Why Don’t Foundations Give More Support to Development Teams?
I am an old guy, I still listen to Disco. Yeah …Disco. On these things called records. I have been in our profession for over 30 years. The point is I have seen a lot over that time. If you’re a development officer like me you spend a lot of time studying prospects, including foundations. Studying guidelines. Who has the affinity, passion, and interest in your cause or institution?
Over the years you can see trends in giving. Some topics rise and others decline. Some methodologies become fashionable and others fade into history. But throughout all this time in the foundation world, they have rightly and justly been concerned with sustainability and scalability of their grantees. So many small and medium nonprofits get generous grant funding and keep their fundraising focused in the foundation area only. Never branching out into other more diverse types of funding. I have seen foundation grantees analyzed for sustainability, but I wonder how deeply? Are they studying the culture of philanthropy in that organization? Do they know what healthy major gifts prospecting systems look like? Do they know the complexities of staff dynamics, class, pay and influence?? Have they looked at the length of tenures of their development staff?
Please read the national study “Underdeveloped”. Authored by the Evelyn and Walter Haas Jr. Fund and Compasspoint. Print it up and have the courage to hand it out to your leadership. How rare to see a study about Development where they actually ask Development Officers!
From the wonderful “Calls to Action” section of this study I quote:
“Funders typically inquire about sustainability as part of due diligence, but they don’t typically look deeply at an organization’s capacity to develop a sustainable income. Drawing on the organizational factors highlighted in this report, funders could develop a more sophisticated “due-diligence” checklist to guide their evaluation of the leadership, governance and operational components of fundraising capacity. This would have the dual benefit of helping to identify strong and sustainable grantees while communicating to grant seekers what we think strong development capacity looks like.”
I have chronicled in past articles the ways small and medium nonprofits stunt their own fundraising. One thing that happens way too often is a large foundation grant unintentionally leads to poor fundraising at that same institution. We have seen it time and time again. Boards and leadership don’t feel the same urgency, need to diversify their funding base while those big foundation checks keep coming. Oh, they will say they will, but it’s not the same as having the “wolf at the door” of urgent budget issues, to use an old phrase.
Now please take this article with a grain of salt. I am speculating and talking from my experience. I have never worked in a foundation, nor would I consider myself in the foundation world. I have worked with practically every major foundation in the US over the years. So that disclaimer aside. My observations are general but I think accurate.
There are foundation veterans whom I would ask to understand the sense of what I am trying to say and distill it into something more concrete. I decided to stick my neck out because I thought it needed to be said.
When I bring up grantee sustainability I am often pointed toward grants for “Capacity” and “Organizational Effectiveness”. It's usually a much smaller piece of the pie than the main program budget. When you dig into capacity building grants, organizational effectiveness funding it gets spent on many things besides developing fundraising capacity. Sadly, when you give capacity building grants to an Executive Director who doesn’t understand what fundraising entails most of the time they are not going to spend it on building fundraising. They will spend it on Program areas they understand. Many Executive Directors or leadership don't even like fundraising so it's unlikely they will spend that money there. To back up my observation I talked with a few ED's who are friends who told me they had received Organizational Effectiveness money. All had spent it on "Leadership Development". Two told me it seemed "odd" and "unconventional" to spend it on fundraising. The third told me it had never occurred to her to spend that money on developing her fundraising team or capacity.
One example of “Organizational Effectiveness’ done right, where diverse fundraising is front and center is the remarkable work done in New Orleans by the Greater New Orleans Foundation. A national model. https://www.gnof.org/work/oe/
I have also seen the Annenberg Foundation include Major Gifts in their Alchemy Seminars. That’s simply wonderful!
Another bright spot is a study conducted by the good folks at the Evelyn and Walter Haas Jr. Fund and Compasspoint. It’s called “Reset Fundraising” http://www.haasjr.org/resources/collections/reset-fundraising . Check it out. What Haas Jr, Annenberg, GNOF have done needs to be standard at every community and regional foundation. Not the exception.
Parallel to asking about why Organizational Effectiveness and Capacity grants is this question: Why don’t we see much more funding, even endowments for actual Development Officers or Offices?
When I worked at a university we had a few individual donors endow a Development Officers job! Wow! This happened when major volunteers worked so closely with Development Officers they learned about and came to appreciate the importance of their work.
It's a simple idea. If you want to support sustainability at a nonprofit what better way than supporting the growth, strength, and longevity of its Development Department? Can you imagine if you endowed a few Development Positions? Or fund a 3-year startup plan? If this has been done, I am guessing its rare and I haven't seen it.
I can only guess at the reasons this not of interest to a foundation's staff and board. One can plainly see that OE and Capacity Building funds are a small part generally of a foundations annual giving. Many of us have seen good Development teams grow and build nonprofits into strength and sustainability. Yet in my opinion, we are still plagued with a massive underinvestment in Development nationally. Could foundations change that story?
One could even make an argument that the best way to fund program, is to develop a strong Development program. Perhaps not a popular thing to say. But in the long term isn't Development "the gift that keeps on giving". You could support a program for 3 years, but if their development team was funded and became successful that initial funding could support program for far more than 3 years?
At the very least let’s make sure when we say, “Organizational Effectiveness” or “Capacity Building” that fundraising is at the top of the list.
I recently saw a quote in the December 2012 issue of the Chronicle of Philanthropy, quoted in the "Underdeveloped" report from iconic foundation executive Gara La Marche:
“‘The most significant regret I have in looking over my 15 years as a leader of two big philanthropies is that while we thought a lot about sustainability at the Open Society Foundations and at the Atlantic Philanthropies, we rarely made grants to strengthen organizations’ fundraising in a way that encouraged innovation and democratization.”
Thank you, Mr. La Marche, for saying that!
Foundations could have a huge impact not only on the sustainability of their grantee's but on the whole nonprofit landscape. I urge foundation leaders to take this message to heart and talk about this internally.
Finally, by emphasizing and honoring fundraising, we can start to confront negative attitudes and trends crippling fundraising at most nonprofits today. Through your granting and leadership honor the role of Development and Development Officers. It's simply a great investment!