The first step consists of identifying the possible services that non-financial-support providers can offer to the SPOs and determining the type of non-financial support they can provide according to their investment strategy, investment thesis or theory of change, their assets, the costs, and available financial resources for non-financial support.
The provider identifies the potential support areas in line with its impact strategy based on the four strategic axes (what: talent and skills, resilience, impact, and access to the ecosystem) and the three focus levels (for whom: individual, organization, and ecosystem).
that can be offered directly or indirectly. Core services differ from non-core services according to the non-financial support provider’s social and environmental impact objectives and the recurrent and essential needs for the development of the SPO. Once the core services are identified, the non-financial support provider analyzes its engagement capacity based on the development stage of the SPO. For instance, with early-stage SPOs, services may focus on setting guidelines and processes needed for their development, such as building a business model or a Theory of Change. For those in a more advanced development stage, the main focus may be on strengthening existing structures to ensure their resilience or development and provide greater access to investors or markets.
that is, the internal resources (e.g., staff and experts within the organization) and external resources (e.g., network of partners and experts outside of the organization) within its reach to provide the non-financial support.
First, the non-financial support provider must determine the types of support and distinguish essential from non-essential services. Then, they must assess “who provides what” based on their internal and external assets and define how to organize and split the work. Finally, the provider must determine the type of involvement with the SPO and the means of participation with the non-financial support provider.
The mechanisms to finance non-financial support vary. Financing generally depends on the non-financial support provider’s source for funding, whether it is their funds, created investment funds, direct donations, or charging for services.
Restricted or earmarked donations or grants
Resources of this nature generally come from foundations that allocate their resources to finance all the activities for the capacity building or strengthening of the SPO. Financing resources in this category tend to be more flexible. They are controlled by non-financial support providers, who allocate specific amounts to support activities, programs, or initiatives co-created with the SPOs.
Non-financial support with financial investment
Resources are allocated to capacity building or strengthening the SPO. Amounts allocated regularly address a specific issue agreed with the former financer or during the investment, usually charged to investors through their fund managers as part of their operational costs.
Services financed by partners
Resources for non-financial support come from networks of external providers and partners to build the capacity of SPOs or strengthen them. These services can provide pro bono or low bono technical assistance, consulting, and specialized services. Although this category may seem not to come with a cost at all, the non-financial support provider has to allocate resources for the completion, management, and oversight of the services provided by external providers and fix the monetary costs of non-financial support.
Co-financing by several investors / through various sources of income
When resources are limited, they may come from different sources and be concentrated in a single social investment program or fund. This mechanism may consist of several financers partnering to tackle specific SPO capacity-building or strengthening challenges, including external grants from international cooperation or corporations. Based on a joint fund or program, specific budgets are allocated, which come from the fees of fund administrators and other external providers, such as consulting firms. However, the actual costs of running these funds must be calculated as part of the costs of non-financial support.
Total or partial payment for service costs
On the one hand, non-financial support providers can allocate specific funds to finance non-financial support and ask the SPOs to contribute an equal or partial amount of financing. On the other hand, SPOs can request direct services from non-financial support providers, which is the case of Business Support Organizations. The costs may be appraised or not at a market level.