How to: set your investee up for success with non-financial support
The right support can make or break a social venture. But what does really good non-financial support look like? Impact Network LATAM and Latimpacto share four key insights from a new toolkit for investors.
Financial capital alone is not enough to help social purpose organisations build a sustainable world. We also need to ensure a bigger bang for each buck. This means not only ensuring that social investments and programmes achieve greater impact, but also ensuring that their impact becomes sustainable in the long-term.
To achieve this, social purpose organisations need help to build their resilience, attract and develop talent, improve impact management and measurement capabilities, and gain access to markets, investors, infrastructure and networks. In other words, they need non-financial support.
However, there is little information in Latin America on what non-financial support is provided, nor how it is provided, particularly when the support is aimed at generating impact through impact organisations.
As a result, Impact Network LATAM and Latimpacto, two Latin American impact ecosystem builders, joined forces to design an interactive toolkit for non-financial support providers. We identify trends and best practices, and share case studies and tools to help providers better structure, manage and measure the non-financial support they offer to social purpose organisations. The toolkit includes the insight of more than 80 non-financial providers and 60 social purpose organisations and builds on the great work of other organisations such as EVPA. Although most of the data is drawn from Latin America, we believe the content is relevant for capital providers worldwide, and for this reason have made the toolkit available in English, Spanish and Portuguese.
Here is what we have learned so far.
1. Think: selection, selection, selection
Selecting the right social purpose organisation is key. According to IC Fundación, a private foundation that supports the growth and development of rural cooperatives in vulnerable communities in Colombia, the success of a non-financial support programme hinges on a sound selection and assessment process.
Some factors to take into account include:
- Mindset: Does the organisation have a mindset towards growth? Will the organisation take ownership and work collectively?
- Impact intentionality: Does the organisation have an explicit intention to create and measure positive social and/or environmental impact?
- Alignment and context: Do the organisation’s values and local context align with the provider’s non-financial support strategy? Does it align with the provider’s investment argument and/or theory of change?
- Conflict of interest: Will the involvement of the provider cause a conflict of interest with respect to the organisation’s activities, processes or value chains?
- Expectations: What are the organisation’s expectations regarding non-financial support?
2. Tailor your support
To be effective, non-financial support programmes need to be tailored to the specific needs, stage of development, context and priorities of the social purpose organisation. Hence it is important for the provider to clarify the “why” and the “for whom” of its programmes.
It is important to clarify the “why” and the “for whom” of your programmes
To design an effective work plan, the non-financial support provider must first:
- Map all potential non-financial support services it has to offer;
- Assess the social purpose organisation’s needs and prioritise them;
- Develop a tailored workplan aligned to the provider’s resources and the organisation’s capacity.
For example, Fundación Bolívar Davivienda, a corporate foundation that supports and bolsters high-impact, transformative projects, underlines the importance of alignment. To this end it requests social purpose organisations to complete a self-assessment, and based on the results, suggests some online courses. Organisations that complete the training are then matched to mentors. Mentors and mentees are required to attend a “speed-dating” beforehand, to ensure the right fit.
As Peter Drucker once said, “You can’t manage what you don’t measure.” And if you don’t measure it, you can’t improve it either. According to our research, 50% of those who provide non-financial support do not evaluate its impact. And the vast majority of non-financial support providers do not have a sense of what their services cost to design and deliver. At a minimum, providers should consider the following questions:
- What is the cost of each service? Is it pro-bono, 'low-bono', or market rate?
- Has the non-financial support helped the social purpose organisation to achieve its objectives?
- How does the social purpose organisation perceive the value of the non-financial support that is has received?
There is little research to date on putting a monetary value on non-financial support. We have made an initial attempt by providing a template to this end, as part of our toolkit.
Half of those who provide non-financial support do not evaluate its impact
4. Innovate and iterate
Non-financial support providers need to start specialising and improving their service offering based on data, including identifying what really drives impact, what services exist and are missing, and gathering and sharing insights that can better guide social purpose organisations.
The use of technology, besides being a channel for delivering services, needs to be taken more seriously. A great example is LUUM, a business support organisation that helps local entrepreneurs to connect with global markets. It uses data insights to help entrepreneurs identify market opportunities and optimise its inventory and logistics.
Financial support is critical for social purpose organisations to survive and grow. Nonetheless, it is non-financial support that can make the difference between modest, short-term results – and long-term, sustainable impact.
- Fernanda Achá is an impact project leader at VIVA Idea; Alan Wagenberg is the director of knowledge management at Latimpacto.
Header photo credit: IC Foundation
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