How Can We Be Better Funders? Let's Do the Homework

Wednesday, May 26, 2021

How Can We Be Better Funders? Let's Do the Homework
By: Maritza Guzmán, Senior Philanthropy Consultant, TCC Group

I’ve spent most of my life as a bridge-builder and translator. As a nine-year-old, I translated for my immigrant Mom. Later I learned to speak the language of philanthropy.  Now at TCC Group, I use my translation skills to help foundations see and appreciate work happening on the ground, often in communities of color.  

Recently I took a deep dive into yet another language. I spent several sessions immersed in Philanthropy New York’s Financial Series, examining nonprofit financial statements, audits, and 990s. As philanthropic professionals, we regularly review publicly available information to better understand the context for a nonprofit organization and its work.  That has become even more important during the pandemic, as nonprofit organizations have been pivoting quickly and creatively to meet the needs of the communities they serve.

Recognizing that these organizations are working under extraordinary circumstances, funders have done their part by reducing proposal and reporting requirements to minimize the burden on nonprofit organizations. It is my fervent hope that this streamlined approach continues as we  prepare to face the “new normal.”  Often the questions funders ask in bespoke applications are answered in the organization’s public documents. We just have to know where to look.

Here are some ways we can continue to minimize the burden on nonprofits.

  • Review the 990. An organization’s 990 covers much of what funders routinely ask for in separate documents. It includes detailed information on governance, year of formation, number of Board members, number of volunteers, and governance policies. All nonprofits have an opportunity to market their accomplishments in the 990.  It also includes a Statement of Program Service Accomplishments for the three largest programs.
  • Provide unrestricted funding. A potential grantee that relies heavily on restricted revenue offers a great opportunity to make a general operating grant. These flexible dollars have been especially crucial during the pandemic. General operating grants allow nonprofit organizations to purchase necessary personal protective equipment, package meals for distribution, or pivot to providing laptops, wifi access, and digital training to under-resourced youth trying to learn remotely. 
  • Be flexible. Organizations that relied heavily on government contracts or special events have been especially vulnerable during the pandemic. Some have been able to secure short-term funding through the Paycheck Protection Program (PPP).  We can expect to see the financial effects of the pandemic well into the coming year, and this is likely to present serious challenges for the sector. As funders, we can remain open to hearing about the struggles an organization is facing, the better to offer support both to the nonprofit and the community it serves. 

There is a wealth of financial information that is available to all funders, without the need for special forms and requirements. Funders who take the time to source this information in a nonprofit’s 990 are doing their part to minimize the time and effort otherwise expended by grantees. We can do our part to understand the organization’s world, context, narrative, struggles and triumphs. As with any language, the more you use it, the easier it gets. 

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