NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

One decade ago Paul Collier sought to explain how traditional aid isn’t working in his piercing book “The Bottom Billion.” In the ten years since, inequality has continued to get worse and the United Nations has released its Sustainable Development Goals to attempt to address urgent problems before they become insurmountable.

A slew of reports over the last two years from the more progressive spheres of the social good sector shows that philanthropy cannot continue with “business as usual” if we hope to actually achieve these goals. Whether they’re involved in nonprofits or social enterprises, the changemakers of the future will be working with new rules, as the landscape of philanthropy is constantly changing—handouts and empty promises simply don’t cut it. Below, we share the top 12 lessons from three reports by The Michael and Susan Dell Foundation, the Global Accelerator Learning Initiative (GALI) and InsideNGO (INGO).

1. Money Can’t Solve Problems (And Sometimes it Creates New Ones)

People, not money, solve problems. According to a recent report from the Michael and Susan Dell Foundation, “Once considered the exclusive province of the wealthy, philanthropy now invites — and even demands — a mix of money, time and talent.” It is increasingly becoming a truism that not all donations or volunteer projects help. In fact, many perpetuate problems or create new ones. According to Thashlin Govender, program director, Dell Young Leaders, “Some philanthropists don’t fully grasp or have an understanding of the actual problem — and it could result in them causing more harm than good.” Pretending that you created change because you spent millions doesn’t work anymore. Though capital continues to be an important part of social impact operations, it isn’t the be-all-end-all that philanthropists of the past believed it to be.

2. Focusing on For-profit Social Enterprises Will Create Sustainable, System-level Change

A recent report by GALI, a collaboration between Social Enterprise @ Goizueta at Emory University and the Aspen Network of Development Entrepreneurs, points out that “This imperative to double down on entrepreneurs who establish ventures with potential for substantial growth leads to a focus on how we can identify and then accelerate promising early-stage ventures in places where development challenges are greatest.”

These enterprises are redefining social capitalism and using market forces for good. Businesses that sustain themselves are a long-term solution as opposed to momentary stop-gaps based on opportunistic funding or volunteering.

3. Donors and Volunteers Must Bring Partnerships to the Table

According to the INGO Amplify report, donors should “provide opportunities for new types of partnerships and approaches.” Indeed, especially in international exchanges, donors and skilled volunteers can help accelerate, innovate and make invaluable connections that create long-term impact. Introducing changemakers to networks amplifies the progress they can create and, as we have seen, can be a much more important force than simply donating money. As corporations embrace corporate responsibility as a fundamental part of their brand rather than a brief opportunity for PR, partnerships with large corporations will become more attractive and common.

4. Organizations Need More than Money from Donors

According to the Dell Foundation, respondents to a survey on philanthropic contributions showed “the majority of our survey respondents felt donors should contribute in other ways as well, whether that is by providing access to their networks (56 percent), sharing strategic direction and support (51 percent) or assisting with enhancing visibility and advocacy (50 percent)”

It’s becoming clear that writing a check and thinking you’ve made a difference isn’t going to create the sustainable change we all hope for. Organizations need the networks, connections, expertise and skills that donors have to offer, not just their wallets. When wielded correctly, these can have a much greater impact than throwing money at a problem.

5. Donors Might Actually be Taking the Long-Term View

Nonprofits are greatly impacted when donors assign ratings — and adjust donation sizes — based on the arbitrary measurement of operational overhead. According to Dan Pallotta, “the way we think about charity is dead wrong.” The desire to only fund immediate impact and know that every dollar is saving lives today means that nonprofits have to take an even shorter-term view than notoriously short-sighted publicly traded companies. The Dell Foundation shared that, “More than 50% of our survey respondents identified a long-term view as the single most important trait that will define effective philanthropists of the future.”

Effectively tying their long-term vision to your day-to-day activities gives nonprofits a greater sense of agency and relevancy in the changing world of philanthropy. It’s also important to communicate this clearly, as donors are increasingly looking for a big-picture view of the future.

6. An Investment in People is an Investment in Growth

GALI data show “Emerging market entrepreneurs have more-than-adequate educational experience and technical competence, according to data and interviews. However, investors often point to a lack of entrepreneurial experience among founding teams.” This is reflected in the following emerging market investor quote: “We often see great technical ability, but significantly lower entrepreneurial ability.”

Simply stated, the skills, passion and experience of social change agents are vast, however there are some fundamental skills sometimes missing that hinder progress. Investing in change agents by helping them develop skills, connecting them to skills training, and encouraging professional growth is an investment not only in the current enterprise, but also in the long-term growth of the team members.

7. Measurement is (Finally) Getting Smarter

Well, at least a little bit. What matters is not only what is measured, but also WHEN it’s measured. Maryana Iskander, CEO of Harambee Youth Employment Accelerator, emphasizes that “There is a difference between being data-driven and data-intelligent. The question is not: Do you have data? It is: How do you use your data? Are you learning the right things?” According to the Dell Foundation, “Forty percent of our survey respondents pointed to improved measurement practices as the most significant positive change brought about by technology disruption in the social impact space.”

Evaluating your program in real-time is becoming necessary to assess its effectiveness and make changes now instead of years down the road.

8. We Must Address Capacity Issues

In the INGO Amplify report, 90 percent of respondents provide technical assistance or other training, and the most popular benefit of increased investing is the technical assistance and capacity building that comes with it: 100 percent of respondents expressed interest in providing technical assistance and capacity development. Technical assistance is invaluable for building and maintaining a business plan, attracting business and scaling up. Though many organizations provide this on a case-by-case basis, a structured, organized method to streamline this process is crucial.

9. Cross-Sector Collaboration is Vital to Progress

As the problems that we seek to address are increasingly systemic, it’s critical that we work collaboratively with diverse people from varied organizations. According to the Dell Foundation’s research, “Today’s impact professionals recognize the power of cross-disciplinary approaches in addressing tough social challenges. In fact, we’re seeing a renewed emphasis on collaboration between organizations with vastly different capabilities, approaches and purviews. Among our survey respondents, 79 percent said they want to see more business-nonprofit collaboration, 75 percent want to see more government-nonprofit collaboration, and 64 percent want to see more business-government collaboration.”

Reaching out, creating networks and offering to connect others is essential to optimizing the work we do.

10. Networks Fuel Growth, But Are Hard to Build

In the GALI report studying entrepreneurship around the world, the most important benefit of accelerator programs was strategic advisors and mentors who help develop business strategy improvements and make connections. In an interview with a project manager, it was noted that: “Peer networking with other accelerator alumni, continued relationships with mentors, and active connections to other service providers or funders matter. Accelerators, and their funders, should think about these important services.”

Helping form these connections and building new networks is an indirect but powerful way to set off a chain reaction that builds resources and increases impact. However, from our experience supporting social enterprises around the world, we see that networks are not always available locally. Those that do exist are often under-developed, and it can be tough for entrepreneurs to identify the right way to tap into them and then harness them.

11. We Can’t Just Talk About Sharing Failure, We Have to Embrace it

The majority of nonprofits express a desire to be more innovative, welcome failure, and learn by sharing it with others. However, the reality is that only a small minority actually are willing to share. The Dell Foundation explains, “Why are people more interested to hear what’s not working? We want that information because it’s immensely instructive. We all want to know which pitfalls we can avoid in our own work. Most of the time, though, each of us has to find out for ourselves: Only 14 percent of respondents feel that their peers often share their failures. We’re running in parallel, but not in sync.”

Being open and admitting that your system might be flawed is the first step to improving it. In fact, having senior leaders set a culture for embracing failure is a necessity! This information is crucial to helping your organization grow but also increases the success of other social impact groups.

12. Using Innovation to Tackle System-level Issues

As renowned philosopher Slajov Zizek explains when talking about curing cleft lips, “if you just operate the child they will live a little better but in the same situation that produced them.” The time needed to solve these long-term issues is vast, but thanks to the social enterprise movement, these systems are finally being fixed using sustainable, market forces.

According to Haile Johnston, co-founder of The Common Market, a nonprofit that connects communities with sustainable family farms and a participant in the Dell study, “Support for traditional charities is important, but foundations should identify space within their portfolios across all program areas to support innovation and new ideas. Unless we support new concepts and approaches to effecting change, we are likely to continue with the same limited outcomes.”

Taking risks and jumping for that “crazy idea” isn’t just attractive — it’s smart, and one of the only ways philanthropy will continue to make a difference.

Mark Horoszowski is the co-founder and CEO of MovingWorlds.org

Petra Barbu is a senior at Northwestern University studying economics and business institutions, and is an intern at MovingWorlds.org. 

Photo by Gaelle Marcel on Unsplash