Tag Archives: nonprofit funding

The Wall of Philanthropy, Wildlings, and White Walkers

wallLast week I wrote about the Sustainability Question and how it is symptomatic of an ineffective funding system where funders and nonprofits are not equal partners but more like frenemies. This apparently resonated with many readers, at least 138, since that’s how many people shared it on Facebook, and only 26 of those were from me mandating staff to do it. “Yeah, Vu, high-five!” said a colleague at a meeting, and we high-fived, which was tricky, since I was holding my 5-month-old baby Viet. We are doing a nanny-share with another Executive Director, but even with the split costs, we could only afford it four days a week, so on Fridays, we two EDs tote our babies around.

The post sparked some great conversations, especially around the challenges of communication between funders and nonprofits. “I call it the Wall of Philanthrophy,” said one of my ED friends. She painted the image of a physical wall between funders and nonprofits. “There is a tiny window in the wall, and every once a while it opens just a little bit, and maybe there is an exchange of ideas, but then it quickly closes, and it’s solid wall again.”

This reminds me of the Wall in the Game of Thrones. It is 700 feet tall, 300-mile-long wall made of solid ice to keep out the Wildlings, people who are regarded as primitive, cruel savages who have poor hygiene. The Wildlings live North of the Wall, a barren, desolate, cutthroat, and eternally wintery landscape that has very few good restaurants. Every once a while they try to cross the Wall and get South into the warm Seven Kingdoms, which are more civilized and you can go to the bathroom for more than two minutes without fear of frostbites and gangrene. While a Wildling or two sneak past the Wall here and there, in a thousand years not a single assault on the guarded Wall has succeeded.

Another unhygienic wildling asking for general operating

Another unhygienic wildling asking for general operating

I don’t think I’m the only one who feels like nonprofit organizations and staff are like the Wildlings trying constantly to make it past the Wall. “Sound the alarms! There is a group of Wildlings at the base of the Wall, and they are chanting ‘General Operating Funds! General Operating Funds!’ Quick, prepare the hot oil!”

This Philanthropic Wall manifests itself in many ways:

  • After the site visit, we hardly see funders at programs and special events
  • Nonprofits are rarely invited to conferences and other important gatherings of funders
  • It takes anywhere from a week to nine years to get a hold of some funders, often when we are trying to get support for time-critical projects
  • Funders almost always refuse to join committees for projects initiated by nonprofits
  • Not a single funder accepted my invitation to 80’s-themed trivioke night, a combination of trivia and karaoke.

I don’t think I will be able to scale this wall in my lifetime, which is why I’ve been training my son Viet when I have him on Fridays, hoping that one day he will follow his father’s footsteps into nonprofit and continue the work. Instead of children’s stories, I’ve been reading strategic plans and annual reports to him. “One day, son, all funding will be general operating. I probably won’t be around to see that. Learn and grow strong and help to make that happen.”

Every once a while, though, there is a glimmer of hope. An Executive Director friend of mine said she was invited to a conference of funders to present her organization’s work. “Really?!” I said, nearly choking on a pluot, “you’re attending a conference of funders? No way!”

“Yeah,” she said, “but they made it amply clear that I am not to approach any of them to solicit funds. Actually, it was hinted that I shouldn’t talk much at all. In fact, I have to wear this scarlet N on my nametag to mark me as a Nonprofit.”

We nonprofits can understand why people feel that the distance between funders and nonprofits is necessary. After all, there are so many nonprofits, and funders should be fair and should not be playing favorites. However, the quest for objectivity and impartiality has led to an unhealthy adversarial system that has been harmful to the field. How can conferences to talk about funding structure and collective impact and other important stuff be effective when the people doing the direct service work and thus have first-hand knowledge of client and community needs are only marginally part of the conversation?

Plus, when there are insurmountable barriers to communication with funders, it just means that the nonprofits with the strongest relationships and connections make it through, finding support for their own projects. So many great ideas never get off the ground because many nonprofits leaders do not have the behind-the-scene connections with funders, and on the other hand, so many crappy ideas do get funded because someone knows someone who knows someone.

Funders have more power, and thus must take a larger share of the responsibility for perpetuating an ineffective system where we nonprofits spend much of our time trying to figure out how to survive instead of innovate. We have been at the base of the Wall chanting things like “general operating funds!” and “overhead is necessary” and “standardize your budget forms!” for a long time now, with little result.

But we nonprofits are not off the hook either. Like the Wildling tribes, we are constantly in competition for survival, which tends to happen when resources are scarce. We have to work together and support one another while simultaneously delivering common messages and proposed solutions. We can’t just keep grumbling at the base of the wall. We must unite.

white walkersWe must ALL unite. In the Game of Thrones the Wall wasn’t originally built to keep out Wildlings. They were just unlucky enough to be caught on that side when the Wall was built thousands of years ago to defend against the White Walkers, who are kind of like scary-as-hell evil ice mummies who could turn dead people and animals into evil ice zombies and the army of mummies/zombies went and killed everyone, Wildlings and civilized people alike, until they were driven back to their cold, wintery home and the Wall was built to keep them there. Winter is coming, it lasts whole generations, and the White Walkers are stirring once again.

The point is, there are greater threats out there—poverty, racism, violence, loneliness, war, inequity, oppression, homophobia, injustice, unaffordable childcare, hunger, illness, death, etc., the White Walkers of our nonfictional world—and we should be working together to defeat those things, not focusing so much of our time building and maintaining walls around ourselves and each other. Funders and nonprofits must communicate better and work in partnership more effectively.

How about we start by carpooling to the next trivioke night?

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Related Posts:

Collective Impact: Resistance is Futile

Site Visits: Uncomfortable, Yet Terrifying

The Most Crotch-Kickingly Craptastic Grant Application Notice Ever

Nonprofit Funding: Ordering a Cake and Restricting it Too

The Sustainability Question, Why it is So Annoying

sustainabilityThis morning, I woke up early and realized I was face-to-face with my son, Viet, who has been sleeping in the same bed with his mom and me. Looking at our sweet little baby, who was still sleeping peacefully, one tiny hand under his soft and rosy cheek, I was filled with warm fatherly thoughts. Namely: “When is this kid going to get a job and help pay for his keep?” I was tempted to wake him up and say, “You do realize that childcare for you each month is literally more than our mortgage, right? You better enjoy this while you can, little dude, because when you turn 18, you’re on your own.”

And that makes me think about the issue of sustainability of nonprofit programs. In every grant application, there is the “Sustainability Question,” which is basically, “How will you sustain this program or project when funding from the So-and-So Foundation runs out?” This seems absolutely reasonable at first glance, but honestly, it’s one of the most annoying questions we face. Most of us nonprofit professionals absolutely hate this question, and each time we see it, we have to leave our desk, go on a walk, maybe do some yoga or watch “The Daily Show,” then come back to our desk, take a deep breath, and write something  like:

“We will continue to develop our staff and board’s ability to fundraise and diversify our revenues, including building relationship with other funders, as well as cultivating support from corporate sponsors and individual donors. Our special events continue to increase in revenues, and the board is leading the effort to explore earned income through program fees and the door-to-door sales of inspiring macaroni artwork made by the children in our extended-learning program.”

All of that is basically a euphemism for “We will leave you alone and bother other people.”

“Just once,” said my ED friend, Director Maureen, “here’s what I’d like to put in response to that question:”

  • Program staff and the board will triple the amount of time they spend praying for money
  • Program participants will be asked to pray for money to provide for their services as well
  • 10% of general operating funds will be utilized to purchase Power Ball lottery tickets
  • Fund development staff will regularly consult a reputable psychic to help track which direction foundations are trending to support

Why is this question so aggravating? Why does every time I answer it, I feel like crap? I sent out an email to my ED friends in the field, asking for their thoughts, and the responses were passionate and insightful. While the issue is complex and requires a lot more time to explore, I’ll try my best to summarize my colleagues’ thoughts. Overall, the Sustainability Question is annoying and frustrating because:

Sustainability is in large part determined by funders, not nonprofits. As much as we love individual donors, many of us still rely on grants, and grants are usually small and one-year in duration. We get a bunch of one-year grants that are Frankensteined together to support programs, each one with their own set of demands and restrictions, (which I explored here in “Nonprofit Funding: Ordering a Cake and Restricting it Too.”). As one ED puts it, “Why is fidelity to the mission so highly valued and expected of nonprofit leaders and staff but funders expect to ‘sleep around?‘ One year and you’re out. [They] don’t even come back and ask.” This lumbering, unwieldy, tenuous system is the antithesis of sustainability, so to ask how we nonprofits will maintain and grow our programs within it is kind of like setting a fire and asking how we will be putting it out.

Sustainability depends on the whole organization being strong, yet funders do not like providing general operating funds. Really great programs do not magically appear out of thin air. It takes real people, people who need, like, an office to work at and healthcare for their stress and carpal tunnel and stuff. These things are critical, and yet we have to constantly fight for them. “We will cultivate relationships with individual donors and corporate sponsors, etc.” sounds great, but that requires development staff, which is fundraising, and no one likes to fund “fundraising” and “admin” expenses, because those things are so frivolous and useless.

The nonprofit model is unique in that success at carrying out our missions leads to increasing costs, not revenues. The more successful programs are, the more clients they will serve, the more staff and other expenses will increase, without a proportionate increase in support. An example is VFA’s Saturday English School (SES) program, which provides English and Math support to recent-arrival immigrant and refugee students every Saturday for three hours. Five years ago, we had 30 students show up each session. Because of how awesome the program is, we now have over 150 students each session. This is a five-fold increase in number of students served. The expenses tripled, since more students means more snacks, more teaching staff, more curriculum material, etc. But funders are not going to triple the amount they provide; if we’re lucky, they’ll renew at the same level, and we’ll have to go search for other, newer funders to provide support. This is the Program Growth Paradox, where the more a program is successful and expands, the less sustainable it is.

Other reasons cited by my ED colleagues include “we know very, very well that not every program that literally changes people’s lives for the better can become self-sustaining” (but should be funded anyway, see “Nonprofit’s Ultimate Outcome: Bringing Unicorns Back to Our World“), “I have no clue where my future funds will come from so everything I say sounds like BS” and “after five or more friggin pages of explaining just HOW MUCH you need the bucks, you are now invited to totally reverse yourself” and “I will think about this and get back to you after I have several drinks to calm down.”

sustainability

Credit: James Hong, VFA’s Director of Operations

The most serious challenge with the Sustainability Question, however, is that it symptomatic of a divisive and patronizing system that perpetuates the unhealthy dichotomy of nonprofits as supplicants continually begging for spare change, and funders as benefactors. “How will YOU sustain this program? How will YOU sustain it after OUR funding that WE (might) give YOU runs out?” We now feel like the underemployed college-grad living in our parents’ basement, freeloading off of their good will, until they call us in for a serious talk about our future and demand to know what our plans are to find a job and inform us that it’s for our own good that in six months they will kick us out. We feel like Oliver Twist, who has to beg for another bowl of gruel from the…uh…that one guy, who serves…gruel…

OK, I haven’t read Oliver Twist.

The Sustainability Question is aggravating because the responsibility is overtly placed on nonprofits’ shoulders to fix problems in the world that we didn’t cause in the first place. Once the question is asked, “It immediately becomes somebody else’s problem,” writes one of my ED friends.  It feels like funders are at the end of their ropes trying to “help” us nonprofits and if we fail to sustain our work, it is all our fault. This is not working for our field.

Every once in a while I meet a program officer who used to be a nonprofit staff. “Ah,” they sometimes reminisce, “I miss being on that side of the table.” And I would say, “Tell me what it’s like on your side of the table?” And we would talk, and I would learn that being on the other side of the table has its challenges, and that it’s not all completely awesome, with ergonomic chairs and dental AND vision insurance and with each person getting access to the company unicorn to ride to important meetings.

But that makes me think, Why the heck are we on opposite sides of the table in the first place? Aren’t we all trying to solve the same problems? Why is the relationship between funders and nonprofits so adversarial? It is ineffective. We should be on the same team, where the quarterback supports the…uh, linebacker so that he can make a, um, rim shot at the…fourth inning…

All right, I don’t know anything about sports. Point is, nonprofits and funders must be equal partners, with different but symbiotic roles, and sustainability of the work must be shouldered by both parties. We nonprofits think all the time about sustainability, even without being prompted, and we will continue to build strong programs and diversify our funding. Funders, as equal partners, should provide multi-year funds, general operating funds, capacity building assistance, and help connect us to other funders and partners. And come visit the programs once a while! We must work together to figure out how to sustain and advance the work. We have to, because the needs of and challenges facing our communities are only going to increase.

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More on funder-fundee relationships: The Wall of Philanthropy, Wildlings, and White Walkers

Nonprofit funding: Ordering a cake and restricting it too

cake-486874_960_720For the past few months one of staff has an eye that’s been twitching. “It’s this grant!” she says, “it’s for our after-school program. It pays for instructors’ teaching time, but not their planning time! How can they teach when they can’t plan?! How? How?!”

“Psst,” I whispered, “let’s talk in the conference room. Since they are dedicated they will plan anyway even without getting paid,”—I paused, looking around—“why don’t you just increase their hourly wages?”

“This grant capped the hourly wage, so I can’t pay them more. The other grant might pay for planning time, but they don’t pay for employer taxes! ” She started pulling at her hair, and both of us collapsed on the floor, weeping and beating our chests in anguish and despair.

OK, I might have exaggerated that last part a bit. But unfortunately, this sort of restriction is not an exaggeration. This challenge that we in the nonprofit sector face daily is historic and pervasive. And very, very frustrating and counterproductive.

Imagine if other businesses ran like this. Funders and donors are basically customers who buy products, not for themselves, but to give away to other people who need them (I’ll talk about the weaknesses of that system in a future post). Imagine what a bakery would be like if it had the same funding restrictions that we have on nonprofits:

Baker: Welcome to the Dusty Apron Gluten-Free Bakery. Can I entice you with a cake?
Customer: Yes, a chocolate cake. It’s for some gluten-free veterans.
Baker: Excellent! We specialize in gluten-free cakes. We can make a delicious flourless chocolate lava cake that was once featured in Tasty Pastry magazine. How does that sound?
Customer: Ooh, the gluten-free veterans would love that. They always get fruit for dessert. How much does it cost?
Baker: For a cake serving 20 people, it’ll cost about $100.
Customer: OK, well, I can only give you $20, so you’ll have to find the other $80 elsewhere
Baker: Well, luckily, we have other customers who want to help make a cake for gluten-free veterans. At least three of them said they’ll pitch in, and we’ll ask some others too.
Customer: Excellent, so here’s $20. However, you can’t spend the $20 on sugar. You can only spend it on chocolate and up to one egg. It’s spelled out here in this cake baking plan.
Baker: What about vanilla? It’s hard to make a delicious cake without good vanilla
Customer: You can spend $1 of the $20 on vanilla, but if you decide you need more vanilla, you have to email and talk to me about changing the baking plan.

One week later:

Customer: We ordered a gluten-free chocolate lava cake from you guys, and it was awful. It was too dense and not nearly sweet enough.
Baker: I’m sorry, but other customers also had their own conditions. One customer said he would pay for sugar, but not butter. Another said she would pay for chocolate, but we already had you paying for chocolate, so we asked her if she would pay for butter, and she said no. Our oven’s thermometer also broke down, but none of the customers would allow their cake payments to be used to fix it, saying that fixing it does not directly benefit gluten-free veterans. I emailed you to ask if $5 of your $20 could be used to buy a temporary thermometer, since we didn’t need so much chocolate, but you said it would take three weeks to change the original cake baking plan.
Customer: Well, I’m not buying any more cakes from you guys. You obviously don’t have enough baking capacity. Goodbye.

Meanwhile, another customer heard the exchange:

Customer 2: Sheesh, I’m sorry about that. If it makes you feel better, I and a bunch of other customers got together and ordered a blueberry bundt cake from you last month, and it was delicious.
Baker: I’m glad to hear you enjoyed it! I hope we’ll see you around more often?
Customer 2: Absolutely not. We only pitch in to buy a cake from any bakery once. If we keep buying cakes from you, you’ll just become dependent on us, and that’s just madness—madness, I tell you!
Baker: Well, I’m sorry to hear that. How can I help you today?
Customer 2: I just formed a committee to explore why there is such a high rate of nervous breakdowns among bakers, and since you guys were featured in Tasty Pastry, I thought I would ask you to join.

Two weeks ago I was out to lunch with a potential new corporate sponsor, who got very excited about a program we did a while ago, where we provided computer training classes in Vietnamese to parents so that they could learn to check their kids’ grades online through Seattle Public Schools’ Source program.

“That’s excellent!” he said, “that aligns really well with our priorities this year. You should apply for our employee giving grant.”

“Cool,” I said, “I did see that on your website. I’ll review further and follow up with you.”

“One thing you should know though,” he said, “we don’t fund staffing. We hate paying for people’s wages. We can pay for the computers and software for this program, but only for client use.”

I know he’s just a messenger for his company, but at that moment, I wanted to unleash the fury of a thousand ED’s and Development Directors on this poor man. I would stand on the table and my eyes would glow white, and a terrifying cyclone of meeting minutes and financial statements would swirl around me, knocking everything over. People would cower under their tables as hundreds of business cards rained down from the heavens. “Who,” I would say in a low voice that would reverberate through the restaurant, “who would make the program happen then? Elves?! UNICORNS?!!!”

I calmed down, thinking of how awesome that scene would be if we had a show about nonprofit work that combines The Office with X-Men. But yeah, seriously, who would manage this program? God, that would make our work so much easier, if we could just summon some multilingual elves to come out and plan programs and fill out paperwork. That would cut down on costs, and I’m sure the elves would have a better grasp on the advanced algebra and calculus required to figure out which funder is paying for what by when.

The sad reality is that we nonprofits spend way too much time navigating the complex maze of funding restrictions, time that could be better spent delivering and improving on services. We should all focus on the final outcomes and allow nonprofits the flexibility to do their jobs. Though restricting funding in the name of accountability has been a standard practice that stemmed from good intentions, in the end, it is the gluten-free veterans who will be eating fruit again.

The art of receiving bad news

bad newsMy sister turned 21. It was an emotional day. You get a number of those moments in your life where you realize that time is finite. Getting your first grey hair. Your mother stopping to catch her breath on a walk. Seeing your baby sister, whom you taught to ride a tiny bike, become of drinking age.

But absolutely worst of all is being mistaken for your father at your sister’s 21st birthday dinner at a Mexican restaurant by her friend who is a waitress there. “And is this your father?” she asked. Linda, my sister, cracked up. I would have run into the bathroom crying, but the chips and salsa were addictive and they kept refilling it.

In the last five years, I have aged ten years. The economy has not been kind to us nonprofit directors. In fact, it’s been grabbing us by the neck and giving us noogies and stealing our lunch money. Tuesday, I received news that a school we partner with did not receive a major grant that we were hoping for. We had worked on that proposal with the school for weeks. Receiving the notice was like getting smacked in the face with a frozen cantaloupe.

I was at my desk, trying to compose a bad-news email to the staff. We are a small organization, and every staff feels every victory and defeat. It is easy to write victory announcements: “Yay, we did it! Teamwork! Synergy! Eff one-ply toilet paper, we’re going two-ply! etc.” It is much harder to write a defeat email. I was drafting one when Mr. Nguyen, our Administrative Assistant, came by to talk to me.

Dear everyone, I was typing, we did not get the grant. I know this is disappointing. We gave it a valiant effort…

“Vu?” said Mr. Nguyen in his soft, eloquent voice, “your signature is not good.”

“Huh?” I said. Sure, we knew our chances were slim, but I was still hopeful. In the next several weeks, please do not get sick or injured, as we might have to cut your health insurance…

“Vu,” said Mr. Nguyen, “your signature, it’s disconnected.” I looked at the piece of paper he was holding, a form approving some office supplies. “See, you have two parts to your signature. That’s not good. It means you’re distancing yourself from your family.”

I was getting annoyed, even though he was just trying to help. “Yes, thank you for your advice.”

“You should make your signature one stroke. Underline it for support. The line adds confidence, strength.”

Argh! All Vietnamese signatures are the same: loopy squiggle with an underline. Mr. Nguyen was encouraging me to make my signature like that. I like my loop, squiggle, loop squiggle signature and didn’t need him to tell me that it was bad luck, especially when I had to send out an encouraging email to the troops after devastating news.

If we all work overtime to raise funds, and form a task-force to dumpster dive for snacks for our programs, we may just be able to weather this storm with only one or two layoffs…

But maybe he’s right. After signing so many things each week, I have dreaded signing anything, especially expense authorization, so the signature has gotten sloppy. Maybe something good will happen if I listen to Mr. Nguyen and work on my signature. Stranger things have happened at the office. Two years ago, we had some cash flow issue due to a heavy reimbursement check that had been delayed two months due to government bureaucracy. Frustrated and desperate and at the office till midnight, I looked at our one lone houseplant, a money tree. It had been dying, its leaves brown and sad. Not knowing what else to do about our cash flow, I decided to prune the tree of its dead leaves and branches. A week later, the tree started looking healthy, and I swear the check came in, and our cash flow was normal again!

Now the money tree has died. My signature apparently sucks and Mr. Nguyen thinks that’s a sign of poor character. I couldn’t blame the waitress for thinking I’m thirty years older than I am.

Each month, some of us ED’s go out for happy hour. It’s like a support group. There we console one another and talk of a bright and idyllic future. We sip our well drinks and stare into the distance, imagining a nonprofit world where all funds are multi-year and for general operating, where we ED’s could focus more of our attention on improving our services. A world with retirement funds and dental insurance for all our staff, where funders standardize their budget forms. “Hang in there,” we would say to one another, “one day, the economy will improve, you’ll see. It’ll be a beautiful day.” “Golly, Vu, do you really think so?” “Shucks, I know so.” But we all know it’ll take a while, perhaps years, perhaps never. We all dream.

And we all take advantage of senior discounts.