Message from the Executive Director
Beating the "Nonprofit Starvation Cycle"
Recently, Maggie Riden, Executive Director of DC Alliance of Youth Advocates (DCAYA) and I had the pleasure of discussing the challenges and opportunities of working with funders with 12 of Fair Chance partner and alumni Executive Directors. We used a 2009 Stanford Innovation Review article entitled “The Nonprofit Starvation Cycle,” as a thought- piece. The article is built on the premise that most funders prefer to fund programs rather than overhead. In fact, according to the National Committee for Responsive Philanthropy, most funders report less than 10% of total grant dollars as general operating support. As a result, most nonprofits misrepresent their true costs in order to compete successfully, resulting in inadequate infrastructure to support operations or fuel future growth. It also has the effect of reinforcing unrealistic foundation expectations and understanding of true costs.
Fair Chance partners identified this as part of their everyday reality. In particular, they are frustrated that foundations and government agencies are increasingly requiring impact measures and data collection, but are unwilling to fund the additional costs of these activities. Other challenges shared included a lack of multi-year grant funding; changing funder priorities from year to year; and aversion to risk, which stunts nonprofit innovation. Partners, however, were able to identify the following opportunities to explore together: educating funders about the true costs of doing business; collaborating on joint funding requests; exploring new funding strategies and alternative business models, and finding common indicators that tell a common story across issue areas or geography. Partners also emphasized that executive directors must embrace advocacy as a necessary skill in order to be effective.
Several participating leaders agreed to meet again to work on several of the above identified opportunities. I look forward to bringing their ideas to you in future publications.
Yours in service,
Gretchen Van der Veer, PhD