Innovative Strategies to Invest in Nonprofit Infrastructure

Effective nonprofits require high quality operations including the accounting, data management, human resources and many other functions that ensure the organization has the strength, stability, and compliance needed to offer impactful programs and services. 

Funders of nonprofit organizations are recognizing this need and exploring strategies that challenge overhead rates and limitations in operational investment, including movement towards trust-based philanthropy with multi-year unrestricted funding. 

There are also emerging opportunities for funders to support nonprofit operations through comprehensive fiscal sponsorship and other centralized, collaborative, or shared operating systems.

We see these strategies leveling up the conversation, helping funders to shift beyond funding nonprofit operations towards investing in a new nonprofit infrastructure. 

These strategies also support funders to treat operational infrastructure as a long-term asset, one that not only creates impact for specific programs or services, but also drives multiplier effects across a broader whole:

  • Investment in infrastructure strengthens not only one program or service but ALL the programs and services offered by participating organizations
  • Infrastructure can scale to positively impact not only one organization, but a network of organizations that share access to high quality operational services and best practices 
  • Organizations that access shared operational systems can allocate more time, space, and people to mission-focused activities, increasing impacts for the communities being served
  • Shared operational service providers build expertise and best practices by supporting multiple organizations in a more connected learning environment 
  • Organizations with strong infrastructures are better positioned to take advantage of opportunities and handle unexpected challenges when they arise 

Real life examples of funders’ investments in infrastructure include: 

  • A New England foundation convened regional nonprofit leaders to identify key priorities and recommend specific collaborative strategies that will increase access to fiscal sponsorship and other shared operational supports. The foundation subsequently connected with and, in some cases, issued funding to the intermediaries and service providers affiliated with the leaders’ recommendations to build this new infrastructure.
  • A Midwestern foundation funded consultants to provide intensive operational assessment and coaching to grantees.
  • A foundation in Boston recognized the racial leadership gap among local nonprofit organizations and commissioned a Directory of Racial Equity Capacity Builders to better understand the sector’s capacity to address the gap and to provide a resource to help organizations connect with service providers and advance racial equity. 

These funders are supporting strategies that not only improve the operations of individual grantees but rather invest in new and shared platforms to strengthen multiple organizations and communities. In partnership with service providers and consultants, funders are building the intellectual capital and resources that result from these strategies. Funders are also looking beyond short-term and conventional measures of impact, defining a new success with aims to sustain and strengthen the sector as a whole.  

This article is part of a series, based on conversations between Jackie Cefola and Debra Box about nonprofit shared services and related topics. 

Jackie Cefola, principal of Jackie Cefola Consulting, is a trusted advisor to nonprofit leaders who are starting up new collaborations, often related to shared services. Debra Box, principal of In the Box Consulting and former President and CEO of Support KC, where she helped nonprofit organizations to focus on their missions by providing integrated expertise in financial management and support services.

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