How innovation is key to NFP sector
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Associations and charities alike understand the need to negotiate their way through changing patterns of contact and response from government, and have seen how the government’s attitude to the ACNC and regulation of charities has changed lately.
Not only is the intersection of not-for-profits and government closely watched, but the boundaries between the sector and business are becoming more and more blurred as they collaborate. There has been a growth of hybrid relationships, focused mostly on raising funds for projects that would not be possible if relying solely on the government. This has seen new ways of looking at issues and resolutions through collaboration, sometimes with unlikely partners.
However, there is a great gap in understanding the various structures being explored. Lester Salmon (Leverage for Good, 2014) has explored these structures, from social enterprise and impact investing to capital aggregators and enterprise brokers. The range is dizzying: credit enhancement, quasi equity structures, venture philanthropy and social impact bonds, all innovative ways to fund charities.
Newly emerging online portals and exchanges may bring us closer to the vaunted social stock exchange. Also, Philanthropy Australia reported on Program Related Investments in November, which might be applied by foundations making investments to “further their charitable purposes, with the explicit understanding that those investments will earn below-market returns”.
Great potential
Overall, the potential is great. A release by the ACNC last year July indicates it is developing its attitude toward the impact of new philanthropic models. It is not lost on the commission that charities need to attract investment, but in doing so must not lose sight of their mission. Boards carry the risk and responsibility for engaging in such ventures and not straying from their purpose.
Whatever model is used, government and business need measurable outcomes, which have not been easy to provide. Digital technology and Big Data may be the answer to gathering, collating and making sense of results. Four parts of the economy should coalesce to bring real opportunities to create measurable impact: government establishing the appropriate environment; NFPs sharing knowledge of the complexities being faced and adapting to new technologies; business finding the funds and the methods to use them; and digital technology to track, monitor and report outcomes. Already people are asking, “Is there an app for that?”. Charities could embrace technology to find ways to collaborate more widely, increase efficiencies and eliminate duplication.
The Australian Charity Report indicates that 5 per cent of charities control 80 per cent of the sector’s assets, while a third of the sector has income of less than $50,000 a year. It is heartening to see innovation in funding and relationship building is thriving also at community level, where most organisations are active, and where income is lowest.
Payback for business
Social investment strategies can enable businesses to engage with the community to create positive social outcomes, with the payback that this leads to expanded markets for those businesses. These strategies can often be tailored to the local level. For example, the Western Sydney Collective is offering forums that allow businesses and the social sector alike to learn the language and meaning of social investment in all its forms, and work through ideas and projects that might form the basis of a financially rewarding relationship with positive social outcomes. 3Bridges, a 40-year-old non-religious community organisation, provides thought leadership, concentrating on educational seminars targeted at community/business partnerships and social enterprises.
Local government has great potential to lead and foster connections between private businesses and NFPs. Parramatta council’s Social Investment Office is strong on establishing common ground and common mission, with the council’s role being to provide a forum and help in nurturing these innovative partnerships.
All charities should consider using new technologies and financial models, and developing a working relationship with government and members of the business sector who are willing to engage in business for purpose. NFPs of all types desperately need such innovative thinking.
Jonathan Casson is partner at Holman Webb Lawyers.
This article originally appeared in Third Sector’s September magazine- subscribe here.
