How do you stay motivated and “keep the faith” in your cause when results are five, seven, or even ten years off?

That’s the dilemma for nonprofits and foundations that are engaged in advocacy, organizing and civic engagement initiatives.  When years and years of effort seem to show few tangible benefits, enthusiasm wanes and supporters become discouraged and disillusioned.

But don’t give up!  According to the National Committee for Responsive Philanthropy (NCRP), when the pay off finally comes, it’s well worth the wait.

In its latest research report, “Strengthening Democracy, Increasing Opportunities: Impacts of Advocacy, Organizing, and Civic Engagement in Minnesota,” NCRP draws some bold conclusions about the quantitative impact of public policy initiatives in Minnesota:  A $16.5 million investment (70 percent of which came from foundations) garnered $2.28 billion in community benefits.

Some will rightly quibble with the methodology behind the magnitude of the conclusions.  But certain take-aways from the report shouldn’t be ignored, such as best practices for getting the most bang for the public policy buck.  At a gathering of nonprofits and foundations last Wednesday in Minneapolis, NCRP Executive Director Aaron Dorfman offered these recommendations for funders:

• Increase funding for advocacy, organizing and civic engagement. Clearly, it pays!
• Engage trustees and donors in dialogue about the long-term benefits of advocacy. You can’t really achieve your mission if you don’t advocate, noted Marcia Avner of the Minnesota Council of Nonprofits.
• Strengthen peer learning and strategizing. In Minnesota, participants in the “Funders Working Group on Community Organizing,” convened by The McKnight Foundation, are already learning from each other.
• Engage nonprofits as partners. Not as “recipients” or “grantees,” emphasized Trista Harris of Headwaters Foundation for Justice.
• Apply a racial equity lens. A gender equity lens, too, added Lee Roper Batker of the Women’s Foundation of Minnesota.
• Provide general operating and multi-year support. In the research, 45 percent of grant funds were unrestricted and 25 percent were awarded as multi-year grants — atypically high percentages.

The report offers a lot more detail and specific examples of the notable achievements in Minnesota.  But embracing these recommendations would surely be a good first step for funders.  And who knows, with changes such as these, funders might be able to shave a few years off of the arduous journey up the public policy mountain.  Then everyone will find it easier to “keep the faith” and rally others to the cause.

- Wendy Wehr, MCF vice president of communications and information services

I remember the question clearly, because it totally shifted my thinking:

“Could you do more if you had more money?”

Many nonprofits are feeling "the squeeze" from funders to keep overhead low. But at what cost?

The question was posed to me after I made a presentation on the costs of our website redesign to the board of the nonprofit that I volunteer for. I can’t remember who asked the question, but I was grateful that she did. It felt like a weight had been lifted.

I had been so focused on keeping our budget tight that I hadn’t stopped to ask, are we cutting corners? What could we do if we did have more money? What opportunities to better serve our beneficiaries were we missing by being so conservative?

At that moment I realized that I had internalized a “do more with less” mindset, without really considering the consequences of doing so. According to the article “The Nonprofit Starvation Cycle” in The Stanford Social Innovation Review, many nonprofit leaders have also internalized this thinking, often due to the unrealistic demands of some of their funders.

What are the consequences of our “do more with less” fixation?

Article authors Ann Goggins Gregory and Don Howard report that the result has been a hollowing out of nonprofit infrastructure that has crippled the ability of many organizations to fulfill their beneficiaries’ needs.

Their solution? Fixing funders’ unrealistic expectations about how much it costs to run a sustainable nonprofit organization. Unfortunately, the power dynamics inherent to the grantmaker-grantee relationship make it very difficult for nonprofits to be brutally honest about how much it costs, particularly in terms of overhead expenses, to run their organization.

But if the nonprofits can not be relied on to stand up for themselves, what can funders do? Gregory and Howard recommend that funders shift their focus from costs to outcomes.

This shift is fundamental to getting away from the current culture of “low pay, make do, and do without” that has created dysfunction in some organizations.

The one question you should ask grantees.

Gregory and Howard recommend that funders clearly establish that they and their grantees share the same goals. Once goals are clear, funders should ask grantees to answer honestly this question, “What will it take to deliver these outcomes consistently, or to deliver these outcomes at an even higher level of quality or quantity?”

Outcomes, not overhead.

This question, and the question that I was asked at that board meeting, both get beyond the question of money and refocuses the listener on the question of results. Because ultimately, none of us, neither grantee nor funder, is in it for the lowest overhead, we’re in it for outcomes.

For a more complete description of the Nonprofit Starvation Cycle, and actions that funders and grantees can take to break it, read the article at The Stanford Social Innovation Review website.

Join the conversation: Are you taking steps to ensure that your grantees are making sustainable choices and spending adequately on technology and staff? Do you think we can even begin to address the issue of under reporting and underfunding overhead within the current economic context?

- Cary Lenore Walski, MCF web communications associate

Photo CC Accent on Electric

Our grantmaker members have been requesting the opportunity to learn more about resources available to local nonprofits looking to build capacity and support their infrastructure, especially in the current economic environment.

MCF hosted “Getting to Know Your Nonprofit Allies” on July 21 as part of its Economic Roundtable Series for MCF members. A few choice highlights from the event follow. MCF members can download a full report of the event, as well as pdf versions of the PowerPoint presentations given on our Economy and Philanthropy page.

Representatives from three locally based nonprofit assistance organizations discussed accountability, collaboration, mergers, technical assistance, financial expertise, organizational development and capacity building.

Charities Review Council (CRC) executive director Rich Cowles quoted former Star Tribune reporter Bob Franklin as saying that the CRC is morphing from a sector watchdog into a guide dog. CRC’s Accountability Wizard tool is one reason why.

Cowles explained that engaging in the process to complete the Accountability Wizard gives nonprofits the opportunity to strengthen their policies and procedures and make sure they are aligned with accepted and sound practices. It also lets prospective and current donors know that the organization is paying attention to accountability/transparency issues. A recent survey showed that donors who have higher trust in an organization tend to give more.

Organizations that meet all the accountability standards earn a fundraising “seal,” which can set them apart in the field, which is especially important in this economy.

Fieldstone Alliance works with nonprofits, philanthropic organizations and academia, looking at all the pieces that contribute to strengthening the nonprofit sector.  Carol Lukas, president, cited examples of Fieldstone’s work in research, publication of learning resources, capacity-building initiatives and partnerships, training and consulting.

In lean times, Lukas pointed out that many nonprofits tend to look only at expenses, but developing a strategy for revenues is also important.

The ”Free Resources” section of Fieldstone’s website provides the most recent economic resources, as well as practical, downloadable research reports, e-newsletters and tools. Several assessment products also are detailed on the website, including resources to help define and measure sustainability and answer the question, “How do you tell if an organization is sustainable?”

MAP for Nonprofits’ Project ReDesign’s director Renae Oswald-Anderson explained that mergers and other forms of realignment should not just be a response in difficult times, but part of an examination of how organizations can best serve and advance their missions. Contrary to for-profit mergers, mission advancement is the top priority in nonprofit mergers.

Merging is not the end of a mission, but the rebirth of a mission and requires full, intentional integration of board, programs, services and funders. The guts of the work focus on reaching common understandings on the “Big 3”: Organization name and mission (how do we preserve history, create change and move forward?); governing structure (what does this look like and how do we do this?); staffing and management (who will be the leaders?).

Program transfer, in which service sustainability is the key, is another form of realignment.

The presenters discussed grantmakers’ important role in making sure capacity-building progress is maintained by nonprofits:

• Capacity building is not a one-time event, but a long-term investment.
• Change is a two-to-three year process.
• Leadership changes affect capacity building.
• Keys are to follow-up, fund capacity building over time, and support leadership over time.
• Nonprofit organizations can’t survive in the current model with decreased government and private funding, increased need, clients/users of services who cannot pay. We need to experiment with different funding models and discuss how grantmakers can best support grantees. Sustainability is an issue.  Where does an organization go to get money for operations? Boards and trustees may want to consider investing more in organizations than projects.

- Chris Murakami Noonan, MCF communications associate

Photo CC Lucas Towne Designs

Roundup of media coverage of the world of philanthropy and nonprofits.

Economy:

Pohlad Foundation to Give $20 Million to Those Hit by Recession

Mpls./St. Paul Business Journal: The money will go toward small businesses and nonprofit services that meet families’ short-term needs and help them prepare for the future.

Foundations can be Smarter Investors
Inside Philanthropy: Foundations are missing an opportunity to shape social and economic change because they continue to operate as passive investors.

Nonprofits Increase ‘Gift Tax’ On Donors
The Wall Street Journal: A growing number of organizations are tapping donors for a “gift tax.”

Tough Times are Cause to Give More
NPR Marketplace: The economic fallout has hurt charities, and foundations have been tightening their belts, but some donors are giving more.

A Struggle to Slice Stimulus Fund Pie
The New York Times: More than 2,000 applications have poured into the National Endowment for the Arts, each seeking a piece of the stimulus pie.

Local:

Wells Fargo Donations Up 5% in 2008
Mpls./St. Paul Business Journal

Building a Foundation to Make a Difference
The Star Tribune: The Community Foundation for Carver County is working to become a resource for nonprofits.

Linking Younger Generations to the News through Social Networking Sites
editorsweblog.org: Two experiments, funded by the Knight Foundation, hope to get news to Facebook users.

Carbon Markets and Forest Practices Webinar now Available Online

A webinar funded by The Blandin Foundation is now available.

Don’t Volunteer: St. Thomas
Flixya: The Greater Twin Cities United Way and The University of St. Thomas created a video encouraging people not to volunteer.

Nonprofits Encouraged to Apply for Free Wireless Internet Accounts
NRP Digest: Minneapolis is seeking applications for 100 free wireless Internet accounts for non-profit organizations that provide free public computer access.

National:

Sharing in the USA
USA Today: A special philanthropy section features an article by Michelle Obama on the nation’s need for youthful idealism and more.

Confusing Web Sites Discourage Donors from Online Giving
The Chronicle of Philanthropy: Poorly designed web sites deter donors who would be willing to give online, suggests a new study.

Last week, the Weingart Foundation published the guidelines for it’s new Core Support program. The new grant program, which is open to organizations who provide safety net services or infant, child and/or youth services in economically disadvantaged communities, addresses the needs of nonprofits who have been hardest hit by the economic downturn. Organizations who, despite strong, prudent fiscal management, are faced with cutting staff or services are specifically urged to apply. Grant awards will not exceed $150,000 or 10% of the grantee’s total annual budget, whichever is less. Current Weingart grantees must wait until the end of their grant period to apply. For more information click here.

Additionally, the Weingart Foundation has increased the maximum award for its Small Grants Program to $25,000. For more information click here.

Roundup of stories about philanthropy and nonprofits in the local and national media:

Economy:

• In Tough Times, Tough Choices for Grantmakers
  Baltimore Sun: Grantmakers have an obligation to reach out in times like these to help the needy and to increase that help if they can. But many also feel an obligation to the donors who established the philanthropy in perpetuity, believing that a foundation’s assets should be preserved so that the funds can continue to provide resources for future needs.
• Report Finds Overall Climate for Fundraising Worst Since 1998
  Philanthropy News Digest: Nonprofit professionals reported the lowest level of confidence in the fundraising climate in more than a decade, the latest edition of the Philanthropic Giving Index (PGI) from the Center on Philanthropy at Indiana University finds.

Local:

• Sharing the Wealth
  Indian Country Today: The Shakopee Mdewakantaon Sioux (Dakota) Community expresses its philosophy about philanthropy this way: “When our needs are met, we have the good fortune to assist others.”
• Thanks to Donors, Minnesota Zoo Feels No Pain
  Pioneer Press: Riding on the heels of the zoo’s wildly successful Russia’s Grizzly Coast exhibit, trustees donated $6 million to the institution in the past year. Sixty trustees from the Apple Valley zoo’s board and foundation contributed, spurred by a $3 million challenge grant from the Edward Dayton Family Fund.
• Broadband Hearings in St. Paul
  Twin Cities Daily Planet: On Monday, Senator Amy Klobuchar held a hearing at the Minnesota State Capital on access to high-speed data networks (referred to as broadband). The audience included representatives from a number of industry groups, a couple members of the Minnesota Ultra High-Speed Broadband Taskforce, at least one librarian and a few people who work on the Blandin Foundation Rural Broadband Initiative.
• Suiting Up In Style — And Safety
  Marshall Independent: Five Marshall volunteer firefighters will have new turnout gear thanks to an $8,000 contribution from Flint Hills Resources.
• Those Old-Fashioned Barn Raisings are Good Model for Today
  Mille Lacs County Times: Small-town Minnesota is searching for inventive ways to reinvigorate itself. One such present-day example is taking place along the Minnesota River Valley corridor. The Southwest Initiative Foundation is the fiscal agent for the project to turn the corridor into a regional destination site.

National:

• Sacrifice Notion Sabotages our Nonprofits
  Financial Times: The fact is, great organisations are run by talented people, powered by cutting-edge technology and based on the best research. All of these cost money. Rather than asking non-profits to starve themselves of resources, donors should look to invest in the best non-profits and give them licence to use the money to build outstanding organisations.
• The Sin in Doing Good Deeds
  New York Times columnist Nicholas Kristof: If a businessman rakes in a hefty profit while doing good works, is that charity or greed? Do we applaud or hiss?
• The Philanthropy Shakedown
  Wall Street Journal editorial: A new Florida report, like the studies Greenlining has done in other states, makes clear that the agitation for “diversity in philanthropy” isn’t about donating to causes that help minorities. It’s about time that leaders of the foundation world — those who care about results more than politics — stand up and call this the race-baiting money grab it is.
• Charities: The Foundation of Madoff’s Scheme?
  Fortune: By targeting charities, the alleged swindler could avoid the threat of sudden or unexpected withdrawals, argues an expert on Ponzi schemes.
• Many Were Harmed by a Man They Never Knew
  Star Tribune op-ed: Nonprofits that were sustained for decades by the generous individuals and foundations Bernard Madoff defrauded are at risk of significant indirect losses due to the diminished charitable capacity of their longtime donors. This is something that we should all be concerned about.
• The Do-Good Marketplace
  Wall Street Journal: The search for profit-making ventures that also improve the world — by means of “social entrepreneurship” or “philanthro-capitalism” — is now the rage at business schools, and it has given rise to countless books, competitions and consulting groups.

The ongoing debate about restricted program support vs. unrestricted operating support is front and center again.

In our post yesterday we asked about other ways that grantmakers can help nonprofits during this economic downturn (and today’s Star Tribune has an article on this topic, too). Some MCF members — and lots of nonprofits — are suggesting that grantmakers should loosen restrictions on grants so that nonprofits have more flexibility to use funds to support their core missions and, if necessary, to reorganize to survive. This message has been voiced at the first two of three economy roundtables that MCF is hosting with members this week and next.

To help nonprofits manage through the economic downturn, foundations could remove restrictions from grants already made, as well as offer more general operating support grants in the coming year. One MCF member offered one example of the perils of restrictions: A financially-strapped nonprofit dissolved a program that had received $300,000 of dedicated program support; in the end, only $20,000 was available to add back to the organization’s bottom line. In situations like these, the nonprofit needs to have a safe conversation with the funder about how grant monies might become unrestricted or redirected to another program.

The call for more funding flexibility is being heard nationally, too. During a webinar hosted by the Taproot Foundation on Wednesday — “When Hand-Wringing Isn’t Enough: Proactive Approaches Funders Can Use When the Economy is Upside-Down” — panel members encouraged more focus on capacity-building support and unrestricted funding. They also talked about safe conversations: grantees need to be transparent with funders about their situation, and funders need to be open and clear, too. Said one panelist: “Anxiety is driven by ambiguity.”

Taproot has a specific focus on pro bono services and corporate volunteerism. During the webinar discussion panelists noted that, to build a successful volunteer program, nonprofits also need funds to create the infrastructure to recruit and manage volunteers … yet another example of why nonprofits need flexible, unrestricted grants to build capacity and further their missions.

Join the conversation: How are you adapting to the economic crisis? Grantmakers, are you ready to announce changes in your grant guidelines and funding restrictions? Nonprofit leaders, what steps are you taking to boost your unrestricted support?

- Wendy Wehr, MCF V.P. of Communications and Information Services

Last Thursday’s Hutchinson Leader featured an editorial titled ‘It’s A Great Cause, But…’ about how to choose which nonprofit fundraiser to support with your own charitable dollars. The editorial highlights upcoming local events, but no matter where you live or what cause you support, the column’s suggestions are relevant:

The decision really comes down to two things:
1) How you value the services that the nonprofit provides, and

2) How you value the fundraising event you attend. If it’s a benefit concert or golf tournament, you might view your donation as more of an entertainment cost than a charitable donation. It depends on your point of view.

I could go off on a tangent about how inefficient events are as fundraising strategies (believe me, they are entertainment), but instead I’ll muse on the overall nonprofit efficiency question that the editorial raises. The writer cites the Charities Review Council’s 70/30 ratio (at least 70 percent of a nonprofit budget should go toward programs and not more than 30 percent should be spent on management and fundraising) as the standard by which nonprofits should be judged.

The efficiency vs. effectiveness topic is hotly debated today. MCF touched on it in our recent Giving Forum issue on general operating support. Our grantmaker members make tough choices every day — not just about which cause and organization to support, but about whether to restrict grants for program expenses or whether to make general operating grants — and trust the nonprofit recipient to decide how to best to use the money to further its mission.

Kate Barr, executive director of the Nonprofits Assistance Fund, blogs regularly (and occasionally rants) about efficiency/effectiveness measures. She’s even declared it’s time to throw the 70/30 ratio out the window. Whether you agree with her or not, she has a point: if we want to make an impact with our charitable gifts, we must understand what we are measuring … and that efficiency doesn’t necessarily equal effectiveness.

Join the conversation: How do you determine whether your favorite charity is getting the most bang for your buck? How do you measure effectiveness in your organization?

MCF engaged four member foundations and a representative of the nonprofit community in a roundtable discussion about general operating support for the Spring 2008 edition of Giving Forum. The age-old questions surfaced: How much is enough? What about measuring results? Why don’t foundations “get it”? Why don’t nonprofits “get it”? The answers from our roundtable participants — both in print and in audio clips — might surprise you.

More:

• Research: General Operating Support Slipping
• Voices in Philanthropy | Giving Stories | Resources

When I read David Brooks’ New York Times column about social entrepreneurs this week, I was reminded of a recent conversation among some MCF members. We had convened a small group of grantmakers to talk about the pros and cons of giving general operating support. To no one’s surprise, the issue of accountability and nonprofit effectiveness surfaced. All around the table, the participants seemed to agree: while nonprofits need to show results, philanthropists shouldn’t tell nonprofits how to run their own show. One person pointed a finger at social venture capitalists: Who are they to presume they know how to manage nonprofits better than nonprofits do?

But wait a minute. Can’t we all benefit from a little innovation? I’m not suggesting that the philanthropists should call the shots, but maybe we can set aside the labels we place on each other and learn from each other. Sure, the social venture capitalists are probably more than a little naive when it comes to understanding the nonprofit sector, but what new ideas can they offer? And how can the nonprofit sector harness some of the social venture capitalists’ creativity, energy and resources?

What do you think? As a philanthropist, what life experiences have put you more in touch with the nonprofit sector? As a nonprofit professional, what take-aways from the business world would help you meet your mission? As a human being, what can you learn from another person — no matter his or her station in life — that will make this world a better place?

- Wendy Wehr, MCF vice president of communications and information services

Yesterday I was working frantically to set up a roundtable discussion about general operating support. (This conversation between a nonprofit ally and some of our grantmaker members will be used as the basis for a story in our print publication Giving Forum.) The emails were flying and the phone wires humming. Some of the invited participants responded without hesitation: “I’d love to join in!” “Let me send you my blog postings on this subject.”

Others were more hesitant: “Who are the other participants?” “Do you know what they will say?” This reaction is certainly valid, too. After all, don’t we have an obligation to manage our organizations’ images? And shouldn’t we be fearful of a venue in which we don’t control the message and the conversation might become spirited or a little contentious?

But maybe that’s old-style thinking. New media may have changed the rules of the communications game. Spontaneous, uncontrolled interaction in digital media can led to new insights, greater openness and more inclusivity. Remember the old days when those of us on the outside were wondering what business decisions were being made in the executive washroom or on the country club golf course? In the new media of blogs and wikis and social networks, everyone (well, at least those not adversely affected by the digital divide) can join in for a healthy discussion of diverse points of view. It may be scary at first, but maybe we should welcome these new voices to the vast, not-to-be-defined roundtable of digital communication.

Join the conversation: What do you think? Is the philanthropy community ready to embrace new media? Are you and your colleagues ready to stop printing and start blogging?

- Wendy Wehr, MCF vice president of communications and information services