Sharing the Burden—Nontraditional Sources of Funding May Be Key to Building Nonprofit Capacity

July 01, 2010

As seen during the recent economic crisis, coming up with the money to fund key work has become of paramount importance to many community development organizations.  Unfortunately, the pursuit of money can unintentionally steer organizations away from their missions (known as mission creep), which undermines the work of organizations and results in denial of delivery of the goods and services organizations were created to deliver. 

While some might say that such organizations have arguably become overly dependent upon traditional sources of capital, such as grants, tax credits, government contracts, foundations and annual campaigns, it’s clear that changing conditions do prompt organizations to seek new means or alternative sources for needed capital—both financial capital and human capital.  To succeed, some nonprofits are discovering that developing greater capacity may not necessarily mean doing different things, but doing things differently. 

Building new relationships with a broad base of local, nontraditional investors and volunteers may provide a productive, different way forward, allowing community development organizations to build capacity for community change.  Who are those new entities?  They are community members themselves.  This approach is unique because it is dependent upon building stronger, broader and deeper relationships among, between and within the community when defining the work and getting it done.  Creating such local relationships does not mean sacrificing the organizational mission.  On the contrary, it means building stronger support by sharing the mission, articulating organizational values and seeking out community members that can embrace the mission, as well as share those values and work to carry them out.  These types of local relationships—whether with funders, other organizations, individuals, clients or constituents—have the potential to build a broader, deeper and more sustainable base of human and financial capital than traditional approaches.

This is easier said than done, especially in our current stressful conditions and given the acute levels of apathy and disengagement that plague many communities. Perhaps community members believe they are not equipped to bring value to the work. Perhaps they do not understand the work.  Or they simply have not been asked to engage with the organization.  While the rationale might ring true, the key to engaging community members in supporting and adding capacity to organizations is in understanding and communicating how the mission of the organization matches up with the values and desires of the community.

Self-help institutions, neighborhood associations, volunteer organizations, service clubs and individuals all are potential partners that can contribute toward bettering communities.  In particular, citizen self-help programs assist those who want to organize and take action, and can be particularly valuable in times of stress when citizens seemingly pull together with uncommon resolve. 

The Missouri Community Betterment Program (MCB) is one of several original programs in the nation that supports local citizen-led action.  Created in 1963, MCB is a statewide organization whose goal is to help communities improve their quality of life by supporting the value of citizen-led work in communities.   It offers a way for citizens to organize around ideas they create and work with partners to manage projects that will improve their communities.  MCB accomplishes this through several key activities.  For example, MCB provides a method to inventory community assets, prioritize needs and plan projects.  In addition, the organization provides a framework to measure and record project outcomes.  MCB also offers an independent judging process for community accomplishments and conducts an annual learning conference to recognize community achievements.

Citizen-led action and organizations like MCB are gaining attention in the public domain these days.  The challenge is to expand the base of investor support as demand grows for locally controlled activities.  To do so effectively, organizations must clearly define and track their values, and articulate their return on investment, which is the benefit of the value.  First, the organization’s board of directors should match the value it provides with the type of value a community investor is seeking.  Next, the organization should clearly articulate its various values to the investor; common types of return on investment are economic, financial, environmental and social.

When communicating values to a community, organizations should consider that not all returns on investment must be direct; in fact, they should promote both use-value as well as three types of non-use value in communities.  (See sidebar.)  Doing so just might help citizens refocus on local action and take initiative, boosting the support and capacity of their local organizations.  Adapting a phrase from John F. Kennedy, “Ask not what your community can do for you, but what you can do for your community.”

For further reading: Citizen You: Doing Your Part to Change the World by Jonathan Tisch.  Tisch is co-chair of the board and member of the office of the president of Loews Corporation, one of the largest diversified financial holding companies in the nation.

Communicating Values in Communities

Use-value: A value obtained through using a product, service, environmental or cultural asset.

I use the public library and biking trails every week and choose to live in a community with these types of assets.  I need a place to locate books, eat food and use public transportation to get me to my job.

Non-use value:  A value to humans derived purely from the fact that an environmental or cultural asset exists, even if they never intend to use it or see it in person.  It can be further subdivided into existence values and bequest values.

Existence:  The value to an individual of knowing that a particular environmental or cultural asset exists.  It is independent of any use that the person may make of the asset.

I don’t water ski or go to plays but prefer to live in a community near a lake and with a regional theater league.

Option:  The benefits accruing to individuals not from the actual use of an environmental asset, but from the option to use it in the future.

I don’t have time at this stage in my life to use the parks system of my community, but think that when I grow older, I’ll use the parks system a lot.

Bequest:  A non-use value, usually measured by willingness-to-pay, attached to an environmental or cultural asset that people want to transmit to their children or to future generations.

I don’t have small children; so, I don’t have a use of day-care centers, playgrounds or public schools.  But I prefer to live in a community that has them for the benefit of my grandchildren.

Source: Organisation for Economic Co-operation and Development glossary



Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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