Prioritizing Social Enterprise Sustainability

Despite the conventional wisdom that organizations that invest in developing a robust infrastructure are more likely to succeed and recognition of financial support for capacity building as a philanthropic best practice by Grantmakers for Effective Organizations, social impact funders have yet to collectively make a substantial financial commitment to building organizational capacity. In an article published by Stanford Social Innovation Review, Paul Brest, former president of the William and Flora Hewlett Foundation, stated: “Although the interest in social entrepreneurship has grown, the sector is still lacking in patient capital to build, sustain, and grow promising nonprofits.” This may stem from a desire to invest in strengthening the operations of social enterprises that funders know well and are comfortable working with, particularly after they have demonstrated results. However, this can deprive organizations that are just starting out of an opportunity to produce the kind of results that funders look for. In weighing the opportunities and risks of funding it may also be helpful to also consider the quality of the idea and leadership as well as the potential for success.

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In cases where technical support is combined with funding, there is a tendency to support social enterprises in operating like a business, such as developing a business plan or preparing pitches to investors. In some instances, an arrangement is made with a large consulting firm to provide pro bono consulting, which tends to be limited in terms of resources and scope, or a capacity building grant is awarded with the expectation that the recipient will hire a consultant for a short-term project. To have maximum impact, capacity building should extend beyond leaders and specific tasks to encompass the entire organization. (Source: csrwire.com)

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