Alternative models to funding social impact

Funding of social services typically comes from philanthropic grants, taxes (to fund grants or to fund government-run services), or user fees.

I recently heard a lecture given by folks from FIMRC, which features a business model that is less common. They fund core services via volunteers that are interested in participating for relatively short periods of time, and are willing paying a premium to do so. These volunteers pay directly and also fundraise themselves. Further, FIMRC has monetized the relationship with volunteers by referring them to venders for services they might use (language skills, travel insurance), and charging a referral fee.  Through these efforts FIMRC therefore monetizes the desire of some people to take part in social impact work. This revenue model creates enough funding to support full-time staff such that the volunteers need not achieve any impact themselves, beyond financing the services.

This is model is quite powerful because it allows the financial agenda to not be donor driven. I am curious, however, what, if any, perverse incentives it does create. Like accepting donor funds, an organization can accept volunteers and funding in a way that distracts, does not interfere with, or even adds to the work of their mission. Most often donor funds are not wholly in line with an organization’s mission and therefore their constraints pull organizations away from their core business. I wonder how well addressing volunteer needs and desires has distracted FIMRC from achieving their highest potential impact.

One important constraint of this model is that it relies on the difference between wealth in high income countries and low costs in developing countries. If each volunteer contributes several hundred dollars to a healthcare system that spends $20-100 a person, per year, the model works. But in the US, where healthcare costs $8000 per person, there simply would not be enough volunteer wealth to make this happen.

An interestingly similar organization, however, does work in the US. Share Our Strength has chefs fundraise at cooking events to fund their anti-hunger services. Like FIMRC they monetize these relationships with people who `wish to market to chefs. Unlike FIMRC, their relationships are with higher-value fundraisers as chefs may have more of their own capital and more ability to create funds through fancy dinners than do college students.

Both of these organizations should inspire all non-profits to seek revenue from core constituencies that believe in their mission and want a role that is neither professional full-time, long term service delivery nor simply writing a check. Partners in Health could charge to put pharmaceutical and other medically relevant ads on fundraising and advocacy materials sent to physicians. While philosophically many groups might be opposed to this style of fundraising, should they be?

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