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Why the Nonprofit Funding Model Needs an Overhaul

Today’s nonprofit funding model is broken. It’s time to modernize our outdated models to allow organizations to innovate and scale. While funders often want their donations to be allocated to programmatic efforts that directly support the nonprofit’s core mission, this type of restricted funding can hinder organizations’ investment in critical operational outlays such as talent acquisition and technology. To overcome this obstacle, it’s essential for nonprofits to not only identify flexible funding sources, but also to allocate those funds for recruiting the technical talent and implementing the technology that ultimately scales an organization’s mission. At Twilio, we refer to this as ‘tech-inclusive funding.’

We’re certainly not alone in calling for a change to the conventional funding model. As Jessica Culverhouse, Vice President of New Client Partnerships at Elevate, points out in an article she contributed to Blue Avocado, donors should never assume that they know better than the nonprofits about how to serve their communities and run their organizations.

“This does not mean (and the data does not support) the idea that nonprofits should exclusively pursue grants that fund general operating support,” adds Culverhouse. “Instead, we should think of general operating support as one component of a holistic grant strategy. Grantseekers must first identify where they most need resources, be that for staffing, technology, training, rent, or program materials.”

As the Chief Social Impact Officer at Twilio, the leader in cloud communications and digital engagement, I’ve worked with a wide range of nonprofits to help them use digital tools to maximize impact. Whether it’s using chatbots to efficiently register millions of displaced people for humanitarian aid or connecting LGBTQ+ youth experiencing personal crises with trained volunteers over a hotline, more than 20,000 social impact organizations use Twilio technology to reach over half a billion people a year.

Through my experiences with various organizations, I’ve witnessed the transformative power of digital engagement tools. Nonprofits must have the autonomy to allocate funds towards hiring technical talent and prioritizing technology builds, which are critical ingredients to delivering meaningful impact at incredible scale. We’ll examine four success stories from nonprofits that made digital engagement a critical part of their strategy and provide updated models for nonprofit leaders and funders.

Leverage flexible funding to invest in technical talent

Talent and funding are highly interdependent. If you have one, you are often able to attract the other. Unfortunately, so many organizations find themselves lacking in one or both aspects. For example, our research reveals that most nonprofits need more funding to invest in software engineers and developers to make nonprofit programs more readily available to their increasingly digital-native clients. We found that only one in four nonprofits at the beginning stages of digital maturity have the developer resources they need. Greater flexibility over how nonprofits can allocate funds they raise will help solve that problem.

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Asylum Seeker Advocacy Project (ASAP), a nonprofit that helps asylum seekers navigate the immigration system in the U.S., used flexible funding from Twilio to hire its first full-time director of engineering. With this resource, the ASAP team implemented a digital communications strategy to engage with over 600,000 asylum-seekers — more than any other organization except the U.S. government — many of whom move frequently and are not in any one location for long, making digital channels such as a mobile phone vital to ASAP’s programming.

“We’ve never met 99.99% of our members in person, but we have established deep trust with them using technology,” says ASAP’s co-founder and co-executive director Swapna Reddy. “We’ve rebuilt our tech from scratch to eliminate tech debt and more easily implement new features.”

Be user-centric when deploying digital communications platforms

As the ASAP model demonstrates, recruiting technical leaders helps set the groundwork for innovation, and once the technical team is in place, nonprofits should focus on developing digital communication strategies that meet the specific needs of their communities. This includes leveraging their clients’ preferred digital communications channels.

For example, flexible funding enabled Empower Work to experiment with the most effective ways to communicate with the individuals they serve.

Empower Work is a national nonprofit that serves historically marginalized workers, including an estimated 40 million Americans who experience high levels of stress and anxiety at work and feel stuck and overwhelmed. Peer counselors provide resources and coaching to help people overcome these complex work challenges.

Founder and executive director Jaime-Alexis Fowler started the organization with a simple test. She created a helpline phone number, photocopied hundreds of fliers with the number, and then posted them around San Francisco. The flier did not instruct people how to use the phone number.

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Fowler discovered that 95% of people contacted Empower Work via text message. Texting is important for many of these workers, who may be at work and unable to talk on the phone without alerting coworkers or bosses, or who need to reach out for help as they prepare dinner or care for their children at home.

As a result, texting has become the organization’s primary communication tool, but that doesn’t mean those interactions are cold and impersonal. One help seeker reported that “using the text line is like sitting in a coffee shop having a deep, connected conversation.” And, Empower Work is delivering results. Since starting, Empower Work has supported over 350,000 people. Over 90% of users report improved mental health, and over 80% report improved financial situations.

With flexible, fast funding, nonprofits, like Empower Work, can connect with clients at their preferred time and through their preferred channels. Whether that’s SMS, WhatsApp, or a social media platform, let the users’ needs guide the investment in relevant digital solutions.

A digital-first culture allows organizations to pivot

Flexible funding also supports nonprofits in adapting their digital strategies to meet the changing needs of their community. For example, HERA Digital Health, a nonprofit focused on helping refugees navigate health services wherever they go, used flexible funding to hire tech talent who could quickly spin up solutions in response to deadly earthquakes.

HERA’s field team arrived in Adana, Türkiye on February 6, 2023, to conduct a pilot study of using the HERA mobile app to coordinate disaster preparation and response — the same day two devastating earthquakes with magnitudes of 7.7 and 7.6 struck Turkïye and Syria. Over 50,000 people lost their lives, more than 110,000 people were injured, and 307,000 buildings suffered damage that rendered them unusable.

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HERA’s digital-first culture enabled its field teams to quickly pivot from its original mission to building a new Disaster Health Map for the mobile app. It displayed real-time status updates of health service providers and the locations of the nearest health units in the earthquake-affected regions, along with the services each field hospital provided.

Displacement of refugees is associated with high health risks, particularly for pregnant women and young children. Based on the success of the Disaster Health Map in helping people in the Turkïye and Syria earthquake zones, HERA expanded its mobile app’s capabilities to help displaced pregnant women receive regular preventative medical care.

“As our users’ needs evolve, our work is evolving, too,” says HERA founder Aral Sürmeli. “We need to be where refugees are, digitally. Without access to flexible funding and in-house technical talent at the ready, nonprofits are at risk of being unable to adopt new user-centric digital solutions and evolve with their changing needs.”

Deliver better outcomes with data

Polaris, which operates the U.S. National Human Trafficking Hotline and has provided support and services to over 75,000 victims and survivors of sex and labor trafficking, also understands the importance of prioritizing tech and tech talent to scale its impact. With Twilio’s support, Polaris began using a chatbot for text messaging that made it much easier and faster for survivors to request and receive assistance.

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And that was just the first step. With three primary data sources, Polaris holds the most extensive data set on trafficking in North America. By approaching their technology work with a unique philosophy — Mission Engineering — Polaris works towards a vision of leveraging AI and large language models to generate predictive and actionable insights for corporate, governmental, and NGO partners across the anti-trafficking field. Mission Engineering requires advanced technical skills, an interdisciplinary systems approach, and a survivor-centered, trauma-informed perspective, all while responding to a rapidly changing threat landscape. This approach will enable Polaris to scale their operations and provide more targeted and responsive support to victims and survivors of human trafficking.

“Our partnership with Twilio has enabled us to test-drive our mission-engineering approach to problem solving, and set us up for even bigger and better data modernization moves for the anti-trafficking movement,” said Polaris’s Chief Development and External Affairs Officer, Patrick McIntyre.

How the philanthropy and private sector can help champion tech-inclusive funding for greater impact

The ASAP, Empower Work, HERA Digital Health and Polaris case studies demonstrate what tech-forward nonprofits can achieve with flexible, fast funding. Inspired by these results, we at Twilio have embraced tech-inclusive funding and introduced the Digital Innovation grants in 2022.

We listened and learned that nonprofits often find hiring and retaining technical talent challenging. They also need to secure flexible funding for technical builds. Our Digital Innovation Grants help nonprofits overcome the specific challenges that often accompany restricted funding. Nonprofits are free to use our funding for technology infrastructure or personnel, such as hiring tech talent.

Our funding is also fast. Grants are usually completed within four weeks – far faster than the many months that federal, state, and foundation grants require.

Since 2022, we’ve deployed $5 million in funding from the Digital Innovation grants program across 47 grants to organizations operating in more than 25 countries. So far, these grantees have reached six million people with their services, and we expect them to reach more than 60 million people in the coming year – a testament to how funding technology and talent can directly scale an organization’s impact.

By adopting a more flexible approach, we help nonprofits prioritize digital transformation and seed projects that are experimenting with new and unproven models of service delivery that have the potential to deliver outsized impact. We believe that the Digital Innovation grants initiative can fill a gap in the funding spectrum and serve as a model for the private and philanthropy sectors to prioritize tech-inclusive funding.

To learn more about our upcoming funding rounds, visit our website.

This content was paid for and created by Twilio.

The editorial staff of The Chronicle had no role in its preparation.

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