Nonprofits rethink approach as donor demands add to challenge
Nonprofits are beholden to donors who can make competing demands on their resources. While donors often insist that 100 percent of their donations go to the people being served, nonprofit organizations struggle to pay for operations, to meet increasing needs in the community and to report back on the work they do.
Last week’s news of Care Communities having to dissolve for lack of funds, as well as news of the Health Alliance for Austin Musician’s financial struggle to meet a growing need, demonstrate the paradoxical demands made on nonprofits today.
When it comes to making donations, some people believe “overhead” is a dirty word. Most nonprofits rely on a variety of sources to fund operations, but for Care Communities, for example, many of those sources were in jeopardy. As a provider of services to people facing a serious illness with little support, Care Communities operated in a region with a growing senior population and an increasingly dispersed poor population, all amid uncertain federal, state and city health care funding.
“Several mitigating circumstances have led us to this point,” said Mary Hearon, executive director of Care Communities.
Andrew Levack of St. David’s Foundation said the problem is not an isolated one.” Right now, all health and human services nonprofits are being challenged to grow and serve a growing population with increased needs,” he said.
“Nonprofit work is really challenging work,” said Levack. “There are incredible demands to do several things at once because you are a service provider and you have to have high quality of service. Yet you also have to raise money and be a good steward of funds. It’s just like any business in that there are so many aspects to it.”
At the same time donors are reluctant to fund operating costs, they also demand that nonprofits are transparent about how every dollar is spent. Foundations and government agencies require that the organizations they fund report on their effect on a regular basis. Individual donors, too, want to see data on the nonprofit’s impact.
Susanne Wilson of Water to Thrive said that accounting for every dollar is a cornerstone of her organization’s mission, but that the level or reporting required can be another expense that nonprofits can’t afford. “We don’t always have time to do the research,” said Wilson, “because we’re doing the work.”
The challenge forces nonprofits to adapt their organizations to the needs of the people they serve as well as to donors’ needs. David Smith, executive director of United Way for Greater Austin, said, “I think we have to re-think how we give, and instead of just asking that it not go to overhead or administration, start asking more about the long-lasting impact of the services we are funding as donors.”
For AIDS Services of Austin, that meant giving up a popular fundraising gala and focusing instead on individual giving that puts the mission first. “People were walking out of the event not knowing what we did,” said Paul Scott, the group’s executive director. “We’ve had to shift how we fundraise so people have a better understanding of what we do.”
Smith agreed that both donors and nonprofit groups have to adapt to the community’s needs. “We can do this, but only if we come together and let go of some of our older notions of what giving is about. It’s an investment that affects and enriches not just those in need, but all of us.”
Care Communities, which was part of the Statesman’s Season for Caring campaign, operated in a region with a growing senior population and an increasingly dispersed poor population. It folded because of funding issues.