I recently had the opportunity to take a step back and review my seven years as Director of Development for ActionAid USA. I was putting together an internal presentation about my job, and realized it gave me the perfect excuse to reflect on accomplishments as well as think through where I want to take the work moving forward. I created a timeline for myself and picked out one accomplishment from each year I felt particularly proud of. In doing so, I noticed a pattern – from my efforts to create a solid revenue projection model for the organization, build new streams of funding, and strengthen the development efforts of our Board of Directors – the common thread was financial sustainability.
At once that seemed both self-evident and also radical. One might think that building financial sustainability is an inherent part of the job description of every fundraising leader at every organization…right? Well, kind of.
It turns out, there’s actually a lot stacked against nonprofit leaders that puts financial sustainability out of reach. This is not new information – in 2008, the Bridgespan Group put out a report laying out a vicious cycle that exists around overhead costs in the nonprofit sector. From “misleading reporting,” to “unrealistic expectations,” to “pressure to conform,” this report reminds us that in order to receive even minimal funding to carry out our missions, nonprofits must contend with the nonsensical notion from funders that they should “do more with less.” When these findings were later dubbed the Nonprofit Starvation Cycle, they gained some interest, but little changed, demonstrating (again) just how difficult it is for nonprofits to cover their true costs of operation – putting financial stability out of reach – much less financial sustainability.
As Bridgespan Group’s work with five foundations leaders a decade later reminds us, not much has changed. The presidents of five leading U.S. foundations, for the first time ever, committed in 2019 to “working together to advance solutions to chronic underfunding of their grantees.” And they’ve made some progress – the Ford Foundation, for instance, implemented a standard of 20% indirect cost coverage across its grantees – but it turns out that even action from a handful of powerful foundation leaders isn’t necessarily enough to make waves across the sector.
So this is a hopeless cause, right?
Not quite.
Though the problem most certainly has deeply entrenched roots that must be systematically tackled at an institutional level (more to come on this in future writings!), there is a lot that we can do as nonprofit leaders to bring this issue to the fore. In my opinion, it all starts with speaking truth to power with funders.
Over the next several months, I’ll be sharing more here about my own efforts and those of countless other non-profit fundraisers and leaders in the uphill battle to build financial sustainability for our organizations and build a more just and equitable philanthropic community. It is my hope that by pulling back the curtain on the nonprofit starvation cycle, others will join the fight to dismantle the current structure and work to create a system that allows both non-profits and philanthropies to thrive – and do good – together.
As I put my thoughts to paper, I’d love to hear from donors and nonprofit professionals alike on the issue! You can email me at: Meredith.Slater@actionaid.org.
