In order for organization to be successful
it is vital to build strong infrastructures that include financial systems,
skills training, fundraising process and other crucial overhead aspects. Nonprofits and social ventures are no
different yet most nonprofits are not spending enough money on overhead. By sparing on overheard it can result in devastating
effects on the nonprofit or social venture and ultimately reducing their potential
impact. I feel that nonprofits and
social ventures are skimping on overhead in order to meet the unrealistic
expectation of funders. In article published in the Stanford Social Innovation
Review, it speak of a vicious cycle, called the nonprofit starvation cycle,
that starts with funders unrealistic expectation
about costs of running a nonprofit, and results in the nonprofits misrepresenting
their cost while skimping on vital
systems. [1]. The article also suggests taking action at step one of the cycle
funder’s unrealistic exceptions and I
agree. The importance of funding to any
business especially nonprofits and social venture is undeniable however if that
funding comes with unrealistic expectation, it places the focus of the organization
on meeting the needs of the funders instead of making an impact. Thus either the funders’ expectation need to
change or funding needs to be obtained by other means. As suggested in Kimberly Tripp Article “It’s
Not All About Growth for Social Enterprises”,
funders need to be more interest in shared contribution instead of
direct attribution [2]. In
order to change funders’ view to shared contribution organization need to find a
better way to communicate their expenses to donors. Additional, in the article,
In Search of Hybrid Ideal, it examines the rise of hybrid organization that combines
components of profit and nonprofit [3]. If organizations were to utilize this model
it reduce would the dependence on funders, grants, and government subsidies
which would in turn place the focus more on the organizations’ mission.
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