By: Chris Fink
As a freshman in high school, I faced an athletic choice. Up until 9th grade I swam in the fall, wrestled in the winter, and went back to the pool in the spring. But, if I aimed to really do something in either sport, I had to give up one and invest in the other. I needed to develop a routine around the sport if I ever wanted to be good at it. I’ll come back to how that story ends.
Every couple of years the Nonprofit Finance Fund surveys leaders in the sector on a range of topics from impact and finance to fears and wins. As many of us here at Spectrum expected, the data indicated that once again, executives are challenged by organizational sustainability, that is, how to balance having exceptional impact with financial viability. In part, this challenge remains due to the insecurity around revenue; in fact, 57% of respondents report funding programs at their full cost as a top challenge as well.
While nonprofits bring in revenue from a variety of places, many of these dollars come with strings attached, in particular, government funds. As you might guess, this pot of restricted monies isn’t chump change: in 2012 the Urban Institute found that governments across our federalist system paid nonprofit organizations $137 billion for a plethora of services.
Given the restrictions on these dollars, it’s also worth examining the reliability of government grants and contracts. According to NFF, only twenty-two percent of nonprofits receiving government funding reported increases in that funding, with 30% reporting no change and 25% claiming decreases. Almost 95% of respondents feel underfunded by government often or sometimes. It’s no wonder that executives remain concerned about financial viability when large portions of their revenue come from a stream with low flexibility and low reliability.
Clearly, the solution to the paradox around government funding isn’t, “We’re going to cancel all of the contracts!” These funds often help nonprofits provide critical services to marginalized groups including people who are elderly, were formerly incarcerated, or struggle with mental health conditions.
As organizations evaluate the role of government funding in the larger context of their revenue strategies and business models, it is critical to consider their capacities and strengths to generate revenue. Specifically, with government funding, organizations positioned to succeed using this as the main revenue stream typically have:
- access to relevant public funding programs,
- robust reporting and accountability policies, and
- a deep commitment to or support of advocacy.
If your organization receives government funds but does not engage in advocacy work, consider widening your definition of what this includes. Nonprofits don’t need Directors of Public Policy in order to be effective advocates. In fact, many organizations focus their advocacy efforts on “brokering resources and promoting” themselves. This might mean joining an issue-based network or association, supporting efforts of more political members of the community through a sign-on letter, social media campaigns, or participation at events, or engaging the public to increase their awareness of the organization and its programs.
Committing to advocacy work, in the broadest of terms, also presents nonprofits with an opportunity to develop their internal capacities in other areas. Groups can refine their message and value proposition, which can contribute to more effective fundraising campaigns. They can network with government officials and community leaders who can help forge partnerships around key initiatives. They can use advocacy opportunities as a way to steward supporters, bringing them into the fold and allowing for a meaningful contribution of time (in addition to financial resources).
There is no shortage of challenges for nonprofits that receive government funds. But, there are ways for groups to invest in and grow their capacity to protect and succeed with these funds.
I ended up choosing swimming, spending countless hours going back and forth in the pool staring at that black line, coming home to do maintenance strength training workouts in my basement, and foraging for as many carbohydrates as I could get my hands on. I gave up wrestling practice and invested in the kind of training that would prepare me to compete in the pool, a very different regimen than that required of my wrestler friends. These kind of choices are hard but necessary to strengthen organizations…and athletes.