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Nonprofit Management

The Road to Scale Runs Through Improved Donor Strategies

Less donor fragmentation can lead to impact at a transformative scale.

SSIR x Bridgespan: Achieving Transformative Scale SSIR x Bridgespan: Achieving Transformative Scale Achieving Transformative Scale is an eight-week blog series exploring pathways that social sector leaders around the world are pursuing to take solutions that work to a scale that truly transforms society.

After working a collective 35 years as CEO of two global nonprofit organizations, World Learning and Save the Children, I have come to believe that the fragmentation and unrealistic expectations in the donor marketplace account for much of the failure to scale in the social sector. The marketplace includes small donors, mega-philanthropists, foundations, corporations, and government agencies. Very different goals and motivations drive different types of donors, and few understand the duration, magnitude, and types of investments that real impact at transformative scale requires. That makes aggregating donors’ varying expectations into a coherent, large-scale strategy all but impossible.

The exception that proves the rule in my experience is the Saving Newborn Lives initiative led by the Bill & Melinda Gates Foundation and Save the Children. Both organizations saw that newborn mortality accounted for more than 40 percent of all deaths for children under age five in developing nations. To address this issue, the Gates Foundation made a large, multiyear, multicountry commitment to reduce newborn mortality. Since 2000, the foundation has allocated nearly $150 million to fund the upstream elements needed to improve newborn health at scale, specifically: international and national networks and conferences, ministerial and health system capacity-building, policy and legislative reform, operations research and evidence gathering, global health community engagement, and catalyzing government and donor investment at the field level.

This kind of philanthropic work might seem like common sense. It provides long-term commitments for chronic problems; synthesizes global, national, and local investments; coordinates activities of numerous stakeholders; commits funding to essential capacity- and field-building activities; and invests in the establishment of global and national movements that can sustain transformative change at scale. And yet, after more than three decades in the sector, Saving Newborn Lives is the only example I’ve seen first-hand. Every other attempt to achieve impact at scale has required that organizations painstakingly stitch together hundreds or thousands of grants of varying size, each with its own objectives, restrictions, and durations. No coherent whole can emerge from the sum of such disparate parts.

Why is this the case? Most donors focus on short-term, programmatic results. This is unfortunate, because such commitments don’t address the messiness inherent in personal or societal change, or the time and money required to make a serious difference. Furthermore, to many donors, capacity- and field-building sounds like “boring” and/or “wasteful” overhead.

Nonprofit organizations also contribute to donors’ misconceptions. When competing for funds on often-unrealistic marketplace terms, many nonprofits reinforce the illusion that there are simple, quick fixes to complicated problems and that organizations don’t require funding for robust organizational systems. Consequently, nonprofits often end up with short-term, smaller-scale grants that fundamentally inhibit strategic solutions. Moreover, the intense competition for funding in this fragmented market incentivizes a “winner-takes-all” mentality, when the reality is that only deep collaboration will address large-scale problems.

It doesn’t have to be this way. And it’s not just the Gates Foundation that can do things differently. Smaller donors can come together to form leadership groups that drive long-term solutions at scale. As a coherent team, they can pool investments and make aligned, long-term commitments to capacity building, policy change, and evidence gathering. Larger frameworks, such as the Millennium Development Goals, can help with this, providing global, national, and local stakeholders with a common work plan and timetable. Universities and think tanks can help set such agendas by organizing their research and recommendations around more concrete, multi-stakeholder initiatives.

The first and most important step is for major international donors in various sectors to congregate more regularly and commit to pool funding around shared large-scale strategies that use many organizations to implement. The process undoubtedly will be painful, but given the scale of today’s global problems and opportunities, the pay-off will be enormous.

Just as rays of light have little impact when scattered widely, but can cut through steel when tightly focused, so it is for donors’ efforts. In the Saving Newborn Lives initiative, the Gates Foundation used concentrated financial and convening power to dramatically improve a long-term global health problem. The Rockefeller Foundation did the same in decades past to support agricultural research and the Green Revolution. Other foundations and philanthropists supporting a great many global issues could play the same strategic role by coming together and agreeing on common strategies, time frames, and multi-stakeholder grants. I firmly believe that if we can reduce donor fragmentation and adjust unrealistic expectations, impact at a transformative scale will follow.

See more from SSIR x Bridgespan: Achieving Transformative Scale

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COMMENTS

  • BY Lori Bartczak, GEO

    ON May 15, 2014 10:24 AM

    Charles, thank you for raising such a critical issue in our sector and illustrating it with such a great story. Grantmakers for Effective Organizations has data from our national study of philanthropic practice that underscores your argument here. From our research, we have found that only 20 percent of all grant dollars are given in the form of general operating support, and only 14 percent of staffed foundations in the US say they often, almost always or always make multiyear grants of two years or longer. And we know from Foundation Center Data that the median grant size is $20,000. These are hardly the size and type of investments that will fuel transformative scale. Hopefully more funders will decide to make larger, longer and more flexible contributions to the organizations that matter most to them in order to grow their impact.

  • BY Alice Casey

    ON May 15, 2014 02:46 PM

    Thanks for sharing your thoughts on this area. I’m really interested in what role you think there is for opening up grantmaking data when enabling cross-funder/ themed collaborations to invest more effectively and act over the long term. I’m working on an initiative to encourage publication and use of open of grant data at the moment at http://www.threesixtygiving.com based in the UK so thinking about related questions from a data and analysis point of view. Be great to get your thoughts.

  • BY Amma Aboagye

    ON May 16, 2014 10:10 AM

    FINALLY! Thank you so much for saying this. The NGO’s, in my opinion, are largely to blame for trying to sell ‘cost effective, easily scaled’ ideas. Donors are not experts. NGO’s are supposed to ‘experts’ in one way or another, therefore if they are touting silver bullets, then donors can only oblige. There is also the ideas about the complications of rendering government obsolete when such long term projects are scaled, such as the example with the Gates foundation. I agree that the problem is nuanced and the politics and foreign policy play a part as well, but I think that the message about coordination and collaboration is salient. And it is so great to hear someone senior in the NGO field say what I have been feeling for the last two years.

  • BY Brenda Herchmer

    ON May 19, 2014 02:40 PM

    I do agree new donor strategies are important because we won’t be able to address any of our respective challenges without getting everyone to collaborate for collective impact. But perhaps even more important is the need to invest in leadership development because ultimately communities get better when their leaders get better. None of the change we want to see will happen without knowing and trusting one another. Trusted relationships, and collaborative and interlocking networks and webs are an essential foundation if we are to grow our capacity to do the meshwork that will be essential for addressing complex issues and challenges. The transformation we are all seeking needs to originate from within and that means strong and prepared leaders able to think within a futures context. 

  • BY Caroline Avakian

    ON June 23, 2014 07:49 AM

    Thank you for this wonderfully articulated and insightful article on what we all know we should be doing better. I really like the idea of funder ‘leadership circles’ around global development priorities/MDGs, creating what we in the #globaldev communications circles call a ‘thunderclap’. We need more thunderclaps around funding priorities.

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