A colleague called me and asked me to consult with her about an interesting situation. An organization she works with had been receiving support for a number of years from a well established foundation. There was a strong connection between the foundation’s staff and the organization’s professional staff and board members. Over the years the foundation expressed their commitment to the organization’s purposes and goals not only financially but also through their partnership in encouraging the growth and development of the non-profit agency.
The foundation strongly identified with the organization’s values as well as their programs and felt a strong sense of pride in being able to contribute to the development of Israeli society through their support. The foundation’s leadership never hesitated to share their thinking with the agency’s leadership and even defined their relationship as being more than “funders” or “financial supporters.” Throughout the years the foundation became the organization’s core source of financial support for their programs, and they felt a sense of security in knowing that each year the foundation would allocate a sizeable amount of money that would enable the organization to provide programs to those who were interested in the specific issues that were the focus of the agency’s efforts.
Recently the organization’s chief executive officer received an e-mail that stated the foundation had been reconsidering their priorities and the allocation for the calendar year 2010 would, in all likelihood, be reduced. Of course, this sent a sense of panic throughout the organization and the professional staff and board members began to worry about what would happen during the course of the New Year. How would the budget be balanced? Would programs have to be cut? How would the organization maintain its present level of service and what would happen to their plans for new programs?
After the initial shock, the professional staff spoke with my colleague and inquired about the courses of actions that were possible and what they should communicate to the foundation about its decision so late in the program year. In thinking about how to respond to the chief executive officer she decided to call me and discuss the issue with me.
The most interesting part of the situation was the characterization of the organization’s relationship with the foundation as a “partnership”, on one hand, and the foundation’s decision to essentially unilaterally cut the organization’s allocation without any consultation with them, on the other hand. If there was a “real” partnership then there should have been some advance notification and even joint planning effort.
My colleague asked me what I thought the organization’s response should be to the foundation’s e-mail communication and if there was any way to deal with the impending cut in the allocation. Given the size of the agency’s budget and the heavy reliance on this foundation grant there was going to be a devastating impact unless the decision could be reversed. There was also a question about what the organization’s leadership could learn from this experience and how they should move forward in the future.
The clearest message in this situation is never take a foundation’s allocation or a donor’s contribution for granted. Regardless of the size of the allocation or gift, it should be one of a number of sources of support. An allocation of a sizeable amount of money is always wonderful for a non-profit organization and sometimes is even characterized as a “miracle”. At the same time it can set a trap and hold the institution at risk when the financial support for the effort is not spread among a number of sources of funding.
Given the present circumstance, I was asked how to word an e-mail to be sent to the director of the foundation. I thought it was important to focus on the foundation’s commitment and involvement with the organization. The foundation’s volunteer leadership and the key professional staff should be invited to participate in a conversation with professional and volunteer leadership of the non-profit agency. Given the close working relationship and the perception of a real “partnership” between the source of funds and the implementing body this would be the best approach.
When there is a true sense of partnership then the invitation to talk together should not focus on the dollar figure of the allocation over the years. Instead, the conversation should deal with the nature of the relationship between the “contributor” and the recipient agency and the process the agency employed for reducing its overall allocations. This should be seen as an opportunity to strengthen the organization and to share the problem-solving process with a major “stakeholder.”
This has the potential to initiate a different process where the foundation is prepared to invest in assisting the organization in grappling with a different reality. By engaging the staff from the foundation they can then demonstrate their long standing attachment to the organization through working with them on this process. In other words, this is a way to “protect” the foundation’s investment in the organization’s future.
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.
Stephen,
This is an excellent piece.
As a foundation director I believe that foundations that are major supporters of a specific nonprofit and have a long-term relationship termed a “partnership,” they have an ethical responsibility to work on an appropriate exit strategy that does not cause undue damage to the agency. This might include: (1) giving a year’s notice in advance of the cutbacks, (2) gradually reduce funding over a number of years, (3) provide a capacity building grant to enable the organization to expand its base of support among numerous donors and foundations, (4) provide a letter of recommendation stating that the reason for the reduction in funding is due to a change in priorities rather than due to a real lack of faith in the organization, and (5) network with other potential donors to help the agency find funds to replace the reliance on the foundation.
David Roth
The Yoreinu Foundation
David is correct to identify the ethical responsibilities of funders who/which provide key operating support to a non profit and then, for whatever reason, choose to discontinue that funding. Funders do need to be fully aware of the dependence which a non profit develops when a single funder provides a critical level of support and should exit such arrangements carefully and responsibly.
What is more striking about the story is the very word “partnership.” I know that the field has chosen to use the word to describe vertical relationships – as a way to downplay the power imbalance implied by “grantee” and, further, the recognition that grantmakers cannot fulfill their missions without those nonprofits that implement their missions. Fair enough, although as this story makes clear, it is often nothing more than a pc kind of expression.
As Stephen suggests, a partnership assumes some mutuality of commitment. If a “partnership” can be severed by an email, it doesn’t seem as if both sides were operating on the same page – whatever word they used to describe it. The lesson of this story is really at a much earlier stage of this relationship. There was an evident absence of clarity at the deepest level of what was the mutuality of interest between this key funder and recipient. In good times, no one needed to ask; with bad news, it was too late.
In my view [and in my teaching on this subject] the responsibility is really the funder’s. It is not fair to have a non-profit/ngo have to guess or presume. From the beginning of a funding relationship, the funder should make clear what the relationship is and how it is expected to be manifest [reports/site visits/repeat funding/etc]. An astute non profit will try to precipitate the conversation, but the onus is on the funder. This story illustrates what happens, even after a long positive experience, when the funder hasn’t been clear. It may or may not have assuaged the pain of this impending cut, but it would less likely have caught the grantee by surprise and ill prepared.