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Strengthening the “Nonprofit Ecosystem”

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Sometimes the most important places to read about philanthropy and the non-profit sector are in publications outside the sector. Clay Holtzman’s piece in last week’s Puget Sound Business Journal is a good example because he looks at everything from a different vantage point.  His article about the Nonprofit Ecosystem report stresses a fundamentally vital issue:

The best investment one can make in a non-profit is to build the nonprofit organizational strength, not just the program.

That resonates with SVP and me not just because that’s our core strategy for working with our nonprofit investees, but because we have seen how vital it is time and time again from our first hand, on-the-ground experiences working in and with nonprofits.

The organization is the foundation upon which programs are delivered; if the organization is weak, then the programs ultimately will be too.  Everyone loves to fund the “program that helps the kids,” but they put a too narrow focus on funding those programs at the expense of the underlying organization.  It’s always puzzling how so many private sector philanthropists will decry organizational expenses at nonprofits when they would never shortchange organization-building for the companies they are a part of.

If I could clarify one line in Clay’s article it would be this one: “By funding administrative services and even shared resources rather than specific programs, grant makers can help nonprofit organizations …”

“Administrative,” is too limiting a term.  Organization-building investments are not just “overhead.” These are often investments in the nonprofit’s most important asset, its people (e.g. leadership and board development, human resources and management trainings, etc.). No private sector company would call all of its people “administration” or “overhead” and yet that is what happens far too often in the nonprofit sector.

Just to be clear, I am not implying that it’s an either/or situation – fund the organization or specific programs.  It’s both. Just be sure the program and the organization are properly funded.

So where will the Nonprofit Ecosystem report go from here? If no one takes action, it’ll gather dust in that long file drawer we all have that includes unused strategic plans, business plans, etc.  We are determined to keep that from happening.  SVP Seattle and the other six funders of the study have committed to jointly funding two or more of the recommendations the report makes to foster a thriving nonprofit ecosystem (e.g. an building an information & referral system, developing a Nonprofit 101 curriculum, etc.).

Strengthening the whole nonprofit sector is just as important as strengthening individual nonprofits. If we do the former, more of the latter will happen as a natural consequence.

The recommendations of the Nonprofit Ecosystem report would be important at any time, but they are doubly important given the economic and social conditions over the last 18 months. The needs in our community have grown and the importance of having strong nonprofits to meet those needs is more critical than ever.


If funders could do ONE thing to strengthen the “nonprofit ecosystem,” what should it be?


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