National Council of Nonprofits Releases Principles for Consideration of New Funding Mechanisms

Principles provide framework for governments, nonprofits, and investors to consider funding mechanisms, such as pay-for-success and social impact bonds, without harming delivery of services to individuals and communities

WASHINGTON--()--The National Council of Nonprofits (Council of Nonprofits) today released “Principles for Consideration of New Funding Mechanisms,” providing nonprofits, governments, foundations, and for-profit entities with guidance on issues that must be considered before launching pay-for-success initiatives, social impact bonds, or other new funding mechanisms.

As interest in pay-for-success initiatives and social impact bond programs have spread in recent years at the local, state, and federal levels, these experiments have had mixed results. The results show that the new funding mechanisms are neither the cure-all remedy for every social problem or public funding short-fall as promoted by some nor the guaranteed disaster in every circumstance warned against by others. Rather, they are nuanced tools that can be appropriate in certain situations. The Principles will help parties contemplating alternative funding arrangements set expectations and avoid unintended consequences as they seek to address community problems.

“Collaboration and innovation are vital to solving some of the most deeply engrained problems in our communities,” said Lisa Maruyama, President and CEO of the Hawai`i Alliance of Nonprofit Organizations and Chair of the National Council of Nonprofits’ Public Policy Committee. “Based on the results of several experiments in recent years, the Principles can aid in decisions about how to structure future partnerships – or to determine whether these funding mechanisms may not be right for a particular project or community.”

“This is a federal issue; this is a state issue; this is a local issue. But more importantly, these funding mechanisms have presented both new opportunities and new concerns for front-line nonprofits,” said David L. Thompson, Vice President of Public Policy for the National Council of Nonprofits. “At the end of the day, these proposals are about groups from different sectors coming together to improve lives in local communities. Our hope is that the Principles help those collaborations run smoother for the benefit of the individuals and communities that nonprofits serve.”

The “Principles for Consideration of New Funding Mechanisms” can be viewed at https://www.councilofnonprofits.org/trends-policy-issues/pay-success-social-impact-bonds-principles-new-funding-mechanisms.

About the National Council of Nonprofits

The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve. Learn more at www.CouncilofNonprofits.org.

Contacts

National Council of Nonprofits
Rick Cohen, 202-962-0322
rcohen@councilofnonprofits.org

Release Summary

Principles for Consideration of New Funding Mechanisms, provides guidance on considerations before launching pay-for-success initiatives, social impact bonds, or other new funding mechanisms

Contacts

National Council of Nonprofits
Rick Cohen, 202-962-0322
rcohen@councilofnonprofits.org