Stanford Social Innovation Review

Hi Perla,
Its a useful question and to help frame it, I think we need to dig into whose responsibility it is. Foundations don’t want to pay for primary care because they believe it is government’s responsibility. Who does government think is responsible for paying for it? Who do citizens think are responsible for paying for the services? What portion of the actual costs are paid for by the beneficiaries themselves? At Ashoka, I focused a huge segment of my research (of case studies demonstrating how nonprofits diversify their resource bases globally) on sliding fee scale structures employed by nonprofits who were using new techniques for providing primary services to marginal populations, e.g. dental care to rural populations. Both the nonprofits and the beneficiaries believed they had some responsibility to pay for the care, and the nonprofits obviously saw better take up rates when the target population paid some amount (even a small amount) of the cost (the old you-value-something-you-pay-for principle.) I don’t know if there is a general statistics (perhaps per service or per target population) out there, but that would be of interest…

»» Posted by: Eli Stefanski on December 12, 2006 06:55 AM

Eli,

Especially in developing countries, this is even a larger issue with relatively new nonprofits, lack of private funding and weaker governments. 

If you can, please share your research on sliding fee scale structures.  Is there a website where you are posting your work?  I think other nonprofits would very much be interested.

Perla

»» Posted by: Perla Ni on December 12, 2006 04:08 PM

A portion of the research is available online at http://www.citizenbase.org; the entire lot was aimed for publication, but I’m not sure where that stands.

»» Posted by: Eli Stefanski on December 13, 2006 09:21 AM

Ironically, the answer to your question can be found on the same page that I found your article.

»» Posted by: Daniel Shasserre on December 14, 2006 03:13 PM

“The fault, dear Brutus, lies not in our stars....” but in a lack of vision and planning.  Boards and staffs of these nonprofit organizations got used to easy money through grants and contracts and thought it would always be there.  They just never got around to really developing their capacity to raise philanthropic dollars.

Sure, they created special events (which are very high cost and low efficient ways to raise money) and did an annual mailing to ask for support, but they never really got into develping a comprehensive and susustainable program of seeking philanthropic support.  Now they need it and all they can do is bemoan the loss of the way they have always done business.

If boards and organizations are serious about continue to accomplish their missions--in the face of dwindling support from government--it’s time they really got busy developing the phlianthropic support from individuals that they should have been doing all along.  It’s time for the boards to really get to work:  develop a strategic plan, make sure they really are accomplishing their mission, and then seek philanthropic support from those who beleive in and will support their work.

»» Posted by: Fred Matthews on December 14, 2006 04:09 PM

I completely agree that these are key issues, and I have had the same sorts of observations and am happy to see them raised here.  I believe that the short answer isn’t as horrible as you fear.

The more that people participate in community activities, the stronger the urge to create an institutional form of collecting—via taxation or community giving. Opportunities to engage are like products, and to the extent they’re created, sold to people as something to do, and the community nurtured… well, we know how to do this!

The long answer may seem more daunting, but I think it’s inevitable precisely because it IS related to environmental issues, so it’s just an expansion not something that’s a Change.  I blogged a more extensive explanation, but I’ll cut to the chase: I think the long-term solution is to think in terms of a non-profit “portfolio”:  Funding new research that uses a systems approach to understanding these problems; resolving to have incremental improvements operationally, and having those efforts be identified and led by those with domain knowledge - perhaps facilitated to think more broadly than they have in the past where necessary (often these people have NEVER been fully resourced); and building on some great efforts to encourage individuals’ participation in the broader community.

To the extent the government creates programs that follow the non-profits, some funding may be available to assist those efforts as well.

»» Posted by: Jessica Margolin on December 14, 2006 08:12 PM

An example of a systems approach: Pacoima Beautifu Grist profile. They teach high school students to take environmental data and then how to put it into a presentation for the city councilmember.  The city councilmember then has a much stronger case to make environmental improvements; students understand the point of education and lower the dropout rate and continue to college; this mitigates gang membership; the adults have pride in their children and their resilience improves.  Further health outcomes go up because of the actual environmental changes.

»» Posted by: Jessica Margolin on December 14, 2006 08:20 PM

I’ve been fighting the brutal fact that there is never enough money nor people to carry out the important work of the nonprofit sector all of my 40 years as a CEO.
We have launched a new ‘engine’ at http://www.citizensmatch.org. A commercial trade marketplace whose proceeds get distributed to eldercare, this model blends our government funding base into a localized mutual exchange marketplace trading in Citizen Dollars (valued @ 1 US$) expanding both local business and caring bottom lines.
The model has just been launched so, in spite of its 25 or so years gestation, is in its infancy. We welcome dialogue about it and I am delighted to come upon Ms Ni’s post and since it hits the nail right on the head.

»» Posted by: Robert V. Gallant on December 15, 2006 07:36 AM

Thanks all for these posts!  I feel more hopeful knowing that you guys are out there planning and launching new initiatives that deal with this systemic shift in funding. 

I want to ask - so do you guys think the responsibility then does fall on the nonprofits to find new ways of raising money, raising awareness, launching a market for nonprofit services? 

In other words, do you think we should still ought to try to do anything to either 1. get foundations to rethink it’s positioning in the funding ecosystem or 2. government to re-think its retrenchment?

Perla

»» Posted by: Perla Ni on December 16, 2006 04:46 PM

Some reflects:
One answer is to attack the government and steal money from them; as government is no longer doing welfare
Another is bit tougher than the first,
I was telling a success story of our family as wisdom come from the elders, it is a beauty that both graduates from management schools and poor men equally understood this on wealth accumulation;
If no funding or help is coming what to do, we have to work very hard and save, spend as much but not exceeding to what you can earn; save if possible to your younger generation; do not destroy what your parents gave you, keep it or hold it as long as possible… there is sad element also, at terminal illness, elders won’t allow the young to spend on them, they would suffer the pain and undergo the in-evitable; we have seen young families spending all the wealth for the man, and finally the whole family of children and woman suffering for ever..

The third option is after all, negotiate with the government, convince the influential persons, even ppor ladies contribute as donations for needy people

Somehow, I have a feeling that both computers and money are fooling us

»» Posted by: purushothaman pillai on January 2, 2007 01:04 AM

A recent article in The Wall Street Journal on December 28, 2006 ("Charity for Charities” by Arthur C. Brooks of the Maxwell School of Public Affairs, Syracuse University) says in part: 

“The problem with government funding goes beyond just its volatility.  Studies by economists over the past decade have demonstrated that government spending on nonprofit activities actually lowers private charitable giving.  In the case of social welfare services, a dollar in government funding to nonprofits generally suppresses private giving by 25 cents or more...There is also evidence...that charities spend less effort fundraising after governments give them money.”

“The bottom line is that there is nothing free about cash from the government.  Perhaps this should come as no surprise, given what we know about the effects of public subsidies to individuals, such as welfare recipients.  I would not argue with the destabilizing effects of government subsidies and the downward pressure on giving are reasons to eliminate public funding to nonprofits.  But these effects do represent serious unintended consequences of nonprofit reliance on the government.”

This is a perspective that is fairly unique in the nonprofit world.  Since the 60’s and the major infusion of government funding into the nonprofit world--especially social services--through the Great Society and its successor programs, nonprofits have come to rely (become dependent upon, perhaps addicted to ) on the government.  The nonprofit field has historically been thought of as the “third sector"--along with business and government.  In many ways, some very significant parts of the third sector have become an extension of government through funding and adjusting their programs and priorities to receive those funds.

If these areas of the “third sector” is to be truly sustainable and true to their historic misssions, they will need to return to (in some cases) or become deeply committed to (in other cases) developing private philanthopic support.  And with the volatility of foundation and corporate support, that private support must have individual donors at its core.

»» Posted by: ShyBearOnCougarMtn on January 4, 2007 10:10 AM

ShyBear, thanks for your post.  Your point is well taken - the robust and independent third sector is the ideal underpinning the nonprofit sector.  The question is whether private philanthropic support will be enough.  In the past couple of years, in many instances, private support has not stepped up.  And as a result nonprofits have had to close their doors or cut down on their services.  So the theory may be right, but in practice, it’s may not be doable. 

You mention the Great Society which dramatically changed the boundaries of the government and nonprofit sectors.  The boundaries, as I see them, are being redrawn again now.  Here in Santa Clara county for instance, the government used to run many community centers.  Now they are asking nonprofits to run them.  With the privitization of schools, healthcare, communication and so forth… so which services should the government provide and which should be shouldered by the nonprofits through private donations?

»» Posted by: Perla Ni on January 4, 2007 03:12 PM

One of tha majot reasons “private philanthopy” has not stepped up in that many nonprofits that have grown dependent on government grants and contracts have either not developed robust fund development programs or have let them atrophy.  Part of this is that, while senior staff leadership has increased markedly in management and related areas, most ED’s and CEO’s know little or nothing about fundraising and think that all you need to do is do some direct mail and have a fundraising event or two--that’s their idea of fundraising.  In reality, that type of fundraising is just the easy stuff and will not create the kind of support organizations are beginning to need.

This is why smart organizations are re-evaluating the kind of fundraising they have been doing and are starting to invest in developing major and planned giving programs that will help provide a truly sustainable base of private support.  They are also seeking help in developing “transformative” gifts and not just “transactional” gifts--the kind that just help “now” and don’t look to building sustainability.

»» Posted by: ShyBearOnCougarMtn on January 5, 2007 07:15 AM

I agree with you that more nonprofits who are fundraising out there should try to aim for “transformative” rather than just short-term “transactional” gifts, regardless on the larger question of the role of government.  It’s one of the things that universities, arts centers, museums and hospitals do so well and gives them much more stability.  I and the other readers would love to learn from examples of smaller and perhaps less glitzy organizations and their successful major planned giving programs, if you can share some to inspire us!

»» Posted by: Perla Ni on January 6, 2007 01:31 AM

Discussing it offline intially would be my preference.  How can I contact you?

»» Posted by: ShyBearOnCougarMtn on January 8, 2007 10:34 AM

Shybear,

You can email me:  ni.perla at gmail.com

Best,
Perla

»» Posted by: Perla Ni on January 15, 2007 11:16 PM

Perla, Thank you for such a frank discussion. It’s a very difficult issue. For Universal Giving (http://universalgiving.org), we’ve found it is a diverse but focused combination. Because we help people give and volunteer with quality organizations all around the world, we had to find both individuals and corporations who have financial backing and global mindset. The best solution I have found is to start with individuals--and it takes time.

One has to find the right fit both in interest, motivation, and professional fit with the organization. Equally important, we also have created ways as a nonprofit to generate revenue from companies. We help them internationally, and they pay us (it is not a grant.) I find that this combination is the quickest way to attain funding for your organization.

Additonally, we really attain a ton of operational support from a wonderful cadre of volunteers and interns. There is such team spirt and “dollar” value by these volunteer team members who contribute so much--and truly help us achieve our mission of service.

I hope it is helpful and look forward to other people’s feedback.

»» Posted by: Pamela Hawley on January 18, 2007 06:24 PM

Might the challenge lie in how we as a people want to invest in ourselves? I wonder if Arthur Brooks’ work “a dollar in government funding to nonprofits generally suppresses private giving by 25 cents or more” might be an indication of how people react when they feel a problem is ‘taken care of’ and maybe the suppression is a good thing.
The fact that the work of attending to peoples’ well being has been abandoned by government points to the extent to which this work is still left to the moral economy. Our market economy is discovering the benefits of blending the two with models of corporate social responsibility emerging.
As a CEO of a $6m state and federally funded elder services system, I’ve been resisting buying a MacD franchise to plow its profits into addressing elder service shortfalls.
Is there a path to pursue between government and taxation abandonment and loyalty systems reserving funds to ‘your favorite charity’?
Doesn’t the problem lie with us - that we haven’t the collective will to truly invest in ourselves? Why so many options to invest? If I want to sustain NPR can’t I just increase my taxes by raising a ruckus with my legislators - no, we’ve been romanced into getting government off our backs and then volunteering to do a fund raiser to keep it all going.
We all have a moral responsibility to bring caring into the world of investing in our Common wealth - Great Society gave us many models. We can do them one better in this new millennium!

»» Posted by: Merlyn on January 19, 2007 07:26 AM

It recently dawned on me that two words that I had for long considered synonymous actually were not.  Those words are nonprofit and philanthropic.  Many of the human/social service organizations in existence today either sprang from the Great Society or its antecedents.  To a limited extent, those programs have served us well but they certainly have not eliminated the social problems they were designed to solve.

In some ways, they were also an extension of the classic line:  “I’m from Washington, DC and I’m here to help you.” We all know that one.  It’s kind of like:  “Trust me.”

Too many nonprofits have just gotten too accustomed to being “on the government dole.” Until somewhat recently, despite some of the bumps since the Reagan administration and its efforts to shrink the federal government, stayiing on the dole has been OK.  It is becoming increasingly clear, however, that even the Democrats gain the White House and maintain Congress in 2008, things will not go back to an earlier time. 

The tremendous debt that will be left from the war, an economy that is being seriously challenged by China, Inda, the EU, Brazil, etc., and an increasingly diverse citizenry are all challenging the way things have traditionally (since the 60’s) been funded by government.

It is time to see the signs of the times and for organizations serious about maintaining and sustaining their missions to engage in serious philanthropic support.  It will be those in our communities, regions and country who care about our missions who will make the difference in coming decades.  It is time to reunite the terms nonprofit and philanthropic.  It is time for nonprofit organizations to get into “detox” and stop their addiction to and dependence on government. 

Government, folks, can no longer be counted on to fund our good causes.  As Bob Dylan said back in the 60’s:  “The times, they are a’changin.”

»» Posted by: Shybear on Cougar Mountain on March 5, 2007 09:42 AM