When Charities Hit Roadblocks, Even Small Gifts Can Help Them Survive
This post originally appeared in The Chronicle of Philanthropy
The world is unpredictable. No matter how carefully nonprofits prepare themselves for all contingencies, inevitably they confront unexpected challenges caused by everything from geopolitics to climate change to government bureaucratic tangles.
Yet it is nearly impossible for most nonprofits to get money to manage unanticipated disruptions. As a result, many ambitious, promising, multimillion-dollar efforts are stalled due to the lack of small amounts of money, sometimes as little as $20,000.
After I had heard one too many tales of high-potential projects that were stymied after encountering obstacles midstream, I was motivated to see if this was, in fact, a problem affecting nonprofits of all kinds.
Two years of research and conversations with dozens of nonprofit leaders and global philanthropy experts made it clear to me that this scenario is a quiet but ubiquitous problem in the nonprofit world, indifferent to organizational size or geography.
Now, after more than a year of running Open Road Alliance, an organization I created to focus solely on providing critical funds to high-achieving nonprofits facing unforeseen roadblocks, I am certain that donors can help these organizations achieve exponentially greater impact than they do now.
Not only do I find this approach fulfilling, I quickly see tangible results, and I can stretch my dollars further because I am giving small sums compared with the hundreds of thousands or, at times, millions already invested by other sophisticated donors.
To date, Open Road has supported 16 projects in 11 countries with modest gifts ranging from $16,000 to $100,000.
Among our efforts:
- This spring we provided $95,000 to continue a project in India that was demonstrating success in linking small farmers to wholesale distributors using middlemen who charged only a flat, affordable fee. Since middlemen generally try to extract the highest fee possible, this was a big financial benefit to the farmers and sped up the process of getting produce to market before it spoiled. The project was designed to test whether the approach the nonprofit took could be used across India. Despite early positive results, it was threatened with premature closure when the primary supporter pulled its money.
- In Burundi, a multimillion-dollar clinical nutritional trial two years in the planning faced failure after unexpected delays prevented the study from starting in the fall. Since the trial was to establish whether a supplemental grain would prevent anemia in schoolchildren, it had to be conducted during the school year. We provided $75,000 to help the nonprofit retain its research staff and replenish supplies to conduct the test the following year. If the results are as expected, the study will show that providing this supplemental grain to children and their mothers reduces significant nutritional deficiencies.
When nonprofits face unexpected money problems, they generally divert their own resources and pull out the duct tape, to the detriment of their staffs, their efficiency, and ultimately, their impact. In the worst case, an organization may abandon the project altogether, concluding that efforts to find money quickly will derail other programs and waste valuable staff time.
Closing a project forces staff members to seek work elsewhere, an issue that is particularly thorny when the nonprofit has spent valuable time and money training workers in developing countries for specific tasks or recruiting project managers who must relocate. The loss of expertise and infrastructure hurts the viability of future projects and damages the nonprofit’s reputation for reliability.
To an outsider, it makes little sense that nonprofits working on multimillion-dollar projects can’t just appeal to their original supporters for a little extra help, but I have found that philanthropy does not work that way.
Some foundations do not give emergency funds and only approve grants as part of their yearly or quarterly cycle. Very few grant makers set aside any extra funds in the budget to cover unforeseen risks for their beneficiaries. Those that are willing to process requests have no procedure for acting swiftly enough to do the nonprofits any good.
Because nonprofits depend so heavily on the goodwill of their donors, they are often reluctant to ask for extra help. In my conversations, nonprofits frequently express a concern that asking for additional money would be viewed as a tacit admission of failure in the eyes of their original benefactors. They are afraid that such requests would compromise their ability to apply successfully for future grants, and consequently they choose to scale back their ambitions in favor of being on time and on budget.
In turn, donors reinforce these fears by not providing an open, collaborative environment in which to discuss project roadblocks and the need for additional funds. Even staff members at foundations that well understand the issues nonprofits face are internally constrained by the bureaucracy of their organizations or the reluctance of their leadership or boards to authorize flexible funds.
When considered as a business proposition, this state of affairs is extremely ineffective, and in a world guided by the pursuit of return on investment, it’s almost oddly illogical.
A more effective approach would be for all donors and nonprofits to commit to talking candidly when obstacles arise and to join together to devise solutions to protect the original investments. When donors cut off funds in the case of genuinely unavoidable events, they are endangering the fulfillment of their own goals and their own effectiveness.
Since disruptive events inevitably occur, grant makers need to anticipate the unexpected and be ready to step in with the necessary resources to see their projects to the finish line.
I invite others to join me in opening their checkbooks to create more flexible financing and opening a dialogue with nonprofits and other philanthropists to better understand the dynamics at play.
Risk and uncertainty are inherent in the work nonprofits do. By embracing that reality and creating mechanisms to plan for uncertainties, we can unlock new opportunities and achieve even greater impact.
Laurie Michaels founded Open Road Alliance