Executive Summary: 'Non-Profit and Philanthropic Initiatives: Broad Strategy and Operating Principles'

In this post, I will share the Executive Summary of a document which discusses everything I learnt in my personal involvement, since 2007, with non-profit and philanthropic initiatives that were domiciled within the African context. The document can be downloaded directly here:

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This document discusses the main lessons that the writer learnt in his involvement, since 2007, with non-profit and philanthropic initiatives that were domiciled within the African context. The lessons are framed as broad strategic and operating principles.

The main frameworks that are used to advance the discussion include: a strategic framework which employs two dimensions — 1) Economic Growth and 2) Political Stability — to exposition: 1) the types of environments that non-profits operate in, and; 2) the strategic imperatives that are dictated by each type of operating environment. The concept of Embedded Leverage which is encapsulated in a framework with two dimensions – 1) A Project’s Incremental Funding Requirements, and; 2) The Time until the Project Yields Tangible Results – is used to advance a discussion on the ideal non-profit investment targets. In section 3.1, a framework which employs two dimensions – 1) Style (systems and procedures) and; 2) Values – is used to advance a discussion on the question of who to partner.

In Section 1.0, the writer argues that there are three main types of environments, as is shown in Illustration 1 —  below:

Illustration 1 (click on Illustration to zoom in)

As  Illustration 1 —  above — shows, there are:

• Environments with Low Economic Growth and Low Social or Political Stability: The turbulence in these environments tends to derail medium-to-long term projects. The best approach in such environments is to invest in one-off, short term — i.e. less than 1 year in duration — disaster relief projects as and when they avail themselves.
• Environments with Low Economic Growth and High Social or Political Stability: The aggregate funding that is donated to the non-profit sector is pro-cyclical. In environments of low economic growth, the supply of funding falls (while the need for an expanding social safety net is rising). Hence, the effective demand for philanthropic donations rises. This makes it possible to select high quality grant-seeking projects — with a duration under 3 years — that require financial technology and real assets.
• Environments with High Economic Growth and High Social or Political Stability: These are the ideal operating environments for most philanthropic initiatives. Projects that have an average duration of 5 years should be targeted in such contexts.

Section 2.0 opens with a lesson which can be abbreviated as follows: Do not deploy funds for the sake of deploying funds; particularly when there is a paucity of initiatives that conform to desired standards, or, if the environment is sub-optimal. 

In Section 2.0, the writer argues for non-profits to restrict their investment to projects with high embedded leverage; i.e. projects that have low Incremental Funding Requirements and a low Time until Tangible Results Become Visible. 

The writer uses Michael Milken’s prosperity equation in Section 2.3 to argue for a balanced approach to philanthropy, which starts by auditing the community to calibrate the available: human capital, social capital, real assets and financial technology.

Once the audit is complete, the writer argues for non-profits to focus their activities on the provision of deficit elements of Michael Milken’s prosperity equation. The writer closes off by asserting that a philanthropist should exclusively focus investments on communities with high social capital. That is; communities with grass root civic structures that can:

1. Be leveraged during the implementation phase of the initiative, and;
2. Assume control over the administration of the initiative once it has been successfully implemented.

In Section 2.4, the writer argues that non-profit initiatives are made or broken by an organization’s project management competence, which exists at two levels:

1. Project Manager Competence.
2. Organizational Project Management Maturity.

Section 3.0 argues for a philanthropist to seek partnership opportunities in which there is an alignment of the parties’; 1) Values and; 2) Style – i.e. the means to the desired end-states. The section also advocates a question-driven framework for assessing the strategic rationale of prospective non-profit partnerships. The constituent questions of the framework are:

Question 1: Who does what? 
Question 2: Why is it supposed to be done? 
Question 3: When is it supposed to be done? 
Question 4: How are the outputs measured? 
Question 5: What do they get in return for their efforts? [1]

In Section 4.0 of the document, the human resource mix of a non-profit is discussed. At the Board or Trustee level, the writer argues for the recruitment of people with the following broad skillsets: Geography, Finance, Behavioural Economics, Community Intelligence, General Non-Profit Domain Skills and Analytics. 

The writer argues against staffing project implementation teams with volunteers. The key argument can be summed as follows:

Most small to mid-sized non-profit initiatives attract low volumes of qualified potential volunteers. Thus, they are forced to recruit volunteers on a first-come-first-served basis; they cannot recruit selectively. This makes it difficult for them to staff each role with the best-suited candidate. Ultimately, this dilutes the potency of their efforts.

The document closes off, in Section 5.0, by arguing that non-profit initiatives, especially those that target to change the way a community acts and interacts, fail because their sponsors do not appreciate that all non-profit initiatives are change management endeavours.

Hence, non-profit initiatives necessitate change management resource capabilities and competencies [2].


[1] There is a subset of non-profits which is called Social Entrepreneurship ventures. These are basically initiatives that are set up by Social Entrepreneurs to provide public goods to underserved communities, or, to solve neglected social problems. They may, at times, operate using hybrid for-profit / non-profit structures. The best time to work with Social Entrepreneurs is in Low Economic Growth; High Social Stability environments and to assist them with Financial Technology and Real Assets. Generally, it is prudent to only work with Social Entrepreneurs who have solid track records of achievement in collaborative endeavours, have good reputations and come via recommendations from the philanthropist’s network. When a non-profit collaborates with Social Entrepreneurs, it has to be cognizant of the fact that the majority of them derive financial sustenance from the initiatives. Thus, it is vital to have clarity about how much of the invested funding goes towards the Social Entrepreneur’s remuneration. When engaging with Social Entrepreneurs, it is critical to only engage with those whose personal remuneration is more or less equivalent to the market rate that would be paid to professional project managers to implement a similar project. Generally, it would be wise to avoid initiatives where the effective social entrepreneur remuneration is over 10% of the project outlay. It is also important to focus on initiatives that are self-sustaining; initiatives that have the potential to snowball and assume a life of their own. When dealing with Social Entrepreneurs, it is important to give them detailed feedback when you reject their initiatives, and, to link them up to potential resources than can help to address the deficiencies.
[2] Helpful Resources on Managing Change: Change Paradigms: An Overview by Léon de Caluwé and Hans Vermaak and The Change Kaleidoscope from Exploring Strategic Change 4th Edition by Julia Balogun, ‎Veronica Hope Hailey and ‎Stafanie Gustafsson.