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At NEX-Impact, we spend most our time engaging recipients of social investments (more commonly called “grantees”). These recipients are typically social benefit organizations, or projects that fall under the umbrella of an organization with legal nonprofit status. Besides offering capacity building and technical assistance to these organizations, NEX-Impact is also fully equipped to offer support, assistance, and guidance to those who invest in these organizations. As much as recipients are constantly trying to figure out how to gain a competitive edge in accessing dollars from investors, the investors probably spend more time re-thinking their investment approaches. Many of them grapple with the idea of how to get more impact on their investments. “To Fund … or Not to Fund” … that is the perpetual question. For this blog entry, we’ll focus on institutional investors, or more commonly known as foundations and corporations.

A colleague of mine used to constantly remind the staff that knowing one foundation means just that … knowing ONE foundation. Institutional investors vary greatly in their giving priorities, due diligence processes, investment amounts, flexibility, etc. Since the recession of 2008, more investors have started thinking more strategically about where to direct their dollars.  The days of simply being moved by “warm and fuzzy” feel good organizations and causes have generally taken a back seat to focus on “strategic” investments.

This certainly makes sense given investors want to ensure they get “bang for their bucks.” They want reassurance that social benefit organizations will deliver, can substantiate their results, and achieve the desired impact. But what happens when the investors’ ideas and definitions of “bang” clash with their grantees’ ideas and definitions of “bang?” Social investors often have staff who are perched in the “high tower” and aren’t authentically engaged with the communities they intend to serve. Given this norm, can philanthropy realistically have a role in substantive change for our communities in this capacity?

While it is wise for investors to maintain baseline standards for their giving, we implore them to trust the practices, approaches, and sentiments of those grounded in the community. Fortunately, the disconnect between investors and social benefit organizations can be resolved. It requires investors to take a bold stance and dare to invest outside of the philanthropic box. Especially during these trying times in our country, philanthropy should challenge itself to answer this question: “Are we about real change or perpetuating the status quo?” If real change is the answer, being more responsive, flexible and receptive toward innovative, “no box” approaches may just be worth considering. Otherwise, we’ll continue to get the “same ole same,” which we can hardly afford given the climate of America.

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To Fund or Not to Fund