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INTRODUCTION | VPP LEARNINGS | WORKSHOP SUMMARY |
Pre-workshop
Reading Materials | List
of Participants |
Action Ideas | Additional
Resources | Acknowledgments |
Download Full
Report (PDF) |
THE LATE ‘90S AND RECENT YEARS
The workshop began with participants reviewing and discussing
the McKinsey pre-workshop material (see Appendix A) that describes
the interplay between funding streams for community-based organizations
serving children of low-income families and demands for services
in recent years. The group looked at the analysis of trends from
the late ‘90s through the present and considered possible
and probable circumstances for this sector moving forward. The
material below summarizes both the data and participants’
own impressions and assessments.
In the late ‘90s an economic boom and policy shift towards
devolution and outsourcing led to an increase in the variety of
government funding to nonprofits (e.g. contracts and vouchers)
and unprecedented growth in private funding. For many organizations,
these were relatively comfortable times with an increase in the
total number of nonprofits as well as in the revenues for individual
organizations. At the same time, the effects of welfare reform
and increased immigration in the National Capital Region began
to change the needs of the communities served. Indicators linked
to child outcomes began to show improvement for children’s
well-being, although, overall, the decrease in poverty was less
in this region than in other major metropolitan areas. For example,
the number of mothers receiving late or no prenatal care decreased
dramatically from 14.9% to 7.6%, but remained higher than the
average of 5% around the country.
More recently, in the “squeeze” years of 2001-2003,
the situation changed substantially. The economic downturn, massive
state budget shortfalls, and continued devolution and pressure
on social services have resulted in decreased funding for nonprofits.
Private giving, from both individuals and foundations, has diminished.
Organizations are responding by cutting back programs, laying
off staff, even closing their doors. According to a Guidestar
survey, two-thirds of nonprofits polled report decreased or stagnant
contributions when comparing donations from January-October, 2002,
to the same period a year before. At the same time, need for services
increased. A Washington Grantmakers poll in June 2002 showed 82%
of surveyed National Capital Region nonprofits reported increased
demand for service over the past 12 months.
WORKSHOP RESPONSE
Participants generally agreed with the picture presented with
a significant qualification:
While the economic “boom” of the late ‘90s
resulted in increased philanthropy in general, it did not lead
to a significant net gain for revenues in nonprofits serving children,
nor did low-income families in the National Capital Region benefit
as much as those in other urban areas. The sector continued to
be undercapitalized and stressed, as did the communities it serves.
In the ensuing discussion, a number of critical elements were
raised that helped set the context for the brainstorming to take
place later in the workshop: Conditions for low-income and poor
families have worsened over the last decade, and we have only
begun to see the “tip of the iceberg” in demand for
services. Federal and state funding cuts have increased the cost
of traditional pathways out of poverty such as community college
education. Rising costs of basic services like public transportation
and childcare further stress the working poor who are struggling
to maintain jobs in a rapidly deteriorating environment.
While the pre-workshop reading material and agenda of the meeting
itself were designed to specifically focus on low-income families,
many participants pointed out that working poor and even some
lower-middle class families are greatly affected by these factors
as well.
FUTURE TRENDS: THE “GLOOMY OUTLOOK”
 “This is much worse [than the recession of the early ‘90s]. There isn’t a window we can look through and see that if we just tighten our belts, we will get through it. We’re much more scared than we’ve ever been” – Beatriz Otero, Executive Director, Calvary Bilingual Multicultural Learning Center, Washington, DC
The outlook for 2003-2010 is decidedly gloomy. At least in the
short term (two-four years), the likely continuation of stagnation
in the economy, policy trends, and state deficits will lead to
continued funding cuts for community-based organizations. As public
funding makes up such a large proportion of these nonprofits’ budgets, private funding has a limited potential to fill the gap.
The needs of communities will increase as low-income and working
poor families continue to struggle in this environment. The increase
is dependent on the future evolution of federal, state, and local
policy measures, which mostly look unfavorable. The state budget
shortfalls in Virginia and Maryland for 2004 are currently over
$1 billion. A returning prisoner population, continued gentrification,
and the large new American population in the National Capital
Region all indicate probable need for more services and new types
of services.
WORKSHOP RESPONSE
Participants agreed that the outlook for nonprofits in the next
two to four years looked particularly grim, with little alleviation
in funding cuts or demands for service in sight. Although some
workshop attendees cautioned that it’s difficult to predict
too far in advance, most felt that even if the US economy recovers
in the next year to 18 months, community-based organizations serving
children of low-income families will not benefit from that recovery
quickly, nor will the constituents they serve.
“We’re facing a situation where problems will build up incrementally. We need people to see things with a different lens. The ability to sustain Medicare is dependent on a strong future workforce, which is dependent on good education and positive youth development programs. We need a good storyteller.” – Bob Boisture, Partner, Caplin & Drysdale Attorneys
Key Factors for Families
The group surfaced a number of other key factors that may contribute
to hard times ahead for low-income families and those already
living in poverty. The rising Medicare budget is likely to limit
state spending on human services as the baby boomer generation
ages and costs increase for services. Military service is increasing,
particularly for new Americans, as a fast-track to citizenship;
however, relatively low military compensation levels and a new
national security environment puts increased pressures on many
military families. A potential rollback of affirmative action
efforts and programs would also have direct impact on many communities
reached by human service organizations.
Trends for Nonprofit Sector
Additional factors straining the nonprofit and philanthropic sectors
in the immediate future include:
-
The potential for erosion of public trust in the sectors
due to the perceived mishandling of 9.11 donations, the United
Way of the National Capital Area and Nature Conservancy debacles,
and the heightened attention on foundations, including debate
over foundation payout rates and administration costs.
-
Possible effects of the Sarbanes-Oxley Act on nonprofits,
with the implication of increased resources and time devoted to
auditing, managing, and governance, as well as difficulty recruiting
and engaging board members who may be concerned about accountability
requirements.
-
The coming shortage of nonprofit executive directors
as a generation of leaders begins to turn over with few qualified
and interested young leaders to fill their ranks.
IMPORTANCE OF TIMING
Participants agreed that a huge sense of urgency pervaded their discussion as irreversible state budget decisions were being made in the near future, most notably a recent $500M budget cut in Maryland with another $500M expected imminently. Advocates were looking for immediate ideas to influence the debate, and, as one put it, “In this climate, any plan that’s actionable is a good one.”
Continuing Challenges
As the group prepared to move into generating ideas for responding
to this prolonged state of limited funding and rising demands,
participants raised challenges to keep in mind:
-
Particularly in the National Capital Region, a deep
dysfunction among public entities, in part due to the silo structure
of various entities, makes systemic change even more unlikely.
-
Again, in this region, the local nature of issues, compared
to the state and national sources for most funding, limits options
for new or increased revenue streams.
-
In the broader picture, connecting across generations
so the elderly and those concerned with Medicare and social security
see the direct correlation between their support and the health
and success of our nation’s children is vital.
"If we're talking about going forward, it would seem that we should remind ourselves that we still haven't finished understanding both what the problems and opportunities are for structural change and development and reform. Especially, at a time when the money situation is bad, it can expose some of these things that could be fixed, where things would function better.” – Peter Edelman, Professor of Law, Georgetown University Law Center
Opportunities
Participants were able to identify a number of opportunities and
success factors created by the dire funding environment as well:
-
The potential that exists in difficult times for deep,
structural change
-
Possible willingness for both nonprofits and foundations
to explore new financing options given the low investment returns
from traditional market interaction
-
Potential talent available for the sector as other job
markets become smaller and more competitive
-
An ability to tap into the advanced understanding and
research on successful interventions for children of low-income
families
-
Encouraging landscaping underway by the Urban Institute
to map the nonprofit sector serving low-income families in the
National Capital Region.
OPPORTUNITIES FOR THE FIELD
In break-out groups and general discussion, participants brainstormed
possible responses and solutions for the field in the face of
a rapidly shifting environment for community-based organizations.
Suggestions fell into a few general areas—advocacy, consolidation
and collaboration, and talent, with, by far, the most time spent
on discussing advocacy and the public policy factor.
ADVOCACY
The majority of low-income families are impacted by many different
factors, only some of which can be directly addressed by community-based
service providers. Influencing public policy that affects low-income
families was unanimously seen by the group as the key lever for
increasing outcomes and opportunities for success for children.
By influencing government policies that impact children of low-income
families and the nonprofits that serve them, both the needs and
the funding challenges can be addressed.
Focus of Advocacy
Both tightly targeted and broad-based foci were suggested:
-
Pressuring legislative systems to unlock money for low-income
families and the programs and organizations that serve them
-
Advocating restructuring and consolidation of existing
federal youth programs to provide local communities with more
flexibility to develop and fund comprehensive youth development
strategies
-
Protecting existing favorable policies (e.g. nonprofits’ tax exempt status) and fending off potentially unfavorable policies
-
Proposing tax increases that will result in increased
revenues for programs aimed at low-income families
-
Informing/educating the public to foster civic engagement
and massively mobilize voters, particularly those from the communities
served.
"The solutions are not in the nonprofit sector...the solutions are fundamentally political. As providers, we are not generating the leadership capacity to fight those battles. Tinkering at the edges is not going to solve the fundamental issue. –
Henry Fernandez, Economic Development Administrator, City of New Haven, former Executive Director, LEAP
Current Barriers to Advocacy
Structural conditions for advocacy are particularly unfavorable.
Unlike the continual and more coordinated support from private
donors and foundations for advocacy efforts by environmental organizations,
philanthropy historically has separated support of advocacy and
services in the area of children and families. The “silo-ization”
of funding results in a disconnect between organizations trying
to provide services and those working on policy issues. What little
support there is for advocacy efforts is often organization-centric
and project-based (vs. field-advancing) which leads to a zero-sum
game for the whole field. Efforts in the National Capital Region
tend to be further divided by geography, niche issues, and race.
The recent evolution of funding from private to increasingly
local, state, and federal money tied to specific projects has
added to CBOs’ limitations in engaging in public policy.
Peter Goldberg, President and CEO of the Alliance for Children
and Families, said, “We are not afforded sufficient time,
effort, or ability to participate in the advocacy process as we
would like. As nonprofit organizations are increasingly treated
by government as contractors, we don’t know what those implications
are going to be.”
Cultural resistance towards advocacy from nonprofit board members
and staff also plays a role. Board members often have little understanding
of the value of advocacy or their organization’s stake in
a wider policy debate. Misperceptions around the legalities of
CBOs engaging in the legislative process further erode board members’
support of policy efforts.
Nonprofits serving children are often fragmented, with underpaid
staff and limited capacity. Leaders tend to be doers and service
providers, and not necessarily advocates by nature. The lack of
collaboration found with service provision is exacerbated when
applied to policy efforts. Small organizations specializing in
particular service provision areas have difficulty demonstrating
the performance-based results policy makers need to see.
“Frequently funders focus on and support project advocacy as opposed to long-term advocacy focused on overall systems reform. As a result we see short-term results and inadequate staying power."– Rick Cohen, President, National Committee for Responsive Philanthropy
Collaboration and Connections
Through the breakout groups and general discussion, a number of
different strategies were surfaced and action ideas generated.
The need to “connect the dots” between research,
advocacy, community organizing, and service provision emerged
as a fundamental theme throughout many of the ideas the group
pondered. Much research has been done on successful programs for
at-risk children and youth and policy issues affecting the communities
in question. But often the work is inaccessible to both the advocacy
organizations and the general public. More tools, messages, stories,
and partnerships between key actors must be developed in order
to see results.
Collaboration and connections are needed among advocacy organizations
themselves to aggregate their political will. Without a coordinated
strategy, nonprofits will just be “fighting over the same
pieces of the pie,” in the words of one participant. In
the National Capital Region, various stakeholders are beginning
to come together through organizations like the Nonprofit Roundtable
of Greater Washington, the Maryland Association of Nonprofit Organizations,
and the new Charter School Association, but these groups need
more partners and increased support.
Unlike other movements, the advocacy effort on behalf of children
and families has few “champions” relevant to today’s
legislators and public attitudes—a lack of both high-profile
individuals who can speak up in state capitals and on the Hill
and private funders who can support research institutions and
help coordinate broad-based efforts as Pew Charitable Trusts does
with environmental issues and Robert Wood Johnson Foundation does
on healthcare. Private foundations that work on issues regionally
need to communicate about their areas of support in order to ensure
proper coverage of all aspects of the advocacy process.
SUCCESSFUL COLLABORATION FOR ACTION
The Brookings Institution undertook substantial research on the refundable child tax credit in 2001, creating an entire model of the new option. The Center on Budget and Policy Priorities took the model and advocated successfully to make it law. The result? A $50 billion tax cut to benefit children and families.
Learn more about this case.
On the community level, fostering a strong advocacy movement
among campus youth, connecting activists more effectively to the
communities they serve, training and supporting community organizers,
and, again, connecting these key actors to larger organizations
are all needed actions.
Participants also suggested strengthening the advocacy capabilities
of existing individual service providers, including support to
increase strategic communications capacity. A more “stretched”
version of this concept is to actually require advocacy of grantees.
Success Factors
As ideas were developed, participants identified a number of aspects
to the challenges and solutions that contribute greatly to advancement
of the cause:
-
Surface relevant facts to drive informed debate
and action. For example, research into the scope and
size of the nonprofit sector in New York City revealed that nonprofits
employ one in seven New Yorkers. This kind of information can
be leveraged to build political clout for the sector. “The
data [collected from the New York City census of nonprofits] provided
whole new dimensions of understanding and created ’a-ha’
moments that didn’t happen before because no one had any
information,” reported Hildy Simmons, Managing Director
at JP Morgan Chase.
-
Engage constituents from communities who are
impacted by public policy to pressure politicians in home bases
and equip them with data to make their case. As one participant
remarked: “The legislators that I know don’t respond
well to people showing up in suits. What they do respond well
to is a group of constituents.” In addition to personal
stories, constituents need information to demonstrate the broader
impact of policies they’re trying to change.
-
Demonstrate measurable results and clear returns
on investment in social programs to policy makers. John
Bennett, the Secretary of Finance of the Commonwealth of Virginia,
had this advice for advocates: “Unless you can give [policy
makers] a reason to invest other than this is for the social good,
you'll have a hard time. While I wouldn't translate the private-sector
model entirely, some of the language does fit. It is an investment
you're making. There is a business case to be made for preschool
programs and others with real returns."
-
Make the connection between taxes/government
policies and the quality of services more visible to the average
person. A number of participants pointed out that the
average voter and taxpayer doesn’t automatically connect
tax cuts to decreases in the quality of services. As one explained:
“The damage to services right now is stealth damage. The
DMV is where the average citizen interacts with public services...People
don’t connect state government with state colleges.”
-
Focus on strategic communications and message
development. Participants raised a number of success
factors to take into consideration when developing efforts around
the communication side of advocacy:
- Keep messages simple
- Frame issues universally; e.g., talk about childcare for everyone,
not just low-income families
- Use stories of the actual impact on children and families rather
than argument based on cuts
- Lay claim to positions around the values of family, caring adults,
and the lives of children.
COLLABORATION AND CONSOLIDATION
Many of the action items generated through participant brainstorming
fell into the category of increased collaboration of both nonprofits
and funders, possibly leading to some reconfiguration of the underlying
structure in the sector. Such ideas could take advantage of the
crisis underway to help the sectors work more effectively and
efficiently.
Focus of Collaboration
Collaboration opportunities fall into two different types:
-
Collaboration across complementary approaches
and organizations. For example, incentives to encourage
research and advocacy groups to work together or the development
of a continuity model for services reaching children in the National
Capital Region. The ability to drive common, mutually beneficial
agendas, e.g., the collective prioritization of funding needs,
also contributes to this kind of effort coordination.
-
Collaboration to reduce duplication of services
and practices among nonprofit organizations and also among funders.
Strengthening infrastructure and intermediary organizations, as
well as “mapping the sector,” are practical applications
of such a strategy.
PRIVATE FOUNDATION MODEL FOR
COORDINATED ADVOCACY STRATEGY
Don Kimelman, the Director of the Pew Charitable Trusts Venture Fund, shared a brief overview with the group of Pew's successful model for health and human service advocacy:
-
Pick an issue. As a guideline for issue selection, ask yourself key questions: Is it important? Is it timely? Can we make a difference? Is it ripe for policy action in three to four years?
-
Construct a beginning-to-end strategy based on extensive outreach and research.
-
Raise the issue's profile through public education.
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Develop information about the issue and solutions.
-
Engage key stakeholders.
-
Craft sophisticated strategic communications, public awareness, and policy maker education strategies to reach targeted audiences.
-
Commit to the strategy but don’t be afraid to shift tactics in response to changes in the environment.
-
Create benchmarks in developing the strategy and measure progress over the course of the initiative.
Learn more about Pew's efforts.
Success Factors
A number of factors set the stage for success of action ideas
around partnership:
-
Consider collaboration both across activity
(advocacy/organization/service provision) and constituency boundaries.
Participants harkened back to observations made earlier in the
day of the “silo” nature of human service providers
in the National Capital Region and their disconnect from those
leading advocacy efforts. The geographical challenges of the region
and shifting demographics also necessitate coordination of activities
on a neighborhood basis.
-
Collaborate around concrete and focused issues,
not just in the abstract for its own sake. Mario Morino made the
point that collaboration for collaboration’s sake is ineffective
and dilutes critical resources of those involved. Parties would
be well served to find tangible, relatively manageable, finite
projects that would allow them to test the relationship and see
results.
-
Encourage funders and board members to play
a key role. Foundations are in the somewhat unique position
to bring together a variety of different stakeholders and organizations.
As Hildy Simmons put it, “This is where foundations and
others can play a major role: the role to convene.” Private
foundations also need to do a better job of providing incentives
to organizations to work together. The current grant application
process often forces nonprofits to emphasize their uniqueness.
Board members also play a role with both support and contacts
for networking.
-
Promote funder collaboration as a promising
strategy in its own right. As resources are tighter,
individual donors and philanthropic organizations should take
the opportunity to create group efforts to support the local nonprofit
sector. For example, developing a shared pot of funds for nonprofit
collaboration in the area could facilitate communication among
groups and leverage both knowledge and dollars. Institutions need
to develop their own internal mechanisms to encourage working
together. As one participant remarked, “I worry a lot about
the lack of incentives for program officers to encourage collaboration.
They get rewarded for finding the next best thing.”
“Funders actually incentivize lack of collaboration and differentiation of organizations…Collaboration or consolidation in nonprofits is often seen as an ‘unnatural act between unconsenting adults.’ ” Rick Cohen, President, National Committee for Responsive Philanthropy
TALENT
Participants spent considerable time discussing the pressing need
for talent in the nonprofit sector at all levels of organizations.
Ideas were suggested to attract, develop, and support nonprofit
leadership capacity for entry- through senior-level positions.
Efforts are needed to help young people already engaged by service
models, like Teach for America, make the connection to bigger-picture
advocacy work and community organizing. On a different front,
programs to develop the leadership and management skills of executives
are also in demand. Specific ideas to expand and improve the talent
sector included:
-
Raise awareness of the critical shortage
and provide financial and other support to address the talent
issue. Nonprofit boards play a key role.
-
Provide incentives to increase the attractiveness
and viability of nonprofit careers, for example, improved
compensation, stipended fellowships, training and professional
development, loan forgiveness, and an inspiring vision for change.
-
Ensure that programs provide networking as well as training components. A number of participants cited
the benefits of the Black Student Leadership Network and Echoing
Green’s Fellows network. In addition to drawing young leaders
to these programs, the networks help informally support collaboration
and strengthen the foundation for social change movements as fellows
move on in their careers to other sectors, including public office.
“What I found interesting is that the success of the Children Defense Fund’s Black Student Leadership Network (which no longer operates) had very little to do with money. The participants craved the opportunity to be developed and the social opportunities that the network provided them. It had more to do with the ability of that network to sell these people on a different vision of society. Young people like a different view of society.”
–
Henry Fernandez, Economic Development Administrator, City of New Haven
"We need to make sure that we can sustain a nonprofit sector that can advocate effectively. But to do that, we must make sure that we are addressing issues of compensation. While certain people are compelled to do this work, everyone deserves to earn a living wage."
– Terri Lee Freeman, President, The Community Foundation for the National Capital Region
OTHER IDEAS
In addition to strategies for increasing the effectiveness of
community-based organizations serving children and low-income
families by encouraging collaboration and partnerships, participants
came up with a number of other ideas that would support change
in the sector as a whole:
-
Develop innovative financing and capital access
instruments and the expansion of nonprofit revenue generation.
As Peter Goldberg pointed out, “The community development
field has lapped [the human services field] in thinking about
ways to finance. We always upfront costs in the human services
sector. There is tremendous lost opportunity right now.” Others mentioned the earned-income tax credit (EITC) and the low-income
housing tax credit as examples of the kinds of funding mechanisms
the sector could explore.
-
Create a human services-focused funding campaign,
workplace or individual, to improve the conditions of the National
Capital Region low-income population.
-
Encourage foundations to invest their endowments
into social value-creating investments and increase the
use of pre-existing options like program-related investments.
“In a market environment when you can’t get the returns that you could in the ‘90s, this is a good time to talk about a different way to think about financing.” – Hildy Simmons, Managing Director, JP Morgan Chase
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Strengthen the infrastructure and capacity of
nonprofits, for example, by emphasizing the training of nonprofit
managers.
-
Address geographic imbalances in services provision
through the National Capital Region. Gentrification and
other factors are forcing communities, particularly new immigrant
populations, to move around the area. Community-based organizations
in the region serving those clientele need support and expertise
to expand, regionalize, and, in some cases, shift the locales
of their efforts. Local funders need to be more aware of these
challenges and in touch with the data on both the populations
served and current coverage and gaps of service.
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