Transform Your Impact: Get Funds for Results, Not Programs

Your Ingenious Nonprofit

April 2013

Traditional government funding mechanisms can actually do more harm than good. Their stop-start nature means that nonprofits must forever start and then discard even promising programs. I hear this from nonprofit leaders all the time. One recently echoed: “When the grant ended, we had to stop a great service that was saving the community thousands of dollars.”

There is a better way. Community Based Care of Central Florida (CBC) has developed a powerful new approach to working with government funders. It’s a model that can create enduring mission impact.

CBC serves children who are in the child welfare system by developing  community-based services for children and families. They obtain government funds in bulk, with funding commitments for up to ten years. Surpluses can be used to prevent children from entering the welfare system. With the money, CBC accepts the responsibility, the risk, and these conditions: all who need services must be served, no waiting list is allowed, and if more children need more services than the funds provide, CBC must raise them.

What does this mean in practice? CBC obtains greater responsibilities and control of its income. Since CBC buys services from local nonprofit children’s service providers it also means that as these nonprofits produce results, CBC offers them rewards for success, income stability, and additional opportunities to improve children’s lives.

Furthermore, the lengthy contract incentivizes CBC to serve children immediately. This minimizes the time and expense associated with any child being “in the system.” If a child needs $100, or even $1,000 in services today that will prevent far greater costs down the road, CBC makes the investment.

The most important result of the effort is its effect on children. In the CBC service area, the number of foster children has been reduced by 35 percent. In the bigger picture, for years Florida languished at the bottom of state-by-state comparisons in this area. Today, according to Right for Kids, it ranks among the top five.

How It Works

Instead of government officials prescribing detailed procedure by grant application processes, governments buy results. By promising results, the nonprofit stabilizes its income. This frees CBC to focus on helping children and families to stay out of the system. This new exchange provides greater value to all: the government, the nonprofit, taxpayers, and, most importantly, vulnerable children. Fundamentally, a tried and true but challenging value exchange is transformed into one that is more successful.

How to Implement This New Funding Approach

You can use the strategy to obtain more value whatever sources of income your nonprofit receives.

For nonprofits with government funding:

“Setting up this arrangement is not for the faint of heart,” advises Glen Casel, the CDC President/CEO. He suggests that, “you leave it alone or decide to solve it.” If you want to transform your relationship with government agencies, expect a  multi-year effort to overcome inertia. “You also need a champion, such as your trade association, who has a voice and can give you a voice.”

For foundations and nonprofits:

Consider the income exchange processes that impact your nonprofit. Where do they work? Where do they challenge? How might they be improved? For example, The James Graham Brown Foundation in Louisville, Kentucky began funding the Brown Fellows Program at Centre College and The University of Louisville. The impetus for the Fellows Program was disappointment with funding requests, such as building and deferred maintenance, from institutions of higher education. Inspired by the board’s restiveness, the Foundation created The Brown Fellows Program. This program offers a full ride plus scholarship opportunity for twenty undergraduates a year, and meets the Foundation’s goal to promote the well-being of the citizens of Louisville and Kentucky. The colleges gain top students, tuition fees, and a closer relationship with the Foundation.

Five Steps Nonprofits Can Take to Explore Alternative Funding Models

1. Find and learn about models, like the CDC, that work.

2. Identify changes that will create more results.

3. Learn about your funding sources’ challenges. What results do they want?  What are their frustrations with the current process?

4. Commit to a change. Explore what you are willing to give to make the change.

5. Talk to your trade associations and peers to identify possible solutions and next steps.

This month’s strategy explores a new government-nonprofit partnership that positively impacts children’s lives. Next month in Your Ingenious Nonprofit, you will learn about a nonprofit that obtains massive in-kind help and how corporate funding flows naturally it.