November 2002
In the midst of a continuing economic downturn
and severe budget pressures at all levels of government,
we at VPP continue to be concerned about the constrained
supply of funding for nonprofit organizations at a time
of rising demand for core safety-net services. We are concerned
not only about the diminished flow of dollars into the sector;
we are also concerned that the available funding is not
being invested as wisely as it could be.
Of course, there are many organizations that desperately
need quick infusions of cash to keep the doors open and
to enable them to continue providing food, shelter, health
care, or other services to the most vulnerable members of
our communities. And yet we at VPP believe that there has
never been a more important time for funders to get serious
about stepping forward to direct a much greater share of
their funding, as well as their leverage in the community,
to help build the organizational capacity of their grantees.
It is our belief that the only way we can help organizations
to absorb today’s tough economic blows is by investing
substantially in capacity, providing passionate, committed
leaders with the resources and support they need to increase
the impact of their programs and strengthen their organizations.
We at VPP focus the majority of our funding and time in
six key areas: helping nonprofit leaders build strong management
teams, create effective and engaged boards, gain clarity
of mission and goals, define sustainable economic models
with diverse funding streams, improve products and services,
and create a culture of performance tied to concrete social
outcomes. If these core issues are not addressed, not much
else matters.
It was gratifying for us to see that the need for focused
support for nonprofit capacity building was a recurring
theme last week at the national Independent Sector (IS)
conference in Cleveland. One speaker, Gary Yates, president
and CEO of the California Wellness Foundation, went so far
as to challenge grantmakers to dedicate as much as 50 percent
of all grant dollars to core operating support. IS President
Sara Melendez challenged corporate and foundation funders
to make capacity building a priority over infatuation with
exciting new programs. Despite this high-level discussion
of the importance of capacity building, we know that we
still have a long way to go before the commitment among
funders reaches a critical mass. And even when individual
funders make an investment in capacity building, they often
underfund the opportunity.
We simply have to acknowledge that helping organizations
take steps to really strengthen themselves and grow is a
challenging and very costly process. And yet, we don’t
believe that there is any other choice. The nonprofit sector
is at a critical juncture, a potential tipping point. If
both public and private funders are willing to step up to
the plate in a much larger way to seriously and strategically
support capacity building and leadership development, we
could begin to get beyond a short-term triage mentality
and help nonprofit leaders build to last. This will require
grantmakers and grantees alike to speak with a louder, more
unified voice when federal, state, and local funding decisions
are being made. It may also mean that foundations should
distribute annually more than the relatively small percentage
of their endowments (five percent) that they are obligated
to distribute by law. And it certainly demands that our
society introduce new and creative funding instruments to
benefit the nonprofit sector.
Just as we strengthen ourselves as a country to fight terrorism,
we must help the nonprofit organizations working day in
and day out on the frontlines of our communities to strengthen
themselves so they can more effectively confront an enemy
already firmly entrenched in our homeland: a poverty that
is robbing young children of their chance to thrive and
sapping our nation of its true human potential
—Mario Morino
