How Intermediaries Help Donors Make a Bigger Impact

According to an African proverb, “If you want to go fast, go alone. If you want to go far, go together.”

That’s the idea driving philanthropic intermediaries like the Local Initiatives Support Corporation (LISC). When the Ford Foundation first conceived of LISC, in 1979, it envisioned a nonprofit with strong community partnerships that would connect hard-to-tap public and private resources with places that are overlooked and people working to access opportunities everyone deserves. In the philanthropic world, that type of collaborative agency is called an “intermediary.”

For the general public, intermediaries may be a little challenging to comprehend. Organizations that provide direct services can more easily describe their results: for example, number of meals served in the past month or how many students benefited from a scholarship. Intermediaries, by contrast, are a bit more complex.

Here’s a basic overview of how they work.

What are intermediaries? One study describes intermediaries as “mission-driven organizations that aim to more effectively link donors (individuals, foundations and corporations) with organizations and individuals delivering charitable services.” Similarly, the MacArthur Foundation describes effective intermediaries as “well-run, knowledgeable organizations with the capacity to grant or invest funds and oversee their use.” That’s LISC’s approach. In a nutshell, LISC pools public and private dollars, and in turn works with local partners to support people and places.

How do intermediaries work? Typically, government, foundations and for-profit companies have the capital, but don’t have the knowledge, connections, networks, expertise and/or resources that intermediaries have cultivated within their local communities or specific sectors. By making grants to intermediary organizations, large donors can ensure their investments reach small and midsized organizations and local projects.

LISC helps bridge this gap, with the goal of creating safer, healthier and more inclusive communities, by offering the relationships and expertise to assist community organizations in attracting the kinds of resources that allow them to do their best work.

Why are intermediaries important? Sometimes you’ll see intermediaries described as “regranters” or “middlemen” in the philanthropic arena. However, that’s often an over-simplification. Intermediaries provide strategic capacity and expert guidance, enabling nonprofit initiatives to function more effectively. One philanthropy expert likens intermediaries to fund managers in financial markets. Just as savvy investors rely on fund managers to carefully research and track financial markets, large donors and foundations rely on intermediaries to lend their expertise and knowledge of the nonprofit sectors they serve.

Intermediaries are connectors, linking grantors and grantees who might not otherwise be able to work together. For example, some foundations work on an annual giving cycle. But needs can arise suddenly – such as with a natural disaster – that require a quicker response. Intermediaries can help bridge that gap.

LISC receives funding from banks, corporations, foundations, and government agencies and in turn, uses that funding to provide financing (loans, grants and equity) and technical and management assistance to local partners and developers. Through 38 local offices, a rural program reaching more than 2,400 counties in 49 states, and LISC-founded affiliates and entities, LISC works with a vast network of community-based partners to make investments in housing, businesses, jobs & financial health, education, safety, and health.

Who Benefits from Intermediaries? Ultimately, everyone. For large donors, intermediaries can extend their reach and amplify the potential for impact. For local projects and nonprofits, intermediaries offer access to resources that might not otherwise be accessible.

That’s how LISC is helping forge resilient and inclusive communities of opportunity across America – with local expertise and an extensive partner network, national scale and an emphasis on financial inclusion.

When we create great places to live, work, visit, do business and raise families, everyone benefits.