Funders increasingly keen to help nonprofits ‘think beyond grants’

Funders are paying more attention to financial resilience and other organisational development issues among grantees, according to a new guide from Philea.

Funding Organisational Development: From Insight to Action is aimed at foundations that currently provide funding for nonprofits’ organisational development (OD) activities, and foundations that want to do more of this in future.

OD — a term often used interchangeably with ‘capacity strengthening’ or ‘capacity building’ — is defined in the guide as “the ongoing work of strengthening an organisation so it can deliver its mission effectively, adapt to change, and sustain its impact over time”.

It lists six areas of capacity strengthening that are receiving increasing interest from funders, with financial resilience being one of them. The guide says there is a stronger emphasis on “more systemic and forward-looking approaches” to financial sustainability, and comments:

“In response to shrinking institutional funding and the growth of alternative financing models, some funders are supporting organisations to think beyond grants, strengthen decision-making under uncertainty, and develop more adaptive approaches to financial sustainability.”

The other five areas are:

• Crisis-oriented capacity strengthening, with the guide calling this a “major, rapidly expanding frontier”. This helps organisations needing to survive a crisis, close responsibly or undergo other processes such as mergers or shared staffing models.
• Well-being and mental health. This reflects the view that organisational resilience “depends heavily on human resilience”.
• Safety and security, including legal preparedness and digital security, with organisations increasingly “operating under constraint, repression or heightened scrutiny”.
• Conflict sensitivity, which the guide says is particularly important as organisations operate in increasingly polarised or fragmented environments. It aims to strengthen organisations “without reinforcing harm or division”.
• Digital transformation, especially in relation to access to AI tools, responsible use of data and the limited funding available for digital infrastructure.

Across all six areas, the guide says that support is becoming “more expansive, adaptive, and grounded in real-world complexity”.

Unrestricted funding guidance

Separately, Philea has published Unrestricted Funding: A Practical Guide for Funders. This new resource is designed to provide grantmakers with the “knowledge and tools they need to address their concerns as they shift more to unrestricted funding”.

It includes three documents designed to support an individual wanting to make the case to a board for shifting to unrestricted funding. The three different versions respectively aim to convince a cautious or risk-averse board, an impact-driven board, or a board concerned about organisational legitimacy.