August 19, 2012 | Read Time: 4 minutes
As the economic downturn has persisted, grant makers have strived to increase nonprofits’ financial sustainability. Many foundation leaders recognize that nonprofits they support would fare better in the long run if they depended less on grant money and diversified their revenue.
But no clear formula exists to figure out how grant makers can be most helpful in this process of weaning a nonprofit away from foundation money.
Is it best to give a group general operating support, that is, money earmarked for building new management and financial skills, matching grants, and program-related investments? Or is it best to provide access to tools, training, peer support, coaching, and in-depth consulting?
A group of grant makers recently found an effective combination: providing matching grants along with hands-on coaching to executive and board leaders.
So concluded a study of the Challenge Fund for Journalism, a seven-year project that provided support to 53 nonprofit media organizations. Through the program, the Ford, the John S. and James L. Knight, the McCormick Tribune, and the Ethics and Excellence in Journalism foundations pooled their money and enlisted the management consulting firm TCC Group to work closely with participants.
The media groups, which included organizations like the Fund for Investigative Journalism and the International Women’s Media Foundation, turned the total of $3.6-million they received into almost $9.5-million in money provided by other donors as matching grants.
Although some of the grant recipients have since regressed and are struggling today, many made significant progress. Ninety-one percent of the grantees achieved their fundraising match requirements. Just as significant, 85 percent reported that they had improved their organizations’ management. And 90 percent said that they were able to maintain diversified revenues.
These results are more impressive when considered against the backdrop of an industry in turmoil.
Journalism organizations grappled with not just the recession but a major disruption that threatened their ability to survive.
“It was definitely ‘business as unusual,’” says Calvin Sims, program officer for news media and journalism at the Ford Foundation. “Journalists were losing their jobs and couldn’t afford to pay dues at membership organizations. Grants were tougher to come by. Bringing in revenue from content became more difficult as digital media challenged old business models. For some organizations, this literally was a time of ‘adapt or die.’”
The match requirement helped them adapt. Most groups were expected to generate additional revenues that matched or doubled the grant amounts. That created a sense of urgency that helped open doors with new and existing donors.
But the Challenge Fund for Journalism recognized that matching grants were not enough to bring about long-term sustainability. Typically, donations drop as soon as a matching drive ends. That’s why the challenge was designed to provide additional help.
Both board and staff received advice on how to develop new ways to run their organizations and devise a plan that would lead to financial stability.
The one-on-one coaching helped leaders turn ideas into action. They said the advice helped them especially when they were taking on projects that forced them to leave their comfort zones. They were able to stay on track with “big picture” efforts while managing day-to-day work. What’s more, they could troubleshoot when they faced obstacles.
That was clear in the results they showed: They articulated and shared with donors compelling reasons to support their organizations, acted on business plans, hired fundraising staff members, recruited new board members, and better engaged their boards.
In fact, many executive directors reported that the challenge fund’s requirement to engage board members was especially helpful. The Columbia Journalism Review, for example, created an entirely new advisory board. Likewise, the International Center for Journalists doubled its revenues from planned gifts and bequests, mostly as a result of increasing its board’s role in fundraising.
In the end, transformation comes down to action. No matter how good the strategy is, it’s how a group carries out the plan that matters. This is especially true for media groups, because the state of crisis has made it harder to carry out best-laid plans.
But all grant makers can learn a lesson from our experience: It’s not enough to offer a matching grant or money to hire a strategy consultant. Give nonprofits the kind of training they need to make their ideas blossom if you want your money to make a real difference.
