Non-financial support and how we make it matter

In the first post of a two-part series, we explore and share the conditions which we have found to be present when non-financial support has achieved the desired outcome for the enterprises we support.

Our partners face a daunting task to simultaneously build the market they strive to serve, while struggling to overcome the external and internal barriers to scale and financial viability. Funding alone is not enough.

Non-financial support (NFS), often termed “technical assistance”, refers to specialist support services a funder offers its investees and grantees. For early stage, social impact ventures, it’s often a critical ingredient in determining enterprise success, and a core part of our funding approach.

Over a third of our partners are currently recipients of NFS which comes in a range of guises depending on the needs of each enterprise. This includes advice from our team, our trustees and our broader network, along with dedicated projects delivered by external consultants. In 2021, over 10% of all disbursements will go towards supporting our portfolio in this way through contracts with third parties providing specialised support.

Typically, our support is focused on two key areas.

Financial sustainability – Revenue growth and stronger financial management.

Operational resilience – Strengthening enterprise operations, sales performance, management, and governance practices.

Based on our experience so far in providing specialist non-financial third party support to our portfolio, several common themes emerge:

1. Trust is essential.

The adage ‘trust takes years to build and only minutes to destroy’ might be true if reliability were the only component of trust (which it rarely is). In a pioneering sector, bumps in the road are inevitable. Trust is just as much a function of:

a) Depth of understanding: This means third parties really ‘getting it’, which must be deeply felt by the enterprise. Often external consultants will offer a discovery or light touch phase at the start of its engagement to demonstrate this and actively seek out the views of those tackling similar challenges.

b) Quality: third parties must be credible with a proven track record that’s recognised by the enterprise. When working with consultants, low cost or pro-bono support is not necessarily the best approach. Paying for the time of real experts might be more expensive but delivers better results.

Of course, this means recognising when not to provide non-financial support as much as when to do so.

2. Ownership must reside with our partners

We have increasingly adopted a model which puts our partners at the centre of the arrangement through funding them to bring in and contract with external support. We believe this has yielded the most impactful results as:

– Our partner is the client, not us, which ensures they are accountable to them. It helps foster trust and transparency amongst those who are doing the actual work.

– Our partner must have ‘buy in’ on the problem and the proposed solution. The enterprise leadership and team need to feel they are understood and trust in the credibility of the service provider.

We build discussions of NFS need into conversations with enterprises and let support be demand-led. Here we see how NFS can also provide the opportunity towards redressing the inherent imbalances of power in the investor-investee relationship.

3. Timing is everything.

Most of the enterprises we work with are building stronger foundations to scale or are at the point of scaling. NFS must be weighed against a range of time-related factors. When providing NFS several factors can influence ‘right timing’:

– Maturity or scale of the organisation: Our partners need to be mature enough to absorb support – both in terms of its systems and size, to ensure that change sticks and will have lasting impact.

– Large strategic or organisational changes in the organisation are underway which limits its capacity to take on new projects or results in new leadership which often leads to changes in strategy and approach. 

– The relationship is new: We still need to understand the business and its people, the constraints and strengths, before knowing who to introduced them to in our network.

4. Clear scope and measurable outcomes are key

Lastly, defining how impact will be measured, with quantifiable targets that lead to clear outcomes aligned to the organisations’ business plans, and having a clear scope with defined roles and responsibilities are essential. Ultimately, this is a core part of understanding the value of the support.

So, what next?

Non-financial support has been a critical component of support to our portfolio. However, we still want to learn more about the best way of delivering it. In our next blog, we’ll expand on how we’re approaching three key ideas:

• NFS needs can be identified earlier and be more accessible. We see the same problems again and again, emerging at the same times based on the evolution of the enterprise we support. Whether it’s building a function within the organisation or building capacity so it can scale – demands shift over time and yet in very similar ways. 
• Longer-term partnerships will benefit all parties. We work consistently with a trusted set of experts. Long term, deeper relationships can deliver better value, build expertise and learning across the sector and speed up impact at new enterprises as we deploy trusted resources quickly and easily.  
• Local capacity to deliver services is essential and to be utilised more (and a more resilient approach due to COVID and travel restrictions). Language and cultural barriers do exist when support is provided by external consultants who are in-country for short periods of time. This can be a barrier for effectiveness and efficiency and can feel contrary to market-based approaches.