HOW DOES EC HELP FUNDERS?
The same way it helps nonprofits: by letting them focus more clearly on mission. The structural demands of nonprofit capital markets require nonprofits to “reverse-engineer” their efforts to meet funder demands; reducing those burdens frees up capacity to deliver impact.
Rodney Christopher, director of philanthropic services at Fiscal Management Associates, argues that enterprise capital allows high-impact leaders to think bigger: “The success of using philanthropic equity actually requires organizations to be strong and healthy. Surpluses are in fact necessary.” Equity-like investments also create a powerful alignment of interests between organizations and funders, and the long-term commitment can also allow for more comprehensive measurement of social return on investment.
According to Abigail Suarez, vice president of global philanthropy at JPMorgan Chase & Company, “What makes the concept of ‘enterprise capital’ so powerful is that by removing restrictions, funders give their nonprofit partners the right type of capital and, therefore, the power to achieve the kind of systemic change they both have been seeking.”