’s one of the reasons why a staggering 70 percent of children in these countries can’t read by age 10. In response, many governments and development partners in countries such as Uganda, Liberia, and India have introduced “structured pedagogy” programs, which feature carefully sequenced lesson plans; a strong focus on phonics; teaching at an appropriate pace for early learners; and teacher training and coaching. However, even in programs that incorporate these “ingredients,” classroom practice often looks no different.

This points to a deep challenge for education reform: not just knowing what works, but ensuring that the necessary conditions are in place for what works to take hold in practice. The design of educational programs and the systems in which teachers operate—specifically, what systems prioritize and reward—shapes what happens in the classroom. Without engaging with these underlying incentives, even the strongest interventions will struggle to change practice.

Why Ingredients Alone Are Insufficient

Although school systems can generally provide the components of structured pedagogy programs at low cost, how they come together—the “recipe” that makes them work—ultimately determines whether or not students truly learn.

In their book Building State Capability, Harvard researchers Matt Andrews, Lant Pritchett, and Michael Woolcock categorize change processes according to the capabilities needed for implementation. They point out that some tasks, such as distributing vaccines or fertilizers, are largely logistical; they require many people, but each person performs a standardized action, and success is largely a matter of compliance. Shifting instruction through a structured pedagogy program, by contrast, falls into a category the researchers call “implementation-intensive service delivery.” These tasks also require many people, but each person acts autonomously, often in ways that go against behavioral norms and political pressure. Tasks like these also tend to be less successful than logistical tasks, and there are few examples of improvements sustained at scale.

It’s tempting to treat structured pedagogy as a logistical challenge—to assume that school systems and teachers who have the right ingredients can improve student learning across contexts. But successfully scaling up a structured pedagogy program requires that teachers fundamentally shift their behavior—their instructional practice—for many hours, every day. This often requires that they break away from approaches they experienced during their own education or have employed for many years, and adopt new ones.

Research tells us that changing the behavior of any group of people is difficult and that it generally happens only with strong intrinsic motivation. Teachers are no exception. They will make dramatic changes only if they are highly motivated to do so. And, tragically, most education systems don’t incentivize practices that improve learning.

Why Systems Fail to Promote Deep Learning

Learning improvement is common rhetoric within education systems, but it’s seldom the organizing principle for decision-making, promotions, or budgets. Senior officials tend to define success according to metrics that travel easily through budget hearings, such as the number of classrooms built, teachers recruited, or textbooks delivered.

Improving foundational learning—which includes literacy, numeracy, and core socio-emotional skills—is far more challenging. Better outcomes in reading comprehension or basic math are difficult to achieve, slow to materialize, and hard to attribute. Furthermore, evidence shows that many government leaders underestimate the learning crisis. In a survey by the Center for Global Development, for example, policy makers from 86 percent of low- and middle-income countries assumed children in their country were able to read better than they actually could.

Institutions that neither encourage nor incentivize effective instruction—even if they have the right components on paper—struggle to achieve meaningful changes in instructional practice. Treating low learning outcomes as a layered challenge of politics, culture, and behavior rather than a purely logistical delivery problem fundamentally changes what the recipe for success looks like across the system.

The Top Layer: Politics

One of the reasons governments and donors often assume that learning is taking place is because education’s purpose can seem self-evident. But most education systems in low- and middle-income countries fail to prioritize learning, focusing instead on goals such as access, process compliance, and patronage. As just one example, the majority of speakers at the Transforming Education Summit in 2022, a gathering of global education leaders in the wake of COVID-19, talked about edtech, employability, and inclusion, but very few spoke about improving learning—and when learning isn’t the primary measure of system success, it’s unlikely that it will shape decisions on budgets, policy, or implementation.

Encouragingly, several countries are building momentum around prioritizing foundational learning. South Korea, Vietnam, and Brazil are historical examples of countries that have aligned their education systems with the purpose of learning and have achieved dramatic improvements in learning outcomes as a result. More recently, in 2020, India made foundational learning the central goal of its education system, and there are already signs of success in improving learning outcomes. And, across Africa, initiatives such as the Foundational Learning Exchange, a high-level African conference focusing on foundational literacy and numeracy, and the Foundational Learning Initiative for Government-led Transformation, a government-to-government collaboration aiming to improve learning, are beginning to shift attention in a similar direction, with several countries stating that foundational learning will be a major policy priority.

The Middle Layer: Culture

Commitment from government teacher trainers, classroom supervisors, and advocates who can translate policy into a culture of effective instruction is another necessary part of the mix, even though building this cadre of “culture catalysts” from scratch is no easy task. Many people in these roles have never experienced high-quality instruction themselves, and must learn both new approaches to teaching and how to cultivate those practices with teachers.

Still, it’s possible, and Luminos Fund’s work in Ethiopia helps illustrate what can happen when it’s successful. Since 2022, the fund has worked with the Ethiopian government to design and scale structured pedagogy programs that improve foundational skills while also helping shift the culture of the system around the classroom through hands-on training and coaching with government-employed classroom supervisors. Recent focus group discussions with supervisors involved in the program revealed a cultural shift in how they approach their role; rather than treating supervision as a box-checking administrative exercise, they now see themselves as enablers of effective instruction. As one supervisor in Sidama explained, “Teachers now invite supervisors to observe their classes ... We work together like a family to support student learning.” A supervisor in Tigray remarked, “Before, my approach with teachers was more controlling ... Now I focus purely on supporting teachers, and our relationship has become more horizontal.”

These shifts have led to dramatic gains in learning outcomes. Luminos research showed that learners in the classrooms with structured pedagogy read four times as fast as those in the classrooms without it. And improved learning outcomes in turn increased the intrinsic motivation of supervisors and teachers.

This kind of change often requires a deliberate “show, share, shift” approach—showing what effective instruction looks like, sharing best practices through extensive and practical training, and ultimately shifting norms and incentives across the system. It’s a resource-intensive process, particularly in the early stages, as new behaviors and expectations take hold, but up-front investment to create a culture that values and prioritizes learning is essential to the future success of programs.

The Frontline Layer: Behavior

To move from rote instruction to approaches that build solid foundational skills, teachers themselves must undergo a profound behavioral shift.

The Delhi school system’s ambitious reform to improve foundational literacy illustrates both the challenge and the possibility. Teachers initially resisted it, seeing the new initiatives as administrative drudgery in an already over-burdened system. Deeply ingrained practices, such as a rigid focus on finishing the syllabus, reinforced a business-as-usual inertia that proved difficult to break. Gradually, however, as the system moved away from top-down monitoring and introduced mentor teachers to provide peer support and bridge the gap between policy and the classroom, progress emerged. With sustained support, some teachers recognized the need to understand the learning levels of students in their classroom and teach accordingly, rather than rushing to complete the curriculum.

This kind of change is both cognitively demanding and emotionally risky. The purpose and pressures of the education system in which teachers have built their professional identity deeply influences them. Abandoning the safety of the blackboard requires practice and significant support. Instructional change is ultimately a social process; teachers are more likely to adopt new practices when they see them working in neighboring classrooms and when a new set of professional norms reinforce those practices. When these conditions are in place, teachers move from being the friction in the system to being the drivers of its success.

The work to delineate the ingredients of effective instruction is vital, but governments, donors, and implementers must focus on the recipe that allows them to work in practice. The success of reform depends on what the educational system values and incentivizes. Only where learning outcomes become a shared objective, pursued at all levels—by the education minister, the supervisor, and the teacher—can effective instruction take root and bloom.

Governments and funders have invested heavily in evidence to guide public spending and policy decisions over the past two decades. Randomized controlled trials, evidence clearinghouses, and tiered standards promised a way to move beyond ideology and toward what works, particularly in systems under pressure to justify decisions and demonstrate accountability. In many ways, they delivered on that promise, introducing rigor, discipline, and a shared language for accountability into complex public systems.

Yet, despite this investment, outcomes have not improved at the scale many expected. Across workforce, education, health, and human services, governments continue to struggle to translate evidence into lasting improvements in people’s lives. This gap has prompted renewed debate about whether evidence-based policymaking has reached its limits—whether clearing higher bars of proof alone can meaningfully improve results at scale. From my work with state and local governments, the more difficult conclusion is that evidence has been asked to do work it was never designed to do.

What Paying for Outcomes Revealed

A reentry initiative at Rikers Island illustrates the gap between evidence and outcomes directly. New York City implemented a cognitive behavioral therapy program intended to reduce recidivism among young men. The intervention had a strong evidence base. The financing vehicle—the ABLE Social Impact Bond, the first of its kind in the United States—was structured so the city paid only if recidivism fell by 10 percent or more. The financing worked as designed. An independent evaluation found no impact.

What went wrong was not the evidence base but the circumstances in which the program was attempting to create these outcomes. Conditions inside the facility were not what the program required to succeed. Coordination between the city’s correction and social service agencies was fragmented. The way services were actually delivered to young men on Rikers did not match the conditions under which the program had originally been tested. Each of these failures was knowable, but the contract had no mechanism to surface or respond to them.

This pattern is not unique to one project. Across jurisdictions that have invested in outcomes-based contracting—structures in which payment depends on whether programs achieve predefined results—the same dynamic has played out. Governments can change how they pay for results or whether they fund evidence-based programs. That alone does not determine whether results are achieved. The problem runs deeper than any single contract or program structure.

The Limits of the Evidence Base

Evidence can identify interventions that have worked under specific conditions. But it does not account for whether those conditions exist in practice or whether systems are capable of creating them.

The scope of what is captured in the evidence base is narrower than policy designers often assume—and the consequences are significant. Researchers have documented for decades that rigorous evaluations of social programs almost always fail to find meaningful impacts. Of the 13 large randomized controlled trials the federal government has commissioned to evaluate major congressionally authorized programs, 11 found either no significant positive effects or effects that faded shortly after completion. The programs that do clear the bar for strong evidence represent a narrow slice of the decisions governments face every day—yet policy frameworks treat that bar as the organizing principle for how public dollars get spent.

In many areas, no well-established, evidence-based programs exist that match the needs of the population being served. In others, programs that have demonstrated impact in one setting have not produced the same results elsewhere. The Nurse-Family Partnership, for example, a nurse-led home-visiting program for first-time, low-income mothers, showed strong outcomes in its original trials, but community replication has consistently produced smaller effects. Researchers found that nurses in replication sites were not retaining families at the same rate as in controlled settings. Evidence generated in one context does not reliably predict results in another.

When evidence-based programming becomes the primary organizing principle for funding, systems tend to align around compliance with approved models. Funding flows toward programs that meet evidence thresholds. Frontline teams are expected to implement those programs with fidelity. Data is collected to document adherence. Evaluation is used to determine whether predefined outcomes were achieved.

The result is consistency in how programs are administered, but not necessarily improvement in outcomes. Without structured systems for continuous data collection and learning, teams have no clear way to respond if the promised outcomes stall. Data gets reviewed after the fact rather than during implementation. Staff may not have the authority to adjust course even when problems are visible. Differences across populations or settings are treated as deviations from a model rather than signals that something needs to change.

Where Policy Is Heading

Recent federal policy reflects a continued effort to strengthen evidence-based approaches. The Evidence–Based Grantmaking Act (H.R. 7025), introduced in January 2026, would require 15 federal agencies to prioritize grant awards for applicants using evidence-based practices, conduct periodic evaluations during grant terms, and make those results public. It also directs the Office of Management and Budget to define “evidence-based” within one year and requires agencies to operationalize that definition through rulemaking and public comment over the following year.

The intent is right. Public dollars should support strategies with demonstrated results, and the field has spent decades building the infrastructure to identify them.

But strengthening evidence standards is not the same as building systems that can act on them. The legislation clarifies what should be funded and how results should be reported. It does not establish what agencies and grantees are expected to do when outcomes do not improve under real conditions, which is, in fact, the central challenge the field is grappling with.

What It Means to Govern for Outcomes

A different approach is already taking shape in some places. In Lane County, Oregon, local leaders brought together probation, behavioral health, and community providers to address how people with severe mental illness move through the supervision system, as part of a HUD and DOJ-funded Pay for Success Permanent Supportive Housing Demonstration initiative. The county drew on the Housing First evidence base—a well-established model that prioritizes stable housing before addressing other barriers—but did not require fidelity to any single program model. The organizing question was not which program to implement but whether individuals were stabilizing and avoiding reentry into crisis.

To support that goal, partners made three structural changes. A dedicated parole officer was stationed on-site at the housing development, with a caseload capped at roughly 50 participants—replacing the standard model of monthly office check-ins. A unified system case plan was introduced across corrections, housing, and service partners, replacing siloed individual plans and ensuring everyone working with a participant was operating from the same priorities. And partners established monthly continuous improvement meetings where leaders reviewed a shared performance dashboard tracking housing stability and recidivism in real time, adjusting referral protocols and staffing when results diverged from expectations.

The results to date are significant. Of the 231 individuals placed in permanent supportive housing through the initiative, 87 percent have maintained stable housing. The recidivism rate for program participants—defined as reincarceration for a new felony—has fallen to 11 percent, compared to 26 percent for the high-risk reentry population in Lane County overall. For the first time, the county is seeing recidivism rates for individuals assessed as high-risk on par with lower-risk populations.

This approach places different demands on public systems. Access to outcomes-level data becomes essential. Staff need the ability to interpret that data and the authority to act on it. Coordination across agencies becomes central, not optional. Success is defined by whether outcomes improve, not whether program requirements are met.

Changing how government pays for results is not enough if the systems delivering those results are not built to learn and adapt. What’s required is the institutional capacity to learn whether programs are actually improving lives and to act on what they find. Without continuous learning built into how programs operate, even well-supported approaches will continue to fall short of their promise.

If federal policy continues to emphasize evidence, it can also clarify how systems are expected to respond when evidence does not translate into results. Agencies could require that grant applications specify how data will be used during implementation to adjust service delivery, not only at the end of a grant term. Evaluation could be structured to inform decisions while programs are operating. Guidance on evidence standards could address how systems should proceed in areas where evidence is limited or inconclusive. Without that clarity, agencies will continue to fund programs based on evidence thresholds without a shared expectation for how implementation should change when outcomes stall.

The question the Rikers experience surfaces is not whether evidence matters—it does. The question is whether our policy and systems architecture is built to use it in ways that actually improve lives. Outcomes depend on whether systems are structured to coordinate, to adapt, and to respond to what they are learning. Evidence-based programs can inform those efforts. They cannot substitute for them.