Nonprofits make a budget plan annually. Once the gavel falls, and the board approves the numbers, it becomes the blueprint for guiding forward the achievement of the organization’s aspirations. Most will find it a challenge to project accurately the multiple sources of revenue from which to fund operations for the future year. Revenue streams are dependent on the generosity and judgment of individual donors. The psychology of the guesstimate is like swimming in a current you hope will not carry you out to sea. The uncertainties incentivize nonprofits to stretch beyond traditional development strategies and tactics—grantwriting, direct appeals, fees for services and fundraising events—to support their missions. Many of their business models to stimulate revenue production mimic the language and structures more commonly associated with for-profit enterprises.
It is every nonprofit’s wish list to have more predictable and stable sources of revenue, but the hope of achieving one’s mission is, by comparison, the deeper well. The Harvard Business Review noted in a recent article that the biggest obstacle to scaling up in the social sector is the absence of effective funding models; and an audacious vision to achieve systemic change— whether that be ending homelessness, wiping out food insecurity, or creating more affordable housing—requires sustainable sources of revenue. The present economy fuels need, opportunity, and fertile ground for spawning nonprofit initiatives that address the two sides of this development/mission dilemma. Charities with an entrepreneurial spirit increase the odds they will be successful in sustaining their mission and achieve social and economic change on a scale sufficient to genuinely transform people’s lives.
Public or nonprofit organizations that receive charitable funding know about the “give” and the “take” in the process of grantseeking. Goals, budgets, and operational plans are subject to editing by donors before they write the check; and big donors have the power to invoke a laundry list of restrictions that can so hogtie a grantee they may wonder who is really running the show. Even so, would-be grantees are seldom willing to walk if the donor’s demands get egregious. They accept their disadvantage as a cost of doing business; and know a favorable judgment by donors to fund their proposal makes them pretty-much supplicants in the process. The shorthand characterizing this power imbalance in grant negotiations is the “Golden Rule,” i.e., he/she who has the gold makes the rules.
Big donors aggressive in exercising the upper hand can stir public controversy. Take, for instance, the private donor who ponied up copious amounts of money to support state adoption and implementation of the Common Core State Standards. The Bill and Melinda Gates Foundation heavily invested with grants in the strategy, spending since 2008 about $233 million. Not everyone is pleased about the Foundation’s super-sized influence. The unhappy stakeholders make strange bedfellows in their shared opposition to the standards, including parents and teachers staging protests at the Foundation’s Seattle offices. The makeover of public education as envisioned by the standards has evolved into looking a gift horse in the mouth among those critical of the initiative.