3 creative approaches that leading non-profits are using to achieve scale and drive outcomes
Comprising 600,000 organisations, Australia’s non-profit sector accounts for 4% of national GDP. The sector has annual revenues of more than $100 billion, assets of almost twice that, and it employs around 8% of Australia’s workforce – four times more than the mining sector.
Yet, despite their aggregate economic clout, non-profit organisations often struggle to grow.
Through technology, non-profits can reach thousands, as opposed to hundreds, of people.
The issue for directors is unique to the nature of the sector. Donors prefer their dollars to be put towards the cause, not administration costs. But, if your organisation doesn’t make profits, how do you invest in the technology, people and innovation required to remain relevant and do more good?
As Global Head of the Macquarie Group Foundation for more than five years, Lisa George sees the work of thousands of Australia’s most innovative non-profits. She says many in the sector are responding to this challenge by using creative approaches to increase their impact.
1. Going digital to achieve scale
“Like many for-profit organisations, non-profits that have traditionally offered face-to-face service delivery are now discovering the power of digital to scale up at a dramatically lower per-client cost. Through technology – apps and online platforms – non-profits can reach thousands, as opposed to hundreds of people.”
George says examples include The Smith Family’s iTrack online mentoring program that matches high school students with corporate mentors. The online sessions give students encouragement and advice and guidance about workplace, study and career opportunities from professionals around the country.
She also cites the work of Hello Sunday Morning, which has designed the Daybreak app to support people to change their relationship with alcohol. “Whether it’s taking a break from drinking or simply cutting back, the app helps people to develop new habits with immediate support from the Daybreak community and one-on-one sessions with health coaches.”
To succeed, non-profits need to demonstrate a culture of focusing on outcomes, which comes from the leadership down.
Daybreak was the 2015 recipient of Macquarie’s Australian Social Innovation Award, which recognises an organisation’s contribution to the community through an innovative solution that has addressed an unmet social need.
George says the award was established because “there’s not a lot of risk capital in non-profits. The sector needs a way to seed innovation and help new ideas to get off the ground. The $100,000 grant is essentially scale-up funding for early-stage innovations.”
The 2017 award winner was the Cerebral Palsy Alliance’s ‘Remarkable Accelerator’ program. “This is Australia’s first disability tech-focused start up accelerator, working on new and improved treatments and interventions for people with cerebral palsy and other disabilities.”
2. Focusing on outcomes
George says another notable trend is changes in how non-profits measure their impact.
Robust evaluation is expensive. But, without it, you can’t demonstrate the value you are delivering.
“Ten years ago, most non-profits were still relying on anecdotes and activity levels – ‘we’re working with 1,000 children’ or ‘we gave away 500 pieces of clothing’. Today, organisations are focused on the material outcomes of their support. What metrics have actually changed? Have literacy outcomes improved? Are students staying in school longer?”
She points out that this is also being driven by government’s move towards outcomes-based funding and social benefit bonds. “In general, the expectations of funders and donors are shifting. Contracts are being drawn up to reward outcomes not activity levels. It’s a very different market place.”
“To succeed, non-profits need to demonstrate a culture of focusing on outcomes, which comes from the leadership down. You need real rigour and processes around measurement, from collecting baseline data, to choosing meaningful metrics.”
Done carefully, collaboration should be part of how all non-profits operate.
George concedes that measurement is costly and resource intensive. “It’s another tension for non-profit boards to consider. Robust evaluation is expensive. It takes people, expertise and systems to make it work. But, without it, you can’t demonstrate the value you are delivering.”
“Boards should think about partnering with their funders to improve evaluation. At the Macquarie Group Foundation, we often work with our grantees and invest in training and tools to build internal capacity.”
3. Engaging in collaboration
With non-profits vying for public attention and dollars, George says many organisations are considering merging with their ‘competitors’.
“We’ve seen a lot more merger activity in the last two years, especially in the employment and disability sectors. Part of this is about creating a big enough offering to compete for government tenders. But I think, in general, people are asking: ‘Why compete for the same dollars?’ Of course, you don’t have to merge. Often, it’s enough to come together as a consortium, as we’ve seen in some recent tenders in NSW.”
“I believe that, done carefully, collaboration should be part of how all non-profits operate. If you’re looking to achieve a greater social impact, you can’t do that alone. You need to collaborate with others in the community whose interests align with or complement your own.
“For example, we funded an innovative research fellowship for a new study looking for overlaps between two autoimmune diseases – multiple sclerosis and type 1 diabetes. This was the result of two organisations coming together for a common purpose. I think there’s a lot more non-profits could do to leverage collaborative resources.”
One area George believes has hardly been tapped is for non-profits to use corporate donors in more creative ways.
“Most big companies have some sort of in-kind donations or pro bono support. Non-profits need to take that further. Maybe it’s not just about using corporate staff as volunteers. Maybe you use corporate resources to help you innovate your business model or develop your people.”
George says training is largely overlooked. “Corporates spend large amounts of money developing people. It’s no different in the non-profit sector. Yet, very few organisations allocate resources to skills training. I’d argue that, if you don’t have engaged people, you’re only going to get so far. The sector is professionalising rapidly. Non-profits should work with their networks to provide appropriate development.