Innovative philanthropy and the quest for unrestricted funding

by kiwanja

“In the real world, if you were to invest in a company you thought would make you a tidy profit, you wouldn’t tell the senior management they had to make a product of your choosing, restrict the number of vehicles they purchased, or expand operations into a new country. Why should we do any differently in the social sector? Why not simply invest – fund – on the basis of return in the form of impact? Isn’t that the point?”

Kevin Starr, Stanford Social Innovation Review

Just as Kevin Starr “stumbled into philanthropy”, I stumbled into running an organisation. I’ve been fortunate to meet Kevin on a number of occasions, and we have a fair bit in common. For a start, we ended up in places we weren’t expecting, and we’re both graduates of the School of Learning by Doing. Although this approach can be painful at times, you often find yourself stumbling across answers you wouldn’t have if you’d followed a more traditional, established route. There’s a danger if all you ever do is stay in your comfort zone.

(I remember talking to my mother back in November 2002 when I’d just been offered my first piece of mobile consultancy. I was supposed to build a conservation portal on Vodafone live! but had never done anything with mobile before (very few people had back then). I accepted the gig, although I had absolutely no idea if I’d be able to deliver. A simple fear of failure drove me on over the proceeding twelve months).

Kevin has largely figured it out for himself, too (in between extended bouts of surfing) and the end result – the work of the Mulago Foundation – is as inspiring as it is simple. If you’ve not seen his Pop!Tech talk from last year, do yourself a favour and check it out.

In short, the Mulago Foundation looks for “the best solutions to the biggest problems in the poorest countries”. These projects need to answer four quite simple questions:

Is it needed?
Does it work?
Will it get to those who need it?
Will they use it correctly when they get it?

None of this is rocket science, of course, but it’s what comes after a project answers with four “Yesses” that you might argue was most innovative. Mulago provide unrestricted funding, the holy grail of fundraising. Funding is provided based on a vision, and a path to scale, and it’s down to the organisation to decide how best to spend the funds to achieve that. The rationale is really quite simple. As Kevin puts it:

If you don’t think an organization is smart enough to use your money well, don’t give them any

We’ve been very fortunate to have received critical – essential – funding for FrontlineSMS over the past four years (for the first two it was largely self-funded). Grants from a number of donors have enabled us to continually develop and build on what we started in 2005. The end result? A piece of software in use today in over a hundred countries, driving a dizzying array of projects.

Of course, there’s little use in developing such a useful piece of software if the organisation behind it isn’t able to survive and thrive in tandem. And this is one of the biggest challenges facing many organisations in the non-profit world, not just those focusing on mobile. Rightly, in most instances, there’s a growing expectation that NGOs need to figure out how to live without donor money, but that’s easier said than done (something I’ve also written about before).

About half-a-dozen donors can rightly lay claim to being a key part of the FrontlineSMS story, but when it comes to our organisational development there’s – so far, at least – just the one.

In the past 18 months there have been massive changes in how we go about our business. With roots in camper vans and kitchen tables, today we have offices in London and Nairobi, with another opening soon in Washington DC. We’ve gone from one person to around ten – with a dedicated developer team based in the iHub in Nairobi – and a single US Foundation to a UK-based Community Interest Company and a sub-branch in Kenya. We’re well on the way to resolving complex governance issues, appointing a Board and developing a number of exciting non-donor income streams, not to mention new mobile-based social change tools. A majority of this work has been orchestrated by an excellent senior management team, with Laura Walker Hudson driving things from the UK and Sean McDonald doing the same for us in the US.

Project-based funding is still a critical part of our growth and development strategy, but all of this has happened thanks to the fantastic support of the Omidyar Network who, like Mulago, fully appreciate the value of also providing unrestricted funding to their grantees. The Omidyar Network’s investment criteria is based on five key areas. According to their website:

Alignment. We look for organizations aligned with our mission of creating opportunity for people to improve their lives. We seek for-profit companies and nonprofit organizations that use innovative, market-based approaches within our investment areas.
Impact. We identify organizations that intend to develop new markets or industries, influence policy or practices among existing institutions, alter public perception, or demonstrate the power of business to create social and financial returns. Ideal partners will inspire further entrepreneurial activity in their field.
Potential for scale. We look for organizations with significant growth potential, with the ability to scale operations and develop new markets. We ask for-profits to have the potential for a highly successful business model and nonprofits a path toward operational sustainability.
Leadership. We invest in management teams with a proven track record in their field of operation and an ability to articulate a clear vision and strategy, reinforced by a viable business plan. The organization must practice exemplary governance with operational efficiency and controls, transparent practices, and disciplined financial planning.
Innovation. We seek organizations that employ creative, entrepreneurial strategies to accomplish their goals. Investees may disrupt the status quo, establish a new business paradigm, or pioneer services for untapped markets.

If you need living proof of what a strategy like this looks like, check out Omidyar‘s and Mulago‘s impressive grant portfolios. You can also follow Omidyar on Twitter.

There is much talk of innovation in the technology arena but less, it seems, on innovation in philanthropy. Thank goodness this is beginning to change. We are, after all, all in this together.

69 comments

1 Ken Banks { 08.31.11 at 3:25 pm }: Why we need innovative approaches to giving. "Innovative philanthropy & the quest for unrestricted funding" http://t.co/TM934mS
2 Cathryn Paine { 08.31.11 at 3:31 pm }: Why we need innovative approaches to giving. "Innovative philanthropy & the quest for unrestricted funding" http://t.co/TM934mS
3 mythomobile { 08.31.11 at 3:33 pm }: RT @kiwanja: Why we need innovative approaches to giving. "Innovative philanthropy & the quest for unrestricted funding" http://t.co/9uQQ28l
4 Pietro Turilli { 08.31.11 at 3:39 pm }: RT @kiwanja: Why we need innovative approaches to giving. Innovative philanthropy & the quest for unrestricted funding http://t.co/PHxsx3t
5 changefeed { 08.31.11 at 3:42 pm }: ->@kiwanja: Innovative philanthropy and the quest for unrestricted funding http://t.co/dO9xvgK
6 Fr@nthro { 08.31.11 at 3:53 pm }: #anthro blog post: Innovative philanthropy and the quest for unrestricted funding: “In the real world, if you … http://t.co/RLgFNxi
7 Greg Lloyd { 08.31.11 at 4:02 pm }: #anthro blog post: Innovative philanthropy and the quest for unrestricted funding: “In the real world, if you … http://t.co/RLgFNxi
8 Saleem Ali { 08.31.11 at 4:12 pm }: Why we need innovative approaches to giving. "Innovative philanthropy & the quest for unrestricted funding" http://t.co/TM934mS
9 Joel Selanikio { 08.31.11 at 4:58 pm }: Why we need innovative approaches to giving. "Innovative philanthropy & the quest for unrestricted funding" http://t.co/TM934mS
10 Bahiyah Y. Robinson { 08.31.11 at 5:29 pm }: Why we need innovative approaches to giving. "Innovative philanthropy & the quest for unrestricted funding" http://t.co/TM934mS
11 Michael Downey { 08.31.11 at 8:09 pm }: Innovative philanthropy and the quest for unrestricted funding http://t.co/ilclv81
12 TechChange { 08.31.11 at 8:31 pm }: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d
13 Tony Martignetti { 08.31.11 at 8:35 pm }: RT @TechChange: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d
14 Maryam { 08.31.11 at 8:36 pm }: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d
15 Innovative philanthropy and the quest for unrestricted funding | Global Health Hub { 08.31.11 at 8:47 pm }: [...] More here: Innovative philanthropy and the quest for unrestricted funding [...]
16 Craig Zelizer { 08.31.11 at 8:55 pm }: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d
17 Reed Stockman { 08.31.11 at 8:56 pm }: RT @TechChange: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d
18 Rich Roth { 08.31.11 at 9:14 pm }: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d
19 dap innovations { 09.01.11 at 1:45 am }: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d via @TechChange
20 Josep Maria Miró { 09.01.11 at 5:00 am }: RT @TopsyRT: Innovative philanthropy and the quest for unrestricted funding http://t.co/PZxpfrY
21 Susan Aktemel { 09.01.11 at 5:40 am }: RT @TopsyRT: Innovative philanthropy and the quest for unrestricted funding http://t.co/PZxpfrY
22 giulio quaggiotto { 09.01.11 at 6:29 am }: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d via @TechChange
23 Tony Roberts { 09.01.11 at 6:34 am }: Innovative philanthropy and the quest for unrestricted funding @kiwanja http://t.co/qdgAtTN #ict4d #innovation #funding #fundraising
24 Michele d'Alena { 09.01.11 at 7:08 am }: Innovative philanthropy and the quest for unrestricted funding | http://j.mp/oZo0ZK #socent #ict4d via @TechChange
25 Ken Banks { 09.01.11 at 9:21 am }: The rise of "innovative philanthropy". http://t.co/TM934mS #socent #innovation
26 Budd Hall { 09.01.11 at 9:26 am }: The rise of "innovative philanthropy". http://t.co/TM934mS #socent #innovation
27 Wits College { 09.01.11 at 10:16 am }: The rise of "innovative philanthropy". http://t.co/TM934mS #socent #innovation
28 helen milner { 09.01.11 at 10:45 am }: RT @kiwanja: The rise of "innovative philanthropy". http://t.co/HD3HuYQ #socent #innovation
29 Luis F. Solorzano { 09.01.11 at 10:57 am }: The rise of "innovative philanthropy". http://t.co/TM934mS #socent #innovation
30 Luis F. Solorzano { 09.01.11 at 10:57 am }: The rise of "innovative philanthropy". http://t.co/TM934mS #socent #innovation
31 Jaume Fortuny { 09.01.11 at 2:00 pm }: RT @kiwanja: Why we need innovative approaches to giving. "Innovative philanthropy & the quest for unrestricted funding" http://t.co/HsIWYxj
32 Celine Takatsuno { 09.01.11 at 2:36 pm }: The rise of "innovative philanthropy". http://t.co/TM934mS #socent #innovation
33 Omidyar Network { 09.01.11 at 3:53 pm }: Excellent post by @kiwanja, Innovative #philanthropy & quest for unrestricted funding: http://t.co/wHUmow4. Proud to support @FrontlineSMS.
34 Chris Oakley { 09.01.11 at 4:16 pm }: RT @OmidyarNetwork: Excellent post by @kiwanja, Innovative #philanthropy & quest for unrestricted funding: http://t.co/Ol9joVr.
35 Kyle Westaway { 09.01.11 at 4:18 pm }: RT @omidyarnetwork: post by @kiwanja, Innovative #philanthropy & quest for unrestricted funding: http://t.co/WS7O52t. @FrontlineSMS.
36 FrontlineSMS o/ { 09.01.11 at 4:20 pm }: Thank you! R/T @OmidyarNetwork Excellent post by @kiwanja on "Innovative #philanthropy". http://t.co/sRQkDdO. Proud to support FrontlineSMS
37 Nikki Gler { 09.01.11 at 4:23 pm }: Excellent post by @kiwanja, Innovative #philanthropy & quest for unrestricted funding: http://t.co/wHUmow4. Proud to support @FrontlineSMS.
38 CommonDeeds { 09.01.11 at 4:39 pm }: The rise of "innovative philanthropy". http://t.co/TM934mS #socent #innovation
39 LIFT Partners { 09.01.11 at 4:57 pm }: The rise of "innovative philanthropy" http://ow.ly/6iVZ3 RT @kiwanja #socent #innovation
40 FrontlineSMS:Legal { 09.01.11 at 5:04 pm }: RT @frontlinesms: R/T @OmidyarNetwork Post by @kiwanja on "Innovative #philanthropy". http://t.co/4Zhyx7J. Proud to support FrontlineSMS
41 Francesca Krihely { 09.01.11 at 5:04 pm }: RT @frontlinesms: R/T @OmidyarNetwork Post by @kiwanja on "Innovative #philanthropy". http://t.co/4Zhyx7J. Proud to support FrontlineSMS
42 Francesca Krihely { 09.01.11 at 5:50 pm }: Great piece by @kiwanja on innovative philanthropy http://t.co/i3qW0Ph
43 John A. Kenyon { 09.01.11 at 7:18 pm }: Innovative philanthropy and the quest for unrestricted funding http://t.co/ShE90EH
44 Patrick Maloney { 09.02.11 at 4:09 am }: You're right @kiwanja, @omidyarnetwork and Mulago are cool! http://t.co/GeDparm
45 TechChange { 09.02.11 at 6:58 am }: Innovative philanthropy and the quest for unrestricted funding http://t.co/k64o2vc
46 Kim V { 09.03.11 at 5:12 am }: Innovative philanthropy and the quest for unrestricted funding http://t.co/egzr0UB via @zite
47 Absolut Pablito { 09.03.11 at 5:27 am }: Innovative philanthropy and the quest for unrestricted funding http://t.co/egzr0UB via @zite
48 Brian Meyers { 09.03.11 at 2:58 pm }: Nice take on Innovative philanthropy and the quest for unrestricted funding http://t.co/HsCbNcF via @zite
49 miraj khaled { 09.03.11 at 6:34 pm }: #innovation in #philanthropy- @kiwanja iterates what is possible & how 2 do it! http://t.co/UfS3HJS #nptech #nonprofits #fundraising
50 Ajay Kumar { 09.04.11 at 7:41 am }: RT @kiwanja: Why we need innovative approaches to giving. "Innovative philanthropy & the quest for unrestricted funding" http://t.co/1WETg5S
51 appfrica { 09.04.11 at 7:56 am }: Innovative philanthropy and the quest for unrestricted funding http://t.co/ac4gWFY
52 MARIA { 09.04.11 at 8:02 am }: So how does one get in touch with you?
53 kiwanja { 09.04.11 at 8:10 am }: @MARIA – There’s a form on the main kiwanja website (see the “Get Involved” section). http://www.kiwanja.net
54 Aida Opoku-Mensah { 09.04.11 at 9:04 am }: Innovative philanthropy and the quest for unrestricted funding http://t.co/ac4gWFY
55 Edla Netland { 09.04.11 at 9:37 am }: RT @TopsyRT: Innovative philanthropy and the quest for unrestricted funding http://t.co/OclXpJu
56 Seth Cohen { 09.04.11 at 3:36 pm }: RT @kiwanja: Why we need innovative approaches to giving. "Innovative #philanthropy & the quest 4 unrestricted funding" http://t.co/rImzLrc
57 lisa cap { 09.04.11 at 4:00 pm }: RT @kiwanja: Why we need innovative approaches to giving. "Innovative #philanthropy & the quest 4 unrestricted funding" http://t.co/rImzLrc
58 Daniel Chavez Moran { 09.08.11 at 7:53 pm }: I’m of the opinion that, instead of being reductive, boiling things down to their bare essences can often lay bare simple truths. Those four questions laid out that way are a perfect example of that.
59 Erik Hersman { 09.15.11 at 10:44 am }: Innovation philanthropy and the quest for *unrestricted* funding: http://t.co/KRXWhD7K #giveandtech
60 Stacy Donohue { 09.15.11 at 10:48 am }: Innovation philanthropy and the quest for *unrestricted* funding: http://t.co/KRXWhD7K #giveandtech
61 Rebecca Peel { 09.15.11 at 2:00 pm }: RT @whiteafrican: Innovation philanthropy and the quest for *unrestricted* funding: http://t.co/tF7HMn0W #giveandtech
62 Ken Banks { 09.15.11 at 2:02 pm }: A few thoughts on "innovative philanthropy" of interest/relevance to #giveandtech discussions today. http://t.co/hRrg9Rai
63 The Institute { 09.15.11 at 2:04 pm }: A few thoughts on "innovative philanthropy" of interest/relevance to #giveandtech discussions today. http://t.co/hRrg9Rai
64 Charlie Beckett { 09.15.11 at 2:04 pm }: A few thoughts on "innovative philanthropy" of interest/relevance to #giveandtech discussions today. http://t.co/hRrg9Rai
65 Swagat Sen { 09.15.11 at 2:07 pm }: A few thoughts on "innovative philanthropy" of interest/relevance to #giveandtech discussions today. http://t.co/hRrg9Rai
66 Swagat Sen { 09.15.11 at 2:07 pm }: A few thoughts on "innovative philanthropy" of interest/relevance to #giveandtech discussions today. http://t.co/hRrg9Rai
67 Bill Siemering { 09.15.11 at 6:41 pm }: A few thoughts on "innovative philanthropy" of interest/relevance to #giveandtech discussions today. http://t.co/hRrg9Rai
68 Mawas { 09.15.11 at 10:12 pm }: #FF @kiwanja A few thoughts on "innovative philanthropy" of interest/relevance to #giveandtech discussions today. http://t.co/L3blG3HH
69 Laura Nicol { 10.21.11 at 6:51 pm }: RT @TopsyRT: Innovative philanthropy and the quest for unrestricted funding http://t.co/IOkJMxeN