Out of Philanthropy's Funding Maze
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Published in 2008
Roadmap #1: Strategic Co-Funding
This is the first article in REDF’s “Out of Philanthropy's Funding Maze” series, which has developed out of our concern for the funding environment in which nonprofits carrying out critical social change work must operate. The series of three articles explores ways that private sector financing practices, especially those in private equity and venture capital, can be adapted to improve practices in nonprofit funding. We are grateful to The Aspen Institute’s Nonprofit Sector and Philanthropy Program for funding critical elements of this series.
The types of funding available to nonprofit organizations and the processes for accessing funding are limited, restrictive, and confusing. Compared with for-profit firms’ fundraising activities, nonprofits’ search for funding is more idiosyncratic, circuitous, and expensive with more uncertain and impermanent results. This dysfunction continues to be a concern and an impediment to social mission supporters. We want our community initiatives to solve complex problems. But until we change the ways they access capital, we can’t expect them to succeed. They require more money, more efficient money, and more stable money.
This publication is accompanied by a tool - "Strategic Co-Funding : A Diagnostic Tool" - that is designed to help an organization (or individual) determine whether Strategic Co-Funding is a good fit with its goals, mission, and processes.
The tool is meant as a starting point for discussions among the leadership of your organization about what types of funding structures can best meet your organizational needs. You may want to consider having each person answer the questions separately and then compare answers, or answer the questions through a facilitated group discussion.
