Philanthropic support takes many forms. It can fund nonprofit programs that provide direct services to those in need; increase the capacity of systems so that programs can function more effectively and efficiently; fund research that underpins these programs; and support policy initiatives that are needed to sustain them. It can also back innovation with the potential for game-changing progress.
Across the many social impact areas our team has analyzed, we find that philanthropic support typically falls within one of four categories. Similar to financial investment asset classes, these categories often reflect different levels of risk, time frames for results, and social impact return profiles.
Here, we provide general guidelines related to time frame to impact, associated risks and rewards, measurement of results, and conditions for success. While not hard and fast rules, funders have found these guidelines helpful in choosing opportunities to pursue and in recognizing the tradeoffs in those choices. Nonprofits have also found these guidelines helpful in prioritizing activities and managing funder expectations.