Heather PeelerBuilding and buying your way to sustainability

By: Heather Peeler In: Philanthropy

15 Oct 2013

As much as we’d like to, we can’t predict the future. However, we can ensure the future outlook for effective programs and nonprofits is vibrant. At a recent meeting of grantmakers and nonprofits receiving funding through the federal Social Innovation Fund, Tulaine Montgomery from New Profit Inc., Kate Dempsey from the NYC Center for Economic Opportunity, and Antony Bugg-Levine from the Nonprofit Finance Fund had a conversation with colleagues about what it takes to create resilient, sustainable programs and organizations.

Putting organizations and programs on the path to sustainability is not easy and there are many different approaches to take, yet grantmakers have an obligation to think about and work with their grantees on this issue. For some, sustainability is a factor of organizational health, and in particular an organization’s business model. When nonprofits generate repeatable, predictable income, they have the resources to support their organization over time. For others, sustainability looks like an ecosystem — a constellation of organizations, policies and funding sources working in concert to support long-term solutions. And yet others embrace a blended definition with elements of both the organizational and ecosystem approaches.

Regardless of how they defined the end state, all three leaders agreed that grantees need both flexible money and capacity building support in order to achieve sustainability. The Nonprofit Finance Fund’s buyer vs. builder framework is a useful framework for understanding grantmakers’ roles in supporting organizations. Buyers are grantmakers who pay for program delivery, buying services on behalf of the community and a nonprofit’s beneficiaries. Builders are grantmakers who invest in grantee capacity — the planning, R&D, talent and systems that are required to build strong, adaptable organizations. To achieve results over the long term, organizations need both types of support. For example, CEO invests in piloting and expanding poverty-alleviation programs to different cities, collecting a base of evidence about what works best and for whom. This evidence is used secure more buyers by building a case for state and federal policymakers to fund successful programs. New Profit’s grantees receive extensive strategic and technical support and coaching to build out their fundraising programs and other capabilities so that at the end of the grant period, the organizations are able to raise significantly more funds. Like CEO, New Profit is building grantee capacity to secure more buyers.

If the goal of sustainability is to improve lives and communities, what can grantmakers do to help strong and effective organizations create lasting change?

· Have a conversation with grantees about sustainability on day one of the grant cycle, not near its end. Engage grantees in conversation early on about what sustainability might look like and how you can work together to support it.

· Be clear and transparent about your investment in grantee organizations. Are you providing build money, buy money or both?

· Invest in grantee capacity to use evaluation as a tool for learning and improvement. You and grantees need to understand what’s working and why, what tweaks need to be made and what new skills need to be developed. Consider indicators of program impact, as well as performance measures that assess organizational strength.

· Be a funder and fundraiser. Provide grantees with the flexible resources they need and make introductions to help grantees connect with other grantmakers and networks.

· Partner with other grantmakers and community leaders to align resources and assets to create an ecosystem that supports sustainability.

As with many aspects of social change, there is no one-size-fits-all approach or strategy when it comes to sustainability. It’s also not too late to get started. The future of our communities depends on it.

Heather Peeler is VP of programs at Grantmakers for Effective Organizations.

1 Response to Building and buying your way to sustainability

Dan

October 22nd, 2013 at 5:19 pm

Thanks for the post, Heather. I agree that NFF’s distinctions are important and your points well made. However, I would also say these have been known for some time. The real question is how do we get funders to see it this way? Blog posts and PDFs don’t seem to be moving the needle. What do you think it will take for foundations and others to really embrace this model?

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