Funding for systems change needs much greater alignment among funders and grantees.

A constant struggle for those working in social change is gaining access to enough resources to do the job well.  The struggle is even deeper for the changemaker aiming at systems change.  Why is it harder to get the resources needed to tackle issues from a systems perspective?  Systems change is not a project.  The work is longer-term and has harder to define cause and effect.  Systems change work is more complicated to explain or “sell” and a riskier type of investment, as the work is constantly evolving.

Without sufficient funding, it is difficult for teams to do their work well.  Without the right kind of funding, teams can get pulled in directions that veer from the focus on the bigger change at hand.

Systems change requires flexible, mission-related funding.  Systems change also needs funders that contribute to a realistic and fair share of administrative costs. In exchange, systems change work must be aided by the right financial management systems and information to enable both funders and organizations to track effectiveness.

Our organization is committed to playing a role in advocating that nonprofits, the philanthropic sector, and even impact investors structure funding with greater consideration for the full context in which social organizations operate. Unrestricted funding has been wrongly equated to overhead or administrative costs because “unrestricted funds usually go toward the operating expenses of the organization or to a particular project that the nonprofit picks.”   The concept of unrestricted that we would like actors in the field of systems change to consider is of general operating support, which is one of the most effective strategies grantmakers can use to boost impact.

It is important to analyze, whether you are a funder or an implementer, the impact that funding restrictions have over the capacity of an organization to work on changing systems. Ideally, funders should allocate unrestricted or flexible funding as much as they possibly can, thus freeing organizations to decide how to allocate it overall.

In addition to that, there is an ongoing conversation about nonprofits and funders embracing the concept of full costs, which includes far more than direct program expenses and so-called “overhead.” Covering all the costs associated with the work is indispensable for systems change.

We support organizations and funders on:

• Financial planning and budgeting:
  • Construct a systems change business model.
  • Develop a financial plan that fits your systems change strategy.
  • Put together operational budgets to fit the overall resource plan, including “full costs” of achieving your mission.
  • Support potential and existing grantees to develop budgets and financial management tools for systems change.
• Articulation of a systems change financial plan:
  • Translate this explanation so that board members and staff can support and own the plan.
  • Explain the systems change financial plan to existing and new funders.
• Design of fundraising strategies and grant writing guidelines related to systems change.
• Creation of financial management tools:
  • Create dashboards that track the relevant financial measures of progress towards the plan.
  • Connect relevant organizational data from accounting and funding software to the relevant dashboards
  • Work with staff to understand the why and how of using financial dashboards to track progress and help with management decisions.