Tag: rural philanthropy

Why Rural Philanthropy Should Ensure Access to Quality Back Office Services

Does every nonprofit need a separate, fully functioning back office capable of handling all of the accounting, HR, and regulatory requirements that are now a part of day-to-day nonprofit survival? Perhaps not. If your nonprofit is new, small, or has proven itself to be less than agile or consistent in such matters, one choice may be outsourcing some of this work to a trusted administrative partner. The question is, do such partners exist in your area? Do their services meet your needs? Are they affordable? Will they teach you capacity while serving your needs?

At the University of New Mexico’s Anderson School, “We realized there were a lot of nonprofits that were not meeting the requirement to function in this state,” said Leslie Oakes, chair of the Accounting Department. “There were huge grants…from Kellogg going to nonprofits in some rural regions and there was no one there that could really help them. So they couldn’t get that grant renewed because they didn’t have the accounting to show that they had monitored the grant correctly.”

Janice Moen is one of Oakes’ former students, and when she graduated, Moen and Patrick Wilkins, chief financial officer of the United Way of Central New Mexico, began teaching financial training classes for nonprofit staff. They soon found that in many cases, education only addressed part of the problem: “They walk into the training. They are all excited. They’ve got their coffee. They’ve got their muffins. They sit down. They are all happy. […]  And then we start telling them, here’s the things you need to do fiscally. Here’s your responsibility,” said Moen.

Wilkins added, “All of them were committed to understanding, and then after about 15 minutes, they realized, ‘Oh gosh, I’m the executive director and I’m responsible for fundraising and for doing the program and I also keep the checkbook.’ We are talking about all these regulations and how to file a 990 and proper bookkeeping and restrictions, and all the things that are unique to nonprofits. […] The color would go out of their faces. None of them were accountants and they thought they could come take this class and get some tips and tricks. Then they realized they didn’t know what they didn’t know.” So, in 2011, Moen founded NonProfit Back Office Resources, which for a modest fee helps nonprofits set up financial systems and sometimes even actually runs them, complete with checks and balances.

Association with the university reduces the organization’s cost through access to interns. Oakes says such students are not in short supply:

I taught a writing class last spring and I asked them, “What does it mean to be a professional in your community?” We have students that come from the reservation, from little towns up north and they were talking about how being a professional means giving something back to your community. To be an honored person, who behaves respectfully and gives something back. I don’t think you would hear that from the usual accounting group in Milwaukee or Chicago or Dallas.

NPQ has long advocated for more back office support to nonprofits, and even to groups that are not themselves incorporated but need a nonprofit fiscal sponsor. However, making use of such a model does require a few things both from the nonprofit making use of it and the organization providing the service:

  • The nonprofit needs to do due diligence to ensure the entity with which they are considering contracting has a stellar reputation for dependability, accuracy, responsiveness, and ethics. There are many cautionary tales of things going awry both in fiscal sponsorships and back-office relationships. One of the more recent was in the death of FEGS, which outsourced its financial work—ironically to a social enterprise owned by FEGS—only to so lose sight of its financial position that it made the choice to close the agency, which had a $250 million budget.
  • Having someone else do your books and accounting does not relieve a nonprofit organization of the responsibility to take financial leadership. When it works, the relationship is more like a respectful partnership that strives always to develop systems that are ever more informative to the board and the exec at the nonprofit. This requires a kind of on-the-job training mode of interaction rather than a vendor/contracting-agency relationship.
  • The best of those doing this back office work are grounded in an understanding of the realities of the variables in a particular field. They have enough knowledge to be able to point out to an organization when a practice needs changing and enough skill to help them to make that change.

But this intimacy in the work also can be costly to the contractor. Foundations, like a Kellogg or any of the others that still invest in small powerful community-based efforts, might consider whether they may wish to make a parallel investment in back office service.—Ruth McCambridge

Update: Will Foundations Pay Attention to Ag Sec Vilsack on Rural Philanthropy?

Earlier this month, Agriculture Secretary Tom Vilsack stunned the audience at the National Rural Assembly with his very personal disappointment that rural philanthropic grantmaking by the nation’s foundations had declined over a period of time when overall foundation grantmaking had increased nationwide.

Usually, the press doesn’t talk much about the public policy connections of philanthropy unless it is the announcement of some sort of hyped public-private partnership, like the foundations that have tied into federal initiatives such as the Social Innovation Fund, Promise Neighborhoods, or the Education Department’s Race to the Top and i3 programs. Vilsack’s statement was quite different, a charge that despite whatever projects might be getting funded here or there, philanthropy was seriously shortchanging rural America.

The Gazette, a Cedar Rapids, Iowa newspaper, published an editorial that took notice of the former Iowa governor’s observations about foundations. Written, sources tell us, by Lynda Waddington, who apparently attended the Rural Assembly, the Gazette’s editorial was as straightforward as Vilsack:

Despite the good works provided by a robust network of community foundations, rural areas in Iowa, as elsewhere, struggle to compete for grants and support from most national philanthropic groups…Despite concentrated efforts to turn private not-for-profits’ attention to investments in rural places, the results of such labors have been disappointing… In fact, there has been a decrease in rural investment—even as philanthropic groups have increased giving, overall…There’s a compelling case to be made, as Vilsack and others have publicly asserted, that answers to some of our biggest collective issues—climate change, clean energy and global food security—will be found not in a city center, but farther afield.

The Gazette editorial quoted the widely respected Charles Fluharty, president and CEO of the Rural Policy Research Institute based in Iowa City, commenting on the USDA study that found the trend of rural grants declining and the per capital value of rural grants at half the level of urban grants. “Even the USDA has said that their figures are extremely conservative,” Fluharty said. “In fact, most people in the foundation community believe the percentage of rural giving is between 1 to 3 percent of the total outlays for all national foundations.”

While Vilsack did not specifically reference the 2011 memorandum of understanding signed by the USDA and the Council on Foundations to spur new philanthropic investment in rural, the Gazette editorial did: “The agreement was part of the third and final national philanthropic conference to specifically target rural America. Despite a great deal of optimism following the agreement, foundations haven’t followed through.”

While the editorial outlines some of the impressive efforts that the state of Iowa has undertaken to generate more philanthropic giving through community foundations and through the disbursement of casino tax revenues, the issue still comes down to the role of national foundations. It concludes, “more must be done to educate national grantmaking organizations that rural areas not only matter, but also can be unique and critical partners in solving today’s most urgent issues…The message local nonprofits need to spread, and national philanthropic groups must hear, is that our rural areas are keepers of opportunities with widespread positive potential. Let’s get to work.”

That takes the discussion back to the national level, and specifically to the foundation trade association, the Council on Foundations, that signed the 2011 memorandum of understanding with Vilsack and the USDA with great self-congratulatory fanfare. Since that time, there has been a turnover of leadership at the Council, from Steve Gunderson, a former Republican member of Congress who had represented a rural area of Wisconsin, to Vikki Spruill, who came to the Council from the Ocean Conservancy and had headed FoundationWorks and the Philanthropic Awareness Initiative, both efforts to improve foundations’ strategic communications and outreach. How might the Council on Foundations respond to the Vilsack critique?

If it were up to us, we would hope to see the following from the Council:

“Yes, Secretary Vilsack, you’re right. Despite several conferences and shiny publications, philanthropy is still selling rural America short. And beyond that, with multiple issues on foundations’ plates, rural philanthropy may well have slipped off the center of the radar screens. But we can do better and we will, because we agree with you about what rural America not only needs, but merits as support and investment from foundations. As a trade association, we cannot tell and direct our less than 2,000 members, much less the tens of thousands of foundations that are not members, about how they must use and prioritize their grantmaking. But we can be much better advocates for—and with—rural America to raise the visibility and importance of rural in the views of foundations that don’t think much of rural, but should. As a learning network, we can pledge to use our members to surface and promote the best ideas they have in providing grants to rural communities for housing, economic development, environmental protection, land conservation, renewable energy, and sustainable food production. We can raise the visibility of these grants as well as initiatives that promote regional rural philanthropy such as Colorado’s Rural Philanthropy Days which have yielded foundations making demonstrably new and larger grant commitments to rural communities. And we can invest in foundation affinity groups—rural foundation task forces or funding collaboratives—that will carry the message of the importance, relevance, and potential national societal impact of rural grantmaking. Yes, Secretary Vilsack, philanthropy’s attention to rural America hasn’t been what it should have been, not to mention what the Council hoped it would be after we signed that memorandum of understanding with the Department of Agriculture in 2011. But we pledge that going forward, the energies and commitment of the Council on Foundation will include making rural grantmaking a high priority and ensuring that it will not again slip off the radar screen of national philanthropy.”

Despite Vilsack’s statement and despite coverage in the Gazette, it doesn’t seem to be the case that the foundation community has taken note and responded.  It should.  Whatever one thinks of the Obama Administration’s rural development policies, there is little question that Tom Vilsack has been a dedicated advocate for rural America.  When he departs as a new administration comes in after 2016, a decent, caring, authentic man will have left the helm of the federal government’s rural development bureaucracy.  He deserves a better response from foundations than studied silence.—Rick Cohen