Foundations are increasingly challenged to create significant impact as the severity of causes escalates. One of the strongest assets a foundation has is its network of sponsors, partners and nonprofits. Foundations have a critical role to play in the ecosystem, specifically, integrating their network. They are the drivers – raising awareness, identifying solutions and providing structure to tackle some of the biggest challenges we face. But solving some of the world’s biggest problems is not easy. And while foundations have the capital and influence to make a significant difference, they need nonprofits, among others, to be as effective and efficient in their execution as possible to deliver the services that impact their chosen causes. So, if foundations are the strategic giving organizations and nonprofits are the tactical doing organizations, how do they create the alignment that delivers the best investment value and impact over time?
In this article we will explore key aspects of foundations that are aggressively focused on making long-term substantial impact:
- Foundation Impact
- Ecosystem positioning
- Network alignment & integration
- Nonprofit evaluation
- Nonprofit competitive responses
- Grand challenges
The role foundations play in local communities, regions, nations and globally is irreplaceable, as is their impact on the quality of lives around the world. In fact, numerous foundations have financial assets in the millions of dollars and some even in the billions. But leading foundations are restless. They continually ask, “how do we create an even bigger impact with our significant assets?” Forward-looking organizations are answering that question by recognizing that there is a direct correlation between the causes they choose and their relation to the world’s grand challenges.
Most causes have layers of challenges, with many organizations working at different levels. A foundation can be instrumental in aligning efforts across the layers for maximum impact. The foundation balances reactive and proactive responses. In addition, they engage in integrating a multi-tier response. Multi-tier responses expand a foundation’s sphere of influence to tiers of causes, both horizontally and vertically, thus impacting not only symptoms but root sources.
The exploration efforts of innovative foundations keep their organizations on the pulse of the causes they are trying to eradicate or support. This includes regularly assessing their current role in the ecosystem and intentionally identifying the organization’s next and future roles. The decisions foundations make about their intended influence inform them about what to invest in as well as stop prioritizing. Progressive organizations are investing in specific new capabilities, new assets, and new partnerships.
Ecosystem Alignment & Integration
A single organization cannot solve the broad challenges alone and embraces the partnerships with other foundations and nonprofits that are essential to scaling. There are a number of models to choose from as foundations navigate their way to working most effectively with NGOs, governments, corporations, industry consortiums, and learning organizations, to name a few. Attraction of others to invest in furthering the cause is paramount for long-term, sustainable progress.
Attractive organizations have six key capabilities. The two highlighted here are the alignment and integration of resources. The alignment of resources ensures critical roles are filled, gaps are minimized and opportunities for amplified impact are identified. Alignment assessments provide tools for leadership to clearly see the status of the 12 key alignment components. This is akin to due diligence prior to investment. The more mature the alignment, the more accelerated the integration. Exponential impact occurs with the seamless integration of partnering organizations. Foundations that effectively track and report the related alignment and integration metrics can better evaluate and incrementally improve on these essential areas.
Nonprofits are essential to advancing the progress as the ‘program implementors’ of causes. As foundations seek to efficiently and effectively build teams to execute, they look to engage fiscally strong and agile nonprofits. Two key challenges arise for both foundations and nonprofits: (1) Many nonprofits have quality expertise in their key service areas but their organizations are not healthy and sustainable and, therefore, not attractive to foundations and (2) the new criteria foundations are using to measure the viability of nonprofits to be an agile ecosystem partner requires data that is new to them and they are ill-equipped to provide. Given this dilemma, foundations are realizing that this has presented a key opportunity for them to strengthen nonprofits’ capabilities and in doing so improve the foundation’s investment confidence, return on investment and impact.
In an innovative new model, foundations are investing in shared services for nonprofits. They fund and provide access to the services that nonprofits are not competing on. Shared services are essential accelerators for the nonprofits. Foundations that provide access to and funding for quality shared services reap the benefits of consistent nonprofit information and the ability to evaluate the nonprofit on its direct services. Over time, the nonprofit’s relationship with the foundation matures and the commitment to funding can increase.
Nonprofit Competitive Responses
Today, nonprofits concerned about their futures are focused on creating sustainability and diversification for their organizations. They are well aware that models based on annual fundraising are too risky. Particularly susceptible are those focused on social causes supporting the most vulnerable in our communities and dependent on government funding. In addition, even the smallest nonprofit is impacted by the global, mega, industry, stakeholder and organizational trends. To respond, progressive boards are pushing beyond the traditional nonprofit mentality of primarily being donor-funded. They are aggressively pursuing diversification for sustainability and attraction as a way to not only survive but thrive. Nonprofits exploring diversification are considering both financial and non-financial diversification. Financial diversification is focused on new offerings that generate new revenue for sustainability. Non-financial diversification is about attracting others by expanding the organization’s influence. Both provide for the incremental advancement of the organization to deliver linear and exponential value. The ability to demonstrate this diversification is a key differentiator foundations are seeking. The timing to move in this direction is now and for most nonprofits, it is no longer optional. It means that nonprofit boards have a whole new exciting role to play in positioning their organizations for the future.
Many foundations have disparate causes and fail to see the opportunity to align to the grand challenges and adjacent and emerging initiatives. One of the greatest opportunities foundations have is to strengthen and bring along the ecosystems that implement the solutions aligned to the world’s grand challenges. A strategic direction for foundations will be to align their causes to larger societal and environmental grand challenges. As the world ever increasingly struggles to face the grand challenges, sponsorship and donor money will be increasingly focused at meeting the root causes.
Foundations are uniquely positioned to drive transformational change for maximum impact. They have the funding to respond to large-scale crises as well as the influence to proactively alter the way we live, learn and prosper. Their impact is limited only by their board’s vision, leadership’s ability to innovate and partner, and the organization’s capabilities to scale. Foundations that can create assets will continue to attract other funding and unlock opportunities to make a bigger impact. As foundation leaders explore what’s really possible for them to solve or prevent, they will become increasingly challenged to make it happen. Nonprofit leadership roles are also evolving, and to survive boards are becoming much more aggressive in securing their organization’s future.
Is your foundation creating its greatest impact?
- Does your organization have the right decision support tools to align the ecosystem to drive higher impact across all tiers of the cause?
- Do you have the right support and partnership models to create a stronger ecosystem?
- Can you create a more sustainable investment model to support the cause long term?