As a nonprofit leader, you want to make a positive impact with your philanthropic investments. But how can you ensure that your donations are not only effective, but also sustainable in the long term? In this article, we will explore some strategies and best practices to help you plan, evaluate, and improve your philanthropic investments.
Before you make any philanthropic investment, you need to have a clear vision of what you want to achieve and how you will get there. A theory of change is a tool that helps you map out the causal links between your inputs, activities, outputs, outcomes, and impacts. It also helps you identify the assumptions, risks, and external factors that may affect your results. A theory of change can help you align your goals with your resources, partners, and beneficiaries, and communicate your value proposition to your stakeholders.
To ensure sustainable philanthropic investments, focus on long-term impact over short-term gains. Conduct thorough research to understand the needs of the community and identify effective solutions. Collaborate with local stakeholders and organizations to leverage their expertise and resources. Implement monitoring and evaluation mechanisms to track progress and adapt strategies as needed. Foster transparency and accountability to maintain trust and maximize effectiveness. Continuously learn and iterate to stay responsive to changing circumstances and emerging challenges.
Once you have defined your goals and theory of change, you need to decide how you will fund your philanthropic investments. There are different funding models that you can use, such as grants, loans, equity, prizes, or hybrid forms. Each model has its own advantages and disadvantages, depending on your objectives, risk appetite, and expectations. You also need to choose your partners carefully, based on their mission, capacity, performance, and accountability. You should look for partners that share your vision, values, and standards, and that can complement your strengths and address your gaps.
Ask your funding partners what they would find most impactful. You've developed your vision of what you want to help achieve, and you've intentionally selected partners based on your metric criteria. Find out from the experts doing the work where the gaps are in funding.
To ensure that your philanthropic investments are sustainable, you need to monitor and evaluate your results regularly. Monitoring and evaluation (M&E) are processes that help you measure your progress, learn from your experience, and adjust your strategy as needed. M&E can help you answer questions such as: Are you achieving your intended outcomes and impacts? Are you using your resources efficiently and effectively? Are you addressing the needs and preferences of your beneficiaries? Are you managing the risks and challenges that may arise? Are you creating positive or negative externalities?
Impact reporting is crucial to ensure partners see the value/ROI of their contributions. In order to do this effectively it's important that the organization and the funding partner align and define the metrics that will be monitored as programs and initiatives are deployed. More and more consistently partners are looking to understand the breath and depth of impact; which is only possible if there are metrics to track agains from the very beginning.
Another way to ensure that your philanthropic investments are sustainable is to report and communicate your impact to your stakeholders. Reporting and communication are essential for transparency, accountability, and learning. They can help you showcase your achievements, challenges, and lessons learned, and demonstrate your value and credibility. They can also help you engage your stakeholders, solicit their feedback, and build trust and loyalty. You should use different formats and channels to report and communicate your impact, such as reports, stories, videos, podcasts, or social media.
Finally, to ensure that your philanthropic investments are sustainable, you should seek continuous improvement and innovation. You should always look for ways to enhance your efficiency, effectiveness, and relevance, and to respond to the changing needs and opportunities in your field. You should also embrace innovation, which is the process of creating new or improved solutions that address social or environmental problems. Innovation can help you increase your impact, scale your solutions, or create systemic change.
With any organization, whether for profit or nonprofit, it is important to not get complacent and continue to do things one way because “it’s how we have always done it”. Continuing to have process improvements and assessment of systems is important to the wellbeing of any organization.