The Big Reset

America has never needed more from civil society. That’s because our country is being rocked by a health pandemic, an age-old racism pandemic, economic upheaval, sweeping cuts in safety-net programs, and the increasing political vitriol that’s killing efforts to address these daunting challenges. We feel like we’re in the midst of the 1918 flu pandemic, the Civil Rights/Vietnam era, and the Great Recession all at the same time!

If the virus continues to surge and the restart of the economy sputters into late fall, the next 12 to 18 months may well be the most trying time for our sector in Mario’s memory (and since he’s 77, that’s a long time 😊). These are the realities we face:

• The demand for some core nonprofit services will skyrocket.
• The supply of funding for nonprofit services will decline, largely as a result of multibillion-dollar shortfalls at the state and local level.

To help you focus on what really matters at this inflection moment, we’ve created a package we’re calling The Big Reset, which we hope to release in the next few weeks. The package will contain three parts: suggestions for nonprofits, suggestions for funders, and a triage tool to help leaders identify and prioritize action items in times of crisis and change. The triage approach flows from the insights Mario shared in last month’s update.

The suggestions for nonprofits focus on ways to navigate and survive the next two years. The suggestions for funders focus on ways to do even more to support their grantees. These suggestions draw from the insights of leaders in the field and Mario’s 25+ years of working with and learning from nonprofits.

Here are some brief excerpts from the suggestions for nonprofits:

Leadership communications: “Most of all, be upfront, honest, and transparent. It’s at tense times like these when people are most attuned to their leaders’ communications and actions. They see right through leaders who aren’t forthright.”

Shoring up funding: “Quickly and smartly check in with each of your primary funding sources. For foundations, check in with your liaisons to make sure your relationships are secure, and confirm that their commitments are still solid. Be creative, patient, and respectful in reaching out to them. The more you engage them as problem solvers (not just wallets), the better your chance of continued, accelerated, or even increased funding.”

Financial forecasts: “Develop a cash-flow projection with as much foresight as your conditions allow. It will help you prevent financial surprises, focus on where funding is needed to cover operational shortfalls, and give you one of the essential baselines for planning efforts and consideration of options.”

Potential restructuring: “Look for ways to work to gain tangible, functional benefits by collaborating with other nonprofits (e.g., colocation, shared back-office services, common tech platforms and support, volunteer recruiting). At some point, it might even make sense to convene or have someone convene possible actors to discuss where and how consolidations might add value.”

And here are some nuggets from the suggestions for funders:

Mission investing: “One good way to punch above our weight at this time of severe need is to go beyond traditional charitable grants. Innovators like the Nathan Cummings and Heron Foundations are investing all of the assets from their endowments to make loans and equity investments that advance the mission of their foundations.”

Extra grantee support: “Pull out all the stops to support grantees with the greatest potential to deliver meaningful, financially sustainable results. While hewing to IRS rules, be an advocate for your grantees as they seek government funding. In terms of your funding, provide multiyear, flexible dollars that give the grantee the best chance to succeed.”

Equity: “It’s great to see funders talking about equity. But we fear that some new efforts will actually be counterproductive if they’re more about workshops and checklists than deep introspection and genuine culture change. If you’re open to the latter, then you’ll find PolicyLink, FSG, and Just Capital’s A CEO Blueprint for Racial Equity to be an excellent starting point.”

We’re hopeful that we can rise to the challenge of these times—but only if we’re smart enough to stabilize and then strengthen America’s civil society. In the words of Duke and Columbia Professor Stanley Litow, “No sector of the economy is more vital to achieving equality and social justice, or more deserving of support, than nonprofit agencies that are directly responsible for ensuring the social safety net doesn’t completely shred.”

With hope for a big, constructive reset,

Mario and Lowell

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Mario Morino is chairman of the Morino Institute, co-founder and founding chair of Venture Philanthropy Partners, and author of the lead essay in Leap of Reason. Lowell Weiss is president of Cascade Philanthropy Advisors, co-editor of Leap of Reason, and advisor to the Leap Ambassadors Community.

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Updates From Around the Leap Community

In Lowell’s hometown paper, Seattle nonprofit leaders Andrea Caupain Sanderson, Michelle Merriweather, Angela Jones, and T’wina Nobles discuss their launch of the Black Future Co-op Fund. Exhausted by a philanthropic status quo “built around the people who have money and privilege, not the strengths and challenges of the people they intend to serve,” these leaders decided to become philanthropists themselves by raising $25 million and allocating it to Black-led organizations. “Our goal is not just to create a fund. We intend to turn philanthropy on its head.”

Kudos to Common Future CEO Rodney Foxworth and Nonprofit Finance Fund CEO Antony Bugg-Levine for their passionate takedown of the excuses funders use to justify their lousy track record of supporting Black-led organizations: “We don’t know who these Black leaders are or where to find them.” “We’re concerned that you can’t absorb this capital, given your small budget and staff size.” “But do you have the capacity to provide the data, metrics, stories, and reporting to demonstrate impact?” “Your methods are too radical and political.” “It’s too risky to support community-centered organizations that may not survive the current crisis.”

In “How Philanthropy Can Help Governments Accelerate a Real Recovery,” Results for America’s Michele Jolin and David Medina argue that even though data and evidence can reinforce existing biases, the key to “building back better” is helping governments build the capacity to make smarter budget and policy decisions. Despite the conventional wisdom that the current Administration has killed all momentum in evidence-based policymaking, “even in the age of Trump, the federal government has been quietly building its muscle memory of how to use evidence and data to increase impact.” Jolin and Medina provide five concrete ideas on how foundations can greatly accelerate this progress, regardless of the outcome of the elections in November.

In yet-another great example of why it’s so important to scrutinize research findings, Arnold Ventures’s Straight Talk on Evidence initiative looks carefully at a randomized controlled trial of the federal Job Corps program (the largest residential career-training program for at-risk youth) and finds misleading claims. “The abstract does not mention the central study finding of no statistically significant effects on any outcome for the full sample of Job Corps participants, nor the adverse findings for another key subgroup of youth.”

Stanford’s Bill Meehan does a great service to all foundations (and others) working to apply an equity lens to their investments. In his recent Forbes.com column “Black Lives Matter: How Entrepreneurship Shaped Generations of Freedom and Autonomy,” Meehan brings to light systemic bias in the way investors look at Black-led firms. In the words of Illumen Capital CEO Daryn Dodson, investors “systematically leave money on the table before investing in Black-led firms. So the penalty for success has metastasized within the asset management business, whether that is in hiring, board selection, or investment decision making.” Some forward-thinking foundations, such as Nathan Cummings, are now working hard to root out this bias for all the right reasons. We wouldn’t be surprised if these foundations gain better financial returns in the process.

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Events/Webinars for Raising Performance

Aug 27 — Online
“Adapting Your Annual Development Plan to the New Normal” webinar; GrantSpace by Candid

Sep 2 — Online
“Balancing Purpose, Payout, and Permanence” webinar; National Center for Family Philanthropy

Sep 9 — Online
“Manifesto for a Moral Revolution” virtual book discussion; The Case Foundation

Sep 17-18 — Online
“Intersectional Allyship for Racial Justice” virtual workshop; GEO

Sep 22-24 — Online
“COVID-19: Reshaping Social Innovation” virtual conference; SSIR

Oct 19-23 — Online
“Social Capital Markets virtual convening” virtual convening; SOCAP