August 25, 2022

Four steps funders can take to invest in organisational well-being

Through the pandemic, nonprofits did what they could to support their teams. Now, it is time for the funding community to redesign their approach to grantmaking.

6 min read

The course of COVID-19 in India brought to light some fundamental gaps in the way we have looked at nonprofit organisations and their work so far. While grassroots organisations across the country extended themselves to provide relief during the pandemic, many of them did not have the budgets or the reserves to pay their staff appropriately or provide financial support to them when they or their families were afflicted by COVID-19. This despite close to USD 1.27 billion being donated in 52 days to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) fund for COVID-19 relief.

A key reason for this fallout is the lack of resources that have historically been invested in organisational well-being. While most funding and capacity-building efforts have focused on helping nonprofits ‘perform’ better, what has been missed out is a structural lens that looks at organisational culture, policies, and practices that promote employee health and safety, thereby furthering organisational effectiveness.

It has been demonstrated already that a healthy organisation is more conducive to successful operations. This underlines the strong link between a team’s well-being and profitability. And it makes sense. If we look at only the delivery of work that needs to be done, it is easy to see that if we really cared about outcomes, we would need to focus on the people who ensure outcome delivery. In fact, according to a study conducted by professors at Harvard Business School, organisations that fostered a culture in which employees could work together, surface their weaknesses, and get help to overcome them found that not only were team members growing and learning, but the organisation as a whole was also performing better.

So why are we seriously looking at the well-being of organisations in India’s social sector only now? I think the answer lies in the pressure test that the pandemic put us through. Both globally and in India, there was unprecedented work–life integration; social distancing drastically changed how employees worked, and as teams on the front line began collapsing due to a lack of support, leadership teams across the globe were forced to pay attention to their team members’ mental health.

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And while over the course of the last 18 months nonprofits across the country have been doing what they can to support their teams, it is now time for the funding community to introspect and redesign how we approach our grantmaking.

The role of funders in building organisational well-being for their grantees

The way a nonprofit organisation is structured is not conducive to sustainability. As funders we hold and decide the disbursement of the very resources that nonprofits need to survive, and as such there is an inherent power imbalance. It is therefore our responsibility to be accountable to the grantee organisations we work with, and to their missions that we have decided to support. One very direct way to do this is by helping build resilience and well-being into the DNA of these organisations. Because without us, they will not have the resources they need to put the required practices in place.

So what steps can we as funders take today to help our nonprofit partners build organisational well-being?

1. Invest in financial resilience

Most funders today are focused on helping their nonprofit partners achieve outcomes or create impact through a project. This is the first mindset shift that we need to implement—we have to move from supporting a project to supporting their purpose. We will always have metrics that help us decide how we structure our grantmaking. But in addition to those metrics, we need to be asking ourselves how we can build the capacities of the organisations we work with, how we can influence their ability to advocate for change in a positive manner, and what we can do to help further their mission and vision.

Once we shift our lens from project to purpose, it becomes easier to understand why nonprofits need to build financial reserves, and what we can do to help them. Some ways to invest in an organisation’s financial resilience include developing multiyear partnerships (instead of only annual contracts); understanding the funding gap between indirect costs and available budgets, and seeing how we can bridge it by investing in resources for strategic planning and/or technological infrastructure; and supporting the building of a financial corpus.

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Nonprofits that were able to invest in their own development grew 2x faster than their counterparts | Picture courtesy: Rawpixel/CC BY

A lot of funders have traditionally looked down on some of these practices, especially investing in an organisation’s corpus. It is looked at as a ‘waste’ of resources. However, our partnership with the Pay What It Takes initiative has repeatedly shown us that organisations need this support. According to a financial analysis by the Bridgespan Group, only 18 percent of the 388 organisations surveyed invested in organisational development, which is fundamental to scaling impact, and 80 percent reported that a lack of flexible funding limited their ability to innovate and improve programmes. The nonprofits that were able to invest in their own development grew 2x faster than their counterparts.

2. Invest in team members

As people working in social impact, it is understandable that we want the best outcomes, the best results, and the best quality reports. What we need to recognise, however, is that to achieve this, we need to invest in, and value, the people who will be delivering them.

It is imperative that we create feedback loops with our nonprofit partners.

More often than not, nonprofits work with extremely difficult mandates. Their teams are on the ground, embedded within communities, creating impact despite their limited resources. Given this, it is imperative that we create feedback loops with our nonprofit partners so that we are able to ascertain not only what resources are needed, but also how programmes need to be changed (in real time) and what we can do to help support these efforts.

In terms of resources, we can invest in learning and development (including leadership courses, skill building, and mentorship) so that our partner organisations are more equipped to address the changing needs of their communities. In fact, according to a 2021 report released by Topia, 53 percent of employees say that the opportunity for career growth and development through training, job rotation, or international assignments create an exceptional employee experience. Similarly, supporting the acquisition and retention of talent that helps an organisation’s internal functions—human resources, communications, finance—enables the creation of a structure that is better placed to look out for team members. This can be through the creation of stronger policies, the implementation of open communication channels, or the ability to pay people adequately.

And, lastly, we need to include line items in our grants that allow organisations to directly look after their team members’ mental and physical well-being. This could be in the form of allowances for paid sick leave, mental healthcare, or other medical care.

3. Invest in inclusive policies

Policies help organisations function smoothly and provide security to their team members. And as funders it is our responsibility to support the costs that come with enabling an organisation to create robust, thorough, and inclusive policies. Whether it is by bringing in experts ourselves, or supporting the costs of our nonprofit partners doing the same, we need to ensure that the organisations we work with are able to create and regularly update their insurance, sexual harassment, anti-discrimination, mental health, and leave policies.

One way to do this effectively would be to make space for annual feedback in conversations with nonprofit partners. Understanding what their policy needs are and enabling your partners to learn from one another will help bridge the gap faster and more effectively.

4. Change peer mindsets

As funders we have to actively start championing the need to centre and fund well-being at an organisational level. It is our duty to educate and encourage our funding peers to do the same, and there are a few steps we can take to do this successfully.

First, it is imperative that we lead by example. We need to examine our own grantmaking policies and take the necessary steps to ensure that we are demonstrably building our nonprofit partners’ resilience and investing in their well-being through capacity-building grants, core funding support, policymaking, or a combination of the three.

We should consider creating spaces and structures that allow more funders to experience the benefits of funding organisational well-being.

Once we have done this, we can join forces with peers who are on the same page as us—for instance, Bridgespan’s Pay What It Takes initiative brings together five philanthropies in India and creates a pool of resources to address the problem of chronic nonprofit underfunding in the country. Coming together also enables the creation of non-monetary resources that are needed to further the conversation on organisational well-being. Research papers and case studies highlighting the significance of collaborative philanthropy and its benefits for example, could go a long way in changing how nonprofits advocate for themselves and funders approach their grantmaking.

Lastly, we should consider creating spaces and structures that allow more funders to experience the benefits of funding organisational well-being. This is something we initially tried at EdelGive Foundation through a structure called At the Same Table (ATSTs), which brought together a group of funders to discuss the importance of supporting capacity building in nonprofits, as well as steps on how to do so. Each ATST was designed to showcase a grassroots organisation and curated to spark conversations on how philanthropy can enable what was required for the organisation to grow. In fact, one of the earliest conversations around pay-what-it-takes philanthropy—a proposition we endorse and is integral to GROW—was hosted by us in association with Bridgespan and ATE Chandra Foundation in 2019.

Today we are trying it again, but through the creation of a financial structure (GROW) that brings together funders to support the non-programmatic costs of 100 nonprofits across the country. And what both these experiences have taught us so far is that funders are a lot more willing to take the leap into supporting organisational well-being when they can learn from one another, and do it in a collaborative manner.

As funders it is time for us to take an active role in advocating for nonprofit resilience. And the only way to do that is to practice it ourselves, and show our peers that it is possible.

Know more

  • To understand the problem of underfunding in the social impact space, read this report by Bridgespan, based on a survey of 388 nonprofits.
  • To learn more about the importance of well-being at an individual and organisational level, check out ‘Centred Self’–a series published by IDR.

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Naghma Mulla

Naghma is the Chief Executive Officer (CEO) and member of the Board of Directors at EdelGive Foundation. Over the last eight years, she has enabled growth for the organisations the foundation supports and fostered strategic partnerships within the philanthropic network. She has also developed and nurtured two large collaboratives that are working to support education for children and economic and social empowerment of women. Naghma is a Chartered Accountant from the Institute of Chartered Accountants of India (ICAI) and has a MCom degree from Pune University.