This piece is adapted from posts on Mr. Le’s blog, nonprofitwithballs.com. Read a response to this piece by Nancy Roob, president of the Edna McConnell Clark Foundation.
When Charity Navigator, GuideStar, and the BBB Wise Giving Alliance got together in 2013 and wrote a letter denouncing the Overhead Myth, it helped drive a stake in one of the dumbest and most damaging concepts ever inflicted on nonprofits and the communities they serve. Imagine if we go on Yelp to find help deciding which restaurants to frequent, and all the reviews are like this: “The Happy Chicken serves vegan food, but we were disgusted that they spend over 30 percent of their revenue on rent, water, insurance, and accounting software. Go a block down the street and eat at the Flying Lemur instead; the owner assures me she spends only 10 percent on things like electricity.”
As the Overhead Myth limps along on its last dying breaths, we need to focus on a more subtle but equally insidious concept, the Sustainability Myth. Many foundations (and some donors) have a crippling fear that we nonprofits will become dependent on them — like those millennials who move back in with their parents after graduate school and refuse to leave. As a result of that concern, most foundations give nonrenewable one-year grants, usually restricted. Tough love, you know. And who could blame them? I mean, if my kid came back home to live with me after grad school, I would make it as miserable as I could for him to encourage him to break out on his own and not become a leech. That’s called good parenting.
The concept of sustainability is ubiquitous, overbearing, and frustrating. “Sustainability” is confused with “self-sufficiency,” leading grant makers and donors to believe that if nonprofits just try hard enough, they’ll reach this state of funding nirvana whereby they can generate their own revenues and never have to bother a foundation again. And if they’re not actively working toward reaching fiscal enlightenment, they shouldn’t be supported.
Here’s the issue: This magical land of nonprofit financial self-sufficiency does not exist, and the unwillingness of grant makers to admit this perpetuates an inefficient funding system that stymies nonprofits’ abilities to tackle society’s most challenging problems. Consider:
First, about 50 percent of start-up businesses fail after four years, according to the Small Business Administration. And this is when they spend 100 percent of their time focused on building a single earned-income strategy. What makes anyone believe that a nonprofit can spend less than 25 percent of its time developing a business and have a better rate of success?
Second, foundations’ “tough love” stance is paradoxically the thing that prevents sustainability. Starving nonprofits with purposefully small restrictive one-year grants decreases their chances of achieving this elusive state of self-sufficiency. Each time a grant runs out, it’s like pushing a reset button. Every time we reset something, we waste time and energy ramping it back up. We nonprofits are forced to spend endless amounts of time resetting our work and not building on it.
Third, the pressure on nonprofits to be self-sufficient can lead to mission creep, wasted time and resources on hare-brained schemes, and warped public perceptions. When they work, earned-income ventures are great. But often, the siren song of sustainability leads nonprofits to stray from their path and tackle projects they have no skills for and no business tackling. Many of these ventures fail. The last organization I directed was tempted to open a cafe. It would have been a disaster if we hadn’t had a very wise and business-savvy mentor tell us we were insane.
It seems perfectly normal for us to expect “sustainability” of nonprofits, but imagine if we applied this to other public services, such as the police, firefighters, emergency medical technicians, and public-school teachers. Imagine if firefighters had to spend half their time writing grants, planning events, and cultivating individual donors year after year to keep their work going. Imagine if we asked public defenders and judges, “So how will you keep your programs running once our support ends in a year?” Or tell a teacher, “Hey, I really like your mission of teaching kids and stuff, but I am not going to support your school unless you have a better sustainability plan.”
Sure, if we force teachers to do more to raise funds, they’ll find ways to do it. But is this a good use of their time? And I’m sure EMTs would make amazing grant-proposal writers if necessary, but is that a good use of their time? And yet it seems completely OK to expect this of nonprofits. Our jobs should be to provide counseling, help people find food and shelter, protect kids from abuse and neglect, advocate to change unfair laws, take care of veterans, comfort the lonely, and reduce damage to the environment. We do these things because no one else can do them as effectively. And yet we spend an endless amount of time just trying to raise funds, and we are pressured to waste thousands of hours each year justifying our work instead of doing it.
It is time for us to kill the Sustainability Myth. Think of your favorite restaurant. If it has good food and you want it to be around, you eat there and you tell your friends to give it a try. That’s how a restaurant is sustainable. You don’t go to the owners and say, “Your food is good, but I’ll only eat here if you can prove you have a plan to be around in five years.” If society values public services, it needs to pay for them. If foundations and donors value what we nonprofits do, then they need to support our work. It is a mutual symbiotic relationship, with everyone having a role to play. If you think a nonprofit’s mission is important and you want it to be sustainable, then sustain it.
