Donor Funding Models for Innovation: A Review

To address these challenges, 14 of the world’s leading NGOs partnered up and launched Reimagining Fundraising; an open call to ideators around the world to reinvent fundraising for the future. Stay up to date on all our headline work and the topical issues facing the sector. Our weekly updates will keep you informed of our latest publications, upcoming events and recent blogs. This report is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). Unless your process reflects that, your company will probably fail to systematically develop innovations that matter.

Holistic thinking about the innovation ecosystem should seek to take advantage of each entity’s unique comparative advantages. For example, grand challenges and DIV could concentrate their support on early-stage (pilot) projects that, while carrying some risks, are not as risky because of the size of financial commitments (less than $1 million in most instances). At scale, they could then graduate toward DFI investment alongside impact investors or be scaled by local governments working with bilateral or multilateral donors. This is an ideal scenario, but given the U.S. government’s role in supporting various innovation funding models, there is no reason why it could not create a more seamless ecosystem. Given the relative success that DIV, GIF, and others have achieved in investing in evidence-based innovation, there is an ongoing interest in how to expand innovation and “mainstream” it within the broader global development ecosystem. That said, the amount of funding remains relatively limited, with DIV receiving $30 million in annual appropriations and GIF receiving an initial commitment of $200 million.

As noted above, GIF and DIV have both shown that their investments have yielded impressive impact on a portfolio basis. Their innovations, along with those of the other models analyzed in the paper, have improved the lives of millions of people living in poverty. Despite this impressive impact, these models are unlikely to be sustainable in the long term on their own. To expand their reach, it is critical to recognize gogetfunding that these models exist as part of a broader innovation ecosystem. It is incumbent upon donors who provide financing to these various models to put aside parochial differences and increase support for innovation. Supporting innovation in global development to identify new approaches for old, seemingly intractable problems has been an uneven priority for donors, philanthropists, and impact investors.

GoFundMe VS GoGetFunding: Which is a Better Crowdfunding Platform?

DIV looks for solutions that demonstrate rigorous evidence of impact, cost-effectiveness, and a viable pathway to scale up and achieve sustainability. Since 2010, DIV has funded 252 innovations in 47 countries, totaling $172 million. The use of smart tech by social service agencies and other nonprofits exploded during the pandemic. For example, food banks deployed robots to pack meals; homeless services agencies used chatbots to give legal and mental health advice; and fundraising departments turned to AI-powered software to identify potential donors.

Autonomous Innovation

Now, they are off to the races and looking to disrupt the music device industry. And this is just the beginning…Title III of the Jobs Act, when it passes, would allow non-accredited investors to invest up to $2,500 in any deal they desire, alongside the VC’s. This could unleash many trillions of investment dollars now locked up in personal savings, IRAs, investment accounts that sit around and basically only finance large companies in the public market. Since 2012, under Title II, there has been around $400 million invested through equity crowdfunding.

By doing so, GIF and its partners would help create a robust pipeline of opportunities that the DFC, and USAID more broadly, could support through more regular funding. There are also obvious cofinancing opportunities between DIV, GIF, and PI2. DIV and GIF are similar models and have both provided support to several different innovations over the years.

Many organizations avoid messaging automation, fearing it gives supporters a stale, robotic, and generally unpleasant experience. Your services provider will be able to customize communications sequences to not only fit your nonprofit’s branding and key messaging but also program them to adjust and evolve depending on your supporters’ responses. Social giving allows your nonprofit to connect with the next generation of supporters and begin stewarding them into a lifetime of support.