The System for Funding Nonprofits is Crumbling. That’s a Good Thing.

Nell Edgington

There is much discussion lately about the financial doom that this pandemic is unleashing on nonprofits. Cancelled galas, shrinking corporate donations, fearful foundation donors, disappearing government coffers. It seems that the entire way nonprofits are funded might be crumbling before our eyes.

It’s about time!

That’s because how money flows to the nonprofit sector is horribly broken. Essentially the nonprofit sector has been taught for decades to beg with a tin cup and be eternally grateful for the scraps left over from an extractive financial system.

The broken way we have funded the nonprofit sector includes elements like:

I’m not going to sugar coat it, folks. The way we fund social change is not working.

In this broken system, nonprofit leaders are forced to employ inefficient and exhausting methods for getting people to release pennies and nickels when the problems these leaders are attempting to solve actually require many millions of dollars.

Very few nonprofits achieve the holy grail of sustainable social change simply because — for the most part — money has been concentrated in a small, elite number of people and organizations. And a growing number of nonprofit organizations compete on bended knee for whatever scraps those elite feel willing to part with.

Nonprofit leaders and organizations that are legitimately working to create a healthier, more connected, equitable world should not have to operate under such an antiquated, disempowering system.

So do we want to direct our future attention and energy to shoring up this dysfunctional system? Or should we instead focus on creating a new, more effective system aimed at actually creating sustainable social change?

This would be a social change funding ecosystem where nonprofit leaders confidently and courageously articulate the solutions they envision and exactly how much money it will take to create those solutions. Once articulated, these leaders would form fully equal partnerships with funders, receiving all the money they need to implement and scale the solutions they offer.

In this new reality, nonprofit leaders no longer feel small, exhausted, under-appreciated, disempowered, sidelined and impoverished. Rather, they enjoy an abundance of people, networks, power, influence, and money that easily flow to them and the solutions they offer.

I firmly believe that this pandemic offers us a crossroads in how we fund social change. A crossroads at which we can finally say a hearty goodbye to the broken business as usual of the nonprofit funding ecosystem. And instead start creating a more effective, sustainable future for true social change.

Photo Credit: Diem Nhi Nguyen

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  • Nell Edgington