Philanthropic equity can powerfully benefit the nonprofit sector, according to a new report from Nonprofit Finance Fund (NFF) released on Tuesday. NFF Capital Partners’ Portfolio Performance Reportanalyzed the role of philanthropic equity in the nonprofit sector based on its own engagements, and found that on average it more than tripled program delivery and doubled revenue for nonprofits that have conducted philanthropic equity campaigns.
According to NFF, philanthropic equity investments are typically significant, multi-year investments that a nonprofit organization uses on it way to sustainable growth or change. Philanthropic equity investments can transform an organization in a way that persists, using transparent, shared reporting systems. These investments are distinct and separate from program and operating support used to maintain “business as usual,” NFF said in a statement.
Though still a tiny percentage of charitable giving, philanthropic equity is generating increasing interest among funders and social change entrepreneurs looking for new models to address critical issues, NFF said.
“Like for-profit companies, nonprofit organizations need access to capital investments so they can explore better business models, scale impact and create lasting change,” George Overholser, founder and managing partner of NFF Capital Partners, said in the statement. “We cannot wring more ‘results’ from an overburdened sector without addressing fundamental flaws in the way nonprofits are financed. This report presents evidence that applying the principles and practices of philanthropic equity can create dramatic and sustainable progress. Every organization in our portfolio has substantially enhanced both its program delivery and financial durability.”
Since 2006, NFF Capital Partners has supported 16 campaigns for philanthropic equity, totaling $312 million in financial investments, NFF said. The study analyzed nine campaigns for which multi-year data were available–GlobalGiving, DonorsChoose.org, VolunteerMatch, Year Up, Ashoka’s Changemakers, VisionSpring, Root Capital, Stand for Children, YES Prep Public Schools, College Summit and Project HEALTH.