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The Multiplier Effect

By

Aleem Jivraj

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3 minutes read

In the private sector, there is a widespread understanding that to build a top-tier organisation, investments need to be made in our people and platforms. A lot of time and money is invested in training, succession planning, technology enhancements, research and development, and other capital investments that are expected to generate a higher return.

Unfortunately, in the non-profit sector, there has always been chronic underinvestment in organisational capacity. In fact, many donors and funders prefer to see as small a percentage as possible spent on management and operations, with most of their support directed to projects and programs. Efficiency ratios are still one of the most common ways to assess if a nonprofit is worth supporting.

This is not for lack of good intentions. It largely stems from a desire for donors and funders to see immediate and tangible impact numbers for their support. 

But the implications of this underinvestment are huge. Local civil society organisations doing great work can survive, but cannot thrive. 

Imagine a world where these organisations are growing. Growth for a nonprofit can take on many different forms – physical scale, influence, depth, sustainability. As an example, Lend a Hand India (LAHI) prepares youth for employment and entrepreneurship by integrating vocational education with mainstream education. Receiving flexible funding allowed them to take their jobs skills training program to the next level by developing a module on non-traditional livelihoods for girls and young women, challenging gender-stereotypes, and piloting their train-the-trainer program, helping tens of thousands of young people. This type of funding also allowed them to scale up to other Indian states, train other organisations in India and importantly, to partner with the Indian government, allowing the program to be implemented in government schools. 

One of the pioneers in this space is Ford Foundation, who have created a program called BUILD, which gives a billion dollars in grants to nonprofits and allows them to decide how to spend the money, whether it be adding staff, or new computers. Darren Walker, the President of the Ford Foundation, said: “All of the unexciting parts of a nonprofit have to be paid for– technology and infrastructure, paying the rent. It is both arrogant and ignorant to believe that you can give money to an organization for your project, and not be concerned about the infrastructure that makes your project possible.” Ford Foundation has been at the forefront of championing investments in organisations, their staff and their technology.

And others are following suit, for example the ATE Chandra Foundation in India are intentionally funding organisational strengthening. Another example is EMpower – as a funder, their grantee partners receive 50% of funds as flexible from day one, and by the end of their 10-year partnership 100% of funding is flexible. As a public foundation themselves, all of their overheads are covered by a group of underwriters. Global Fund for Children has assumed a flexible approach to funding since their inception 30 years ago.

If more funding is unrestricted or allocated specifically to capacity building, some priority focus areas include: 

  • Talent development and training – examples include Ashoka, building a community of changemakers, and the Acumen Fellows Network, supporting social entrepreneurs to build their businesses and learn from their peers
  • Investment in infrastructure and new technologies to enhance productivity.
  • Succession planning –an area many nonprofits need to enhance but struggle with due to capacity issues.
  • Convening nonprofits to learn from each other –EMpower connects its grantee partners across the globe— offering time and space to share learnings and build collective knowledge. 
  • More research/advocacy on key issues and examples of system failures 

There is no doubt the movement to give more unrestricted funding is positive, but there is more to be done. Nonprofits need to educate donors and funders about the multiplier effect that investing in capacity building can have. It is a catalytic resource. If we invested in nonprofits the way we invest in for profits the results would be transformative and can have massive ripple effects in the communities where these organisations work. 

References

A. Environmental Stewardship
To protect the environment, we organize programmes like mangrove nursery and Reforestation, Coastal and River Clean-Up, Community Based Environmental Solid Waste Management, Environmental IEC Campaign and Eco-Academy

B. Food Security and Sustainable Livelihood
To ensure a sustainable livelihood for the community, eco-tourism include Buhatan River Cruise Visitor Center Buhatan River Mangrove Boardwalk are run by the community. Others include Organic Vegetable and Root crops Farming, Vegetable and Root crops Chips and by-products Processing and establishing a Zero waste store.

C. Empowered Communities
To empower the community, we provide product and Agri-Enterprise Development Training, Immersion and Learnings Exchange Program, Earth Warrior Training and Community Based Social Entrepreneurship Training

Author

Aleem Jivraj

COO, Global Markets at Nomura and Co-Chair of the Asia Board, EMpower

Aleem Jivraj is the COO, Global Markets at Nomura and Co-Chair of the Asia Board, EMpower – The Emerging Markets Foundation. Over the last 10 years, he has been active as a funder and supporter of many philanthropic organisations, particularly in Asia. In this bi-monthly blog he hopes to share his insights into how the skills, experience and mindset of the private sector can be harnessed to achieve sustainable impact over the long term for young people and their communities.

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