Beanstalk Foundation

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Rethinking Nonprofit Funding

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Rethinking Nonprofit Funding
How Beanstalk is doing more

In second grade, I learned about bean plants. Nursing them from seed to stalk in Ziploc containers, I watched them sprout their first leaves, make their first flowers, and begin laying down roots in the world. I grew fond of my little plastic-bag plants with their tender leaves and tousled roots. Then the dark days of second grade came to pass, and my bean plant babies were taken away…

One afternoon, the plants were systematically sorted into three groups. The first group was starved of water, another of light. The last group had no air. Within a week, withered plants were all that was left. The lesson was clear—even to a 7-year old; if any one of the essential ingredients for life is missing, an organism won’t survive.
 
Unfortunately, many nonprofit organizations face a plight similar to that of my second-grade bean plants. Nonprofits play a valuable role in society, providing vision, services, and hope where business and government can’t or won’t. However, in an economic system where investors flock to ventures with rapid returns, nonprofits struggle to access the investment, human capital, and attention they need to help their ideas take root. Many live hand-to-mouth on fundraising drives, charity calls, and tenuous and perpetual grant cycles. Before long, leaders become occupied with securing the ingredients they need to survive, and running a nonprofit gets in the way of running a nonprofit. Leaders run out of air. Services dry up. Communities starve.
 
This starvation diet is not only the norm for nonprofits—it’s widely promoted. Grant-making organizations, donors and banks often reject nonprofit requests for salaries and other investments needed to expand. Charity rating systems also love starving nonprofits—the lower an organization’s administration and development costs, the higher its marks for efficiency and impact. Even as individual donors, we’ve come to trust that a “mean and lean” nonprofit is the best place to send our checks because there’s no uncertainty in how it will be spent. Our expectation is simply a social profit—charitable services delivered at a fixed cost (and maybe a tax write-off…). We mistakenly believe there’s no opportunity for our money to do more.
 
The Beanstalk Foundation is writing the script for a new kind of nonprofit, one that turns charity into social enterprise, and fills the plate instead of passing it. Beanstalk is building off of past innovations to improve the future. They’re taking crowdfunding to a new level—raising $250,000 for Colorado nonprofits in five years through online campaigns, and investing in community leaders so they don’t burn out and have the capacity to expand their reach. Beanstalk is practicing what Acumen Fund founder Jacqueline Novogratz calls “patient capital”—building the self-reliance and bottom line of social enterprises and nonprofits.
 
One powerful example of patient capital is Beanstalk’s recent loan to Blue Star Recyclers, a nonprofit partner of Beanstalk Foundation based in Colorado Springs. Not only did their $73,500 loan produce a social return on investment by creating meaningful work for the disabled, it reduced thousands of pounds of e-waste and saved nearly $20,000 per worker in reduced government benefits. This “triple bottom line”—Social, Environmental, and Economic—generated by Blue Star is proof that a financially successful social enterprise extends its organization’s and investor’s impact even further.
 
In second grade, I could see that depriving an entity of any one of its essential ingredients for survival resulted in its death. If we can see that we’re denying good nonprofits the investment, human capital, and attention they need, aren’t we obligated to do something? It’s time to blur the lines between business and benevolence, and to find profitable ways to provide nonprofits the ingredients they need to survive. This means investing in innovative social enterprises, so they can raise the dollars necessary for sustainable, systemic impact. It also means taking calculated risks— understanding that while some may fail, others will leverage our return on investment like never before. In the words of Beanstalk’s founder, Ted Stolberg, “we must rethink the way we work with and fund nonprofits.” If we don’t, we will deprive our nation of what it needs to solve the complex problems of our time.
 
- Garrett Mayberry 
Cover photo by charlief via Flickr. Creative Commons: Some rights reserved.