The “starvation cycle” of nonprofit organizations doing more and more with less and less has to end. But how can nonprofit organizations break out of this cycle when donors won’t fund nonprofit capacity?
The news last week that the Boston Foundation will shift the majority of their competitive grants to unrestricted operating support, which in reality means capacity building, is fantastic. The Boston Foundation is one of the few foundations that understands that strengthening nonprofit organizations, through money to support technology, infrastructure, fundraising, top talent, management expertise, strategic planning, evaluation, research and development, is absolutely key to making social change possible.
But the Boston Foundation is just one in a sea of foundations and individual philanthropists who have yet to understand the importance of money to build nonprofit organizations.
But perhaps there is hope. Social Velocity has seen some great early signs that when approached in the right way, foundations and individual donors, who previously may have only provided direct service funding, can become organization builders.
I have discussed before Social Velocity’s work to help Heart House, an after-school program for at-risk kids in Austin and Dallas, strengthen their plan to grow statewide and create a pitch for growth capital. Heart House could not pay for this planning work through their operating budget, so they went to a foundation that was already supporting their program and asked them to invest in this growth planning. When the foundation understood that a small investment in organization building would help this organization that they love improve the lives of even more children, they were happy to invest.
Another example is Social Velocity’s newest client, English at Work, a nonprofit that teaches ESL classes to the employees of restaurants and hotels. English at Work is a subsidized social enterprise where the hotels and restaurants pay them a fee to run these classes. The nonprofit is demonstrating great results and has real potential to replicate the model. First, however, they need to strengthen their overall revenue function to position them for growth, which is where Social Velocity comes in.
But again, English at Work didn’t have the operating revenue to pay for that outside expertise. So they approached a foundation in their fold and made the case for how a strengthened revenue function would put English at Work in a position to start planning for replication. And that replication would mean that their results-achieving model could provide more people with stronger English language skills. Stronger English language skills mean better, higher paying jobs, less stress on the social safety net and a stronger, healthier community. And what English at Work helped their donor understand is that to get to that positive outcome, English at Work as an organization has to be more effective. They have to learn how to create a stronger, more sustainable revenue function that can support a larger organization over the long term. And figuring that out costs money.
Some foundations and individual donors are more predisposed to understand the connection between stronger organizations and greater social impact. But those donors are in the minority. It is fabulous when a large donor like the Boston Foundation makes a dramatic shift toward organization building. That will certainly help raise awareness among the philanthropic community about organization-building investments.
But perhaps another route toward more philanthropic money invested in organization building is if nonprofit organizations start approaching the donors and board members who are already supporting their programs and make the case, in an articulate, reasoned, but passionate, way that in order for more of the outcomes they seek to happen, they have to invest in their organization. And they need those closest to the organization to make those investments. It is a process of educating those nearest and dearest to the organization about the power of a stronger internal organization. It’s a new conversation, but an important, and potentially game-changing, one.
To learn more about Nell Edginton visit http://www.socialvelocity.net/2009/09/making-donors-organization-builders/