Principles for Consideration of New Funding Mechanisms

Principles for Consideration of New Funding Mechanisms

Innovative funding is often necessary to ensure real impact for any organization, whether in the public, for-profit, or charitable sectors. Nevertheless, new funding mechanisms like pay-for-success initiatives, social impact bonds, and other avenues are not one-size-fits-all solutions, and require careful consideration according to the goals of the organization. Indeed, studies show that results for these innovative initiatives are mixed. The National Council of Nonprofits’ “Principles for Consideration of New Funding Mechanisms” outlines a roadmap for nonprofits, governments, foundations, and for-profits in considering how to build new sources of capital.

These Principles are meant to help organizations “set expectations and avoid unintended consequences” as they seek funding to advance the social good. They touch on key issues ranging from recognizing the role of government, to transparency in dealing with third-party intermediaries and investors, to nonprofit contracting, and beyond. The Principles aim to present a rubric for measuring any project that an organization is considering launching, and ensuring that all innovations in funding are conducted with the people receiving services and the community in mind.

The Principles’ recent release, in August 2016, is a timely reminder of how the charitable sector continues to wrestle with critical questions about the benefits and costs of new sources of capital for social good.

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