During difficult economic times, when donors begin to think twice before making a pledge or writing a check, non-profit organizations are torn between pursuing sources of support based on the interest of philanthropists or maintaining a direction in line with their mission and purpose. The pull to respond to available financial support is very strong and the possibility of receiving short-term relief from pressing financial issues can sometimes take an organization off track. There is no question that this is a complicated issue and boards, staff and donors need to consider all the implications when making crucial decisions for the non-profit agency.
When a question is raised with the professional staff and/or the board members the first response is, “If you do not want me to take their money can you find me other sources of support.” It is not unusual to receive a comment like, “If we do not go after the funding, then the organization may be at risk.” I have also been confronted with “If you do not want me to accept the funding for this program then how would you suggest we pay our expenses.”
As we all know, the enticement of the much needed funds sometimes clouds the vision of the organization’s leadership who are responsible for not only raising funds but also for covering the non-profit’s on-going expenses. If available funding can ensure several months or more of not having to worry about paying bills, then the pull is even stronger. However, sometimes there are reasons to pass up available funding in order to maintain the organization’s integrity as reflected in the relationship to the agency’s mission and purpose as juxtaposed to initiating programs because they can strengthen the organization’s short-term financial situation.
Yes, it is easy to write about these kinds of conflicts and yet another thing to live through them. However, short-term decisions often have a long-term term impact on the organization. When non-profits begin to expand their repertoire of services based on possibility of receiving funding they run the risk of losing track of what the leadership and the organization decided was important when they established the agency.
Today, more than ever, funders and foundations do not want to cover administrative expenses. Grant applications and donors who are requesting budget information for a project will often state they are only interested in knowing what percent of the agency’s budget is allocated for administration. This means a non-profit would receive funds for the implementation of a program and would be responsible for absorbing the overhead expenses.
Although this does not necessarily appear to be a serious problem it does mean that the organization must absorb administrative expenses for a program that is not necessarily consistent with its mission. An example of this kind of dilemma is “All About Children” (ABC – an agency that established a series of after school programs for children-at-risk (ages 7 – 12). They slowly built up a network in a number of cities in Israel with support from donors, foundations and reimbursements from the Ministry of Social Welfare. The services they provide include a hot lunch, assisting the children with home work, a variety of informal educational and social programs focused on improving the children’s self-image and self-confidence, and cultural programs.
A foundation circulated an RFP (request for proposals) focused on programs to strengthen family mental health. The interest was developing and strengthening family life through subsidizing mental health programs such as family therapy, marital therapy and group therapy. The director of the ABC network immediately thought of responding to the RFP as a way of receiving additional support and expanding the agency’s services. The idea that resonated with her was that they could strengthen the professional services to children while expanding their reach to the parents and the families in a broader way.
After reviewing the categories in the RFP the director knew the agency would have to engage additional staff with expertise in the provision of mental health services. The present staff were not qualified to provide the kinds of services that would be funded. The categories in the RFP did not include overhead or supervisory services for the professional staff providing the therapeutic services to children. This meant that the funds would have to be found within the existing budget to cover these additional costs.
ABC’s director had to prepare a new program plan, a new budget, and a rationale for adding these additional services. The “cost” of making these changes had to be analyzed by the professional staff and presented to the board of directors. Would the expansion into mental health strengthen the agency’s ability to impact on the children served? Would the desire to broaden the services based on the availability of funds become an additional burden on everyone?
When approached the president of the ABC board decided that the best way to handle the challenge was to have the program committee of the board review the expansion of the agency’s services. If there was a decision to move forward then it should be referred to the finance committee to consider the fiscal implications for the budget in the coming three to five years. At this time it is being debated and reviewed as to whether the agency should pursue receiving the funds to expand services and to alter the focus of their services. It may be that following the availability of funds it may not be in the best interest of the organization and remaining within the present framework is the appropriate path to follow for the board, the staff and the clients. It is only through due diligence that an appropriate decision can be reached for the non-profit organization.
Stephen G. Donshik, D.S.W., is a lecturer at Hebrew University’s International Leadership and Philanthropy Program and has a consulting firm focused on strengthening non-profit organizations and their leadership for tomorrow. Stephen is a regular contributor to eJewish Philanthropy.