Next month, more than a dozen Chicago activists will lace up their walking shoes and begin a 200-mile march to Springfield, Ill. There, at the state capitol, and in churches and community centers along the way, they plan to marry up with other nonprofit leaders to deliver a message to the Democrat-led legislature and Republican Gov. Bruce Rauner: You have failed us.
For nearly two years, Illinois lawmakers have tried to pass a budget and come up short. As a result, the state comptroller’s office has a backlog of about $13 billion in unpaid bills.
It’s unclear exactly what portion of the suspended payments is owed to nonprofits that provide state services. But throughout Illinois, organizations that respond to domestic violence, provide services to the elderly, and run after-school programs have struggled to do their work without a clear idea of when they will be paid.
“We’re entering a crisis point,” says Delia Coleman, vice president of strategy and policy at Forefront, a network of Illinois nonprofits and foundations. “We’ve seen our public partners withdrawing from the partnership. Organizations are continuing to deliver services as much as they possibly can, but for many of them, payment is a mystery.”
Footing the bill for next month’s march is a group of 10 Illinois foundations that pooled $177,500 in what they named the Nonprofit Impact Awareness Fund. Its aim is to spread the word about how the budget impasse is hurting charities.
The bill for the march — $10,000 to organizing group Fair Economy Illinois — is relatively small but complements the fund’s efforts to spotlight the issue. Over the past year, the fund has supported state budget forums and training sessions, and grantees have met with dozens of elected officials and business leaders.
Media attention followed, with nearly 300 news stories in local and national outlets pegged to the budget impasse’s impact on nonprofits. Fund leaders hope rallying grass-roots organizations and local business groups will gin up additional attention and put pressure on lawmakers to find a solution.
Budget Standoff
Mr. Rauner, a former private-equity executive, was elected in 2014 with plans to slash spending and cut taxes. In his first legislative session, his proposals were blocked by the Democratic legislature, which passed a budget that restored spending cuts in education, health, and other areas but with significant red ink.
The governor vetoed that plan in June 2015. Illinois has not passed a full budget since.
Not long after the veto, Illinois foundations began fielding panicked calls from grantees worried about whether the state would be able to pay them, says Leslie Ramyk, executive director of the Conant Family Foundation. As requests for stopgap funding piled up, grant makers grew concerned but also expected that “something was going to get worked out,” she says.
But as budget negotiations plodded on for months, foundations — among them Conant, the Woods Fund Chicago, and the Chicago Community Trust — decided to take action.
Rather than stepping in where the state payments had come up short, the group decided to support advocacy, something that doesn’t come naturally for many foundations. The participating grant makers worked together to draw up plans with help from an outside lawyer and Forefront, which is administering much of the effort.
That collaborative approach, and the legal sign-off, helped get groups that might otherwise have been leery of direct advocacy to buy in, says Grace Hou, president of the Woods Fund.
“They see their peers rallying around this,” she says. “It makes foundations feel comfortable.”
The creation of the fund made a difference even among some foundations that didn’t join up. For instance, the VNA Foundation, which funds home and community health care, did not contribute; Robert DiLeonardi, its president, said VNA prefers to give “soup on the table” grants rather than sound off on a cause. But he sent a member of his staff to several of the fund’s meetings.
Often, Mr. DiLeonardi says, foundation officers only hear from their own grantees. The fund’s gatherings attracted nonprofits from around the state, helping VNA get a comprehensive view of the pain the budget stalemate was inflicting.
“Domestic-violence programs were getting ruthlessly slashed,” he says. “In times like these, those needs are most pressing.”
In response, VNA increased its grants to Mujeres Latinas en Acción — a group to which it had given only sporadic support over the previous two decades — to pay for services for sexual-assault victims in low-income areas.
Playing Defense
The Nonprofit Impact Awareness Fund has yet to achieve its goal — passage of a state budget that provides ample funds for nonprofits. Nevertheless, some think it can be a model for how foundations and nonprofits respond to state and even federal budget cuts by coordinating messages delivered through the media and directly to lawmakers.
The lessons may prove especially salient given the extensive cuts laid out in President Trump’s preliminary budget, which would dramatically scale back domestic discretionary programs. Rather than filling in gaps in public funding, a task well beyond the capacity of philanthropy, many nonprofit leaders think a better use of foundation cash is to set up a solid defense against spending cuts.
That is a break with practice. According to a Foundation Center analysis of grants made by the nation’s largest foundations, less than 13 percent of such support is explicitly directed to advocacy, policy, and systems reform. Rather than, say, fund a campaign to change a state’s school-lunch policies, foundations are more likely to support food banks that provide meals for low-income children.
Private grant makers are allowed to engage in “self-defense” lobbying on legislation that might put their very existence into question — for example, capping or eliminating the charitable tax deduction — but are prohibited from lobbying on other matters. There is, however, a lot of work they can do short of weighing in on specific bills. Foundations can make grants to nonprofits that work to sway public opinion or engage in grass-roots organizing. They can provide general operating support to groups that work directly with lawmakers.
Through the Nonprofit Impact Awareness Fund, nonprofit leaders in Illinois want to build support across party lines for charities suffering the effects of the budget impasse.
“People are angry,” says Lori Clark, executive director of social-justice activist group the Jane Addams Senior Caucus and one of the organizers of next month’s march to Springfield. “They’re hurting and they’re scared. They want to take this anger and channel it so we send a loud and clear message to our public officials in Illinois and Washington to make sure these potential cuts don’t happen.”
In addition to supporting the march, other recent grants from the fund include $30,000 to Illinois Partners for Human Service to help the group hire a community organizer and $50,000 to the Sargent Shriver National Center on Poverty Law, to be used to support the Responsible Budget Coalition, an Illinois advocacy group. Past grants have been used to pay for media consultants to devise a public-relations strategy for the advocacy effort.
‘Chronic Budget Stress’
Illinois nonprofits’ problems are acute but by no means unique. According to a report by the National Association of State Budget Officers, nearly half of states won’t meet revenue targets this year. In a column for The Hill explaining why 11 states had their credit ratings downgraded over the past year, Gabriel Petek, a managing director of S&P Global Ratings, wrote that states had entered an era of “chronic budget stress.”
In Connecticut, which faces a $3 billion deficit over the next two years, the Hartford Foundation for Public Giving created a $1 million fund to help nonprofits hit by budget cuts. In Pennsylvania, which struggled through an extended budget delay in 2015, the Forbes Funds and the Berks County Community Foundation offered lines of credit and revolving loan funds.
Since well before that crisis, the Pittsburgh Foundation has been working to strengthen nonprofits’ hand in budget wars. Over the past seven years, it has steered $945,000 to the Campaign for What Works, a partnership with the Forbes Funds, local United Way affiliates, and other groups that aims to boost state funding for human services. (As a community foundation, the Pittsburgh Foundation is not constrained by the same rules against lobbying that private foundations face.)
Maxwell King, the foundation’s CEO, hopes to convince other grant makers to get more involved at a state policy conference his group is helping organize next month. Too often, he says, the foundation approach “is to say ‘our good works will speak for themselves.’ "
Perhaps, he says, the “terrifying” threat of both state and federal cut backs will galvanize his peers. “We’ll find out how comfortable people are with advocacy — some won’t be comfortable at all.”
Past attempts to bring nonprofits and foundations together to make a case for a strong state budget haven’t been effective, says Anne Gingerich, executive director of the Pennsylvania Association of Nonprofit Organizations.
“A lot of foundations are focused locally,” she says. “We haven’t been able to create a concerted effort around this issue.”
Being a ‘Hammer’
In Illinois, where the budget crisis continues, contributors to the Nonprofit Impact Awareness Fund have started round two of the fund. They expect to pool at least as much money as they did last year. Since December, they have collected $80,000, including a $50,000 grant from the MacArthur Foundation.
Has the money made a difference? Though state lawmakers and Gov. Rauner seem no closer to a budget handshake, fund participants insist the answer is yes. By bringing together donors and grantees from across the Illinois and concentrating their energy on a single goal, they contend, the collaboration will ultimately pay dividends.
“Measuring the impact based on whether the budget passed or didn’t pass is an unfair barometer for a $200,000 fund,” says Ms. Hou of the Woods Fund. “Awareness was the goal.”
She and the Conant Foundation’s Ms. Ramyk want legislators to feel the same pressure from nonprofits as they do from the state’s business community. By keeping up the fight, Ms. Ramyk says, nonprofits can be a “hammer” that effectively shapes policy and contributes to regular passage of budgets that support human services.
“It didn’t give us the outcome we wanted, but it certainly has increased the degree of knowledge and understanding,” she says. “There isn’t an elected representative or chamber of commerce statewide that isn’t aware of how nonprofit organizations are being impacted.”
