• There is a dramatic imbalance of power and lack of real dialogue between funders and social entrepreneurs.
  • Funders’ exertion of power manifests in compromises, ethical knots and budgetary jeopardy.
  • Some funders are showing a willingness to grapple with the power dynamic.

In September, five major US foundations pledged to do more to help grantees cover operating costs – including rent, technology infrastructure, decent wages, and other overheads. This is a welcome and positive step by foundation leaders. Yet it is only scratching the surface of what is desperately needed to support social sector innovators.

The real need is to address the dramatic imbalance of power and lack of real dialogue between funders and social entrepreneurs. It is a difficult discussion. The perception is that speaking up might jeopardize potential future funding. But if we are serious about catalyzing genuine progress on critical global social issues, it is imperative that we talk about the elephants in the room.

In 2019, we distributed an anonymous, practitioner-driven survey asking an international group of social entrepreneurs with an average of 15+ years in the sector, to identify barriers to scaling. Social entrepreneurs reported that the #1 barrier to scaling their organization is the lack of consistent access to capital – and they specifically cited the imbalance of power and the lack of real dialogue between funders and social entrepreneurs. This central issue undermines the very impacts that we all seek.

What power dynamics can look like

Here are some examples provided through our survey:

“A donor’s large contribution allowed us to provide tens of thousands of vulnerable African children with practical information via our solar and wind-up radios. However, the donor imposed excessive reporting requirements, allowed only 2% overhead, and her ongoing contract changes required $10,000 in legal expenses, resulting in a significant financial loss. I felt hoodwinked and ashamed.”

“A donor requested we turn our female employees into volunteers in order to ‘make our organization more financially sustainable.’ Obviously, we said no.”

“A development finance institution made their grant contingent upon our hiring an expensive consulting firm. The consulting fees we had to pay ate up a significant portion of the grant.”

“A well-known donor institution funded the distribution of our affordable medical devices to public health clinics yet refused to fund the training required for nurses/doctors to use the devices properly. We pushed back, arguing that improper use of the devices could cause life-threatening health complications. We struggled for months to fundraise for the training component from other sources because we couldn’t jeopardize safety. Eventually, they relented. But it was shocking we had to advocate so vociferously for patient safety with a name-brand donor.

Read the rest of the article at World Economic Forum (blog)