Nonprofits can be their own worst enemy.
Too often they bow to the establishment and let funders dictate how to spend their money and run their organization.
However, while integrating baby animal pictures and Game of Thrones references in his presentation at Cause Camp 2015, Vu Le, author of Nonprofit with Balls, showed ways nonprofits can fight some of the red tape and spend more time actually working on their mission.
“We need to stop reinforcing society’s perceptions of us and then complaining about it.” Le said. “We have to start to change society’s mindset about these things.”
Le, who is also the Executive Director of Rainier Valley Corps, said he spends way too much of his time calculating where all of his funding goes, what the money can be spent on and making sure all the earmarks on donations are being met.
And he’s not alone. He said many people are driven from the nonprofit sector because they spend too much of their time on paperwork.
“All this time we spent trying to figure out what funder is paying for which part of which program, under which phase of the moon, could actually be spent helping people,” Le said. “It’s not the work that is driving people out of the field. It’s being micromanaged and funders not trusting us to do our work.”
The key to overcoming these issues is obtaining unregulated donations. In order to do that, nonprofits need to fight two myths adhered to by funders and take the power back.
The Sustainability Myth
Funders want to give to programs but they don’t want to be on the hook for eternity. (Because that’s how long your nonprofit is going to last, right?) This myth often manifests itself in the common grant application question of, “What are you going to do when our funding runs out?”
Le said he is developing a blog post standard response to this question, and hopes to change the mindset of organizations to stop worrying about what will happen when the money stops.
Often funders want to pay for programming, but not the people or resources that make these programs happen. As a result, Le said nonprofits result to “Frankensteining” funding from several different sources.
“Who do you think is going to do the work? Do you think unicorns or elves are?” Le said. “They restrict funding that we need to be sustainable when we are constantly scraping funding together. We cannot be sustainable when we can’t pay our staff a salary they deserve to do this work.”
Just because an organization is not charged with making money doesn’t mean they shouldn’t be profitable or develop a savings egg. Le said having a reserve is different than holding money back. When it is done in the name of sustainability, it helps the organization thrive in the long run.
The Overhead Myth
Le’s top pet peeve is when nonprofits make the claim that 100 percent of a donation goes to programming. He said the message this sends to our donors and funders is that programming expenses are good and everything else is bad. (I mean who would ever write an article promoting that? Oh yeah.)
“Everything else is like funding terrorism or throwing rocks at the elderly,” Le said. “We need to put a stop to it because everything else is what allows all this to work.”
Part of the problems comes from watchdog sites such as Guidestar and Charity Navigator. These organizations publish reports on how much a nonprofit spends on programming versus overhead, which can greatly impact donations. (Even though these groups started a campaign against using the overhead ratio for a nonprofit’s success.)
Le said nonprofits need to stop seeking approval of these watchdog organizations, whether it is adjusting their overhead numbers or paying to receive a seal that says they spend money wisely. If someone complains about higher overhead (or as Le calls it “critical infrastructure”), a nonprofit can counter with the difference they make in the community.
Just because you run a tight ship doesn’t mean you can’t invest in yourself. Similar to investing money in salaries to keep high-quality employees around, you need to invest in the other infrastructures to make the nonprofit succeed, including chairs.
“We cannot be sitting on crappy chairs while we are helping the world,” Le said. “It’s counter productive. We need to stop this scrappiness mentality that we have. We have this martyr complex where we have to be saving and we have to be suffering as much as our clients are. It does not work.”
Le acknowledged that his stances are unpopular with the mainstream belief, and nonprofits have to be willing to give feedback and lose a few funders to gain more freedom and prosperity in the long run. For donors who do give unrestricted funds, recognize them and support them in any way. Le said the more you do to work with those types of donors, the more likely they will be to spread the word about your organization.
Le said the current dynamic between funders and nonprofits is too much like a boss-employee relationship—but that nonprofits aren’t a leech upon society, and when allowed to focus on their missions, they can accomplish great things. Le said funders need to accept they have a symbiotic relationship with nonprofits. It isn’t a give-and-take relationship, but instead one where each party can benefit.
“The word ‘giving’ implies that we are taking,” Le said. “How are we takers? We are giving our entire lives to making our communities better. They are contributing funding, but we are contributing just as much as anyone out there and we need to own this.”