Nonprofit Resource Equity and Access: A Call to Close the Gap

Nonprofit Resource Equity and Access: A Call to Close the Gap
By Kate Crisalli, Associate Director and Peter Kramer, Director at Nonprofit Finance Fund

What happens when well-resourced nonprofits keep getting stronger, and historically under-resourced nonprofits struggle to make ends meet? We run the risk of replicating or compounding society’s inequities in our sector.

The issue of equity and access in the nonprofit funding world came into sharper relief for Nonprofit Finance Fund’s New York-based consulting team during our series of free financial capacity-building workshops in each of New York City’s five boroughs in the fall of 2017. Attendees tended to be from organizations of smaller budget sizes – 43% had expense budgets of less than $1 million and 71% had expense budgets under $5 million. And workshops were best attended outside of Manhattan, where NFF partnered with local community conveners and where funders and resources tend to be scarcer.

Nonprofit leaders in attendance demonstrated expert first-hand knowledge of their communities, deep commitment to meeting local needs, and a hunger for infrastructure, staff, and financial resources to support and grow their mission effectiveness. One nonprofit leader put her challenges this way:

It is ever more challenging to bring resources to our community.  As a vehicle for resources to improve lives and community vitality, we serve low and middle-income residents and businesses. Compliance requirements always increase, without a corresponding increase in resources.

The strain on this leader’s community-based organization is palpable in the infrastructure needed to comply with funding requirements. Individuals also shared first-hand accounts of struggles “operating under-resourced” and not “being able to grow capacity and sustainability,” especially when their starting place as an organization may be with a staff of just one or two employees in a community without deep pockets.

When funders support only established organizations who can demonstrate results, they execute a reasoned strategy to further their goals and affect change. But by design or unintentionally, this strategy excludes organizations who lack capacity to track and demonstrate results, relationships with funders, or both. The gap between well-resourced organizations and those with limited funding access and capacity to measure results will continue to widen if funding is allocated inequitably.

Nonprofits of all sizes, but especially smaller organizations and those led by people of color and other marginalized populations, have suffered from chronic underinvestment as constrained resources favor direct programs over infrastructure needs. This lack of support across the sector perpetuates a cycle where nonprofits lacking the capacity to measure results are at further disadvantage in attracting funding that increasingly prizes data and “what works.” Historically under-resourced organizations are most vulnerable, yet are often most deeply connected with individuals and communities in need.

What can funders do to champion funding equity and inclusion in their grantmaking?

1. Fund a continuum of organizational capacity improvement. Support nonprofits that can already demonstrate results and those in need of capacity to measure results. NFF’s outcomes campaign offers valuable resources, advocating that all nonprofits can move along the path of measuring results and realizing better outcomes for communities.
2. Reach beyond existing relationships and networks. Build connections with local networks and community leaders to better appreciate the local landscape of nonprofits that may be overlooked and under-resourced. Listen to the specific challenges and opportunities of these leaders and work toward a deeper understanding of these organizations and communities.
3. Value community assets and non-traditional signs of measured results. The people-power and unique local relationships and networks of grassroots community-based organizations are assets that can provide substantial value in advancing mission goals. Though formal metrics and systems may still be developing, weigh indicators such as community longevity and reputation, depth or breadth of volunteer engagement, local knowledge, and/or responsiveness.
4. Promote clear, trust-based communications. Ask applicants and grantees how you can help them move along this continuum of improvement. Establish a safe space for them to share progress and challenges, making it clear that their funding is not at risk.
5. Grant flexible funds that cover the full costs of programs and services, with appropriately sized reporting requirements. Unrestricted dollars are absolutely essential for nonprofits leaders to develop the infrastructure it takes to show results. Equally necessary is the grantor-grantee trust that flexible funding requires. Ensure that expectations for results and grant reporting reflect the relative size of the grant amount awarded.
6. Build capacity where needed. Skilled staff are critical to getting the most out of flexible grant funds. Offer capacity building, particularly to smaller organizations: Since these are typically run by just a few people wearing many hats, training and coaching on key topics can have big and immediate results.
7. Be patient. Service providers need time to track, analyze, and incorporate program data into a culture of continuous improvement. Recognize that up-front investments are critical, before requiring results.

Think creatively about how your organization’s grantmaking guidelines can accommodate these recommendations — and push for change internally where needed. Together, we can move towards a future in which resources are more equitably allocated; long-ignored nonprofits can achieve the outcomes they seek; and our communities are the ultimate winners.