Bringing to Life the Buzzword “Leverage”

February 15, 2010

Over the past year, as I’ve been writing for various publications of the Minnesota Council on Foundations and reading extensively on philanthropy, the word that’s rising to the top more and more is “leverage.”

Dictionary.com defines the word several ways, but the most relevant to philanthropy are:

  • The power or ability to act or to influence people, events, decisions, etc.; sway.
  • The use of a small initial investment, credit or borrowed funds to gain a very high return in relation to one’s investment, to control a much larger investment, or to reduce one’s own liability for any loss.

Kevin Walker, president and CEO of Northwest Area Foundation, has described “leverage” the most vividly. At MCF’s 2010 Outlook Program for Minnesota Grantmakers and Nonprofits on Jan. 29, as part of the panel discussion, he said leveraging is “making sure our dollar pushes other dollars in a direction in pursuit of our mission.”

As part of my research for our spring issue of Giving Forum, which will focus on innovation in philanthropy, I am reading the annual reports of several MCF members. The 2009 report of West Central Initiative (WCI) was filled with stories of how it is leveraging its funding in the nine counties and 83 communities the foundation serves in west central Minnesota.

Among the highlights:

  • WCI’s Community Organizing and Visioning Grant was joined with a variety of public and private funding to energize stewards in Bemidji, Alexandria and Fergus Falls to create “destiny statements” envisioning the future of their communities and measurable goals to achieve.
  • WCI is acting as fiscal host, grant writer and coordinator of the Early Childhood Dental Network, which has grown into a regional effort to combat a deficiency in access to oral health care.
  • Gap financing – such as that provided to local entrepreneurs, including TFC Poultry in Ashby – is supporting job creation and business establishment and expansion in rural Minnesota.
  • WCI used its expertise to help community organizers map out a fundraising effort and create the Pelican Rapids School Fund to raise and administer funds when the school levy referendum failed and the school district faced dire cutbacks.

These are energizing, motivating and inspirational ways WCI is bringing to life the concept of “leveraging” – using its resources to push other resources as WCI pursues its mission in greater Minnesota.

– Chris Murakami Noonan, MCF communications associate

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Posted by Chris Noonan

Helping Individuals and Families Navigate Crisis: Interim Report on the Bremer Emergency Fund

December 8, 2009

Not unlike many other foundations, the Otto Bremer Foundation responded quickly last winter when the economy started its free fall with no end in sight.

The Bremer Emergency Fund (BEF) was a joint response – with foundation grant dollars supplemented by donations from the Bremer banks. In January, the fund gave 81 grants totaling $4.2 million to community organizations in Minnesota, North Dakota and Wisconsin to provide emergency financial assistance to families and individuals struggling to provide basics such as food, warm and stable housing, health care and reliable transportation.

“We recognize that timely financial assistance can sometimes make the difference between instability and security, enabling families and individuals to meet emergency needs and retain housing or jobs,” William Lipschultz, foundation trustee, said last January. “Once people are able to meet their basic needs and avert a crisis situation, they are in a better position to access community programs that can help them achieve long-term economic stability.”

Halfway through the one-year grant period, the foundation surveyed its grantees. The results of their responses were released today in an interim report.

“The Resources Available Have Not Kept Pace With the Need”

According to the report summary: “Three-quarters of BEF grantees are seeing more unmet needs than they expected, and many are expending funds much more quickly than they anticipated. Applicants for assistance are in deeper crisis than expected, with broader needs. More people are affected by job loss, and job searches are taking longer than in the past. Homeowners as well as renters are in need of support. Areas with high poverty rates have been especially hard hit.”

Measuring Impact

Grantees are measuring the impact of the BEF grants in a variety of ways, including:

  • Increase in number of requests for emergency assistance to which the agency can now respond.
  • Increase in amount of assistance the agency can provide to each individual/family.
  • Percent of clients’ needs agency could meet.
  • Ability to keep clients in their homes, with heating and lighting, and prevent homelessness.
  • Ability to provide access to food, assistance for transportation emergencies, help with medical expenses such as purchase of prescription drugs, shelter for homeless clients, assistance in budgeting.
  • Ability to help clients retain or find new employment.
  • Ability to help clients who have been turned away from all other forms of assistance.
  • Ability to help clients meet their goals, resolve the current crisis, prevent future emergency needs, improve family stability, and/or connect to long-term solutions.
  • Indirect impacts, which include preventing child abuse/neglect and domestic violence and ensuring school continuation for children.

Sharing What’s Been Learned

Grantees overwhelmingly expressed an interest in learning from each other and sharing resources. Foundation staff are planning to follow up by:

  • Facilitating learning among BEF grantees by helping them share information, tools and questions.
  • Conducting a final grantee survey in early 2010, the end of the funding period, to explore outcomes, impact and lessons of the grant-supported initiatives and the program as a whole.
  • Developing a final learning report on the BEF, including information about the creation, operation, impact and lessons of the program.

- Chris Murakami Noonan, MCF communications associate

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Sometimes less is less. The case for focusing on outcomes, not overhead.

August 27, 2009

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 costs?

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

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Local Nonprofit Allies Are Valuable Assets During Tough Economic Times

July 31, 2009

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

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Posted by Chris Noonan

In the Media

April 15, 2009

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.

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In the Media

January 2, 2009

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.

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Posted by MCF Webmaster

Ease Up on the Restrictions

November 21, 2008

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

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Posted by Wendy Wehr

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