To the Editor:
We appreciate how columnist Phil Buchanan put a spotlight on supporting small, cornerstone nonprofits in his opinion piece (“What Grant Makers Can Do to Help Small, Local Nonprofits Thrive,” April), but we feel some points were overlooked. We want to share some of Marguerite Casey Foundation’s insights, learned by providing sizable multiyear general operating support to small organizations for almost two decades.
Buchanan suggests that foundations can strengthen nonprofits, but we assert that foundations merely provide the resources for nonprofits to strengthen themselves. We believe that general support truly means no restrictions — foundations shouldn’t create new rules about how organizations should build their capacity, including determining the best way to find and retain staff.
We define small organizations as having annual revenues under $500,000, and these community organizations have been partners in creating a family-led movement since Marguerite Casey Foundation began making grants in 2002. Currently about 20 percent of our portfolio fits our definition of small grantees, and each is an organization that punches above its weight class.
If we defined “small” as Buchanan did (annual revenues under $3 million), then 58 percent of our portfolio would be classified as small. We’ve found that smaller organizations can be flexible when new challenges arise and that less bureaucracy allows small grantees to test new ideas and embrace change.
We wanted to share some lessons we’ve learned over the years about supporting small groups:
Small organizations can merit large grants. We’ve often heard that foundations are concerned that giving large grants to small organizations will “tip” those charities into private-foundation status because such a high percentage of revenue comes from ones source. Because foundations face more federal restrictions than charities, nobody wants that outcome. We work within the guidelines of the IRS to ensure our grants won’t change the legal status of small nonprofits but still represent a deep investment. What we give small organizations is, on average, 26 percent of their revenues, a significant portion. This type of investment demonstrates true trust in small organizations and allows them to plan for the long term while still responding to short-term needs.
Small organizations can manage their finances. Within our own portfolio, 90 percent of small organizations reported running a surplus or breaking even in 2017, a number that has increased over time. While some small organizations may experience financial instability, small grantees are overall stable and financially healthy, bucking the stereotype that small groups cannot manage their expenses without running a deficit.
Small organizations don’t always stay small. Philanthropic investment has helped many small, grassroots groups grow, but it must be up to each organization to decide what scale is best. Almost 40 percent of our small grantees grew to have revenues above $500,000 over a five-year period (2013-18). Providing consistent general operating support allows those that are ready to grow to make strategic decisions and invest in their infrastructure.
Our conviction that families must lead the movements that claim to represent their interests goes deeper than words. It is reflected in the nuts and bolts of our grant-making protocols, which are designed to support leadership among grantees and their constituents, rather than forcing them to accept top-down mandates to receive the funding they so desperately need.
We believe that for foundations to truly serve their missions, they must not impose their priorities on grantees, no matter their size. We need to really listen to grantees and, even more important, to those they serve.
Zeeba Khalili
Learning and Evaluation Officer
Marguerite Casey Foundation
Seattle