December 12, 2002 | Read Time: 4 minutes
In a tsunami of bad news for nonprofit organizations, states are reporting unprecedented budget shortfalls, foundation assets are plummeting, and many individuals are cutting back their charitable donations. At the same time, with the economy shaky and unemployment at worrisome levels, ever greater numbers of people are turning to already-stressed charities for health and social services.
Throughout the nation, nonprofit groups are struggling, making it imperative that foundations respond. California, for instance, faced a $24-billion deficit this year, and a shortfall of $21-billion is projected for next year. The situation is similarly grim at the local level. In Los Angeles County, for example, the Department of Health Services is facing a projected $800-million budget deficit over the next three years, and in the past several months, the county has closed 11 of its clinics and reduced financial support to others by $15-million.
Grant makers cannot make up the difference in government budget cuts, but they can help key social-service organizations in hard-hit communities to weather the economic storm.
Foundations throughout the country should consider, among other things, making grants for operating support — in other words, for everything from office equipment to administrative personnel — and they should be providing money for grantees’ public-policy advocacy efforts.
Now is not the time to require that nonprofit health and human-service providers design new and innovative projects. But it is the time to help them maintain their service levels and programs. With unrestricted grants for operations, some grantees of the California Wellness Foundation have been able to hire fund-raising consultants who can help the providers broaden their donor bases; improve their administrative capabilities, so that services can be delivered more efficiently; and increase the number of hours that medical personnel are available to provide services.
Foundation money also is essential to support advocacy organizations working to preserve government support for vital health and social services. Because foundation resources are minuscule compared with government funds, one of the most effective ways to magnify the impact of grant dollars is to help preserve government funds, or even increase them. Without advocacy groups making the case, the needs of the most vulnerable populations are often ignored.
One can’t simply hope that elected officials will do the right thing. Given the complexity and obtuse language of state budgets, many elected officials and their staffs may not even know how proposed cuts will affect their constituents. Advocacy organizations can make the voice of the voiceless heard before decisions are made.
Providing advocacy organizations with financial support enables them to do the policy analysis, coalition building, and organizing that is necessary to educate policy makers and opinion leaders about the effects that proposed cuts to health care and social services would have on real people.
This year, California Gov. Gray Davis proposed budget cuts and changes in eligibility rules that would have resulted in more than 500,000 Medicaid-eligible recipients being denied care. Health advocates, many of whom received operating-support grants from the California Wellness Foundation, conducted research and documented the impact of the proposed cuts; organized a broad coalition of health-care providers, consumer groups, and grass-roots and religious organizations to educate policy makers and opinion leaders; held press conferences across the state to highlight what would happen to local services; and brought 4,000 low-income people to the state capital to tell their stories, putting a human face on the numbers.
The efforts paid off. The budget that the Legislature passed and the governor signed contained only a fraction of the proposed cuts.
Besides providing more money for advocacy work, foundations also should consider some simple administrative changes to help their grantees.
First, they should streamline grantees’ reporting requirements by reducing the length of progress reports to one page and asking that they be submitted annually, instead of quarterly or twice a year.
Second, foundations should provide one-time payments on multiple-year grants. For example, a $150,000 grant over three years could be paid in one check at the beginning of the grant period. That way, grantees will have maximum flexibility and will not have to worry so much about where tomorrow’s dollars will come from.
These are tough times for everyone. Foundations should not make things harder for nonprofit organizations than they already are. By focusing on operating-support grants, financing advocacy efforts, and making a few simple administrative changes, grant makers can make a world of difference to nonprofit organizations, allowing them to focus more fully on serving those hardest hit by the economic downturn.
Ruth Holton is director of public policy at the California Wellness Foundation, in Woodland Hills, Calif. Gary L. Yates is the foundation’s chief executive officer.
