The funding ecosystem for feminist movements has been upended by recent political and economic shifts, yet the work of feminist and social justice organizations has never been more critical. What are alternatives to traditional philanthropy that can create sustainable financial streams for operations? How can we reimagine finance as a system to ensure the effectiveness and stability of an organization’s revenue through challenging times? Criterion Institute and the Equality Fund explored these ideas in a recent webinar featuring Yifat Susskind, Executive Director of Madre, Joy Anderson, Co-founder of Criterion Institute, and Kat Im-Jenkins, Managing Director of the Equality Fund.   

The work of both innovative finance systems and feminist movements is to think about the future we want- and bring it into being. We acknowledge that finance has traditionally been used to perpetuate harmful forms of capitalism that creates inequality and injustice. Yet, this is an opportunity for a reimagination of how financial tools can serve movements, especially in this moment of upheaval.

“Somehow we've created a story inside of the global women's movement that philanthropy is good because those are our allies. And capital markets are bad because that's part of capitalism. The reality is that the system is not working for us right now. And I think we have reached the outer limits of what philanthropy will do or can do, not just because of the economic downturn, but because progressive philanthropy, at least in the US, is very much under attack. We need some new ways to finance our work and think about how we leverage systems long-term.” 

– Yifat Susskind, Madre

^‍Traditional financing sources, including endowments, are ripe for innovation because they have gender and power dynamics that, if addressed, can unlock their full potential as a feminist funding mechanism. The Equality Fund is one example, using a non-traditional approach to endowments. With feminists at the helm, and backed by an investment portfolio that is 100% gender lens focused, it mobilizes large amounts of resources through multi-sectoral partners to work at large scale. With a $296M seed portfolio, at year five the Equality Fund’s investments have achieved a +6% annual return and a current value of $342M CAD, while securing $100M CAD in commitments from philanthropic and government sources. This has enabled the Equality Fund to commit $100M CAD in grants to 1,000 organizations working on gender equality in some of the poorest and most fragile contexts in the world. 

While this is but one approach, we recognize that endowments have their drawbacks. They only work if capital markets are successful, and require a meaningful volume of investment dollars to maximize returns and value, usually out of reach for smaller organizations. However, smaller nonprofits can explore how to invest their longer-term reserves in liquid and return-generating investments that align with their organization’s purpose. A number of public equity and fixed income products also have screens for ESG and gender criteria.

Alternatively, there are ​​many ways, other than endowments, that use systems of finance to support organizations. At an organizational level, finance can do three things:

1. It can reduce financial risk for the organization, by sharing that risk with an investor. 
2. It can extend time horizons. Finance systems can provide more time to develop a new program, or provide cash flow to allow for carry-through time between funding agreements.   
3. It can increase adaptability. In response to a crisis or to take advantage of an opportunity or innovation, finance can provide capital for urgent action, or enable experimentation and thinking outside the box.

While these won’t increase how much funding you actually have, they can increase how effectively current funding is used. 

Here are some ideas percolating inside innovation finance conversations. 

Optimizing cash flow

Organizations often operate on funding commitments that are a series of future cash flows. However, operations run the risk that these flows may not materialize. Commitments could be cancelled due to funder financing being subject to volatility and liquidity constraints, or in the cases of government funding, changes to policies and priorities. This is where organizations can share risk with an investor through receivables financing, which converts future expected income into immediate working capital by using anticipated grants, donations, and contract revenue as collateral. This can allow for more strategic planning, more financial confidence as you bridge funding gaps, or enable a quick response to an emerging opportunity. Shared risk does come with a cost: because the investor is sharing risk with you, they would receive compensation for their support. This could be interest on a loan or discounted receivables, with the organization receiving, say, 85% of the money. 

The other strategy for cash flow optimization is revenue-based financing, which aligns repayment of the financing with actual financial or income capacity. This approach shares risk between the organization and investors. It can foster collaboration between women's rights or civil society organizations and investors by financing opportunities throughout their pathway to revenue generation. If that revenue pathway does not materialize, the investment ceases without penalty to the organization. It’s a model that has become popular in impact investing and other social investment models because it ties tangible revenue with investment returns. 

Consolidating ecosystems: Pooled reserves and mergers

Small nonprofits often struggle with ways to pool funds. A pooled reserve fund allows multiple organizations to have access to flexible capital and to share the ebbs and flows of financial needs. 

Another opportunity is looking at thoughtfully financed mergers. Organizations that recognize synergies between their programmatic activities and other nonprofits could consider collaborations. The investor who provides financing could be repaid through those reduced costs in the future. This approach provides increased flexibility in resource allocation, and potential for looking at the collective power of feminist organizations with a financing structure that paves the way for these kinds of mergers. The crucial element is to identify added value or decreased costs through a merger.

Recurring revenue through income-generating investment strategies

One growing area is feminist real estate investment trusts (REITs), long-term trusts where property is collectively owned. Revenue could be generated from rental income. It’s also an interesting way of looking at collective ownership of land or infrastructure, and could extend to co-owned intellectual property. This could be co-owned platforms that license content such as feminist education, art, or research, where revenue is split between creators and platform owners. The intellectual property generates recurring income with little incremental cost, and creates the ability to monetize digital products and evolve with audience interests and tech tools. 

There are many possibilities for reimagining resourcing. The key is for us to collectively tell the stories of a hopeful future and make the case for investing in what is possible.

“As activists, imagination is our superpower, right? It is the source code for every single thing that we do. Because if we're trying to create a just world, we have to be able to first imagine something that never has fully existed. And I feel like we are used to thinking about that in our programming, and less used to thinking that way in how we finance our work.” 

- Yifat Susskind

As we imagine different futures, we can reimagine ways to share risk and create more connected, integrated systems. Innovative strategies are available, and grounded by a shared vision of a just and sustainable future, they are worth exploring.

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We are committed to continuing this conversation on feminist financial imagination and resourcing social transformation alongside others:

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‍#51 - Reimagining Resourcing for Social Transformation - Part One