Knowledge Exchange: Network Funding

Investing in Networks Grows Impact

We often hear grantmakers talk about leveraging dollars but rarely get to see year-to-year data showing a funder’s investment over time with the additional resources they attract to an issue. The Garfield Foundation agreed to let us review their investments in the RE-AMP network over the last ten years so we could take a closer look at a specific case. Our analysis shows that even foundations with a modest corpus can leverage their charitable dollars many times over by investing in networks. Our latest blog post on this topic is featured in The Stanford Social Innovation Review .

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Online Fundraising for networks webinar

Online fundraising has seen real growth in the last few years not only with services likes PayPal and NetworkforGood, but also through Facebook and Twitter campaigns. Have you asked yourself if this is a fit for your work? In this webinar we will provide examples of different types of online fundraising and the scenarios in which they were most effective with particular emphasis on collaboratives and networks. Creating social media policies and guidelines are also discussed.

Download the presentation slides Online Fundraising for Networks (PDF)

A recording of the 1 hour webinar will be available soon.

Other resources:
Idealware’s Social Media Decisionmakers Guide

2011 Nonprofit Social Networks Benchmark Study

Learning from Obama report (2009)

Presenters: Anne Whatley, Cause Communications with Madeleine Beaubien Taylor, INC/Network Impact

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Network Funding: Pitching to Investors

Even donors who get why funding networks makes sense have concerns about the specifics.

The good news is that philanthropy is increasingly aware of the changing landscape in which they make investment decisions and is adopting strategies for increasing impact that include “activating networks.”

From the Monitor Institute’s recent (and excellent) report, “What’s Next for Philanthropy”
Simply stated, philanthropists operate today in a stressful, rapidly evolving, networked, and interdependent world.  Although the individual grant is the typical unit of analysis for most foundations, the success of any grant or organization is rarely sufficient to move the needle on a complex problem. We have all felt the irony when successful programs are lauded while the system they aspire to change continues to fail. Funders are well positioned to support connectivity and to coordinate and knit together the pieces of a network of activity that can have impacts far beyond the success of any one grant, grantee, or donor. And advances in network theory and practice now allow funders to be much more deliberate about supporting and participating in networks and in thinking about how the collective impact of a coordinated portfolio of grants can produce more significant change.

Some foundations are getting smart about funding networks and are communicating lessons learned to the wider philanthropic community (among them: the Annie E. Casey Foundation, the Packard Foundation, and the Barr Foundation.

Still, many perceived challenges remain. Typical donor concerns – reasons donors may be hesitant to fund network efforts- include uncertainty about fiscal arrangements and accountability; the upfront investments needed for network development; and issues related to network operations and evaluation.

Typical Funder Concern: Who gets and manages the money?
What This Is About
: Donors may only be permitted to fund nonprofits which qualify under regulations of the United States Internal Revenue Service.
Possible ways to address this concern: This is not necessarily a reason for a network to form a 501c3. But it is a reason to select a qualified fiscal agent with a track record of managing foundation grants.

Typical Funder Concern:Who is accountable for results?
What is this about: Networks are perceived to be more flexible and fluid than most organizations. Donors wonder how networks who will account for emergent decisions and actions
Possible ways to address this concern: In addition to educating funders about the advantages of network adaptation, networks may wish to prepare and share MOUs as well as network plans and budgets

Typical Funder Concern:Up front time and resources
What is this about: Creating a firm basis for effective network action may require considerable investments of time and money. It is not easy for donors to make long term flexible commitments in a results-oriented world.
Possible ways to address this concern: In addition to educating funders about network developmental cycles, members may wish to pursue some activities that yield quick tangible results.

Typical Funder Concern: New skills needed
What is this about: The set of skills that support development of networks, such as network weaving, are quite different from those for developing organizations.
Possible ways to address this concern: Sources now exist that describe the fundamentals of effective network practice. Networks can also offer examples from their own experience.

Typical Funder Concern:Knowledge capture systems
What is this about: Funders want to learn from their experience supporting networks but may not know themselves what to look for. They wonder if the knowledge capture systems that a network employs will surface lessons learned that are transferable to other networks.
Possible ways to address this concern: One way to address this concern is to develop robust knowledge capture systems (see below: How to evaluate)

Typical Funder Concern: How to evaluate
What is this about: Some donors may not support networks (or support networks at higher levels) because they believe it is difficult to measure a network’s impact.
Possible ways to address this concern: Ways to assess a network’s impact and evolution include network mapping, network health monitoring and other specialized network evaluation approaches.

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Network Funding: The Five Sources of Money

Networks, like organizations, wrestle continually with the question of how to keep going. But networks, by their very nature, require different kinds of care and feeding and are presented with unique financial sustainability challenges.

If you are a network with social change mission, your principal resources are likely to come from a combination of sources, including: operating grants, member fees, project fund raising, earned income and/or in- kind contributions. Here’s a description of each source:

Source: Operating Grants
What this is: Grants from donors to cover network operating costs (e.g., coordination, communications, F2F meetings )
When & Why: Funders who play a role in convening a network may underwrite the network’s operating costs for an initial period. But longer term donor commitments – beyond one or two funding cycles – are typically more difficult to secure.
When approaching any donor, be prepared to make the case: What do you achieve as a network that individual member organizations could not achieve alone?

Source: Member fees
What this is: Fee that individual members agree to pay to support  network operations  (e.g., Annual Membership fee)
When & Why: However small the overall contribution to network budgets, networks should consider this strategy. Member fees signal to outside donors that members are committed and that they derive value from their participation in the network. Some networks use a sliding scale for fees, to address differences in members’ ability to pay.

Source: Project/program  grants
What this is: Funds from donors that are project- or program- specific
When & Why: Most donors will support network projects/ programs that are in line with their own mission and strategies, rather than backing network operations.
Projects grant funds can be used to pay part of a network’s general overhead costs.

Source: Earned income
What this is: Fee for service; sales of products produced by network
When & Why: When a network’s members produce value for others (individuals or organizations) it may be able to charge a fee. For example, information products and analysis can be sold.

Source: In-kind contributions
What this is: Non-monetary contributions from members, whether in the form of sweat equity or the result of more formal network agreements.
When & Why: Individual members with specific capacities may enter agreements to provide resources (e.g., space or services) as in-kind contributions to the network.
Many networks calculate the value of in-kind contributions and add this to members’ fees when reporting members’ total contributions to donors.


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Network Tool: Network Health Scorecard

Regular check ups can help network builders track progress and decide what the network needs next. The Network Health Scorecard provides a quick series of questions that can yield a useful assessment of the health of your network - diagnosing strengths and areas for growth.

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