Join readers of The Ecosystem Builders Edge for tips, strategies, and resources to launch, grow, and sustain your innovation ecosystem.
Share
Beyond the Soundbite: A Field Guide to Balancing Funder Expectations with Systems Reality
Published about 1 month ago • 7 min read
🌱 "The best time to plant a tree was 20 years ago. The second best time is now."
— Chinese Proverb
The Ecosystem Builder's Universal Challenge
After 15+ years navigating everything from federal grants to corporate partnerships, one pattern stands out. Funders across all sectors demand transformation on unrealistic timelines, while burying leaders in compliance work that undermines the very systems change they’re asking for. Whether you work with federal agencies, private philanthropy, corporate social impact teams, or impact investors, the tension is the same. How do we meet funder demands and build the lasting infrastructure that actually delivers impact?
This month’s newsletter offers field-tested strategies to navigate this paradox, with a clear approach for protecting your coordination work without compromising funder alignment.
Never Sacrifice Systems for Sizzle: The 80/20 Rule for Sustainable Funding
🔥 The Funder's Paradox (You Know This One…)
aYou've probably experienced at least one of these:
Writing quarterly reports that consume 40% of your program time
Pitching "innovative pilot programs" when you know the real need is boring invisible infrastructure building
Watching well-intentioned programs fail because stakeholders weren't aligned before launch or priorities changed multiple times mid cycle
Explaining why your community needs relationship-building when funders want flashy news and immediate wins to justify their investment
Defending why groundwork takes time in a system built for sprint cycles
This isn't just frustrating, it undermines the very change these investments are meant to create, whether they come from taxpayers, philanthropists, or shareholders.
The best ecosystem builders don’t choose between compliance and coordination. They do both, strategically.
🧠 The 80/20 Rule for Sustainable Funding
Apply Pareto’s Principle to your portfolio:
80% of activities = visible deliverables that align with funder priorities
20% = protected time and resources for ecosystem infrastructure: trust, coordination, and connective tissue that make everything else work
The quickest way to sabotage an ecosystem? Focus only on sizzle. Skip the systems.
🏗️ The Invisible Infrastructure No One Wants to Fund
Here's the uncomfortable truth: the most critical work in ecosystem building is also the most boring to fund across all sectors. I'm talking about the "glue" that holds everything together... the relationship maintenance, stakeholder alignment, information flow systems, and coordination mechanisms that enable everything else to work.
Most organizations respond to funding pressures by avoiding this invisible work entirely and dialing up the fluff:
📋 Over-documentation: Spending more time reporting than implementing
🎪 Performance theater: Creating flashy events, campaigns and tools that don't strengthen ecosystem connections and lead to lasting results
⚡ Sprint mentality: Treating ecosystem building like a quick project rather than the long-term, patient work it requires
🏃 Pilot proliferation: Launching isolated programs instead of building interconnected systems and a long view
🎯 Shiny object chasing: Constantly pivoting to new initiatives instead of deepening and scaling what's working
📊 Vanity metrics obsession: Celebrating attendance numbers and social media engagement while ignoring relationship quality and ecosystem health
💰 The Economics of Interconnection: Why Coordination Infrastructure Pays
Let’s talk ROI. Ecosystem coordination isn't a nice-to-have, it's a multiplier. Research from MIT's Enrico Moretti demonstrates that each innovation job creates 5 additional jobs, but only when the surrounding system is well-connected.
Here's what happens when we under index on building the right coordination infrastructure:
💸 Resource Duplication Costs In fragmented ecosystems, similar programs get funded multiple times by different sources. GAO's annual reports on government fragmentation consistently identify billions in potential savings from addressing duplicative programs, and similar inefficiencies exist across private foundation and corporate funding landscapes.
🔌 Network Failure Losses When ecosystem actors can't find or connect with each other, deals don't happen, collaborations fail to form, and talent leaves for better-connected regions. Research consistently shows that network connectivity is a key determinant of regional innovation performance, with well-connected regions demonstrating significantly higher economic impact than fragmented ones with similar resource inputs.
📉 Information Asymmetry Penalties Stakeholders operating with incomplete information make suboptimal decisions. This costs innovation ecosystems an estimated 15-25% of potential impact annually across all funding types—whether measuring social return on investment for foundations or economic development ROI for government programs. 🌀 Institutional Friction Drag Every misaligned incentive, unclear governance structure, or communication breakdown creates drag on the entire system. Research suggests that high-performing innovation ecosystems have 30-40% lower transaction costs than fragmented ones, regardless of whether they're funded through public or private sources. The pattern observed across multiple contexts: ecosystem coordination infrastructure typically requires a relatively small percentage of total program budgets (often 2-5%) but can have disproportionate impact on total system effectiveness. While specific ROI calculations vary significantly by context and are difficult to measure precisely, the principle that coordination infrastructure acts as a multiplier for other investments is well-established—yet it's consistently underfunded because the benefits are diffuse and hard to attribute to specific programs.
💡 The Solution: Strategic Communication and Protective Budgeting
The wisdom lies not in choosing between systems work and funder requirements, but in becoming sophisticated enough to deliver both while making the economic case for coordination infrastructure. Here's the framework that's worked across dozens of ecosystem building contexts with diverse funding sources:
Conduct a Hidden Systems Audit
Before writing any proposal, conduct a "coordination cost analysis." Calculate how much money gets wasted annually due to poor ecosystem connections including duplicated programs, failed partnerships, talent exodus, missed opportunities. Present coordination infrastructure as cost-avoidance rather than additional expense.
Model the Impact in Their Language
Use the words they care about. Deliver the numbers they need.
For Government Funders: Use regional economic models to demonstrate how improved ecosystem coordination translates to GDP growth. A 1% improvement in innovation ecosystem connectivity typically correlates with 0.3-0.5% regional GDP growth over 3-5 years.
Private Foundations: Frame coordination as "systems leverage" showing how coordination infrastructure multiplies the impact of every dollar invested by reducing friction and increasing alignment across their entire portfolio.
Corporate Partners: Present ecosystem coordination as "market development" by demonstrating how better-connected ecosystems create more opportunities for partnership, talent acquisition, and innovation collaboration.
Impact Investors: Use "portfolio effect" language to indicate that ecosystem coordination improves the success rate and scale potential of all investments in a region.
Track the ROI of Coordination Work
Track and report the economic value generated by ecosystem connections you facilitate, regardless of funding source. When two organizations you connected secure a $2M contract, that's measurable ROI from your coordination work. When three universities align their research priorities, calculate the efficiency gains.
Communicate With Funders Strategically
Begin with their urgency: Acknowledge constraints (political for government, board pressure for foundations, market demands for corporate)
Reframe using their language: Convert systems concepts into each funder's terminology
Illustrate with concrete examples: Use stories and case studies relevant to their sector
Document invisible progress: Create metrics that capture relationship-building and infrastructure development
Generate quick wins strategically: Deliver visible results that support rather than undermine systems goals
Educate gradually: Shift conversations toward longer-term thinking over many interactions
🔧 Step-by-Step Implementation Guide for Regional Innovation Ecosystem Builders
✅ Step 1: Map Your Funding & Communication Gaps
Time: 2 hours (initial planning)
Create a simple matrix or spreadsheet with these columns:
Funder Type (e.g., federal, state, philanthropy, corporate)
What They Fund (deliverables explicitly in scope)
Ecosystem Work You’re Actually Doing (strategic coordination, trust-building, knowledge sharing)
How to Reframe It in Their Language (translation strategies—see Step 2)
Time/Resources You Need to Protect (unfunded but essential coordination work)
What’s at Risk If Ignored (missed partnerships, duplicated efforts, burn-out)
🧠 Pro Tip: For every funder, identify 2–3 "stealth systems" activities—core ecosystem coordination tasks you can bake into deliverables they already understand.
🗣 Step 2: Build Your Diplomatic Vocabulary
Speak Systems in Their Language
Regional innovation leaders often face a translation problem: funders don’t always fund ecosystem work, even though they depend on its outcomes. Use these reframes to align your message with each funder’s worldview:
For Government Agencies
❌ “We need funding for relationship-building.”
✅ “We’re implementing a regional coordination model to reduce duplication and accelerate service delivery.”
For Private Foundations
❌ “Systems alignment takes time.”
✅ “We’re increasing regional impact by aligning siloed investments through shared infrastructure.”
For Corporate Partners
❌ “We’re doing stakeholder engagement.”
✅ “We’re developing regional partnership pipelines and real-time market intelligence.”
For Impact Investors
❌ “Infrastructure development is crucial.”
✅ “We’re de-risking the region through pre-competitive collaboration and strategic capacity-building.”
💸 Step 3: Design a Protective Budget Strategy
Time: 1 hour per proposal or budget cycle
Use the 80/20 Rule for Ecosystem Builders:
80% of your budget = what funders expect to see (programs, outputs, measurable wins)
20% = proactive protection for the work that holds the ecosystem together (coordination, trust infrastructure, shared platforms)
Suggested Protective Budget Categories:
Regional Ecosystem Coordination and Integration
Cluster Strategy and Implementation
Capacity Building for Ecosystem Organizations
Cross-Sector Partnership Management
Data Infrastructure and Performance Management
Knowledge Management and Dissemination
🧠 Pro Tip: Use indirect cost rates, shared services fees, or cross-cutting line items to further shield these functions.
📊 Step 4: Define Universal Systems Metrics
Time: 45 min setup, 15 min per week
Go beyond what each funder asks. Start tracking universal systems health indicators that show you're building long-term capacity, not just short-term outputs.
Funders Typically Ask For:
Number of companies/startups served
Jobs created
Events, workshops, or pilots run
But You Can Also Track:
Network Density (How interconnected is your region’s innovation network?)
Cross-Sector Resource Sharing (Are people collaborating across silos?)
📈 Pro Tip: Make the invisible visible. Say: “We’ve increased network density by 10%, which correlates with a 15–20% boost in program outcomes over 18 months.” This builds a business case across all funder types.
🎯 Your 30-Day Action Plan
Week 1: Complete your funding communication assessment for current grants/partnerships across all funding sources
Week 2: Build your diplomatic vocabulary for each funder type and practice reframing with colleagues
Week 3: Redesign one current project budget to include foundational systems work
Week 4: Implement systems metrics tracking and share first results with your team
Remember: Every conversation where you successfully reframe systems needs into any funder's language creates space for more organizations to do this essential work and greater long term impact.
Highlighted Events
The Ecosystem Building Leadership Network (EBLN) curates a list of upcoming events for ecosystem builders. Add an event you are attending here. I'm attending the ones marked with a 🌟 and would love to connect.
“Distinguishing the signal from the noise requires both scientific knowledge and self-knowledge: the serenity to accept the things we cannot predict, the courage to predict the things we can, and the wisdom to know the difference.” — Nate Silver, The Signal and the Noise: Why So Many Predictions Fail—But Some Don't The Ecosystem Builder's Edge After 15+ years building innovation ecosystems, we've mastered a simple system for tracking ecosystem wins without resorting to expensive tools,...
"Success is the lifelong experiment of discovering what makes you feel most alive." — Anne-Laure Le Cunff, Tiny Experiments: How to Live Freely in a Goal Obsessed World Welcome to The Ecosystem Builder's Edge After more than 15 years in the trenches of ecosystem building, I created The Ecosystem Builder's Edge to experiment with ideas in my work as an ecosystem builder now supporting other ecosystem builders. This week we are leaning into the idea of tiny experiments that can have a large...
"The most interesting things happen at the boundaries between order and chaos. That's where creativity lives, where growth happens, where evolution takes place." — Margaret Wheatley Welcome to The Ecosystem Builder's Edge After more than 15 years in the trenches of ecosystem building, I created The Ecosystem Builder's Edge to share what actually works. No theory and no fluff. Just field-tested strategies and actionable insights to help ecosystem builders like you drive real transformation....
