An important aspect of equity capital in for-profit world is the easily measurable outcome: profits.
I agree above with the need for funders to align in establishing clearly measurable and reportable outcomes in the nonprofits. Nonprofit investors with an equity capital mindset will demand, just as do more and more regular donors, clear indicators that their investments are producing the promised social returns.
As these outcomes become more standardized (and focused on results like people served, not on process—like fundrasing and administrative cost percentages), we will realize important progress in the idea of nonprofit equity markets.
Imagine the cost an inefficiency of requiring a for-profit enterprise to prepare a separate, customized annual report for each individual stockholder! Yet that is what funders sometimes expect of nonprofits.
The distinction between ‘buyer’ and ‘builder’ is right on the money or lack thereof. Our primary buyer is the public sector which has systematically raised the outcome expectations while holding their purchase price nearly static. This dynamic has forced us to supplement their investment with private support from any and all sources just to stay in the high stakes accountability game.
While we have articulated a new cost-per-outcome business model we hope to implement to normalize the inputs, outputs and outcomes produced by each of our forty-one local ‘retailers’, we can’t generate the equity capital to support the research & development and take the new systems to scale. There is no surplus in the operational budget to spend on organizational development; everything nickel is being spent on services.
COMMENTS
BY Varden Hadfield
ON June 30, 2008 03:23 PM
An important aspect of equity capital in for-profit world is the easily measurable outcome: profits.
I agree above with the need for funders to align in establishing clearly measurable and reportable outcomes in the nonprofits. Nonprofit investors with an equity capital mindset will demand, just as do more and more regular donors, clear indicators that their investments are producing the promised social returns.
As these outcomes become more standardized (and focused on results like people served, not on process—like fundrasing and administrative cost percentages), we will realize important progress in the idea of nonprofit equity markets.
Imagine the cost an inefficiency of requiring a for-profit enterprise to prepare a separate, customized annual report for each individual stockholder! Yet that is what funders sometimes expect of nonprofits.
BY Kevin Smith
ON July 31, 2008 01:17 PM
The distinction between ‘buyer’ and ‘builder’ is right on the money or lack thereof. Our primary buyer is the public sector which has systematically raised the outcome expectations while holding their purchase price nearly static. This dynamic has forced us to supplement their investment with private support from any and all sources just to stay in the high stakes accountability game.
While we have articulated a new cost-per-outcome business model we hope to implement to normalize the inputs, outputs and outcomes produced by each of our forty-one local ‘retailers’, we can’t generate the equity capital to support the research & development and take the new systems to scale. There is no surplus in the operational budget to spend on organizational development; everything nickel is being spent on services.