Bill Strickland, president-CEO of Manchester Bidwell Corp., says being in an environment where you’re being listened to and considered by a lot of people makes his work more possible.
He’s expanded his career training centers to eight other cities through affiliations. And in those locations, it takes longer to uncover the support system that is so apparent in Pittsburgh.
Rosa Davis, executive director of the Pennsylvania Organization for Women in Early Recovery, says the foundation community doesn’t just want to make monetary contributions to projects or agencies they believe in. Their leadership gets involved in brainstorming and problem-solving community issues.
“I see real interest on the part of foundation staff,” she says. “They are eager to listen and learn about POWER and what our needs are.”
Competing in the sector
Despite the strength of the foundation sector, like any industry Pittsburgh nonprofits face challenges, including competition for funding and attention.
“It is competitive. There’s no question, and I don’t think there’s anything wrong with it being competitive,” Flanagan says.
It forces everyone to be on the top of their game — to perform better and deliver measurable results, he says.
Dewey sees the same thing — nonprofits striving to put their best foot forward, realizing that if their organization is just ordinary, more than likely they won’t get foundation support.
That support is important, although only a minor piece of nonprofit budgets. In Pittsburgh, it isn’t always easy to generate individual donations.
There’s a history of everyone turning to the foundations for support, Crawford says. It’s hard to even think of individual philanthropists in the region.
“The foundations have been so effective,” he says. “They haven’t shut down and they haven’t walked away from the challenge, so no one else has had to step up. When everyone is used to looking at the big foundations for funding, why bother to look anywhere else?”
Kenya Boswell, president of the BNY Mellon Foundation of Southwestern Pennsylvania, doesn’t think Pittsburgh is much different than what she sees nationally. As government support becomes scarcer, the remaining funding has more competition.
Becky DiLettuso, executive director of The Early Learning Institute, knows that any proposal she submits needs to be tight, and that’s not necessarily a bad thing because you want a strong business plan for a project. But she doesn’t want to depend on foundation money, which may only be short term, for sustainability.
Grace Coleman, executive director of Crisis Center North, a small nonprofit with a budget of less than $700,000, spends increasingly more time on the revenue-generating aspects of her organization than the development of programming.
She’s been working to chip away at CCN’s reliance on federal and foundation funding.
The problem with grants is that if you get a lot of funding one year and less the next year, it shows up as net losses on your budget, Coleman says.
And this continues to be a challenge, she says, living in an area where individual donations are lower than average. CCN’s individual donations were $43,000 in 2005 and dropped to $23,000 in 2014.
Collaborate for efficiency
While operating in a competitive environment, many nonprofits are striving to increase efficiency through consolidation, alliances and shared services. In fact, the foundations have been encouraging this trend.
“The mergers piece is something that we’ve encouraged whenever we think it’s appropriate and necessary,” Oliphant says.
The Allegheny Conference on Community Development itself was a product of a merger in 2003, Flanagan says, and a lot of other organizations are at least moving towards a shared services model.
“I think the foundations have been a big part in encouraging organizations to explore those opportunities and implement them where they make sense,” he says.
The recent announcement of the intent of a merger between Rivers of Steel and River Quest came as a result of the foundations encouraging the two organizations to talk and see if a consolidated organization could preserve the educational programming, Flanagan says, after River Quest had been struggling financially.
“These organizations are doing great work and it’s important work and it’s needed, but if the fundamental financials aren’t working, the foundations are often very helpful in encouraging them to explore alternatives, whether it’s a merger or something else,” he says.
Andrew Butcher, founder and CEO of Growth Through Energy and Community Health, says that for four years GTECH has shared a CFO.
“None of us could afford to pay a high-level financial officer, but after a pretty extensive planning process, we identified the potential of sharing a CFO and pooling our resources,” he says.
All five nonprofits now have direct improved performance in their administration, Butcher says.
“It’s really been tremendously successful and I think a wonderful example of organizations being smart in collaboration,” he says. “That has allowed for us as organizations to all do what we do independently very well, but also to be smart and efficient in our costs.”
Davis says in her experience collaboration is difficult and not always very successful. She finds back office sharing types of collaboration easier than program collaboration.
At POWER, they started a human resources collaborative about eight years ago, as it’s much easier to share a HR director than a clinical director.
“We’ve always had the idea that eventually it could become a revenue producer,” Davis says. “That right now we share the cost equally, but is there a way to grow this HR collaborative and bring other folks in and actually generate a little bit of income for the founding partners?”
Mirroring for-profits
Consolidation brings economies of scale and helps with sustainability, while competition helps control the abilities and number of nonprofits. Oliphant says the system mirrors what happens in the for-profit world.
“Nonprofits compete, and if they can prove that they have a reason to exist, they get resources,” he says. “Ultimately that system isn’t perfect, but it’s better than the one where we would try and control that through some top-down system.”
Oliphant used to believe that the number of Pittsburgh nonprofits was out of proportion because of the number of foundations, but over the past 20 years there’s been explosive growth nationally.
“So I think you’re seeing a lot of nonprofits nationally, as well, and some of them are frightfully under-resourced,” he says. “You wonder how they keep the doors open, but if they keep the doors open and they are doing social good, then good for them.”
Much like the for-profit world, there’s also some expectation of a return on investment when foundations provide funds to nonprofits, Crawford says.
Like a portfolio manager for someone’s 401(k), the foundations balance their portfolios of grants with making sure that tried and true nonprofits get their fair share of funding, while taking some risks with new programs or projects, he says.
Flanagan sees the foundations coming in like venture capital firms and capitalizing on new ideas for a number of years to get it going.
