Thursday, February 26, 2009

Taxomony Please!

During the past six months, I think I’ve sat in about ten meetings during which nonprofit financing and capitalization—and new models of each—were discussed. The meetings included a mix of funders and nonprofit leaders and were usually led by someone with considerable background in finance and business. At a cursory level, the concepts and ideas put forward were intriguing and interesting. Any attempt to dig deeper, however, was a lost cause. Why? Because most of us didn’t (or don’t) have MBAs or have 20 years of experience as investment bankers or economists. But wait! Even the MBAs were confused, it turns out. After these meetings, some confided in me that they, too, “had no idea what all these terms meant” because “everyone uses them differently,” and it’s “mostly meaningless jargon.”

But few people want to admit that, especially publicly. So, no one asks basic questions or for clarity about key terms or concepts.

I have a suggestion that seems pretty simple on the face of it, but it’s never been done, to my knowledge. How about someone producing a basic “primer” outlining the spectrum of new revenue-generating approaches (as well as the terms related to them) for the philanthropy leaders and others who are not from the business/finance domains? Right now, we only seem to have monographs outlining very specific strategies and/or mind-numbing (mostly) theoretical treatises.

Providing a clear and straightforward summary about these approaches and clarifying terms in plain English would be a major benefit to the field and help philanthropic institutions and nonprofits—many of whom roll their eyes and tune out as soon as they hear the words “metrics,” “benchmarks,” “investments,” “capital,” and others—better understand what these mean and why they are important. With more understanding, in turn, nonprofits and philanthropic institutions might be more amenable to experimenting with these approaches, rather than throwing up their hands in frustration and walking away (as some funders have done).

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