What Happened?
When state and federal government funding is cut, many communities see vital projects push forward through nonprofit organizations.
Change Capital NYC
The New York City Community Resilience Fund has awarded a total of $1.6 million in grants to seven nonprofit organization across the city. The projects supported by the grants are designed to spur recovery of New York City’s safety net, and the funding is considered “change capital.”
The $1.6 million in grants will enable the seven nonprofit organizations to adjust their operations now to become more adaptable to future economic conditions. The funding will aid the nonprofits in increasing or maintaining their capacity and operations so their programs can continue even when funding challenges arise. Specific programs supported by the change capital funding include:
- Investments in fee-for-service revenue models
- Implementing merger activities
- Deploying branding strategies
- Fundraising and communications
- Building infrastructure to ensure quality service delivery
- Preparing recipients to meet community needs in a variety of economic climates
The Community Resilience Fund was launched to protect the financial integrity of social safety net nonprofits through specialized expertise and capital to encourage organizational changes. Since its creation in 2013, the Community Resilience Fund has worked with 17 nonprofits citywide by providing personalized financial advice and industry best practices.
Pay For Success
The U.S. Corporation for National and Community Service announced $3.6 million in grants will be given to Nonprofit Finance Fund to fuel its Pay For Success projects across the country. The Nonprofit Finance Fund’s Pay For Success initiative provides funding for critical social services.
The program identifies areas of weaknesses in services or delivery and addresses them in the early stages. Then, taxpayer dollars are used to support the initiatives once success has been proven. Governments will select key programs that can solve social problems, and private investors support the efforts initially. Such programs aim to:
- Reduce homelessness
- Lower rates of recidivism
- Expand access to early childhood education
The $3.6 million awarded to the Nonprofit Finance Fund is part of a $12 million federal investment in Pay For Success projects across the country. The overall goal of the investment is to implement a problem-solving strategy for nonprofits and governmental agencies to improve the delivery of key social services to communities in need. The best practices demonstrated by grant recipients can be applied by other nonprofits and agencies.
Need For Financial Stability
A recent State of the Arts and Culture Sector report from Nonprofit Finance Fund revealed many nonprofits across the country continue to struggle financially while adjusting to changing demographics and new technological requirements.
Because nonprofits make up a significant portion of educational and economic service providers, it is in the best interest of local governments and communities to keep these groups financially strong. Unfortunately, the survey found 47 percent of nonprofits consider long-term financial sustainability as their key challenge due to:
- Mismatched funding: a struggle to build up reserves while expanding programs and services
- Missing dialog: difficulty discussing flexible capital for growth or change with funders
- Misaligned reporting requirements: requirements often outsize the amount of a grant awarded
- Funding falls short: less than 25 percent of nonprofits report funders covering all program costs
To better overcome these barriers, many arts nonprofits are collaborating with programs to deliver services, are engaging audiences through social technologies and are collecting more data on user preferences and behaviors to increase efficiency.
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