High-Engagement Funders by Irene Park & Shikha Dalal

The 2008 Cohort of the Student Social Venture Fund at NYU’s Stern School of Business recently hosted a panel discussion and networking session entitled, “Full Contact Funding: The Good, the Bad, and the Ugly of High-Engagement Funding Relationships.”  The discussion revolved around the positive and negative aspects of high-engagement relationships from both the funder and grantee perspective, and the strategy and evaluation processes that transpire when funders decide to finance these projects as capacity building initiatives.  To begin, let us take a deeper look at the current definition of high-engagement funders.

According to a 2004 report developed by Venture Philanthropy Partners and Community Wealth Ventures entitled “High-Engagement Philanthropy: A Bridge to a More Effective Social Sector,” the characteristics of ‘high-engagement philanthropy’ are defined as specific ways in which funders (investors) are directly or personally involved with their grantees (investment partners) beyond just providing financial support.  In addition to funding, a typical high-engagement funding relationship provides capacity building support by offering technical assistance, such as strategic planning, leadership development, external relationship facilitation, and programmatic development. 

Ultimately, funders are very selective, investing a great deal of time in understanding the inner affairs of each nonprofit to see if there is an alignment of core mission and values, and to ensure grantees have the capacity to utilize its financial assistance.  Nonprofits see a clear benefit with this type of partnership, i.e. resources and support to strengthen the infrastructure of the organization, which plays a large role in the successful program development and implementation of the funding they received.

The panelists included members from the nonprofit and foundation worlds; however, there was no representation from the for-profit sector.  As consultants who work with corporate funders who strive to be as engaged as possible, we questioned why companies were not included in the discussion let alone considered high-engagement funders. 

As the corporate sector evolves in its social engagement, businesses are adopting a more strategic giving platform that ties its investments to its core business model to achieve a sustainable community relationship.  Companies are no longer just “cutting checks” but offering more tactical grant support to further the return on their investment.  In a similar vein to other high-engagement funders initiating a relationship with grantees, companies are adopting a more selective process in determining appropriate organizations to fund and are more invested throughout the relationship. 

As community involvement becomes an important measure of good corporate citizenship and can have a great impact on brand image, companies understand there is a level of expectation from the public they must fulfill.  This becomes a dual benefit as companies are responsible to their stakeholders and to their bottom line.

In addition, companies have lots of reasons to be considered highly engaged not least among is the desire to reap benefits among its employees.  Case in point: the 2008 Deloitte Volunteer IMPACT survey of Fortune 500 human resource managers indicates that 91 percent of respondents agree that skills-based volunteering (which involves the contribution of business knowledge and experience to help nonprofits increase their capacity) would add value to training and development programs, particularly as it relates to fostering business and leadership skills.

As the strategic giving platform trend continues onward and upward, companies are working all the harder to invest more than just their dollars in the community.  This movement mirrors how current high-engagement funders are approaching funding relationships today.  What do you think, FLiPs?  Can corporations be high-engagement funders, too?

Irene Park & Shikha Dalal are Associate Directors in Changing Our World, Inc.’s Corporate Social Engagement practice, which advises corporations on planning and implementing effective community involvement programs.