Social Services Groups Are Stepping Up Fundraising to Combat Threats

Milena Lanz began to worry last spring that the Pennsylvania health-care charity she heads might shortly lose some of its federal aid. As she and her colleagues worked out what the loss could mean, they started training staff members to take on extra duties in case layoffs were needed, and they stepped up fundraising to cover the looming shortfall.

This year, the organization hopes to raise $555,000 from private sources — about 40 percent of its budget, up from about 30 percent in recent years. It plans to expand a spring fundraising luncheon, strengthen ties to the dozens of foundations that have provided past support, and step up appeals to individual donors.

The charity is one of many that are getting more aggressive about how they raise private money to counter cutbacks. Some are hiring new fundraisers to reach out to companies set to reap big gains from the new federal tax cuts. Others are collaborating with peer organizations or investing in ways to better demonstrate the value of their work. But not all are optimistic that the fundraising push will let them avoid cuts in programs.

Lanz says her group, the Maternal and Child Health Consortium of Chester County, is making contingency plans in case it loses a federal grant that enables it to help 4,000 people a year apply for health insurance and food assistance. Even with the training and fundraising push, Maternal and Child Health will be able to help only about half that number if the grant is dropped.

“We are doing what we can in a really tough, unstable time,” she says.

Federal Spending

Similar considerations are playing out at social-service nonprofits across the country as the fate of government contracts and the impact of tax-law changes serve up a double helping of financial uncertainty. Groups that provide services for low-income families, the disabled, and other vulnerable populations are particularly at risk because they tend to rely heavily on the community-development block grants and safety-net programs under siege by budget hawks.

A new report from two national associations of social-service groups says many face significant financial stress. Even before factoring in contemplated cutbacks, government contracts rarely cover the full cost of providing services. And national measures of fundraising, including “Giving USA” and the Chronicle’s Philanthropy 400, show lackluster giving to social-service nonprofits, with gains lagging behind support for other types of charities. All at a time when growing economic inequality, an aging population, the worsening opioid crisis, and other challenges are driving up demand for social services across the country.

Patrick Feeley, chief development officer at Caron Treatment Centers, sees “an important call to action” in the stumbling blocks facing nonprofits. “The main and consistent goal should be diversifying revenue,” he says. “With the possibility of a shrinking government, if that’s the future, then social-service organizations will need to lean on fundraising more.” He adds, “I’m very bullish on fundraising this year.”

Caron, which provides drug and alcohol treatment at sites in Pennsylvania and Florida with an annual budget of about $110 million, expects to raise $14 million this year, up from $12 million in 2017. Feeley intends to focus on boosting contributions from businesses. He’s hiring a new fundraiser to attract grants from companies and foundations.

“With the cuts in corporate taxes, there will be more revenue to invest in sponsorships and cause-related marketing,” he says. “Caron is ground zero with the heroin epidemic, and I see the opportunities for us to work with corporations that want to show they care.”

$30 Million From Paul Allen

Mercy Housing Northwest also sees opportunities in what the group’s president, Bill Rumpf, describes as “a crazy economic boom in Seattle and King County that has shined a light on the region’s income disparity.”

Last year, tech billionaire Paul Allen pledged $30 million toward the construction of new housing for low-income families, which Mercy will operate. The charity will also run a neighborhood service center at the complex, seeking public and private money to cover the costs.

One of Rumpf’s fundraising targets is millennials, who are moving to the area in droves for tech jobs offering six-figure salaries. He describes these younger donors as more hands-on than older generations.

To attract them, Mercy is introducing itself through participatory programs like its annual backpack drive, to which it invited Amazon workers for the first time last year. They solicited the company’s vendors and delivered more than 1,200 backpacks, nearly a third more than Mercy had collected in 2016. Some of the same Amazon employees subsequently took part in another Mercy fundraising event and sponsored families during the charity’s holiday campaign.

“The housing issue is very visible in the news,” Rumpf says, “and if people want to get involved in doing something about it, we are there to show them how we are building family housing and how we are using housing as a platform to bring stability and upward mobility to people’s lives.”

Making the Case

Peter Berns, CEO of the Arc, which serves people with intellectual and developmental disabilities, says nonprofits need to clearly and persistently communicate messages about their impact to donors, politicians, policy makers, anyone who will listen.

“We’re fighting to prevent the dismantling of everything we spent decades building. We’re contemplating the possibility of very significant cuts in funding” for groups that serve the disabled and provide other social services, Berns says. While diversifying revenue and expanding fundraising efforts will help, he adds, “private philanthropy can’t do it all.”

Combined annual revenue for the Arc’s 655 chapters and Washington, D.C., national office is more than $4 billion. Only about 4 percent comes from charitable gifts. National campaigns are focused in part on advocacy and public education, raising money that can be used to attract government funds and increase public awareness of disability issues. Last year, the Ford Foundation, which had recently made disability rights part of its social-justice grant making, made its first grant to the Arc in support of its awareness efforts.

“Part of the job of human-service and social-service nonprofits is to make our case,” Berns says.

Maternal and Child Health made its case to donors in its year-end mail appeal, starting the letter by stating how many people in Chester County are without health insurance and ending it by noting that government funding “is increasingly unstable and the current health-care coverage landscape remains precarious.” The appeal drew $13,000 in gifts, a hefty increase from $5,000 the year before.

Here’s what some other social-services groups are doing to shore up their fundraising:

Storytelling at Second Harvest Food Bank of Central Florida

Last summer, this Feeding America affiliate created a new staff position: mission storyteller. The new employee, Erika Spence, set out to meet with local food pantries and other organizations Second Harvest supplies, as well as their clients, and is writing close-up accounts of their work, experiences, impact, and perspectives.

“For a long time, our food bank would talk to the community about our impact in terms of our output — how many pounds of groceries, the dollar value, the number of meals,” says Greg Higgerson, vice president for development. “But that wasn’t touching the heart on an individual level.”

Sharing the stories on the group’s website, in blogs, with local media, and with current and prospective supporters has made a difference, he says. For example, 48 percent of Second Harvest donors gave twice during the fiscal year that ended June 30; 53 percent did so over the following six months.

Cash gifts also rose in those six months, by 35 percent compared with July through December 2016. Higgerson says about 40 percent of the increase was related to disaster relief after last year’s hurricanes, but much of the rest was better fundraising through better storytelling.

“We have demonstrated what the impact of cuts would be,” he says, referring to proposed shrinking of federal health-care and food-assistance programs, “and we have shown, on the individual level, the impact of our services, our broader work with job training and with health-care partnerships.”

Thinking Big at Dallas’s Family Gateway

Ellen Magnis knew that Family Gateway, a homeless shelter in Dallas, needed two things when she became its executive director in the summer of 2016: a new revenue mix and a bolder mission.

Since then, Family Gateway has decreased its reliance on government grants, from 34 percent of revenue in 2016 to just 20 percent this year.

More important, the organization took on a new leadership role. In coordination with other local agencies, Family Gateway now provides “assessment and diversion” for all requests for help from the homeless in Dallas, matching callers with the most appropriate services, shelter or otherwise.

This triage role has allowed Family Gateway to serve more people and ensure that money, shelter beds, and other resources are used efficiently. It has also attracted more foundation money and more donor interest. Two local grant makers that had been giving the charity $5,000 in some years stepped up their contributions last year to $40,000 and $65,000 to help cover higher staff costs for the new work.

“We started to think bigger, more about what we could do that was transformational,” Magnis says. “Differentiating ourselves in what we offer, what impact we are having, and having the data to back it up has made all the difference.”

Collaborating in Illinois and Elsewhere

The Family Counseling Center, in Vienna, Ill., knows what it’s like to be too dependent on government grants. During the state’s two-year budget impasse that ended last summer, the center had to close its shelter for homeless youths, the only one in the region, and scramble to keep its mental-health and other programs running.

The charity set a goal to reduce its reliance on government money from 90 percent of its budget to 75 percent over the next three years, says Sherrie Crabb, its executive director, and “to keep it going down from there.”

That means dialing up fundraising. The biggest hurdle is geography, Crabb says: The organization works in rural areas of Southern Illinois that have few businesses and not much personal wealth. The center turned to a national program on collaboration designed by the Alliance for Strong Families and Communities and is teaming up with as many as 14 other human-service nonprofits in the region to share fundraising duties and other tasks.

“Asking for money as a collective will be much more effective,” says Crabb. “If we can come to [foundations] with a case for investment that includes long-term return, outcomes, innovation, strategic partnerships, that’s where we can get the funding.”

Collaboration is popping up in other places as nonprofits see how they can capitalize on their own alliances not only to improve results for the people they serve but also to advance fundraising.

ProMedica, a nonprofit hospital group in the Midwest, is building its own programs and collaborating with others as part of a major effort to improve health and well-being in communities it serves.

As it raises money to build a hospital in Michigan, for example, part of the campaign will cover rebuilding a local YMCA. And ProMedica is also helping the Toledo, Ohio, chapters of Boys & Girls Clubs and First Tee, a youth-development organization focused on golf, raise $6 million to build a golf course and a shared facility.

“We know that health-care providers need to step outside our four walls to address community health,” says Gary Cates, ProMedica’s chief philanthropy officer. “And we know that resonates with donors who are looking for solutions.”