An interesting solution to the “Non-Profit Problem”

Raising money is a pain in the butt, and one of the reasons is because non-profits have to justify specifically where every penny goes. I can’t think of a non-profit that raises money just to have a surplus to support general growth. But, in an online article in The NY Times, David Bornstein writes about non-profits trying to do just that.

What if great social organizations could grow the way companies do? Could we solve our social problems more effectively if we improved the way we finance them? There are actually many modest-sized organizations that get impressive results, doing things like boosting academic achievement, preparing unemployed clients for good jobs, getting homeless people into supportive housing. If they were businesses, they would attract investment. As nonprofits, however, they are like Ferraris on a dirt track. What if we could figure out how to help high-performing organizations get on the highway? Could success become more the rule and less the exception?

One organization that is exploring this question is the Nonprofit Finance Fund (N.F.F.) Capital Partners division, which has developed a creative model for helping successful nonprofits raise what it calls “philanthropic equity” — grants that mimic the institution-building function of for-profit equity. N.F.F. Capital Partners reports that, since 2006, it has advised 18 organizations that have raised $326 million in donations to finance growth, and in turn, those organizations have markedly increased their impact.

The article considers non-profits that work in specific charitable sectors, like health or education. But for a theatre, this might work as well. Armed with a mission statement, couldn’t a theatre raise creative capitol just to put on an entire season? That’s the main service theatres offer, after all, but nearly every non-profit arts organization seems to have to justify its existence with education outreach programs, which is not why the movement started in the 1960’s.

Something to ponder.

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