Being a value-added intermediary is not easy. In most cases, funders and nonprofits don’t need an intermediary standing between them. In others, an intermediary adds some value but not enough to justify its costs. Sometimes an intermediary which once added sufficient value to justify its existence no longer does so because of a change in the environment such as technology, funding streams, the state of knowledge, etc. And all too often intermediaries offers services that are largely duplicative with those offered by others.
SeaChange has a three-pronged approach to ensure that we add-value:
We focus only in those limited situations where we have demonstrated a value-added role on a pilot/test basis. These tend to be areas that are small, unproven, risky (or perceived as risky), “dry” (i.e. quantitative/ analytical/financial) and which play to our strengths as “bankers at heart”. And we try to stay disciplined by regularly revisiting each of our activities to ensure that we are still adding value.
We are committed to staying small. This makes it easier to be disciplined in terms of the areas we get into (and out of). It ensures that we can maintain a consistently high-quality team of people with the right mix of skills and experience. It means that we don’t waste too much of our time fund-raising rather than working on the transactional which is our reason for being. It keeps our fixed costs low giving up more reserves (relative to expenses) and therefore more ability to take risk.
We work in partnership with others to the full extent possible. Having positive, cost-effective social-impact is a team sport and SeaChange is just one small player. We do not have the programmatic expertise to do our work without piggy-backing on the knowledge of our funders. We would not be economically efficient absent pro-bono (or low-bono) assistance of Davis Polk, Willkie Farr, Amalgamated Bank and Oliver Wyman. We could not find opportunities on a cost-effective basis without referrals from our network. We are proud to work closely with other members of the ecosystem that helps underlying nonprofits do better (like the Human Services Council, United Neighborhood Houses, the Lawyers Alliance, etc).
Our economic model is simple. Our grant-making and lending is organized into funds (see “Our Funds”) each of which pay SeaChange a management fee to cover our costs – mostly staff time – of doing the associated work. In addition to being the manager, SeaChange is a meaningful participant in each fund. We also earn fees from our advisory services work. Our research and insight-sharing is funded though a combination of our own unrestricted resources and supporting grant. New or pilot activities are generally funded from our own unrestricted resources. While foundations provide the majority of the funds from which we make grants and loans, wealthy individuals provide the majority of the unrestricted resources – in effect the “equity” – which allows us to pilot new things.