Funders shouldn’t stop funding just because they can. In this article, Kevin Starr makes a strong case for the importance of unrestricted funding to nonprofits and having greater patience with outcomes.

Many funders, from small family outfits to marquee foundations, seem to operate under an unwritten rule that organizations should be funded for a limited time—say, two to five years—and then dumped in favor of newer, fresher faces.

It doesn’t make sense. Let’s say you invested in a company and things are going well. Your due diligence was solid, you made a smart bet, and it’s starting to pay off. Profits are growing, and so you what—pull your money? Of course not. If anything, you double down.

The role of philanthropy is to make up for market failure, to make vital stuff happen that wouldn’t happen otherwise. As long as an organization is taking on something important, demonstrates real, cost-effective impact, and continues to get better at what it does, it ought to get your money.

House under construction
Photo Courtesy: Environmental Protection Agency

When you provide money to an effective organization, your dollars have the same effect as everyone else’s. If those dollars are unrestricted, they’re even more valuable. A relatively small amount of unrestricted funding can make a big difference, even for organizations that you’d think were too large to notice.

There are so many benefits to staying the course. You get the privilege of working with wonderful people as they struggle and evolve, and the fun of seeing them year after year. You get huge efficiencies: less time prospecting, less due diligence, and of course, less time spent on fundraising and paperwork by the organizations themselves. You get leverage: Your continued funding is a vote of confidence that can attract and reassure other funders. You get a solid, vital network that grows with your portfolio.

Things usually take longer than we’d hope, because the people we fund are doing hard things in hard places. We don’t need less rigor, but we might need a little more patience. Stick it out.

This is an excerpt from the full article, which can be found here.

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Stanford Social Innovation Review

Stanford Social Innovation Review

Stanford Social Innovation Review (SSIR) is published by the Stanford Center on Philanthropy and Civil Society at Stanford University. It seeks to advance, educate, and inspire the field of social innovation by seeking out, cultivating, and disseminating the best in research- and practice-based knowledge. SSIR informs and inspires millions of social change leaders from around the world and from all sectors of society—nonprofits, business, and government. With webinars, conferences, magazines, online articles, podcasts, and more, SSIR bridges research, theory, and practice on a wide range of topics, including human rights, impact investing, and nonprofit business models.

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