The Cost of Foundation Disinvestment in Advocacy Now will be Paid by the Most Vulnerable for Years to Come

posted on: July 8, 2010

NCRP has been studying the policy advocacy, community organizing and civic engagement activities of local and statewide nonprofits across the country for the last two years. What we are hearing now is so disturbing that we couldn’t wait until our next study comes out to sound the alarm.

The economic crisis is hitting nonprofit advocacy and community organizing groups especially hard. Staff from community organizations in Pennsylvania and states in the Northwest – Idaho, Montana, Oregon and Washington – have been telling stories of how they had to freeze activities or close their doors altogether. Others have lost staff, including executive directors. Many of the groups that are participating in our Grantmaking for Community Impact Project have talked about their struggles to stay afloat and continue to be effective advocates.

A new report [PDF] from the National Organizers Alliance and DataCenter confirms that our anecdotal evidence is indicative of a broader crisis. The report surveyed 203 organizations to gauge the impact of the recession on organizing and advocacy work. While most of the respondents reported continuing their work at pre-recession levels or even expanding their efforts, a significant proportion is doing so with reduced staff (45 percent) or reduced staff hours (31 percent). Importantly, 65 percent of respondents have seen their resources from foundations reduced since the recession began.

To cope with reduced human and financial resources, almost half of the organizations surveyed reported an increase in utilizing volunteers and interns and an increase in collaboration with others. Still, four out of ten respondents are depleting their emergency reserves to remain operational and one third are surviving on a month-to-month basis. Five were closing altogether in the four month period of the survey. These findings highlight the severity of the situation for many nonprofits focused on advocacy.

Our outreach in the Pacific Northwest and Pennsylvania corroborates these findings. When we began making calls to community leaders in Idaho in April, for example, we quickly learned that a group we hoped to include in our research sample, the Idaho Women’s Network, had literally just folded. Although by all accounts it was a highly effective organization with an excellent reputation, two major national funders pulled their support, leaving the network without enough resources to keep staff. There is little support for organizing and advocacy within Idaho, and because the state is one of 10 “philanthropic divide states” – states with the least amount of local philanthropic assets – nonprofits in the area are highly dependent on out-of-state funders for survival.

According to Gail Heylmun, executive director at the Fund for Idaho, progressive foundations have pulled out of Idaho as it solidified as a red state over the last decade and as the recession took a bite out of their funding capacity. Yet IWN had a long list of accomplishments in areas such as women’s health, domestic violence, child care, and LGBT rights. They had built up years of capacity, relationships, and reputation. Their absence will be keenly felt in the small advocacy community in that state.

In Pennsylvania, the state budget was over 100 days late in 2009. As a result, the city of Philadelphia did not pay vendors for 62 days, which included nonprofit service providers like the AIDS Law Project. ALP is a nonprofit public interest law firm that combines legal aid services with systemic advocacy on behalf of people living with HIV/AIDS, and much of the funding for its direct legal aid work comes from public sources. The organization was desperate; Executive Director Ronda Goldfien was on the verge of asking employees to work without pay for an indefinite period. Goldfien reached out to everyone she could think of who might be able to help and the Philadelphia Foundation came through. Goldfien and ALP did not have a strong existing relationship with the foundation and had not received funding from them in the past. Goldfien said the Philadelphia Foundation “really rose to the occasion” by providing a grant quickly and without an application.

Other organizations in Pennsylvania have not been as fortunate. Many have reduced staff or experienced executive turnover in the past two years. There were several organizations that could not participate in the research despite a strong interest, citing capacity issues and the need to stay focused on being effective advocates for their constituents. When organizations doing solid advocacy and organizing work turn down an opportunity to have their accomplishments highlighted in nationally disseminated research, it’s a clear indication that the economic recession is far from over for the nonprofit sector.

What can funders do?

First, listen to your grantees. Ask them how the recession has impacted their ability to operate effectively.

Secondly, provide general operating support. This is the most flexible form of support and allows nonprofits to spend money where it is needed most.

Third, have a flexible grant cycle that can be responsive to critical needs in your community. Consider establishing an emergency grants or loan fund to shore up nonprofits experiencing a temporary cash flow crisis, and develop procedures for getting the money out the door quickly.

And finally, don’t write off advocacy in states that seem too “red” to effect change. In recent years, Idaho advocates and organizers have won a statewide minimum wage for farmworkers, a subsequent raise for all minimum wage workers, clean up of nuclear waste, prevention of new polluting coal and nuclear power plants, and curbing of environmentally harmful large scale animal factories.

As the examples above illustrate, nonprofits now more than ever need to be able to be effective advocates for themselves and their constituents. State and local lawmakers are making decisions every day that will profoundly affect the future of communities that grantmakers care about; without financial stability, nonprofits will not be at the table. Foundation endowments have taken a hit this recession, but it is important for grantmakers to weigh the opportunity cost of losing an effective organization against the instinct to protect assets.

Many expect that 2011 will be an even more challenging year than 2010 for nonprofit fundraising, particularly as funders remain concerned about meeting basic emergency service needs in their communities. Taking steps now to support grantees as they represent the communities your foundation cares about can ensure nonprofits have the resources they need to be effective advocates.

Lisa Ranghelli is director of the Grantmaking for Community Impact Project, and Julia Craig is research associate at the National Committee for Responsive Philanthropy (NCRP). Both are co-authors of the Strengthening Democracy, Increasing Opportunities reports.