Referring to my last post on social impact investment funding to a nonprofit: Why is this match complicated?
To start, there is an obvious and classic power imbalance here:
Them: In general, social impact investors reason that since they became wealthy through business, then business must be a logical way for the world’s poor to elevate their own lot. Not illogical thinking given what a poor job governments and nonprofits have been doing in solving this seemingly intractable problem. As the global rich add daily to their already impossibly massive wealth, millions of people – no, literally billions of people – wallow in the depths of poverty with little opportunity to change the unstable and precarious nature of their lives. These investors want to change that, and they have approached us to become a part of the solution. Holy moly – that is just so great!
But we really don’t know who they are. They are two anonymous people, from two different countries, one male and one female.
That’s it. That’s all we know. And they’re holding some pretty significant cards.
Us: We are an American nonprofit with core people in Canada, the UK and the USA. Our work is fueled by experienced, humanitarian professionals – almost all volunteers – with deep networks to sector NGOs, funders and technical experts. We work in 9 countries. Check out our website for more details HERE.
See what I mean about an imbalance?
The power imbalance lies not just in the fact that the investors hold some serious purse-strings. It also lies in knowledge about each other.
We lay our cards on the table for the world to see. Anyone with access to wifi can see who we are, our photo and a short bio. With that information, and using the web, due diligence is possible – investors can find much more about each and every one of us. They can use this information to decide whether we are worthy of their trust, whether we have a past that is squeaky clean (or checkered), and perhaps whether our values match.
We can’t do any of that. Beyond knowing that they want to support business initiatives to alleviate global poverty we know nothing about them.
Some of my initial questions run like this:
How much do they know about development work? Do they have global experience? Do they feel as strongly as we do about leveraging learning and sharing knowledge? Are they as committed to strengthening community; and does strengthening community come above strengthening any one business proposition?
What about their business reputation? Although we haven’t had to have a conversation with the Board about “funding acceptance policies”, we have agreed in principle that we need to do due diligence should a major funder step forward. Just as an investor wants to know that they can trust us, we need to be assured that we can trust them, and trust their motives for their social investment”
More on “trust” next posting.