Self-Sacrifice Doesn't Equal Impact: A Funder Gets Real About Nonprofit Life

Nonprofit leaders have been saying forever that they need more general support, and lately, it's been encouraging to hear some funders saying the same thing—from Ford President Darren Walker to local foundation leaders like Terry Mazany at Chicago Community Trust. 

One Texas foundation that we follow pretty closely, the Episcopal Health Foundation, is the latest funder that gets it. In a recent post, "Rethinking the Nonprofit Funding Formula," EHF program officer Katy Butterwick called out poor working conditions and quality of life in the social sector—along with the complicity of funders in these problems. 

The plain truth is that many nonprofits can’t afford to prioritize and offer health insurance, paid time off, or livable wages to their employees, much less maternity/paternity leave and other benefits. And why can’t they? It has something to do in part with funders’ reluctance to offer operational support—unrestricted capital that can be used for these and other essential purposes.

Funders are drawn to project or program support, said Butterwick, because it seems to offer the surest path to demonstrable impact. In fact, though, this approach undermines impact over time, because "continual self-sacrifice is not sustainable." Butterwick wrote:

Turnover in the nonprofit sector is rampant. Young, promising nonprofit workers are reluctant to take on greater responsibility and leadership. New generations have expectations around work-life balance that demand—and rightly—competitive salary and fair benefits whether they are non- or for-profit workers. 

It is simply wrong, wrote Butterwick, to imagine that employees in this sector will unconditionally commit to making the world a better place without regard for their own benefits and welfare.

This EHF program officer is hardly the first person to make this point. But it's not a perspective we hear often enough from the funding side of the fence, where the power lies. Which raises an obvious question: What's EHF going to do to address the issues that Buttterwick raised? 

Hoping for an answer, I connected with Butterwick to ask a few follow-up questions to her thought-provoking piece.

The first question I had was a practical one: How can foundations measure the impact of grants for general operating and staff support? Keep in mind that EHF is still a relatively new foundation that’s still developing its own processes and learning from its peers. But with that said, Butterwick and her colleagues have some ideas on how to make this work.

Here's what she told me.

Both grantmakers and grantees have been conditioned to think in terms of programmatic outputs. Evaluating operational investments means thinking together about broader, mission-driven organizational outcomes and how those might be measured. Some questions that might help us get there are, “How do each of your programs help you accomplish your mission?”; “What else are you doing that isn’t within a program?”; and “What do you want to see happen for your beneficiaries?”

We want to measure what matters to our grantees and to our foundation, and we hope that we can do both with an approach to evaluation that emphasizes shared learning and opportunity.

We may consider our grantee organization’s progress toward goals within their business plan (related to their strategic plan) as a good measure of operational health.

An organizational assessment that points up opportunities to grow in particular areas might also measure progress toward shared goals and illustrate organizational health.

In regards to staff support, we may become more intentional about asking due diligence questions like “Do you have a policy about employee self-care?”;  “Have you measured your employees’ level of engagement and/or satisfaction, and if so, what did you learn from that?”; “What is your staff retention rate?”; “Why do employees choose to work for your organization, and why do they leave?”; “Do you have an on-boarding process and/or conduct exit interviews with staff?” and “How would you describe the culture of your organization?”

All that sounds well and good, but what about EHF's actual grantmaking

In fact, Butterwick said that EHF does plan to boost its support for nonprofit capacity building in future funding cycles. She said:

We have recently welcomed a capacity building officer to the EHF grants team, and she will work to build out our support in this area both through strategic grantmaking and in direct service. We are focused on organizational health as it pertains to financial management (including diversifying revenue sources), adaptive, brave, and compassionate leadership, and the ability to develop, deliver, and continuously improve service to a particular population.

This is all good news for grantseekers in Texas, and perhaps beyond, as EHF joins an important movement among funders to support the people and core organizational capacity that makes the social sector go.