Greater Good Blog

Funders in the Age of Political Entrepreneurship

Shelley Whelpton
Funders in the Age of Political Entrepreneurship

To enable vitally needed change in the civic sphere, we must close the gap between how philanthropy often works and what today’s challenges require. Individual donors have a unique opportunity here.

[Editor’s note: Shelley Whelpton originally published this post on LinkedIn.]

We’re living in a period of tremendous political entrepreneurship—in which people and groups are disrupting traditional models of political change by building non-traditional coalitions, using new civic engagement technologies to transform the citizen experience, empowering new types of self-organization and action, and more. Today’s political entrepreneurs are innovating democracy itself; challenging old assumptions, paradigms, and institutions; and often putting new ideas into action at internet speeds.

As someone privileged to get to work alongside such political entrepreneurs, I can tell you that there’s no lack of civic-square spirit, fearless trail blazing, and good ideas. There’s also no lack of potential resources for funding and advancing the best of those ideas. Too often, however, there’s a significant and persistent challenge in matching great ideas with the kind of resources needed to move them forward effectively—in part because of the way philanthropy has historically operated.

In today’s political environment, speed and agility are critical. Advocates on the front lines of change have to move at the speed of the news cycle. In this context, some of the well-established funding processes and characteristics of traditional philanthropy, such as five-year strategic plans and lengthy evaluation processes, just don’t fit. We still need solid strategies, of course. And we still need to monitor, evaluate, and learn. But we need to design our processes to match the actual pace of events, not hope to make history conform to the traditional grant cycle. In particular, philanthropy needs to get better at seeding and supporting early stage efforts, assessing and managing risk, and providing the right kinds of capital to drive real policy change.

Seeding and Supporting Innovative Political Entrepreneurs

It’s a simple truth that the plumbing of philanthropy is best set up to work with larger, well established, national organizations—and many of today’s political entrepreneurs are comparatively small, new, and local enough to directly represent their communities. Providing seed capital that enables such entrepreneurs to grow and flourish is critical. Demanding that they meet all of the criteria applied to large, long-established grantee organizations, however, is a non-starter and often preserves implicit biases at a moment when funders are striving to reduce inequity.

Here we can learn from organizations that already seed innovation in other contexts, like Echoing Green and Ashoka. Funders can also take advantage of intermediary organizations, donor collaboratives, and rapid-response funding vehicles specifically designed both to enable them to work with smaller organizations and to provide funds on more flexible cycles.

Assessing and Managing Risk

Some funders view policy and advocacy work as inherently risky. It requires a new understanding of impact timeframes and metrics, different types of compliance efforts, and a willingness to take positions on questions that, in nearly every case, someone will consider controversial or even wrong. Funding entrepreneurs in this arena, who are doing new types of work and may lack an evaluated track record, can be perceived as even riskier. Some risks, however, are worth taking—especially once you consider the risks inherent in doing nothing.

Talk about risk is nothing new for philanthropy. In foundation board rooms around the country, leaders regularly assess risk as they review progress toward goals and re-evaluate giving priorities. Nevertheless, recent research bears out what I’ve also seen personally: collectively, we need to become more fluent in assessing and managing risk, in full recognition that inaction carries risks of its own. There are emerging tools to help board members and staff productively navigate risk discussions, thanks largely to the leadership of the Open Road Alliance.

Providing the Right Kinds of Capital

Far too often, organizers and advocates don’t have enough of the right kind of capital to be successful—because, when it comes to changing public policy, not all dollars are created equal. The tax-deductible funds that flow to organizations the IRS classifies as “501c3 public charities” have to be used mainly for education and outreach work (with strict limits on lobbying), while non-tax-deductible funds that go to “501c4 social welfare organizations” can be used more flexibly for more political activities such as lobbying and electoral support.

Under the law, a 501c3 organization can’t make a public statement like, “Vote for Candidate A who supports our issue” or “Don’t vote for Candidate B who cut a program our constituency relies on.” Yet that kind of communication is often critical to advocating successfully for better public policies. Other types of organizations—including 501c4 organizations—can communicate in such ways. As a result, advocates who care about advancing say, paid family and medical leave policies, might be flush with capital to do education and outreach (501c3 funds) but desperate for the sort of capital that would allow them to hold elected officials accountable (501c4 funds).

Many of the most sophisticated political entrepreneurs now recognize that they need to create hybrid platforms—with both 501c3 and 501c4 components—to make the most of every dollar. To support their work and advance social change, funders need to recognize that the most powerful approaches often involve applying different types of capital at the right places and times.

A Role for Individual Donors

Compared with institutional foundation funders, individual donors often have greater flexibility to move resources and engage, and we’re now seeing some of the most strategic giving to political entrepreneurs come from individual philanthropists—even those who are comparatively new to funding in areas like civic engagement. Often supported by well-networked advisors, these donors are bypassing the bureaucracy of larger organizations and institutions and quickly getting vital resources to on-the-ground groups and innovators. Or they’re investing in initiatives with the potential to change politics itself by incentivizing new alliances, requiring greater data transparency, etc.

Individual donors often wonder if they can be as impactful as institutional funders, since the latter’s money often dwarfs the former’s. But in the current political moment, speed matters just as much as size—and maybe even more. Individual donors have the opportunity to be the first to strike and to catalyze giving by others, including large foundations. After all, funding begets more funding.

As hard as the current challenges may seem (and they are), this is not a time for caution, withdrawal, or paralysis. This is a moment to step up and fully embrace what I believe is philanthropy’s true calling: providing the critical innovation and risk capital for social change. Individual donors are uniquely positioned for outsized impact here—by empowering today’s political entrepreneurs and helping to overcome the risks inherent in doing business as usual.


Shelley Whelpton is a Senior Managing Director at Arabella Advisors. See her bio. Follow her on Twitter. Connect with her on LinkedIn.

Back to Blog