Funders Can Do More: 5 Next Best Practices

In their recent report, State of Nonprofits 2023: What Funders Need to Know, the Center for Effective Philanthropy is doing all of us an incredible service by lifting up the experiences and perspectives of nonprofits around the country in this uncertain moment. I am intrigued to see how the new report’s findings mirror so closely with what I hear from leaders of the nonprofits we support at The California Wellness Foundation — especially on the issue of staffing.

In recent meetings with our community partners, large or small, the conversations quickly focus on recruiting and retaining talent. A leader of a statewide policy nonprofit recently shared with me that he lost his third top director in a year. Similarly, when I asked a recently appointed head of a major arts organization about their first year on the job, they said they had spent most of the year recruiting talent to replace several unexpected vacancies on their executive team.

Our program staff are hearing the same things. For the most part, right now, it’s not financial capital issues that are keeping nonprofit leaders up at night; it’s human capital issues. Folks are exhausted and stretched as they strive to meet the needs of the communities they serve, while at the same time struggling with the day-to-day pressures on their teams and wondering how to keep their organizations and their people vibrant and strong.

We’re all seeing and feeling these pressures — it’s a regular topic of conversation at just about every foundation CEO table I am on. All organizations are navigating new and different challenges related to COVID’s long tail and this unprecedented period of racial reckoning, natural disasters, and more. But we in the philanthropic sector are in a position of privilege. We have the resources to respond to these challenges: sophisticated and fully staffed HR departments; IT departments to support people working remotely; search firms to fill vacant roles, alongside resources to backfill with temp and consultant support; and, of course, the ability to offer above-average pay and benefits, including sabbaticals, generous paid time off and leave, mental health support, and more.

Frontline nonprofits, not so much. It’s remarkable that fully half of nonprofit leaders tell CEP that staffing is a key pain point, while only one-quarter say the same about fundraising and funding.

The Next Best Practices for Funders

What’s heartening in the CEP survey is that nonprofit leaders actually give funders credit for some favorable changes in practice. These include more unrestricted support, streamlined application and reporting processes, and other practices that chip away at the burdens that philanthropy historically has imposed on nonprofits.

But in order for philanthropy to truly respond to the day-to-day needs of our grantee partners, the CEP survey (and my own conversations with Cal Wellness grantees) lift up additional possibilities for action. Five immediately come to mind:

1. Maximize the power of our endowments to help nonprofits cope. For those of us who are hitting or exceeding our payout targets and who have shifted to providing more multiyear general operating support, a next logical step is to leverage our endowments to provide additional support for nonprofits. Cal Wellness recently teamed up with Liberty Hill Foundation to provide bridge loans to social justice nonprofits in Los Angeles that are facing ongoing challenges because of delays in payments on government contracts.
2. Share knowledge and resources. At this time when nonprofits are experiencing staff shortages in key functional areas or when they could simply use a little technical assistance to strengthen their impact, why not tap the talents of our own people to help? During COVID-19, I shared our HR department’s COVID protocols with some of our community partners, and, later, some helpful “dos and don’ts” about managing hybrid teams. Most recently, I shared research we’ve done on compensation management and moving to an unlimited PTO system. I fully realize this is just a start; we and other funders could do so much more — like providing training and webinars for grantees on key issues, or lending staff to nonprofits to address specific, time-limited needs.
3. Sponsor and fund more sabbaticals, retreats, and wellness offerings for nonprofit staff. Our community partners are tired. Even during the pandemic, many direct-serving nonprofits never had the luxury to work remotely. Even now, hybrid work is not an option for many of our frontline colleagues. They just keep going, and that’s causing massive burnout and turnover. Building on early work by the Durfee Foundation, over the years, Cal Wellness has provided nonprofit leaders across the state with three-month sabbaticals. We also have funded short retreats — most recently bringing together immigrant rights advocates for an opportunity to reflect, connect, and reenergize.
4. Help identify talent. Once or twice a quarter, I send an email to my network listing jobs our nonprofit partners are seeking to fill. I call it “Belk’s Jobs List,” and it’s probably one of the most-opened emails I send! As nonprofits continue to struggle with recruitment, especially for people of color, foundations are in a wonderful and privileged position to help spread the word — not just through CEO emails but also through social media, HR channels, and more. I also wonder if there’s a way for philanthropy to create talent banks to connect leaders to nonprofit jobs, or to support the search firms we regularly use to provide their services to grantees. We might also consider pumping the pipeline by funding interns and fellows to work for six months to a year in nonprofit organizations.
5. Take flexible, long-term support to the next level. It’s hard to believe, but providing general operating support to nonprofits was considered crazy as recently as 20 years ago. My predecessor Cal Wellness CEO, Gary Yates, was one of the first who helped the idea take hold. CEP’s own research found that funders loosened grant restrictions and provided more unrestricted funding during COVID. But we can always do more. At Cal Wellness, we have identified a group of “cornerstone” grantees we believe are critical to achieving our mission — and we are providing them with five years’ worth of unrestricted funding up front so they can operate with maximum confidence and flexibility. It’s been a gamechanger for many of these partners. Another area we’re exploring is enterprise capital, a concept developed by one of my favorite thought leaders and nonprofit guru, Andrea Levere. The idea is to support nonprofits to invest in critical infrastructure and assets to deliver on their mission over time. Going forward, let’s consider general operating support the absolute minimum and explore other ways to resource nonprofits as generously as possible.

The CEP report lifts up critical challenges facing the nonprofits we support. As these challenges continue to play out, and as the possibility of recession begins to crimp fundraising across the sector, funders can’t afford to be bystanders simply wringing our hands about the trends we’re seeing. We also can’t afford to rest on our laurels even if we have adopted many of the best practices nonprofits say give them the flexibility they need. We need to move to the next set of best practices for philanthropy, approaches that show we are truly listening and doing everything in our power to help nonprofits build and grow the strong teams they need.