Most successful nonprofits operate in a silo by design. To stay on mission, they narrowly focus their programs and projects. They serve a particular need and identifiable group of people and their donors and volunteers reward them because they do.
This formula worked exceptionally well until recently. Nonprofits are starting to feel a real crunch in their pocketbooks. In short, fundraising is getting even more difficult. With Baby Boomer donor decreasing and Millennials expressing their generosity in service and hospitality, nonprofits are scrambling for new streams of operating revenue.
At the same time, many foundations and larger funders are now looking for nonprofits to demonstrate their operational competency before funding their organization, programs, or projects. This is new for nonprofits. Until very recently, nonprofits simply had to request the needed funding from sympathetic larger funders with similar sensibilities through a simple proposal process.
Nonprofits want more funding. Funders want more confidence.
It is interesting to note that larger funders have always been more sophisticated than most of their nonprofit counterparts and have always had their own philanthropic objectives. These funders, now more than ever, feel an incredible burden to invest their charitable funds with worthy programs that not only match their agendas but exhibit the competence and capacity to do what they say they will.
Traditionally, nonprofits just provided compelling success stories supported by their financial track record to accompany their funding requests to prove capability. About a decade ago, the concept of Performance Philanthropy started to gain momentum in the financial media and entered the funding conversation.
The spirit behind Performance Philanthropy is that philanthropy is similar to investing and should be treated with a similar level of discipline. Although many larger funders would not specifically identify with Performance Philanthropy or any of the derivative philosophies, the concept has changed the the charitable landscape forever.
Here is a simple five-step plan for nonprofits and funders to consider to expand beyond the organizational boundaries to achieve their respective objectives:
Step One: The Project
The nonprofit defines the need with objectives, timelines, and funding requirements.
Step Two: The Invitation
The nonprofit invites the funder to review, comment on, and collaborate on the project.
Step Three: The Collaboration
The nonprofit and funder work together to make the best plan possible while meeting respective objectives.
Step Four: The Delivery
The nonprofit implements the plan and the funder receives real-time updates and ongoing communications.
Step Five: The Impact
The nonprofit demonstrates competency. The funder gains confidence. Lives are changed.