Several VPP investment partners report that they have already incurred major cuts in their funding, forcing them to reduce services and reassess their plans for the future. And these are some of the very best community-based organizations in our region. Unfortunately, those applying the funding cuts often do not take into account the high performance and the positive impact that these organizations have on their communities.

Fortunately, most of our investment partners are already taking aggressive steps to respond to the challenges by reducing programs and expenses and pursuing new funding sources. They are also exploring creative options such as real estate refinancing, public/private partnerships, and fee-based services.

To complement those yeoman efforts, we are stepping up our efforts at VPP to help our investment partners respond to the short- and long-term funding challenge by:

• Supporting our investment partners to build up their fund development capacity to help them develop financial sustainability for the long-term. These efforts include helping investment partners add new members to their boards, recruit experienced senior management to lead fund development, connect them with funding specialists, and provide guidance on marketing, branding, and communications;



• Helping our investment partners pursue federal funding. The law firm of Patton Boggs is providing counsel and advice to six of our seven investment partners. We will enlist the help of key people in our network to write or call members of Congress to make them aware of the excellent work of our investment partners;
  


• Leveraging our contacts in local and state governments to bring our investment partners to their attention, to seek potential funding for them, and to help remove bureaucratic obstacles that impede their work; and
  


• Planning a pilot effort with The Finance Project, an organization that assesses the financing options of nonprofits, to see how they might help our investments partners develop stronger, long-term financing strategies.

In addition to these tactical activities, we are learning as much as we can about the funding environment to guide our efforts and those of our investment partners. On June 3, McKinsey & Company, a strategic advisor to VPP’s board, hosted a workshop on “Implications of the Changing Funding Environment for Community-Based Nonprofits Serving Children of Low-Income Families.” The day-long session brought together 18 experts in the fields of federal, state and municipal financing, regional and national foundation funding, charitable giving, high-net-worth donors, and public policy. The purpose of the workshop was to understand what the leaders and supporters of community-based nonprofits might do to help their organizations survive and respond to the increased demand for their services in the face of an extremely challenging funding environment.

The discussion confirmed that community-based organizations serving low-income families are facing the most serious funding challenges that the sector has seen in decades. Furthermore, participants concluded, even if the US economy turns around by sometime in 2004, the funding environment for community-based nonprofits serving children of low-income families would, at best, not see recovery for several years, if at all. An even more serious problem, however, is the declining financial health of working poor families across the country. Even though the discussion identified numerous actions that could improve this gloomy outlook, the consensus was that the ultimate remedy for both of these challenges lies in public policy changes that support children of low-income families. Participants further agreed on the strong need for more thoughtful and aggressive efforts to influence public opinion and public policy to create financial relief and employment opportunities for working poor families, as well as to support and strengthen the nonprofit sector that provides many essential education, health, and human services.

We are still sorting through the findings of this session, and we will publish the results in the weeks ahead. The session underscored how radically the playing field on which Venture Philanthropy Partners was created has changed in the past few years. Despite those changes, the role of community-based organizations has never been more important, nor has the risk to their survival been greater. The hope for many children here in our region lies in the remarkable people in our communities who are leading high-quality community-based organizations and applying workable approaches to many of the most difficult social problems and needs facing children today.

Nonprofits have weathered tough storms before. The best organizations have learned to be resilient and optimistic. But they can’t stay afloat without significant support. These tough times require bold leadership and meaningful action. We encourage all of you who care about children and nonprofits to do what you can — from making a donation or sponsoring a table at a fund-raising event, to contacting elected officials to make the case for supporting organizations that are indeed the safety net for children and families in this region.

--Mario Morino

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The business plan competition awarded $100,000 each to four winners and $25,000 to four semi-finalists to implement their plans. One local organization, Nation’s Capital Child and Family Development, was a semi-finalist.
Learn more about the winners.

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Mario noted the social and economic vicissitudes that have caused a sea change in the way nonprofits operate and how philanthropic organizations approach supporting nonprofits, but he pointed out that the hope for the future “lies in the remarkable people in our communities who are leading high-quality community-based organizations with workable approaches to many of our most difficult social problems and needs.” The challenge, he said, is to discover those leaders with great potential and help them to do more by providing the resources to help them build community institutions.

Following the event Susan Eagan, executive director of the Mandel Center, said “[Mario’s] remarks stimulated and challenged us to think more deeply about ways in which organizations and foundations can become more effective in addressing critical social issues.

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• Which nonprofit organizations in the DC region provide services for children?


• What is the fiscal health of these organizations—that is, what are their sources of funding, have these sources changed over time, and are organizations thriving or struggling financially?


• Are child-related nonprofits geographically distributed near low-income families with children in the DC region?


• What are the implications of the recent economic downturn in the region, declining charitable contributions, and budget deficits in Maryland and Virginia on organizations that serve children?


• How has welfare reform impacted child-serving nonprofits in the DC area?
• To what extent do religious congregations in the DC area provide services to children?

While many local and national leaders are looking to nonprofits and congregations to fill in the resulting gaps in the safety net caused by budget cuts, fiscal problems, and emerging service needs, it’s not clear to what extent these groups are able to fulfill that role. This study will gather the basic information needed to identify gaps and redundancies in services and provide a new analytic tool for grantmakers, advocates, and policy makers to develop strategies for improving services to children and families.

We at VPP are working with the Urban Institute to reach out to other funders in the region who might be interested in supporting this important work. So far, the Morino Institute and the Annie E. Casey Foundation, along with the Advisory Board Foundation, led by VPP investor Katherine Bradley, have committed funding for this project. If you are interested in learning more about this study, please contact Eric Twombly at the Urban Institute.

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