Working In The Impact Space: Three Under-Addressed Challenges

CHALLENGES. We all face them, regardless of where we work; however, they are more pronounced when it comes to the third sector where the definition of success is hazier with goals focused on “impact” rather than profit. Things that corporate teams take for granted seem unreachable or unimaginable to those working in under-resourced, donor-dependent, grant-driven environments. Here are just a few issues plaguing the sector and how we can work together to address them.

Legitimacy and credibility

A 2015 Chronicle of Philanthropy poll in the US showed that ~33% of respondents expressed concern about finances, stating that they don’t think nonprofits “spend money wisely” and 41% said leaders were “paid too much”.

The 2016 UK Charity Commission report revealed that while people still value charities’ services, 75% of those surveyed said they were uncomfortable with fundraising methods and trust declined from 70% to 48% due to issues with transparency and accountability.

And according to Bain’s 2015 India Philanthropy Report, “donor apathy and a mistrust of nonprofit organisations and their operations are widespread. [Donors] demand low overheads due to their lack of faith in nonprofits. There are also a large number of small, unsophisticated nonprofits that lack adequate transparency, sophistication and organisational capacity, which make them less credible to donors.”

In a time where the public’s faith in nonprofits is shaky, either due to scandals exacerbated by media coverage or a lack of understanding of how NGOs operate, legitimate agencies are struggling to rebuild trust in an arena where one is automatically suspected of ulterior motives or wrongdoing. Being an informed donor/partner can foster assurance in a much-needed sector that consistently fills the gaps between governmental and social services.

Devaluation of work

Corporate staff prove their value by working efficiently, cutting costs and raising profit margins for stakeholders. However, people with comparable experience and education working in nonprofits – be it because they believe in the mission or it’s an available job that fits their work experience – are expected to accept less pay than their corporate counterparts, many times not even earning a living wage, despite a similar ability to serve their audience, raise funds, or manage resources because “it’s just charity work”.

This double standard that encourages agencies to maintain low overhead costs while achieving the mission seems to have been cemented in place by the pervasive expectations of the public, board members and donors. Supporters can stop this demoralising trend by acknowledging that “lean” organisations are actually doing a disservice to the industry by promoting one cause at the expense of their employees.

Donor fatigue

Similar to what we’ve seen with angel investors stepping away from the overabundance of tech start-ups and “social enterprises”, “many business clients face this mentality that they are an unlimited resource, making them feel as though no matter how much they give, sponsor, etc., it’s never enough”, reports one consultant who connects companies with nonprofit agencies seeking sponsors.

Another industry expert explains why this occurs: “Nonprofit organisations have fewer overall structural models and are unable to go into capital markets the way businesses can, leaving them with fewer options than the private sector. Nonprofit funders also have more restrictions than those supporting private sector projects.”

This disparity leads to charities repeatedly approaching the same companies/grant makers/individuals with funding requests, unable to become self-sustaining in the current model. This cycle not only leads to donor burnout but also prevents less refined charities from reaching the more substantial donors as many prefer to give to those with whom they have established relationships.

Instead of promoting competition between NGOs, encouraging more established organisations to combine efforts with smaller grassroots groups will benefit the industry by extending the larger organisations’ reach while building the credibility of the less sophisticated agencies.

Another way to circumvent burnout is to expand the donor pool by cultivating deeper relationships with individual prospects who may not be contributing because they can’t give as much up front, but may culminate in smaller but more consistent donations or volunteer time.

Help create change. Find an NGO that speaks to you here.

Aadeep