May 9th, 2022
KIN CEO Elaine MacDonald last week interviewed a panel of impact investors and nonprofit leaders who have participated in both for profit and nonprofit models to share innovative ways to raise funding and deliver impact at Harvard Business School’s Nonprofit Board Summit: Change, Innovation & Impact.
The session “Keeping an Eye Towards Social Enterprise Innovation to Inform Nonprofit Innovation” featured panelists Payel Farasat, co-Founder and Managing Principal of V4 Capital, a bespoke private equity impact house, Elizabeth Funk, an early veteran of impact investing with the Dignity Fund, one of the first for-profit funds in the microfinance industry, and Shamil Hargovan, CEO of Altruvest Charitable Services, which provides training and tools for nonprofits. The team spoke to a global audience of nonprofit leaders about the trends they are seeing in the evolving marketplace.
Payel shared the value of leveraging private equity investments for large nonprofits, endowments and foundations, as well as some of the risks. For nonprofits not of this size, she highlighted innovative ways to raise funding by elevating the digital experience, as well as the need to adjust tactics given the rapidly evolving funder demographics landscape. Payel cited a McKinsey study, “Women as the Next Wave of Growth in US Wealth Management“ to point out that women will be taking center stage in controlling funding dollars by 2030.
Elizabeth confronted the underlying assumption by some that “making profits was bad” and was in conflict with the mission of delivering social impact. Sharing her own experiences, Elizabeth articulated how returns could be an engine for good and greater impact, enabling a broader reach than a nonprofit model could achieve. “All nonprofit boards and leaders need to decide where on the spectrum they are at in terms of maximizing returns and maximizing impact,” she said. “There is no right answer, but there needs to be alignment.” Finally, Elizabeth offered that debt financing could be a solution if generating profit “was too scary,” given that investors would then receive known, fixed returns.
Shamil Hargovan spoke about the results of Altruvest’s survey of top needs identified by its 1,200 nonprofits. Help with raising funding, acquiring fresh board talent, measuring impact, and raising awareness were among the top needs cited by nonprofits operating with under $5 million per year.
Shamil shared the value of how leveraging free board matching services such as Altruvest‘s could help nonprofits gain new talent vs. relying on recruiting close contacts. He also outlined how nonprofits, particularly smaller ones, struggle with metrics, but should absolutely invest in measuring impact to unlock funding from new donors. In addition, investing in raising awareness-even sharing success stories with local media outlets–could be highly beneficial to gain the attention of prospective donors.
Elaine summarized the key takeaways from the panel discussion, adding her own perspectives as someone who has worked with hundreds of social impact organizations in her career. “Keeping up with the changing landscape through innovation doesn’t just mean launching your core program in innovative ways. It means looking at your nonprofit holistically and exploring innovative ways to add new talent to your board, taking the time to measure impact to unlock greater dollars, and investing in awareness-raising tactics to broaden funder exposure. Spending all your resources on delivering programmatic services may not be the best way to expand impact in the long run.”