The nature of a nonprofit when it comes to receiving funds is dependent on donations. If it is not donations then it has to be a form of monetary support of somekind. In Japan, the nonprofit sector did not exist legally until the late 1990s prior to that any form of charitable giving was supported by the government.
Today, supporting a nonprofit monetarily is a norm to its existence. The issue presently is when the donor support attaches itself to certain conditions and requests that could compromise the managements value system or even the mission of the organisation. There have been cases recorded in the United States where the donor upon making generous gifts have also made requests that that make it difficult for the nonprofit expecially when it comes to instititionalising their requests. These requests range from having a building renamed or the mission of the organisation reworded.
The fact that a donation these days is tagged to a higher goal set by the donor to fulfil their own mission sometimes makes the alignment to the beneficiary rather uncomfortable. For example, if the donor has to fulfil their mission by ensuring their donation is to have their branding on the front wall of their premise of every nonprofit office, then this could be difficult for a nonprofit who has set its priority of providing visibility to the donor on their annual report only. Changing or accepting to allow for a change can lead a nonprofit to set a precedent or even create some inconvenience in terms of answering to other donors.
So what does a nonprofit do?
There has to be a boundary established between the funder and the nonprofit. This is the inconvenient truth. Funders and donor recipients do need to understand their own authority. A perfect relationship between a funder and a nonprofit is where there the transaction of donations and expected achievables stand on the basis of professionalism and it does not lean towards misalignment of the mission
So why does this happen?
Possibly its because of two aspects: (i) a certain power imbalance between funder and nonprofit that sets a certain inappropriate behaviour. Supposing a nonprofit were to hold their donor to task this could prove to create a possible risk of losing a donation because the decision to accept the donation is decided at the nonprofit level. Chances are sometimes the nonprofit could risk loosing a sizable gift and sometimes the person who challenges the funders request could even loose their job. There does need to be a level of awareness and education to the funder and nonprofit when it comes to how far can a request be made.
Activist and fundraiser Dan Pallotta makes the point that funding in today’s context is based on driving the relationship with a funder by making the nonprofit continue to follow the path of nonsustainability. He says, the funders way of thinking if accepted is what nonprofits have to wrestle with when it comes to issues of ethics, morals and cultural change.
Secondly, (ii) nonprofits at times get confused what exactly is the terms from the funder that are either non-negotiable or to be insistent upon. Many times the funder makes decisions of what they want the nonprofit to execute or conduct and at times it’s the nonprofit boards that are in a state of limbo because they were either unclear as to what is or they were not involved at the early stages of discussions with the funder.
There have been cases where certain funders do decide if the nonprofit requires/does not require a certain staff, expertise or consultant to conduct a specific job. There is little the board and management can do or cannot do as the money is being sponsored. When this happens, it gives an impression that the board or management is powerless or incapable in making decisions.
Many funders often find the nonprofits unclear or uncertain of what they actually want. Therefore, funders are pushed to make certain decisions that will help the board and management of the nonprofit move forward. For example, many funders have complained that the level of proposals they receive is generally lacking in quality. Thus funders need to work with the nonprofits in improving on it. When this happens, funders get misunderstood as if they are meddling into management affairs.
Nonprofits however argue that they find the process of application quite unclear and difficult to make sense of. They say, they are quite clear of what they want but because the process of application is not clear it does not allow them to express their request in a cohesive manner.
To make this relationship work will require certain investments from the funders and a lot of initiative from the nonprofits. For instance, the funders should have an orientation or one day education seminar to help the nonprofits understand the application process. Having an event that allows the fundseekers to come forward with their applications and in the process accept criticisms on their proposal will really fit the needs of the funder better.
It is important nonprofits know when there is a confusion when it comes to funding and how it can impact the affairs of board and management matters. This is because it denotes their own incompetence or failure to manage effectively.
To know what these signals are, here are some examples:
· When the funder is not satisfied with the deliverables in the proposal
· There is a frustration from the funder that they believe the nonprofit has gone about the task differently from what they discussed or expected
· The funder starts to focus on the details and take great pride and /or pain in making corrections
· There is a strong desire from the funder to know what the board and management is working on in detail
If a nonprofit wants to build a stronger relationship with their donor they do need to get better at management and board governance.
Below are some management tips:
Manage #1: The board and management of nonprofits must know its role in the organization. This is a simple need but it is important. The board members who are nominated into governance as volunteers and the board or council members who are elected as management are seldom educated, orientated or made aware of their role and responsibility even before accepting the post. Therefore to change this it requires a recruitment or system of election that allows for those who have accepted to hold responsibility to know their job description, level of authority and commitment in advance. They have to abide and adhere to the guidelines and instructions given and there must be a check and balance from the president/chairperson or an internal auditor.
Manage #2: The board and management must have policies or procedures delineating appropriate roles between staff and the board. This is important especially when it comes to working with the funders. Staff must not assume that just because they receive funding they can make decisions independently without the interventions from the management or board.
Manage #3: The board and management must not be motivated to accept funding just because they are desperate. The board and management has to make hard choices which could mean reengineering the organisation to ensure it can stay afloat. Such nonprofits that are able to sustain and manage themselves during difficult times will send a strong message of competent leadership and management which is what most funds want to have as a basis of reassurance.
Manage #4: Being brave to say “no” to a funder. There is nothing wrong in declining a request or stopping midway a funding proposal professionally and giving ample notice. This is an important aspect. It can happen to many organisations. Just following the flow or allowing things to happen because the organisation has got started in seeking funds and not wanting to ruffle feathers with the funder is not healthy. In the end, it will not help the funder to realise the actual issues and have a reality check. Sometimes a revisit will help the relationship as the funder could be willing to give the nonprofit a chance to review and refocus in order to make another attempt to seek funds. It is perfectly fine for a nonprofit to decline or say no to a proposal or midway through a proposal if they are finding themselves to compromise on issues or principles they adhere to strongly. Making difficult decisions would set a short term inconvenience but the long term damage is almost negligible.
Finally, every funder has a right to exercise their own desires and needs in order to align to their agenda and funding guidelines set out by regulatory bodies or through the founders principles and values. So does the nonprofit. The right to be wary of what is the motivation behind receiving the funding or why a nonprofit requires the money is vital. Ultimately funding or no funding, it’s the board and management of the nonprofit that has to face the consequences and be responsible for the nonprofits success or failure.
1. Susan Svrluga, May 2 2016. The Washington Post, 2016 - Are conservative donors bullying this public university? Its President Says No. [https://www.washingtonpost.com/news/grade-point/wp/2016/05/02/are-conservative-donors-bullying-this-public-university-the-president-says-no/?utm_term=.7ab05ded7156]
2. Dan Pallota, March 2013, TED2013. The Way We Think of Charity is Dead Wrong.[https://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong]
3. Dan Pallota, Dec 8, 2010. “Micromeddling Board Undermine Progress”. Harvard Business Review. [https://hbr.org/2010/12/micro-meddling-boards-undermin.html]
4. The Grantsmanship Centre. May 2 2016. “When Application Guidelines Are Unclear”. The Nonprofit Times. [http://www.thenonprofittimes.com/management-tips/application-guidelines-unclear/]
5. Hildy Gottlieb. 2009. Why Boards Micro-Manage: How to Get Them to Stop. Help 4Nonprofits. [http://help4nonprofits.com/NP_Bd_MicroManage_Art.htm]
6. Muriel Maignan Wilkins, Nov 11, 2014. “Signs that you are a micromanager.” Harvard Business Review. https://hbr.org/2014/11/signs-that-youre-a-micromanager
The author would like to thank Mr. Pratik Bhatnagar, (Senior Advisor, Innovation and Partnerships, Gavi, The Vaccine Alliance, Switzerland) for reviewing this article and sharing his thoughts, views and insights. Without which this article would not have the impact it deserves.
Dr. Sudeep Mohandas is the Co-Founder and Managing Director of I First International, a nonprofit management consultancy. He can be reached at firstname.lastname@example.org