'Opting out' is OK in this funder-nonprofit dynamic

'Opting out' is OK in this funder-nonprofit dynamic

Posted on July 06, 2015 by Michael Corley, consultant with The Patterson Foundation

ngoYou have a good idea for your organization. You have the opportunity to receive free consulting to help implement that idea. However, you aren’t sure your organization has the capacity to execute on that idea. What do you do? Do you take the valuable, free consulting or not?

Most would view this scenario from the fund recipient’s perspective. In other words, we believe it should be the recipient’s decision whether or not to take the help. We would hope that they would say, “No,” unless they were sure they had the ability to execute. This is logical.

But, alas, decisions involving money aren’t always logical. In the nonprofit space, if a funder is willing to make an investment, the nonprofit organization would be hard-pressed to say, “No.”

Financial resources are limited, so when the opportunity to receive something of considerable value presents itself, the nonprofit leader is almost required to accept it. Not doing so might prevent future opportunities. The money creates the imbalance in power between the funder and fundee involved, and this often forces the fundee to accept money/resources it can’t optimally deploy.


To avoid this, we believe it is the funder’s responsibility to rebalance this dynamic so that the best decision can be made – even if it means the nonprofit does not accept the money/resources at this time. The Patterson Foundation (TPF) recently tested this theory with our latest initiative: Margin & Mission Ignition.

TPF engaged No Margin, No Mission to lead nonprofit organizations through three educational labs, 14 weeks of business planning coaching, and 14 weeks of implementation -- all followed by a year of support for developing an earned-income revenue stream.

We began with a wide net, inviting any organization with a profile on The Giving Partner to participate. Over 70 organizations attended the first workshop. With each successive workshop, and by design, the number of participants declined. This was intended to identify those organizations with the Leadership, Willingness, Readiness, Capacity and Culture to successfully complete the rigorous business-planning coaching and implementation programs.

So how did we rebalance the power previously mentioned? How did we make it OK for an organization to opt-out? In fact, how did we “encourage” those to opt-out if they knew they couldn’t successfully complete the program?

We educated each of the participants on the time and resource commitment necessary to move forward (candidly, we did this ad nauseam so there was a solid understanding) and we provided a financial incentive to postpone involvement until a future date.

After the second lab, any organization that continued into the third lab and beyond was given a mission honorarium of $2,500 to “opt out” and be given the opportunity to participate in the future. In other words, each organization was encouraged to look beyond its desire to continue and to sincerely consider its ability to continue. (The “opt-out” award was not significant enough to sway a decision, but rather an appreciation for the organizations’ efforts and frank self-assessments.)

Of the 70+ organizations that began the process, eight have moved into receiving consulting and coaching on their earned-income strategy. These organizations remained because they have the capacity to execute. On the other hand, each of those that selected to opt out after Lab 2 cited their “lack of capacity to execute at this time” as the reason for not continuing.


• We learned that nonprofit organizations are very concerned about what funders think.

• We identified the eight organizations most likely to successfully develop and implement an earned-income stream. (This will result in a higher ROI for our investment.)

• We created a shift in the power structure by allowing the other organizations to “opt out” at this time and participate in the future. It became their decision rather than ours.

• We compensated those organizations that had taken the time to come to the Labs and complete homework in-between those sessions.

• We created a level of trust with the nonprofit organizations, which ensured they would have the opportunity to participate in the future. Bottom line? They weren’t shut out by opting out.

  • Learn about these and other concepts used in TPF's approach to philanthropy.


Leave a comment

You are commenting as guest.