Dani Robbins

Forks and Funding Streams

In Resource Development on February 23, 2013 at 10:16 am

I once heard a local Executive Director say that fund raising in a non profit was like a new restaurant looking for investors by asking people to pay for forks. That’s exactly right!  It’s illogical, yet it’s exactly right.

Nonprofits raise money through a myriad of sources, often one part of a program, project or piece of equipment a time.  Then once a year, or more often, we submit reports on the use of those funds.

Grants, which used to fund general operating, are now far more often restricted to the priorities areas of the funding institution.  Major donors fund in a similar way, with fewer restrictions usually, but still often to support a specific program or project and for a specific purpose.

It’s how it’s done, both on the side of the giving, and also on the side of the asking.

Granting intuitions – which for the purpose of this post includes corporate, community and family foundations as well as government awards – fund portions (and occasionally all) of projects, programs and staff; some fund only supplies, capital expenses or materials.

Donors and funding institutions absolutely and unequivocally have the right to support whatever they want in whatever method they choose.

It’s the nonprofit leader’s role to decline to accept funding that doesn’t meet their mission or make sense for their agency.  The caveat to all this, of course, is that those restrictions are not just that one foundation; they’re most foundations and other funding sources too.

Everyone funds like that and we all fund raise like that too- to support forks.  Forks – or in the nonprofit world, programs, projects or things – are important, and so are utilities, rent, staff, and programming.

Please let me be clear -this post is not intended to insult or be in any way disrespectful of the many, many institutions and people that support local organizations.  We are grateful to you!

This post is intended to question the efficacy of the status quo.

I am not naïve; I’ve been in this field for 20 years. I know that part of how we got here was a lack of accountability.  There was a lot of good feeling and a minimal amount of impact. I know there are still nonprofits out there not tracking their programs, not measuring outcomes and spinning their wheels but not advancing their missions.

I also know there are many more non profits that are running good programs, measuring the impact of those programs and being excellent stewards of the community’s resources.  They’re also spending a lot of time and energy to raise money and report on that money; time and energy that is taken away from programs.

When I ran the Boys & Girl Clubs of the Western Reserve, we wrote and usually received (and reported on) around 50 grants a year, we asked many more donors each year for financial support; we received money from the United Way, Boys & Girls Clubs of America, the Ohio Alliance of Boys & Girls Clubs; we had events and we had an endowment.  A large portion of the money we received was restricted.  We tracked every restricted dollar to ensure we spent it the way the donor intended.  We were transparent in our business practices and followed best practices for finical management.  That is good financial stewardship.  It’s also expensive and time consuming.  It is critically important, and it is not free.

Someone has to track, coordinate and manage all the pots and agencies can usually only charge a percentage of such costs to the grant.  It’s labor intensive.  It’s expensive.  It’s how it’s done. The current nonprofit funding model works. It’s not unacceptable but it is illogical.

I can’t imagine anyone planned it to be like this.  There is no version of a past that I will believe that has donors, foundation, corporate and government leaders sitting around a table envisioning a funding system that has one program being supported by three different grants each paying for a different percentage of the program staff salaries, and a much smaller percentage of the program leadership’s salary, with yet another grant paying for the materials and special event income making up the difference.

There’s got to be a better way.  The nonprofit service delivery system has been greatly improved through technology, professional and leadership development opportunities, improved tracking and a lens that is focused on impact.  Income generating efforts have similarly evolved, with the introduction of social enterprise, expanded efforts to embrace major donors and mergers when appropriate.

It’s time to re-imagine the funding model.  What else is out there?  How else can we ensure financial stewardship, maintain donor confidence and demonstrate our impact?  What else can we do to ensure the nonprofits in our communities have the resources they need to impact their corner of the world?

Let’s come up with a new plan: I’d rather do that than raise money for forks any day of the week.

As always, I welcome your experience, insight and ideas.

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  1. Thanks, Dani. I would love to re-imagine the model. There was an article in SSIR on funding models a few years ago, but I don’t think it broke it down to these specifics. Especially now that we are working to bring in social enterprise-based revenue streams, it feels like non-profits are holding up their end of the bargain. I’ll hope that we can work to educate each other now that we are moving beyond the overhead myth.

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