by David B. Marcu

Many nonprofit organizations (NPO’s) today, particularly those working in the social services, operate, at least partially with funding from the public sector – government and quasi-governmental sources. This funding is commonly provided on a “fee for service” basis, and thus putting the NPO in the role of a “supplier” of services. In this environment, the fee basis is often set by government, based on its own set of priorities. If at one time such fees were negotiated, today, they are often dictated on a “take it or leave it” basis, meted out by a predetermined and disseminated RFP process.

In this funding environment, where the prevailing economic environment is also a factor, funding is usually limited to the cost of contracted services only, with little to no consideration for other associated costs. This situation can severely impact on the “organizational capacity” of the NPO. These “collateral” administrative costs may not be of primary concern to funders and others outside the organization, but many important, even critical, costs are overlooked as well. For example, to provide quality professional services, training of staff is a critical measure that cannot be overestimated. While the profit making world has long recognized the critical value of training, NPO’s are equally in need of training which provides:

• A knowledge base that is up-to-date and includes latest updates and innovations, which is shared by the organization’s professional cadre
• Systemic approaches which are shared, enabling quality control;
• Effective service provision based on shared goals and objectives;
• A chance for information to not only “trickle down” but also to “manage up,” creating a path for feedback from the field and allowing the organization to adapt and develop in positive new ways.

Research is another cost center not typically covered by public funding sources. While research may have, at one time, been considered a luxury, today it is an unquestionable necessity. Research enables agencies to increase their effectiveness by becoming “outcome” oriented, rather than process oriented. Measuring outcomes is not only the best way to assure organizational effectiveness, it is increasingly required by funders at the RFP stage and throughout the ongoing funding relationship. Organizations must have the means to develop and maintain their research capacity.

Still another area that is not often funded is that of “information management.” NPO’s develop considerable amounts of professional information and knowledge, yet often don’t possess systematic means or frameworks to maintain that knowledge in a way that it can be used by its own professionals as well as allow for sharing with funders and with other agencies.

Finally, in today’s environment which stresses efficiencies, the pursuit of shared interests and collaborations across organizational lines, the creation of coalitions of agencies with similar goals and programs is an imperative. Such coalitions don’t run themselves, and are most often effective when steered by a professional. This requires funding, which many NPO’s find difficult to provide. Such coalitions help agencies influence societal knowledge and attitudes, public policy, government funding patterns and even legislation. Their importance cannot be overestimated.

When NPO’s apply to private funders, such funders often want and expect their funds to go directly to programs and services. Such an approach, while understandable, may ignore the exponential value to the end users which organizational capacity funding can provide. It is hoped that funders will consider approaches which – while clearly benefiting the end user – will help agencies become more professional and better able to assure quality outcomes.

David B. Marcu is the CEO of Israel Elwyn, an organization that provides support services for children and adults with disabilities and their families. He is the immediate past president of the International Association of Jewish Vocational Services, and is a member of the board of directors of the Israel Council for Social Welfare and the professional advisory committee for youth and disabilities of “Tevet”, the employment subsidiary of the JDC.