Why bother about the nonprofit and philanthropic infrastructure, especially now while many nonprofits and foundations writhe in financial freefall due to the plunging economy? That’s exactly why infrastructure matters. When the infrastructure functions, it strengthens the sector, bolsters its advocacy, increases its accountability, and expands its reach and support of nonprofits across the country.
The core finding of this study, funded by the C.S. Mott Foundation, concerns the question of reach. The current system of financing the infrastructure—including foundation funding—tends to favor organizations that support and represent the larger nonprofits of the sector. The infrastructure groups that serve the thousands of smaller and mid-sized nonprofits that constitute the overwhelming bulk of the sector (remember, 85.7% of nonprofits filing 990s and 93.6% of all nonprofits have annual revenues of less than $1,000,000) have been consistently underfunded.
In crises like this one, as in the responses of New York nonprofits after 9/11 and Gulf Coast nonprofits after Hurricanes Katrina and Rita, nonprofits that were well networked were able to identify and distribute resources faster on behalf of their constituents than those that were unconnected. They were also able to find many effective points of collaboration with other organizations to ensure that clients were served on the most holistic and effective basis possible.
Components of a solid national infrastructure already exist to aid local nonprofits in this historic pinch but infrastructure funding is unbalanced and has not been approached systematically. The result is that the national infrastructure does not have the consistent reach that it should to the many corners of the sector (rural areas, the south, marginalized communities) even while some infrastructure organizations representing the elite of the sector build significant reserves.
Specific findings from the study include these:
Funding has been heavily concentrated in a limited number of individual institutions rather than in a comprehensive distributed system of infrastructure. Over the past five years, 104 national infrastructure organizations received foundation grants adding up to more than $1 million. The top ten of these received more than half of the total, although some portion of the funding of the top ten includes pass-through technical assistance and regranting funding they administer on behalf of selected foundations.
There has been a relative lack of foundation support to the national networks serving and representing small to mid-sized nonprofits in the U.S. on the state and local levels. This severely limits the reach and potential for learning and innovation in the sector.
Relationships and personal politics are perceived by many infrastructure groups as a better indicator of who receives funding than mission, reach or work product.
Intense competition and lack of cooperation among some infrastructure groups is cited as having retarded progress in a few key areas; although there are signs of promising collaborative efforts that merit attention and support.
Foundations can and should rethink their funding priorities to make a difference in rebalancing the national infrastructure to better serve a broader array of nonprofit organizations. The NPQ infrastructure report offered the following recommendations for foundation action, which will occur only if the nonprofit sector advocates for a different foundation approach to the infrastructure.
Invest in the national networks of state associations and nonprofit capacity builders whose members are widespread, serving nonprofits of all types and sizes on a state and local basis. As the excellent work of the National Council of Nonprofits demonstrates, these networks are critically important now, perhaps more than ever, as watchdogs of state and federal policies and programs and guiding nonprofits to carry out nonprofit roles in the national economic recovery.
Invest in advocating for federal government support of the large nonprofit databases to feed a future of good research. There is general agreement that the development of these databases such as Guidestar and the Urban Institute’s National Center for Charitable Statistics has been one of the most valuable accomplishments of the infrastructure, but they cost a great deal to establish and maintain and there are concerns about their accessibility as some move toward charging fees. Government generates and makes available huge amounts of data for other industries and sectors; it is time to make government funding of this component of the national infrastructure a national nonprofit advocacy priority.
Invest in a national agenda of research that has practical use to nonprofits. While all research need not be completely utilitarian, there is an acute need for a venue that dedicates itself to the promotion, “translation” and broad dissemination of research that responds directly to practitioner concerns.
There are many “missing in action” foundations on the national infrastructure scene, and local state associations, management support organizations, loan funds and other elements of infrastructure desperately need local philanthropic subsidy to serve the full range of local nonprofits. Considering the marked concentration of current infrastructure funding among a relatively few foundations, major funders of the national infrastructure would be wise to champion a “good citizenship” code of ethics among philanthropy that urges support of these necessary connectors and resource banks.