Foundations and other social sector funders have known for a long time that non-financial support is absolutely crucial in helping organisations achieve and sustain effective societal impact. But how to deliver the support which is needed and valued by your investees and grantees? How to fund and account for it? And how exactly do we assess its value add?
This is the subject of a key report that EVPA launched this month meant to help foundations and social (impact) investors recognise how they help grantees and investees beyond providing financing, while better communicating to the beneficiaries the advantage of this support. The research also offers fundersthe practical and proven tools to measure, evaluate and monetise this work.
The report was motivated by both the importance of non-financial support- which we define as support services to investees to increase their social impact, organisational resilience and financial sustainability – and the lack of comprehensive guidance on the topic. The value of non-financial support is largely underestimated; our research shows that in the VP/SI sector non-financial support makes up only 6.5per cent of Venture Philanthropy (VP) spend (we believe the actual investment in non-financial support is actually signficantly higher but that it is not accounted for).
The product of several months of research by EVPA and discussions by a 24-member working group of practitioners, academics and service providers, the report has given us a number best practices and key learnings inspired by those that offer this type of support every single day.
Below we share some of the learnings we came across as we developed this report:
- Define your core and train your team
Your Theory of Change (the social change you want to achieve through your investment strategy) should guide you in assessing what types of non-financial support you can provide to your beneficiaries, defining what is core to your strategy. The members of your team are your most important asset, so make sure you help them build the skills needed to deliver the core non-financial support.
- Take a needs based approach
There might be a difference between what your investee says it needs and what you believe it needs. It is crucial therefore that you take the time to perform a thorough assessment of the needs of the investee, and to ensure that you are able to offer the support that is needed. Develop a specific intervention/ delivery model for a specific recipient, rather than a ‘one-size-fits-all’ approach and make sure you carefully select partners that will deliver the non-financial support, based on good matching of the investee’s needs.
- Set terms, milestones and objectives
Clearly define terms and conditions, roles and responsibilities, delivery mechanisms, and scope of the non-financial support – this will help manage expectations on both sides and can be used by both parties as a pressure point towards the other to ask for the delivery of results or of support.
It is also good practice to co-develop milestones and target outcomes. In this way, you can provide these goals, and create ownership of the process and results within the investee.
- Consider the importance of networks
Consider the importance of access to network for your investees to learn, network and find additional funding. Peer to peer mentoring, organising investee meetings at global portfolio level and regional level, offering access to thematic networks, providing access to workshops and conferences are just some of the ways in which we’ve found that you can help.
A good local network is also crucial when working in countries that are far apart in terms of culture, as a good local partner can help you deliver non-financial support in a way that is aligned with the culture of the beneficiary.
- Evaluate and create feedback loops
Ensure you monitor and assess the non-financial support you offer; measure – ideally through an independent third party and using the tools in our report- how the investee perceives the value of the non-financial support it has been provided with, periodically, or at least at the end of the investment period. Measuring means that your learnings can inform the future non-financial support cycles, as they generate lessons learned as to what types of support investees value most and which are generating the best outcomes for your receipients’ development.
- Be transparent
Transparency and good communication are of crucial importance throughout the whole process. Whether it is being transparent as to what can/cannot be delivered in terms of non-financial support or about what is working for the benifiaciary and what is not, make sure you always keep an open and honest two-way dialogue going with your beneficiaires. This will go a long way!
The EVPA Guide can be downloaded free of charge here alongside a practical toolkit to account for the cost and monetised value and four videos from experts talking about its importance.
Dr. Lisa Hehenberger is director of research and policy at EVPA.
Priscilla Boiardi is research manager at EVPA.