What Happens to Charities When Foundations Support Trendy Issues — and Abandon Yesterday’s Hot Topics

IN THE TRENCHES

By Jennifer C. Berkshire

When welfare benefits expired for tens of thousands of California residents on January 1, the Los Angeles Coalition to End Hunger and Homelessness was more than prepared. For months, the group’s Welfare Reform Advocacy Project had been conducting seminars around Los Angeles County, educating welfare recipients and charitable organizations about the probable impact of California’s law, which, like the federal law, requires aid to be cut off after five years.

But while the project’s mission is arguably more timely than ever — the Welfare Reform Advocacy Project estimates that some 30,000 Los Angeles County residents will lose their benefits in the next eight months — the group has hit an unexpected roadblock: The foundation grants that financed its work since 1996 have suddenly dried up. “We’re hearing that this work isn’t a priority,” says Nancy Berlin, executive director of the Welfare Reform Advocacy Project. “Foundations are telling us that they’ve shifted to other issues: employment, economic development, and job creation. All of these are very important, but the cutoff of welfare aid here is going to have a huge impact.”

Welfare, a favored cause for many grant makers during the 1990s, no longer carries the cachet it once had — partly because welfare rolls dropped sharply in the late 1990s as stricter eligibility requirements coincided with an economic boom. Since 1996, when federal welfare-overhaul legislation was enacted, the number of welfare recipients has plunged by some 57 percent, or nearly 7 million, surprising policy experts as well as advocates. And as the issue has left the front page and the nightly news, it has also been abandoned by many grant makers.

Just as diet plans grow and shrink in popularity, the nonprofit world is subject to the ebb and flow of trends. And in a field ruled by grant-making cycles as short as a year, last season’s hot topic may soon end up in the reject pile. Welfare is out. Criminal justice: in. Civil society: out. Collaboration: in. Domestic AIDS: out. Global AIDS: in.

Although following trends can be a luxury for foundations during a tight economy, patterns in grant-making nevertheless emerge. “There is definitely trendiness at work here,” says Jane Manners, a senior program associate at the Governance and Public Policy Program of the Open Society Institute, a foundation in New York. “For groups who are trendy, it can be a real boon. But for those who aren’t, finding money can be a real challenge. The trial is to position yourself in relation to the trend and find a sympathetic grant maker.”

But for organizations that find themselves on the wrong side of the trend — where grant making, news-media coverage, and celebrity supporters are scarce — the consequences can be painful. The collapse in foundation support for the Welfare Reform Advocacy Project has resulted in swift and drastic measures: The group has seen its annual budget drop from approximately $100,000 to a fraction of that. One of its two full-time staff members has been laid off, while the group has also given up for now on a plan to hire welfare recipients as part-time educators. “We’re all doing whatever we can,” says Ms. Berlin. “This year instead of a birthday party, I held a house party to raise money.”

A Trend Is Born

The process by which issues and organizations rise in prominence is complex. In the case of welfare and other public-policy issues, legislative changes spurred nonprofit interest, community-based organizing, and charitable giving. In other cases, it’s the sheer drama of an issue that causes it to rise to the forefront. The AIDS epidemic that struck in the 1980s became a cause célèbre as Hollywood stars donned red ribbons — and foundations, along with millions of ordinary citizens, flooded AIDS organizations with donations.

Other trends originate from the current concerns of intellectuals. Take civil society, for example, a concept that rocked the foundation world in the late 1990s, but has since seen its support by grant makers drop. When Harvard professor Robert D. Putnam published an article in the Journal of Democracy in 1995 alleging that Americans were “bowling alone,” meaning that they had become increasingly disconnected from family, friends, neighbors and democratic structures, his writing found a large — and sympathetic — audience. Mr. Putnam’s thesis, published in book form in 2000, and its call for a renewal of civic spirit quickly made its way into the nonprofit world, where it began circulating among foundation staff members.

“Suddenly whole sets of foundations decided that this was the thing, that civil society was what they wanted to explore,” says Kim Fellner, executive director of the National Organizers Alliance, in Washington, an information clearinghouse for nonprofit employees.”Next thing you know, all of the foundations have written the concept into what they want to fund.”

But even as the concept was taking off in the foundation world, few had a clear idea of what “civil society” meant, says Susan Ostrander, a professor of sociology at Tufts University, in Boston, who studies philanthropy. “For some people it meant working with local groups. For others it was an anti-welfare-state movement.”

Meanwhile, she says, few grant makers followed the scholarly debate triggered by Mr. Putnam’s research, namely that he had overemphasized national trends and failed to take into account the importance of civic organization at the community level. “That dialogue and debate never got factored into the foundation decision-making process,” says Ms. Ostrander. “The foundations were off and running.”

Fast forward into the current grant-making cycle, and civil society has lost much of its trendy luster. For organizations that benefited from the trend, says Ms. Fellner, that’s a tough break. “Money for affecting social change is very scarce, so groups often tended to frame their work in ways that dovetail with the current trend, in this case civil society,” she says. “Then the next year, the foundation decides that they’d rather fund campaign-finance reform or sustainable growth. And the organization they previously funded finds itself off its real priorities, and with staff for which there is no money.”

Ms. Ostrander draws another lesson from the experience: that trendiness and charitable giving are at some level incompatible. “It’s deeply problematic that trends emerge and disappear,” she says. “Particularly when foundations want to address the root causes of the most pressing issues of our time, like child poverty and health care.”

Catching a Wave

For nonprofit groups in search of money, staying abreast of the trends — and tailoring grant applications accordingly — can be a Sisyphean task. And even organizations that are able to adapt to the latest lingo often find themselves shifting course, or departing from their stated missions altogether to stay afloat financially.

Before Kelley Weigel became field director for the Western States Center, in Portland, Ore., a regional that advocates for progressive causes, she worked for another nonprofit group in the state. That group, notes Ms. Weigel, began with the intentions of defending the democratic rights of rural Oregonians, focusing on gays and lesbians. But over time, the group’s mission expanded to include welfare restructuring, a change due in part to growing foundation interest in welfare issues. “We shifted our work to meet the funding stream,” she says. “Was that our constituency? At first glance, no. But we realized that a significant part of our membership was part of the welfare system.” In this case, she concludes, the group’s search for grants led it to expand its mission.

Since then, notes Ms. Weigel, the grant-making climate has shifted again, and criminal-justice issues — including efforts to deal with state laws that prohibit inmates and former inmates from voting — are all the rage. “Now groups that want to stay in some sort of funding stream are shifting to felon re-enfranchisement,” she says. “It’s an important issue, but the way the decisions are made feels capricious.”

But if nonprofit organizations like Ms. Weigel’s feel buffeted by the latest grant-making trends, foundations themselves often feel the pressure to envision the future. “Foundations have egos and that’s a problem,” says Peter Dreier, director of the Urban and Environmental Policy Program at Occidental College, in Los Angeles. “The instinct is often to do something different, something no one else is doing. There are plenty of groups out there doing a good job that need more money, but the instinct is to start from scratch.”

The Next Trend

For Ms. Ostrander, the solution to the problem of charities adapting their missions to current grant-making trends is for foundations to be more attentive to what’s going on at the grass-roots level. “Community leaders should be on the boards of foundations,” she says. “They should have a seat at the table and be involved in decision making.”

But Barbara Dyer, head of the Hitachi Foundation, a corporate grant maker in Washington that seeks to improve the quality of life for needy Americans, has a different notion. “The difficulty is that foundations are an imperfect source of financing,” says Ms. Dyer. “Groups have to spend an inordinate amount of time chasing money with all sorts of strings attached, and they don’t have a legitimate source of funding for their core operating expenses.”

Where foundations really contribute, she says, is at the level of research and development. “Some of the best foundations help us to see the world differently,” she says. “They cast the lens in such a way that we can step back and say, ‘What are the issues we really care about?’ and ‘What are the prevailing theories about change?’ We aren’t going to be able to be the banker for community groups throughout the U.S. We don’t have nearly that level of capital. On the other hand, can we make investments that may be risky but help us learn about the world and how to make things better?”

Part of Ms. Dyer’s vision — that charities will begin receiving more money for their operating expenses — may be shaping up as the next trend. Although many foundations report that they have cut that kind of support to grantees during the current economic downturn, a couple of high-profile grant makers are increasing their spending on operating support. Last month, the John D. and Catherine T. MacArthur Foundation, in Chicago, pledged a $42-million package of grants to National Public Radio and 40 Chicago arts and cultural institutions that included millions earmarked for general support. The Robin Hood Foundation, a grant maker that fights poverty in New York, also recently announced that it was creating a $50-million fund explicitly for the capital expenses of nonprofit organizations.

That’s good news for charities and their constituents, says Diane V. Feeney, president of the French American Charitable Trust, a family foundation in San Francisco. “The best people to tell you what they need are the groups themselves. If you’re a funder, general support funding is the most helpful thing you can offer to your grantees. We have to have faith that the groups we fund know what they need.”

But that’s not to say she isn’t looking out for the next trend likely to shake up the nonprofit world. “I hope it’s long-term funding,” says Ms. Feeney. “Multiyear grants that don’t have a maximum time limit attached to them. You can’t ask a business to make money in a year. Nonprofit organizations shouldn’t be asked to show results in a year either.”

Has your organization either benefited — or been hurt — because your mission has fallen in or out of favor with grant makers? Tell us how the windfall or loss of money has affected your group in the Fund Raisers online forum.