Strange that the author doesnt mention that the social business models used by microcredit and other Bangladeshi microentrepreneurs have 30 years experience in sustainable systems
I’m interested in why Growth Capital needs to be limited to later stage nonprofit development and requires that growth capital be restricted to nonprofit revenue success? How many years did it take Amazon to return a profit?
I believe that many more nonprofits would find significant gain and greater growth if funders were willing to make substantive investments in the fund development capacity of promising nonprofits. In their case study of the Steppenwolf Theatre, the Nonprofit Finance Fund points out that the theatre didn’t make significant progress on developing the philanthropy they needed to supplement their ticket revenues until they received the funding to put a DOZEN people in their development department.
Without this type of significant development, most nonprofits are lucky to get one development staff member funded by their local community foundation. This usually does not produce the substantive gains that one would hope.
Lacking any avenues for raising significant investment in revenue development, my observation is the path to grow is limited to one of two tracks: executive directors or board members have the ability to access wealthy donors through their own class affiliation and thus can harness philanthropic revenues (whether family foundation, individual or corporate giving), or, for those who class background is more modest, they find growth through their ability to access significant government funding in a more open process.
The nonprofit that lacks access to wealth through a deficit of class connections, or whose mission does not align with government opportunities (often advocacy groups), finds its growth path much more limited.
We began the Breast Cancer 3-Days with an approximate $350,000 seed investment. That turned into $194,000,000 in NET revenue within 60 months. We began the first AIDSRide with a $50,000 seed investment. That turned into $108 million NET in nine years. Most of what is called “venture philanthropy” is the funding of innovative program models. This is not what’s needed. A lack of innovative program approaches has never been the problem. The sector lacks the revenue to bring them to scale. Foundations should start providing seed money for experimentation with new revenue streams, and let those revenue streams fund programs to scale. This concept seems to be nearly completely lost on institutional funders, most of whom don’t have an entrepreneur among them, so they’ve never internalized or appreciated this simple reality. We have to stop annihilating the potential of foundation capital with program grants and start using that capital to fund new ways to create capital.
The article is very interesting, however, as soon as the potential donors see that it is a nonprofit organisation concerned with social services, such as in our case, disabilities. It would appear that we are no longer a viable group to invest in.
COMMENTS
BY chris macrae
ON September 5, 2008 04:53 AM
Strange that the author doesnt mention that the social business models used by microcredit and other Bangladeshi microentrepreneurs have 30 years experience in sustainable systems
BY Gayle L. Gifford, ACFRE
ON September 16, 2008 10:06 AM
I’m interested in why Growth Capital needs to be limited to later stage nonprofit development and requires that growth capital be restricted to nonprofit revenue success? How many years did it take Amazon to return a profit?
I believe that many more nonprofits would find significant gain and greater growth if funders were willing to make substantive investments in the fund development capacity of promising nonprofits. In their case study of the Steppenwolf Theatre, the Nonprofit Finance Fund points out that the theatre didn’t make significant progress on developing the philanthropy they needed to supplement their ticket revenues until they received the funding to put a DOZEN people in their development department.
Without this type of significant development, most nonprofits are lucky to get one development staff member funded by their local community foundation. This usually does not produce the substantive gains that one would hope.
Lacking any avenues for raising significant investment in revenue development, my observation is the path to grow is limited to one of two tracks: executive directors or board members have the ability to access wealthy donors through their own class affiliation and thus can harness philanthropic revenues (whether family foundation, individual or corporate giving), or, for those who class background is more modest, they find growth through their ability to access significant government funding in a more open process.
The nonprofit that lacks access to wealth through a deficit of class connections, or whose mission does not align with government opportunities (often advocacy groups), finds its growth path much more limited.
BY Dan Pallotta
ON September 18, 2008 04:33 PM
We began the Breast Cancer 3-Days with an approximate $350,000 seed investment. That turned into $194,000,000 in NET revenue within 60 months. We began the first AIDSRide with a $50,000 seed investment. That turned into $108 million NET in nine years. Most of what is called “venture philanthropy” is the funding of innovative program models. This is not what’s needed. A lack of innovative program approaches has never been the problem. The sector lacks the revenue to bring them to scale. Foundations should start providing seed money for experimentation with new revenue streams, and let those revenue streams fund programs to scale. This concept seems to be nearly completely lost on institutional funders, most of whom don’t have an entrepreneur among them, so they’ve never internalized or appreciated this simple reality. We have to stop annihilating the potential of foundation capital with program grants and start using that capital to fund new ways to create capital.
BY Dr. Yinka Akindayomi
ON September 20, 2008 11:48 PM
The article is very interesting, however, as soon as the potential donors see that it is a nonprofit organisation concerned with social services, such as in our case, disabilities. It would appear that we are no longer a viable group to invest in.