Leveraging the Alberta Community Advantage: Recommendations for Funders and Other Stakeholders in Building a Community Prosperity Strategy
By Marokh Yousifshahi, CCVO Policy Analyst; and Alexa Briggs, CCVO Director, Policy & Research
In our previous #ABCommunityAdvantage posts, CCVO suggested recommendations for the provincial government and the nonprofit sector in building a Community Prosperity Strategy that leverages the Alberta Community Advantage. This post focuses on recommendations for funders and other stakeholders, who have also had to make rapid pivots since the onset of the pandemic. Many funders have used different strategies and eased restrictions for nonprofits in order to provide emergency funds where it is most needed. Philanthropic Foundations Canada, Environment Funders Canada, Community Foundations of Canada, and The Circle on Philanthropy and Aboriginal Peoples in Canada developed five guiding principles to assist foundations in assisting their grantees during the pandemic. The five guiding principles are in line with our recommendations for funders and other stakeholders in their contributions towards building a Community Prosperity Strategy.
Through our engagement with nonprofits, community organizations, and thorough research, we have identified the following recommendations for funders and other stakeholders:
Provide targeted funding for operational costs, emergency planning, projects advancing equity within and external to the organization, and for organizations that are not providing COVID-19 related support services.
Provide support to help nonprofits innovate by thinking differently about the sector and provide funding for administrative costs, which are essential to maintain the organization’s mission and maintain employment.
Coordinate and collaborate with other funders to reduce reporting and administrative burden.
RECOMMENDATION 1
Provide targeted funding for operational costs, emergency planning, projects advancing equity within and external to the organization, and organizations that are not providing COVID-19 related support services.
As leaders of foundations and other funders have realized, there was a critical need to innovate and provide community organizations and nonprofits with the support that they needed to respond to the impacts of COVID-19. Many funders implemented and committed to loosening restrictions and provided additional grants for emergency response. As we continue to see further implications of the pandemic, we have identified the following actions that funders can take to continue their support:
FUND CORE OPERATIONAL COSTS
Funders historically favour lower overhead costs and reward more ‘efficient’ nonprofit organizations.[i] As a result, to gain a competitive advantage, nonprofit organizations decrease the ratio of overhead. This leads to donor pressure through increasingly unrealistic expectations,[ii] which negatively impacts nonprofits and does not provide them with the administrative capacity needed to carry out their core work. In turn, this model has built “a level of impoverishment and fragility that has translated into a deficit model, whereby organizations must show desperate needs and lack of funding in order to be considered worthy of support.”[iii] During emergencies or a crisis like the one we are facing, this kind of model becomes problematic for organizations in adapting and continuing their work as their funds are limited.
Restrictions put in place that inhibit organizations do not cover the full costs including staff payroll, rent for office space or facility, heat, and funds to adapt and innovate to emergencies or to build organizational capacity. Additionally, funds provided for projects cannot often be renewed.[iv] Funders should be mindful when providing capital for projects that do not cover the full cost of an organization’s ability to perform their work and better address their clients’ urgent needs.
EMERGENCY PLANNING AND PREPARATION FOR ORGANIZATIONS
This spring, respondents to the Alberta Nonprofit Survey (ANS) indicated that only 40% had an emergency plan for health emergencies or natural disasters before COVID-19; and 46% are creating a plan or still did not have a plan in place.[v] Organizations in Fort McMurray were better prepared to deal with COVID-19 and its impacts as organizations have in place business continuity plans due to the 2016 Fort McMurray wildfires.[vi] These results are not surprising as many nonprofits do not have the capacity or resources to create emergency plans. Although we hope that many have created an emergency plan by now, it is important for funders to consider providing funds to organizations and making emergency planning a priority moving forward. Organizations that are prepared for a crisis can maintain their operations and avoid further disruptions in their services. Other sources of support for emergency preparation can include connecting organizations to the right networks and knowledge systems in order to build strategies that will better prepare them for the next crisis.
ADVANCE EQUITY WITHIN AND EXTERNAL TO ORGANIZATIONS
Foundations can lead and contribute to efforts that address and deepen our understanding of diversity, equity, and inclusion. Senator Ratna Omidvar, who has been a strong voice for the nonprofit sector, recently suggested that funders should “ensure that they are not just funding racial-justice organizations, but they’re looking at the equity of outcomes in all of their granting mechanisms.”[vii] There are a number of ways that funders can move forward in addressing the impact of COVID-19 on people who have been impacted the most – women, people of colour, Indigenous communities, and Black communities.[viii] Philanthropic Foundations Canada identifies various ways that foundations can get started to incorporate diversity, inclusion, and equity, such as identifying and supporting mobilizers; tying diversity, inclusion, and equity to the foundation’s mission; diversifying the foundation’s donor base through the recruitment of population focused donations; and embracing and leveraging “moments” that are fueled by crises to build coalitions, engage collective funds, and lift the collective voice.[ix]
Foundations can also build equity into organizations that are not the usual grantees by funding organizations led by Indigenous people, people of colour, and Black-led organizations.[x] Although data are not available in Canada to show revenues of organizations that are led by racialized groups, Indigenous people, and white-led organizations, a study in the United States by the Bridgespan Group indicates that organizations led by people of colour have fewer resources than their white-led counterparts.[xi] Additionally, the study indicates that unrestricted funding of Black-led organizations is 76% smaller than their white-led counterparts.[xii] Further research is required to see whether this is the case for Canada but it does not weaken the case for funders to include diversity, equity, and inclusion policies to provide funds to where are they are needed. Foundations can shift the power towards communities that are most impacted and provide a platform for them to articulate their vision for the support that they need.
A number of other initiatives can be taken to advance equity, including providing support to organizations on a range of issues that address the impacts of COVID-19, such as supporting technology, employment skills and job training, supportive services, and mental health services.
PROVIDE LOCALIZED SUPPORT AND FUND ORGANIZATIONS NOT PROVIDING COVID-19 RELATED SUPPORT SERVICES
Investing in our local communities, especially during this time, has been a reminder that we rely on the strength and feeling of belonging to our local communities. Local investments into organizations that are small, support communities of colour, support women, and are led by people of colour, Indigenous people, or are Black-led will strengthen local communities and reduce inequalities. Some of these local organizations are not providing front line COVID-19 related supports and therefore are not receiving related funding. However, it is important to recognize and understand that these organizations will also need to operate and maintain their programs and services within their communities. Empowering grassroots organizations that are not on the front lines will require foundations to shift some priorities. Funders should consider engaging more regularly with community organizations that are not the usual prospects, to understand the local impact of the pandemic.
RECOMMENDATION 2
Provide support to help nonprofits innovate by thinking differently about the sector and provide funding for administrative costs, which are essential to maintain the organization’s mission and maintain employment.
SUPPORT THE CAPACITY TO INNOVATE
Prior to the pandemic, many reports including the Senate Recommendations for the Charitable Sector and CCVO’s State of the Alberta Nonprofit Sector 2019 indicated the importance of the sector building technological capacity and the capacity to innovate. Now, the pandemic has made that recommendation even more urgent. Responding to the demand faced by nonprofits and the post-COVID-19 demand will require more technology, and more meaningful impact assessment and evaluation. Technological improvements will be needed to support organizations in delivering services efficiently, collaboration with other organizations and efficiency in their shared learnings, and human resource management. Funding streams that help support the technological capacity of organizations is strongly encouraged. Nonprofits will need fewer administrative hurdles and the support of funders to take more risks so that the sector can meet the demand for rapid shifts and the necessary innovation to spur those shifts.
FUND ADMINISTRATIVE COSTS THAT SUPPORT NONPROFIT TALENT
Nonprofits have had challenges with covering the real costs of services and as a result, often have few or no resources to support volunteers, pay staff a competitive wage, train and support board members, find and take opportunities for collaboration with other organizations, invest in technology, or to develop and implement more innovative services to their members and clients.[xiii] Nonprofits that employ staff have lower salaries and provide fewer benefits due to their limited financial resources. The Mowat Centre specifies, “though many organizations in the NFP sector are focused on providing employment services, alleviating poverty and promoting community health and well-being, little attention is paid to the sector’s role as an employer in promoting these same goals.”[xiv]
With an increase in demand for services,[xv] nonprofits will need to be able to take care of their staff as they are supporting their clients. To assist organizations in finding creative ways to support their staff, funders should be engaged with these community organizations by listening to and understanding their needs.
RECOMMENDATION 3
Coordinate and collaborate with other funders to reduce reporting and administrative burden
The funding system and the way that dollars flow to organizations leaves nonprofits at risk of running short of the full funds needed to support their operations. Many nonprofits and community organizations are obligated and legally required to comply with funder requirements regarding timelines, deliverables, and restrictions on use of funds. The process of seeking and managing grants is onerous on organizations, especially for smaller organizations.[xvi] Recently, as a result of emergency funding required to support organizations on the front line, many funders removed grant restrictions and demonstrated flexibility for their use of funds, and eased timelines and reporting requirements. Canadian political scientist Janice Stein notes, “the failure of the sector to invest in systematic sharing across organizations of the lessons learned from the programming that they do. While other sectors are moving to build aggregators that diffuse knowledge, the philanthropic sector has no systematic way to aggregate knowledge, to compare across cases, and to share that knowledge. The failure to invest in strong analytics is the biggest obstacle in moving small successes to scale.”[xvii] Additionally, she indicates the need for knowledge aggregation will require a change in culture.
Foundations will need to collaborate and amalgamate knowledge and resources, enabling greater impact and developing stronger incentives for organizations to work together.[xviii] Additionally, Janice Stein recommends funding timelines should be lengthened, “so that organizations are not trapped in an endless cycle of grant-writing and grant-reporting that drains the energy and the creativity from the sector and stills the voices that are important to hear.”[xix]
Funders should also share their learning and ideas with other community stakeholders, business leaders, and public sector leaders;[xx] and improve coordination to develop innovative, integrated approaches and in planning funding schedules.[xxi] We also suggest the process that grant reporting should be made easier for organizations through coordination and collaboration of funder organizations. A central database or platform shared amongst funders and donors to eliminate the burden of applications and reporting requirements, which also stores organizations’ grant histories is suggested. Many small organizations also lack the capacity to apply for grants that have an extensive application process, as it consumes time and resources that they are not able to afford. Such a platform will ease this burden and provide nonprofits with the ability to shift their time and resources towards the organization’s mission.
There are several ways that funders can help with a smooth recovery and build towards a Community Prosperity Strategy. Funders can support organizations by providing capital to support initiatives that target specific areas that will contribute to the sustainability of organizations, help innovate and provide more flexible funding, and collaborate with other funders to pool together knowledge and enable a stronger impact. Additionally, funders can be a voice for their grantees and the communities that they support by using their influence to advocate for sustainable organizations when another crisis arises.
The next post in our #ABCommunityAdvantage blog series will include a set of draft recommendations for the private sector. We encourage you to share your thoughts about what makes a community great, helping to build a collective Community Prosperity Strategy. Join the conversation on our website or on social media using #ABCommunityAdvantage.
Read our other blog posts in this series
[i] Burkart, C. et. al. (2017). Funds allocation in NPOs: the role of administrative cost ratios. Central European Journal of Operations Research. Available at: https://link.springer.com/article/10.1007/s10100-017-0512-9
[ii] Ibid.
[iii] Canadian Women’s Foundation et. al. (2020). Resetting Normal: Funding a thriving women’s sector. Available at: https://canadianwomen.org/resetting-normal/
[iv] Ibid.
[v] CCVO. (2020a). From Emergency to Opportunity: Building a Resilient Alberta Nonprofit Sector After COVID-19. Available at: https://static1.squarespace.com/static/5aef5b46cef3728571e6c46c/t/5f2981a48dd96d177c927d2f/1596555687803/From+Emergency+to+Opportunity+CCVO+Report+July+2020.pdf
[vi] Ibid.
[vii] Macneil, Kim Hart. (2020a). The Philanthropist Interview: Senator Ratna Omidvar. Available at: https://thephilanthropist.ca/2020/10/the-philanthropist-interview-senator-ratna-omidvar/
[viii] CCVO. (2020b). Alberta Recovery Plan requires more support for all Albertans. Available at: https://www.calgarycvo.org/ccvo-blog/alberta-recovery-plan-requires-more-support-for-all-albertans
[ix] Philanthropic Foundations Canada (PFC). (2019). Governance and Grantmaking: Approaches to achieve greater diversity, equity and inclusion. Available at: https://pfc.ca/wp-content/uploads/2019/12/pfc_dei_toolkit_en_2019.pdf
[x] Nonprofit Finance Fund. (2020). It’s time to build equity into outcomes funding. Available at: https://nff.org/blog/its-time-build-equity-outcomes-funding
[xi] Dorsey, C. et. al. (2020). Overcoming the racial bias in philanthropic funding. Stanford Social Innovation Review. Available at: https://ssir.org/articles/entry/overcoming_the_racial_bias_in_philanthropic_funding#
[xii] Ibid.
[xiii] The Senate Special Committee on the Charitable Sector. (2019). Catalyst for Change: A Roadmap to a Stronger Charitable Sector. Available at: https://sencanada.ca/en/Committees/cssb/Reports/42-1
[xiv] Mowat Centre. (2015). Change Work: Valuing decent work in the not-for-profit sector. Available at: https://munkschool.utoronto.ca/mowatcentre/change-work/
[xv] CCVO. (2020a).
[xvi] The Senate Special Committee on the Charitable Sector. (2019).
[xvii] Macneil, Kim Hart. (2020b). The Philanthropist Interview: Janice Stein. Available at: https://thephilanthropist.ca/2020/11/the-philanthropist-interview-janice-stein/?utm_content=bufferd327a&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
[xviii] Maximilian, M. (2020). Reestablishing philanthropic vitality after the emergency. Stanford Social Innovation Review. Available at: https://ssir.org/articles/entry/reestablishing_philanthropic_vitality_after_the_emergency
[xix] Macneil, Kim Hart. (2020b).
[xx] Ibid.
[xxi] Government of Alberta. (2020). Moving forward: Charting a path to civil society recovery. Premier’s Council on Charities and Civil Society. Available at: https://open.alberta.ca/publications/moving-forward-charting-a-path-to-civil-society-recovery