“Is our organization choosing to fund over the mission?” This is a common question I often get when speaking with nonprofits and their board members. So what can nonprofits do to make sure they are not choosing to fund over the needs of clients?

In direct response to this question, we here, at Capacity Building & Policy Experts, LLC, conducted a study to assess the long-and-short-term considerations that nonprofits think about when determining how to best serve their target population and remain fiscally solvent. We found that organizations formally and informally evaluate the short-and-long-term impacts of funding opportunities on their organizational infrastructure and on their clients before applying. 

Steps to Ensure You Are Not Choosing Funding Over the Mission

With respect to organizational sustainability, nonprofits consider: 

* How administrative and fiscal systems will be affected, 

* The impact on staff and the potential for overtasking, and 

* Whether the values and ethical practices of funders will impact their organization’s reputation. 

With respect to the client’s needs, nonprofits consider: 

* The short-and-long-term impact on the clients, and

* The impact on the mission, including the sustainability of programs. 

The full results can be found in this link for the book, Corruption, and Government Legitimacy: A Twenty-First Perspective.

The chart below from the book outlines how nonprofits assess the sustainability of the organization and the needs of clients when deciding whether to pursue a funding opportunity.

Mendilow, J. and Phélippeau (Eds.), (2019). “Corruption Perceptions and Transitions: Balancing the Needs of NGO Clients and Organizational Sustainability.” Political Corruption in a World in Transition. Wilmington, Delaware: Vernon Press. Chapter Author: Paulina Alvarado-Goldman

Nonprofits undertake this vetting process to ensure they are not choosing funding over the needs of clients in response to controls and limitations donors place on funding opportunities. Although funders are mostly well-meaning, the control tools they choose often result in administrative deficits for nonprofits, counterintuitive or conflictive standards, and, particularly with government dollars, overbearing compliance programs. 

One Reason Funders Select Funding Parameters

It is important to understand why it is that government, foundations, and private donors place controls on the funding they provide. A major contributor to these mismatched tools and controls is their desire to be responsible stewards. In response to widely publicized scandals involving nonprofits (e.g., Boy Scouts, United Way, executive compensation, etc.), which do not reflect the behavior or practices of most nonprofits, they have selected tools that are meant for either government or the for-profit sector to combat perceived widespread corruption and mismanagement. In reality, though, corruption rates are much lower in the nonprofit sector than in other sectors.

Unfortunately, many of these controls have impeded nonprofits from developing the administrative controls they need to prevent these scandals from happening because they underfund organizational infrastructure, internal controls, overhead, professional development, and administrative costs. All of these organizational characteristics are key components in strong and robust organizations. The end is result is a series of negative unintended effects on the nonprofit industry that inhibit organizations from functioning as effectively as they could and ultimately compromise the sustainability of the industry.  

Vetting Funding So You Are Not Choosing Funding Over the Mission

Nonprofits must be intentional and strategic with the grants and funding opportunities they decide to pursue and accept. In order to ethically advance their mission, nonprofits should always vet all funding opportunities to ensure they are balancing their long-term financial sustainability without compromising their mission. 

Share How You Make Sure to Put Clients and Mission First

Please share with us your experiences. What have been some challenges you have encountered with your funding? How have you worked with funders to make sure you can balance client needs?  

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Need Help Working with ETHOS?

Here at Capacity Building and Policy Experts, LLC, we promote a nonprofit management system that we have patented that we call “Working ETHOS“, which stands for Ethics, Transparency, Harmony, Organizational infrastructure, and Sustainability. Do not hesitate to reach out to me for a free half-hour consultation. I am always happy to help and support you!