It's Time to Do Better.

On a recent webinar with regional private foundation leaders I asked what I thought was a pretty benign question, only to receive a plethora of answers that has me deeply concerned for nonprofits everywhere. 

As organizations scramble to reclaim a sense of fundraising normalcy in this new reality in a COVID-19 environment, we are in desperate need of long standing entities who control a massive portion of wealth to reject the idea of “we’ve always done it this way” and step up to address the growing disparity between nonprofits.

The question I posed to each community and private foundation leader was this:

“COVID-19 is the rainy day each of you have been saving for. How much more have you provided in payouts this year in response to the pandemic, and do you plan on keeping that higher payout going forward to help nonprofits?”

Each one of them did not increase payouts.

Each one of them do not plan on increasing payouts in the future. 

Sure, there was a bit of wordsmithing and redirecting of answers to give each nonprofit on the call a bit of hope that boards were “discussing what steps to take going forward” or “considering all options.” However, none of them gave a definitive positive answer that their foundation is dedicated to building up organizations.

To be fair, each entity helped raise additional funds from the community to help redirect funding to the most urgent needs, and most expedited the process for access to those funds.

Kudos to addressing needs in the moment.

These funds, which are being redirected from previous commitments to immediate relief efforts, however, strips away funding to organizations doing other kinds of vital work in the community unless they fall into the “crisis” category of nonprofits whose missions directly are hurt by the pandemic fallout. 

This isn’t funding that is reaching into the deep pocketed accounts of their reserves. It’s money already allocated for distribution. 

And that is why their hesitation or flat out rejection of any plans to continue this increase funding or elimination of red-tape and hurdles to access money they hold on to so frustrating. 

If, during a time where community and private foundations are given public praise for their response to a crisis, they are able to let go of archaic rules and regulations they created to protect the wealth they have gathered over the course of decades, why is it, then, that immediately following the sense of urgency would you go back to “the way we’ve always done it?”

The 5 most prominent private foundations who work in and around North Dakota, hold nearly a quarter of a billion dollars in accounts currently. Check their 990’s. It's right there for all to see.

Yet only a small fraction of that money is distributed to nonprofits in our communities. Mostly in small amounts that happen to be presented on giant sized checks. 

It’s eye candy for annual reports, sure. But the impact could be so much more powerful if leadership decided to make bold funding decisions. 

Internally, I am sure boards are struggling with one of two scenarios:

1.      We need to keep these reserves to distribute the minimum 5% of investment returns as we have done for years.

2.      We need to make sure we save our reserves for the next rainy day that could be way worse than this current rainy day.

Both of these are unacceptable.

Nonprofit advocate and leader Vu Le said it best:

“You are saving for a rainy day, but how much more water must fall, how many more people and communities must be swept away in the flood, before you will admit that it is raining?”

Now, and going forward, we should be judging the character of these entities by how aggressively they approach the critical funding losses from the boots-on-the-ground nonprofits who are struggling to continue their work because they rely on funding scenarios that don’t address a continued financial crisis.

For example, a community foundation that has $50 million in assets that distributes only 5% of their holdings, would make a $2.5 million impact.

Increasing the payout to 10% - would put $5 million into the hands of nonprofits.

Increasing the payout to 15% - would put $7.5 million into communities.

These small shifts in funding payouts will keep foundations “safe” for the future while acting boldly now. 

We need private and community foundation to act audaciously. If not now, when?

As nonprofit leaders, we need to keep up the pressure to help these entities understand how much good they can do by letting go of past policies and procedures to adopt a more transformative plan to help organizations survive and thrive during our most critical hour.