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Why Nonprofits Don’t Make Mistakes

By Lande Ajose

In the private sector, generally speaking, there is generous room for mistakes. In an R&D function, private companies can spend a lot of money trying and testing a problem, and failing, without the fear of having to make their learning known. Eventually they unearth the positive lessons, bury the negative lessons and move on.

For nonprofits dependent on foundations for resources, R&D is a little tougher. Particularly in this era of accountability, nonprofits are ever-conscious of spending their resources on something that delivers more quantifiable outcomes and impact—or at the very least, some best practices or lessons learned.

In a double whammy for nonprofits funded by foundations, they are also obliged to “learn in public.” NGOs spend a lot of time writing progress and grant reports that give their funders a front-row view of the sausage-making, when they would almost certainly be more comfortable just serving the sausage. It’s a lot easier to learn in public when there’s not so much at stake…like next year’s operating budget.

In The Revolution of Scientific Thinking, Thomas Kuhn makes an argument that significant breakthroughs in knowledge only come about after a long series of smaller breakthroughs. What does that mean for nonprofits that exist in an environment where risk taking, experimentation and making mistakes is not generally permissible?

How can we bring about innovation and new ideas without a chance to make mistakes first?

Luckily, there are some things foundations can do, many of which are already “best practices”:

  • Commit to Longer Multi-year Funding
    The usual conversation about multi-year funding extends just three years out. Yet few organizations are able to create the kind of impact they want to see in that period of time. In a three-year timeframe, nonprofits focus on how to achieve their outcomes quickly, not on what might be the best way to achieve their outcomes. But what if the industry standard for multi-year finding were five years instead of three? How “freed up” would nonprofits feel to be creative, experiment and trust their funders to be thought partners or critical friends, rather than banks? How revolutionary would that be?
  • Provide General Operating Support
    Part and parcel of multi-year funding is providing general support rather than project dollars. Much, of course, has already been written on this. While project dollars may provide some degree of accountability (showing how a foundation’s resources are being spent), they rarely lead to dramatic new insights or findings about how to do the work. They don’t allow a nonprofit to try a new programmatic approach, hire a crackerjack staff person or engage in a strategic thinking exercise to resolve a particular problem. It’s general operating support that provides a cushion for dramatic advances in an organization’s thinking. With more support like this, nonprofits really could change the world.
  • Foundation Advisory Council
    Too often, nonprofits lose out on the very value foundations have to offer: their extraordinary insights and bird’s-eye perspective on a problem. Instead, nonprofits treat foundation staff as people to keep at arm’s length, unless and until you’re looking for dough. This is quite rational. There’s a power imbalance between nonprofits and foundations. Every time a program officer opens his or her mouth to be helpful, that friendly suggestion may in fact be more of an edict in “friendly suggestion” clothing. This dynamic is amplified by foundation staff themselves; one step removed from the action, they often like the process of tinkering in an organization’s business. Yet there must be a way to more fully capitalize on the knowledge that program staff bring to bear and to mitigate their impulse to tinker. What if nonprofits developed a specific forum, such as an advisory council, where foundation partners could be engaged and consulted for their expertise and offer their perspective? This would help channel program staff’s energy and allow the nonprofit to control the agenda, providing some parameters for the foundation’s contributions.An advisory council of program officers might also have a self-policing effect. With a collection of program officers from multiple institutions in the room, no one foundation’s perspective would hold sway; instead, the foundation staff could focus on the problems the nonprofit is trying to solve, rather their own foundation’s agenda.

The irony in all this is that most funders intentions are pure; they really do want to find productive ways to help their grantees and ensure organizational stability and success.

Now, if the field would just change its own best practices enough to allow nonprofits to have safer failures and, consequently, revolutionary breakthroughs….