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Foundation supporters often move on.

The delight that nonprofit managers and fundraisers experience from generous grants doesn't have an inexhaustible shelf life. And, neither does grant support.

As helpful as foundations can be, they are not bottomless wells of money. Many foundations that eagerly bestow grants that will benefit society by helping a good idea get off the ground are not so eager to continue those grants in perpetuity.

Eventually, the money has to come from someplace else. Those nonprofits that are able to find other funding sources continue to operate, even flourish. Those that do not have such success might find it difficult, even impossible, to continue.

That's where organizations like the Growth Philanthropy Network (GPN) come in. Founded in 2003--with foundation support--the New York-based GPN works with both funders and nonprofit organizations to get money to organizations that show they deserve support.

"We have the belief that if we're going to be successful in addressing major, intractable social problems, then we'll need to do so on a scale that's commensurate with those problems," said Alex Rossides, co-founder and president of GPN. "So we feel that it's really quite important to eventually generate billions of dollars in private capital to do that."

Raising money is important, but Rossides stressed that the focus of the organization is not about raising as much as possible today with tomorrow being in another lifetime.

"What you need to do to move billions of dollars is an ecosystem, what we call a 'growth capital marketplace,' something that efficiently and effectively applies capital in different levels of scaling," Rossides said.

He said that the important operating concept is "scaling impact" rather than scaling for its own sake. "How do we scale our best solutions?" is another way Rossides used of phrasing it.

He added that, rather than a one-size-fits-all funding model, organizations need different funding at different stages of their development, and the idea of the ecosystem recognizes and addresses that concern.

This idea is not without precedent, Rossides said, citing SeaChange Capital Partners and the Edna McConnell Clark Foundation as just two examples.

Rossides added that in the for-profit sector there is already a very robust system in place that connects capital with investments, and it includes the vetting of companies to ensure that they are worthy of investment. Such a system does not exist in the nonprofit sector, he said.

In addition, implementing the goal of connecting funders with nonprofits will require financial intermediaries, which is the role that investment banks play in the for-profit sector.

To attract and keep those intermediaries and investors, however, there must be a sufficient number of nonprofits that are operating efficiently. With that in mind, Rossides said that a set of objective criteria must be established to prove to intermediaries and investors that the organizations seeking support are truly worth the effort and investment going into them.

So, the idea is finding a sufficient source of investment money, finding a pool of intermediaries who can locate those sources and finding nonprofits that are shown to be "growth worthy" as well as "growth ready" by a common set of standards, and then connecting all of them. Further, it will be done in a large-scale manner, whether the problems and issues being addressed are national or local ones.

"Our belief is that we need to be able to eventually move billions of dollars to support effective solutions," Rossides said.

As part of its effort, GPN established an initiative called the Social Impact Exchange, a cross-sector membership forum for sharing knowledge and increasing investment in scaling effective social programs and solutions.


In June, the Exchange presented its 2010 Inaugural Conference on Scaling, in partnership with the Duke University Center for Strategic Philanthropy and Civil Society and its Center for the Advancement of Social Entrepreneurship (CASE). Another conference is planned for this year.

The conference reflects the fact that all of the efforts of the GPN and the Social Impact Exchange--locating reliable sources of funding, identifying nonprofits with genuine potential and then linking those together with the help of intermediaries, and doing all of that consistently--requires collaboration.

The effort also requires time and hard work by many people, and Rossides said he is well aware of that.

"There's no question that we are in the process of trying to establish this market," he said. "We want to engage funders who are interested in building this marketplace, or if not interested in building it but in helping nonprofits, we want to connect with them as well."
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Author:McNamara, Don
Publication:The Non-profit Times
Date:Mar 1, 2011
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