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Social Purpose Organisations Should Seek Multiplier Effect Rather Than Just Money

Esteemed journal the Harvard Business Review has published an article about funding for social purpose organisations, or more specifically why ‘smart’ money, and a multiplier effect from funders, is better than ‘just’ money.

Simply writing checks to organisations in the social sector space, the article argues, won’t create the ambitious changes many philanthropists are looking for. Even the richest individuals and largest foundations don’t have enough money to end poverty, reverse climate change, or cure cancer.

Their staggering assets are tiny relative to the dollars involved in large, complex systems like education, the environment, and medical research. According to the HBR analysis, donations from institutional foundations and the ultrawealthy account for only 6% of the U.S. nonprofit sector’s funding.

To achieve breakthrough changes, donors need a multiplier effect—an approach that delivers many dollars’ worth of impact for each dollar invested. In short, they need to develop an investment model. To do so, donors must understand two fundamental areas: the methods of change that breakthrough results require. For funders and fundees of the sector this is an important read.

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