Recently, the United Way of the National Capital Area announced that going forward it would restrict its funding and would make grants only to nonprofits with budgets over $50,000. In this month’s “Voices in the Field” we feature the perspectives and comments of several nonprofit leaders and philanthropy consultants on the issue of the relationship between the size of a nonprofit’s operating budget and the impact it can create.
“United Ways across America are making a concerted effort to change their business models to be more relevant and impactful in the communities they serve. This means shifting from the historic “community chest”, with a broad charitable mission, to a change agent focused on substantive community impact to solve the most pressing civic challenges. The solution includes focusing the community, convening partners and directing financial and personnel resources to effectuate real change…
All of these business model changes will not be easy to implement. But, we believe they are absolutely necessary to make the United Way more relevant, trusted, and financially stable. Further, we are confident that United Way NCA and our member nonprofits, large and small, will mobilize the caring power of communities to create lasting changes that improve peoples’ lives. And that’s what collective impact is all about”.
-Bill Hanbury, President and CEO United Way of the National Capital Area
“The United Way that serves the nation’s capital last month announced a decision that signals trouble for small charities nationwide: It became one of a growing number of United Ways that are limiting their money to large and medium-size groups.
As donors and organizations like United Way focus more of their dollars on big charities, the gap is growing nationally between the haves and have-nots in the nonprofit world. And in a city like Washington, which has many low-income and minority residents, the new policy raises questions about whether the people most in need of money and services will benefit from local philanthropy.
Starting in 2013, the Washington United Way says it will award money only to groups that have at least $50,000 in revenue and overhead costs of 35 percent or less. What’s more, beneficiaries must have operated for at least three years. At risk of losing a share of the United Way pot, which last year tallied $23-million, are 100 to 150 of 800 local organizations.
- Pablo Eisenberg, excerpted from the Chronicle of Philanthropy August 9th commentary,
“A United Way’s Misguided Focus on Big Charities”
“When we first got into the United Way, we were under $40,000. We grew because of the United Way and the opportunity it afforded to get the idea of food recovery and empowerment in front of thousands of potential donors. Sad to think that ‘small’ programs with promise (like we were) might not get the same opportunity to rise up and flourish.”
- Robert Egger, founder and president of DC Central Kitchen, excerpted from “A United Way’s Misguided Focus on Big Charities”
“It’s a good move,” “It’ll enable them to focus on high-performing organizations. It won’t be without pain.”
- Chuck Bean, the president of the Nonprofit Roundtable of Greater Washington, excerpted from The Washington Post July 27th article “D.C. area’s United Way tightens requirements for charity funding”
“Others focus on the advantage small groups have of adapting to new economic environments because ‘they’re more nimble.’ However, just evaluating an organizations financials doesn’t provide the whole picture. The number one way to determine an organization’s effectiveness is the results that its mission achieved.”
- Rebecca Thomas, vice president of direct services, strategy and innovation at the Nonprofit Finance Fund. (Excerpted from The Washington Post 7.27.2012 article “D.C. area’s United Way tightens requirements for charity funding”)
“As more funders like the United Way favor organizations with larger budgets to manage risk, it may raise the stakes for family foundations as they consider to continue to support organizations that have diminishing funding opportunities, fewer funding partners. Family foundations have an opportunity to be a more important voice in the funding community that recognize the role of small nonprofit organizations in the fabric of communities.”
-Prentice Zinn, Director at GMA Foundations, on the National Center’s Family Philanthropy Network on LinkedIn
“In some ways, the DC United Way is leading them back to an original role – and probably reflects a proper role of the large intermediaries in this century. I think that United Ways and their counterparts should [and are best suited to] support infrastructures of the non profit world, but they have never been ideally suited to support riskier philanthropic ventures or effective innovation. Mr. Zinn is correct to suggest that the independent philanthropy part of the sector, such as family funders, should take the lead in more agile funding and to provide for society’s risk capital”.
-Richard Marker, Co-Principal at Wise Philanthropy-Marker Goldsmith Philanthropy Advisors, on the National Center’s Family Philanthropy Network on LinkedIn
FGN Voices from the Field: Share Your Thoughts…
Have a perspective, example, or comment on this current and complex issue? Please add your comments below, or send anonymous comments and perspectives to Lauren Hasey at email@example.com.