Responsive versus Intentional

To date, the funding partners at the Nonprofit Management Fund have agreed to put purchasing power in the hands of our nonprofit consumers (grantees) to spend on the resources (often consultants) of their choice, addressing an organizational (management or governance) challenge that they have identified as a priority. In the vast majority of our grants, this model served us well, and the grantees, the resource providers, and the community benefitted even more. The model worked. It is one that is relatively simple, flexible, anti-bureaucratic, and effective. In the field of philanthropy, we are atypical.

 

Freedom of choice is a hallmark of our democratic society. Having options is critical to being able to make choices. Whether we are shopping for groceries, cars, or shoes, we want options. When pursuing an education, we want options of not just schools, but educational philosophies as well. In choosing a career, or just employment, we want a variety of opportunities. At our leisure, we may spend our time and money today at a sporting event, tomorrow at a play, and next week at the movies or a festival.

 

Apply that free enterprise principle—freedom of choice—to permeate the nonprofit sector. We not only want many different selections for health care, family therapy, theatrical productions, childcare, dance classes, environmental cleanup, or historic preservation, but we also want to select services in our neighborhood, yet have the possibility of going across town. When these nonprofit organizations decide to increase their capacity, or even compete with one another, shouldn’t they have myriad resource opportunities as well? A variety of workshops, an array of websites, a range of consulting expertise, and a spectrum of talented technical assistance providers should all be available.

 

 

The rhetoric in philanthropy is that applicants and donors form “partnerships”. Funders are exhorted to be “partners” when the request is for funds versus advice, expertise, or any other asset besides money, to implement efforts that are designed as part of a submitted proposal. However, just because an investment is made, it doesn’t mean that a partnership occurs…not sure about that? Just think about the partnership you enjoy with the bank that holds your mortgage. There are, of course, examples when the proposal review discussion results in change, and occasionally, a partnership of sorts is forged. It is also understood that this model may be amended for individual donors and others who may take a more “hands on” approach in their grant-making efforts.


 

The Fund developed trust, a key characteristic of a true partnership. Nonprofits were encouraged to analyze an element of their own management and/or governance, secure consultation for resolution, and submit an application for funding. The review of the proposal assured the internal integrity of the idea (for instance, did the consultant’s workplan match the nonprofit’s self-assessment, or did the work product appear to address the problem identified). Occasionally, we would ask questions about the priority of the challenge to be addressed. Trust was involved because the submitting organization was identifying a weakness or challenge, airing their proverbial dirty laundry, to a funder. The Fund trusted the applicant’s basic assessment of its own needs and how best to address the challenges the applicant trusted the Fund Advisor to present their challenge to the decision makers in a way that did not hurt them in the future.

 

During its history, the Fund tested just about every known funding strategy: place-based philanthropy, collective impact, symptom funding, crowdsourcing, civic engagement, etc. It also tackled situations grouped by community challenge (funds were set aside for organizations addressing basic needs), type of nonprofit (faith-based organizations), or by purpose of a grant (diagnostic clinic). However, these were only special projects; the core principle was to let the market set the priorities. There was never any doubt that we were responding to the nonprofit market, as it was telling us what it needed. The funders were not determined to set the priorities; those were identified by people on the “front lines”. An exception was when an application arrived requesting assistance in fundraising. Queries would then be made to determine the root cause for the lack of funds—was it an apathetic Board, poor reputation, or inadequate financial accountability, all of which may have been reasons for a grant other than fundraising.



A few examples: 1) Rarely did we tell an applicant to work on their Board. Typically, an application would be submitted by the Board Chair saying that she needed help in overhauling governance policies or identifying candidates for the Board. 2) We did not mandate formats for financial information. Rather, a finance department staff member applied for new hardware and software to be able to produce more comprehensive financial statements on a more-timely basis. 3) We did not suggest that a new marketing strategy was needed to attract more program participants. More likely, a staff member encouraged the ED to request funding for a new, more user-friendly website that could be better accessed on a smart phone. And, only in the case of a diagnostic clinic (comprehensive organizational assessment) was there a limited roster of consultants from which the applicant could select (only those consultants that were certified through a three-year training program could conduct a clinic); 93% of the time, applicants identified their resource provider of choice for the consultancy.



While several of our funding partners may have selected a philanthropic strategy that aligned with their corporate or foundation goals, they expected that the Fund would experiment with different strategies (sometimes with more than one simultaneously), and yet, we always seemed to return to our core values of responding to a diverse applicant market using a wide-range of resources. The Fund was designed with the freedom to be less prescriptive and more open than many of its investors.



Beyond the myopic view of the nonprofit sector as just encompassing: health and human service nonprofits, educational programs, economic and community development groups, or arts and culture organizations, the Fund also encouraged many other types of tax-exempt corporations to apply. Diversity in mission was just as important to us as diversity in size ($25,000-$3 million in budgets), race (minority-led leadership), geography (central city to suburban to rural), or service scope (we were focused on local organizations). Therefore, 13% of our applicants represented: advocacy, animal welfare, civic, environment, historic preservation, legal, professional development, recreation, religion, or technical assistance sub-sectors. Only a few types of nonprofits designated as 501(c) 3 organizations were excluded: groups that were primarily engaged in making grants (such as federated campaigns, including United Ways); entities that had taxing authority (such as school districts or Business Improvement Districts); and, regional, national, or international organizations (even if located in the Milwaukee area, they had to conduct 70+% of their work here).



Although the applicants varied widely, their organizational challenges were very similar. The quality of the assistance received and the depth of the organizational leadership were the keys to a successful project.



The Fund worked diligently to be responsive to community needs, and it did so using a model that could be characterized as trusting the marketplace.

 

Should that model change?

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