Possibilities & Assumptions: What's Next After a Small Grant?

Do all paths lead to a non-profit? Maybe the question that I'm really asking is if in our heart of hearts, we funders believe that the way to effectiveness is through the non-profit door?

That question surfaced for me in a variety of ways in a variety of settings over the past several weeks.

It was there in discussions about the theory of change that we are developing for Grassroots Grantmakers: are we assuming that the ultimate objective of grassroots grantmaking is to move groups from "emerging" to a successful non-profit organization?

It was there in a presentation by a colleague who manages a grassroots grantmaking program. When asked about indicators of success, this colleague listed the number of grassroots groups that had become fully established non-profit organizations after they began receiving grants.

It was there in a conversation I had with someone about "technical assistance" to grassroots groups receiving grants - with "technical assistance" framed in terms of help learning how to operate as a non-profit organization.

It was there in an article that we just posted on the Grassroots Grantmakers website, sharing insights from Doug Woodward and the Battle Creek Community Foundation's Neighborhood Venture Investment Committee about the next step for groups that want to do work that requires a more substantial structure than a group of neighbors can provide.

I will say out front that I have a definite bias on this question - a bias that I'm sure has come across in previous postings on this blog. I've talked about how some funders view their role in deciding who gets to be a 501(c)(3) and who doesn't. And I've politely fussed about funders who wear mono focal lens glasses that allow them to see nonprofits as the primary (only) creators of healthy, resilient communities, leaving other powerful or even essential partners in change standing in the wings.

I believe that the explosion in the numbers of non-profit organizations that we have seen over the past several decades has been fueled by the position that the funding community has taken that to be "legit", you have to be a non-profit. And I also believe that the proliferation of non-profits has sent a signal to good-intentioned people everywhere that we as people can't or shouldn't act in powerful ways - that non-profits have the know-how and responsibility to solve problems and create change. I believe that non-profits have essentially moved into the space that active citizens once occupied - pushing people, as active citizens, to the sidelines as recipients, clients, consumers, participants, complainers, and advisers.

Now that I've been more out front about that bias, I want to commend my colleagues at the Battle Creek Community Foundation for the exploration they have recently launched with the creation of the Neighborhood Venture Investment Program - recognizing that the small grants experience can ignite a social entrepreneurship spark in some people and groups and that this spark deserves and requires a special type of nurturing if it is to grow. Doug Woodard, a member of the team working on this idea in Battle Creek, is wondering about suitable structures from which social entrepreneurs can work - in particular the non-profit structure. And this is an important question. The Harwood Institute for Public Innovation, in their recent publication, The Organization First Approach, talked about the inclination of institutions to turn inward over time - a turning inward that is fueled by an organization's need to take care of itself if it is to endure. Most if not all of the institutions and larger non-profits that we know in our community began as a spark - an idea that a small group of people found compelling enough to move into action. And according to Harwood's research, the natural tendency is for these same groups to become less connected to their community over time unless there is high value and specific attention placed on staying connected. I've seen this - haven't you?

I think many of us -especially in the funding community - have forgotten that much has also been accomplished through other structures. There are those more fluid, ad hoc structures that don't easily fit into one box or another. And, of course, for-profit structures that serve a social mission while generating a profit.

So the question for me is how can we honor and support that social entrepreneurship spark, and encourage people with good hearts and an orientation toward action, without either explicitly or implicitly pointing them to the non-profit path as the only path? And how can we not send the signal - either intentionally or unintentionally - that people who want to continue doing what they are doing in a way that is manageable for them but may seem small-scale to us, are not contributing in a way that has value? That it's okay if you want to continue to have your neighborhood's summer paint program and don't want to form a community development corporation that is equipped to do more significant home rehab? That it's okay if you want to continue with the two week program for kids in your neighborhood every summer without growing the program to be a youth-serving non-profit? That it's really more than just okay - that by doing the paint program or the two week summer program, you are contributing to community viability and resilience in a way that cannot be replaced by all the non-profit service programs in the world.

When we measure the success of our grassroots grantmaking programs by the number of non-profits that have been created or offer training that is designed for non-profit staff members, I believe that we are making an explicit value statement - that we value non-profits more than we value active citizens and the groups that they create to get things done. We are saying that grassroots groups are all essentially baby non-profits and that the goal is to help all of the babies grow up to be full-functioning non-profit adults. And those that don't......we think of these groups as unrealized potential, the victims of arrested development.

What I'm learning from my friends at the Battle Creek Community Foundation is how a funder can support and affirm the contributions of active citizens and resident-led associations, and at the same time acknowledge that, for some (not all) people, the small grants experience ignites a spark that may take them down a new path. I love the way that Doug Woodward and others on the Neighborhood Investment Venture Program committee are thinking - that there may be a variety of new paths and not the "one-size-fits-all" path that we now know as "non-profit". I also love that by creating this new committee, there remains a welcoming and appreciative place for others who are making space in their lives to do what they can do, together with their neighbors.

I think that the question that the Battle Creek Community Foundation is exploring with the Neighborhood Venture Investment Program is worthwhile, and hope others will join in with their own perspectives on the question. What can funders do to support those social entrepreneurs who have a drive and desire to do more can practically be supported by a small grants program? What are the options besides heading down the non-profit path? And if the non-profit path is indeed the best option, what are we learning about what it takes to stay connected and keep the spark alive? Post a comment to join the discussion.

Do All Small Grants = Grassroots Grantmaking?

I'm home again from about six weeks on the road, taking stock of dozens of opportunities to introduce Grassroots Grantmakers and grassroots grantmaking to new friends and to visit colleagues who are engaged in grassroots grantmaking.

Over this six weeks, I've talked with a lot of people about small grants and grassroots grantmaking. As has been my experience in the past, I've been delighted by the amazing creativity and insightfulness of people who are using small grants as a compelling invitation to people who have the passion, compassion, and desire to move from the sidelines into the action - connecting with neighbors to make a difference on their block or in their neighborhood. I have also been surprised by the different "takes" I've heard on small grants.

Here's my take on the difference between small grants that are powerful tools for grassroots grantmaking and small grants that are about something else.

In the grassroots grantmaking world:

• Small grants are not seed money. They are scale-appropriate investments that build civic capacity and community resilience by activating the passion, dreams, skills, talents, and networks of community residents.
• Small grants are not for non-profit organizations. They are for people who are connecting with their neighbors to do something that they feel has value in their own community. Not people working on behalf of other people, but people who are working together on behalf of their own community.
• Small grants are not about service delivery. They are about self-help and community connectedness rather than the help that comes from professionals and experts.
• Small grants are not about doing more with less. They are about helping people discover their own power and the power of community, with the goal of bringing more resources to play - the resources and resourcefulness of community residents.
• Small grants are not an end. They are a means to an end, with the means - the process of doing - at least as important as the end product of the doing.

Have I missed something? Or do you have a different take on the difference between some small grants programs and those that we associate with grassroots grantmaking. Post a comment to join the discussion!

Foreclosures - Is There a Silver Lining?

My road trip last week included a day in Minneapolis, attending a day-long symposium on neighborhood response to the foreclosure crisis sponsored by the the National Neighborhood Indicators Partnership and University of Minnesota's Center for Urban and Regional Affairs.

I was hoping to hear that we're turning the corner. Not so. Instead Alan Mallach, Director of the National Housing Institute in Montclair, New Jersey, said that we're no where near the end. He mentioned that in March, there were 250 foreclosures a day. Yikes.

He also talked about the next wave of the crisis....what happens when housing prices go below a certain level. Investors spot an opportunity and voila! Whole neighborhoods that had been home-ownership neighborhoods are now rental neighborhoods. Phyllis Betts, Director of the Center for Community Building and Neighborhood Action and InfoWorks Memphis in the School of Urban Affairs and Public Policy at the University of Memphis confirmed this finding, saying that she is seeing signs that some Memphis neighborhoods will be neighborhoods of renters rather than home owners in the near future.

Mallach also said that once foreclosures destabilize a neighborhood, that destabilization cannot easily be undone by dealing with the foreclosure issue alone. He said that a more comprehensive approach will be needed to tip the scales from destabilizing to stabilizing events. Looking at housing transactions alone won't be enough.

Later in the day, someone remarked that this is not the first time - or will it be the last time - that lending institutions have taken advantage of opportunities to strip wealth out of neighborhoods. That neither government nor foundation investments will endure long enough to fix what just happened. That it is the residents who will be there long-term, either by choice or because they have no other choice.

I've thought about what happens in the four hours after the tornado, the hurricane, the earthquake, or the flood - those four hours before the rescue efforts are fully mobilized to bring relief to people who are first experiencing the community devastation that a natural disaster can bring. Its people helping people, energizing the spider web of relationships that they have with each other in their community and personal sense of "I can do something" to provide the first wave of help. And this is the other end of that - the longer-term, mopping up and rebuilding that is required after a man-made disaster like the foreclosure crisis.

This is what I experienced in my Memphis neighborhood, red lined and tormented for twenty years because of someone had drawn the route for an interstate highway right through the middle of the neighborhood - and then had displaced 200 families and demolished their homes before construction was stopped. We lived day to day with the destabilizing impact of that man-made disaster. We also learned, after waiting for years to be rescued, that it was up to us to tilt the scales back the other way to stability, just as Mallach described. And we did it. Today there are 200 new homes on those once-vacant lots, 200 new families who are now part of the fabric of that neighborhood. The tables turned for us when we realized it was up to us, and when we began to do what we could do and began to believe that we were up to the task.

For funders who are engaged in grassroots grantmaking - who are thinking big about small grants - this is the moment for you to think as creatively as possible about what you can do to help residents in neighborhoods that are experiencing the man-made disaster called the foreclosure crisis begin to believe that they can make a difference - because they can.

Tom O'Brien with Neighborhood Connections - The Cleveland Foundation's grassroots grantmaking program - hosted a forum for neighborhood residents as a way to raise awareness, provide information and stimulate discussion about what neighborhood residents can do. The idea for the forum grew out of conversations with neighborhood leaders about what they were doing - and learning that in some neighborhoods, people were already on board. A natural next step was providing the opportunity for people to get together to share what they are doing and to talk about what more they could do.

The silver lining in this foreclosure storm may be the rediscovery once again that we as people - people living in neighborhoods - are an essential part of any community change or recovery scenario. It's not just nice to have people involved or noble for people to volunteer - it's essential. The real silver lining will be the stronger civic capacity that will inevitably result from people working together on this crisis.

What are you doing to use that magical power you have as a funder to up the chances that neighborhoods in your community will come out of this foreclosure crisis in one piece? What can you do to support neighborhood residents do what they can do to tip the scales from destabilizing to stabilizing events? What are you doing to tell the story of the essential role that active citizens play in creating communities that have the resilience they need to weather this storm and the next?

Let's Be Clear - It's a Choice

I was in Atlanta last week, attending the Council on Foundation's annual conference. Lots of interesting conversations. But I attended one session -"Expand Your Effectiveness with Creative and Legal Grantmaking" - looking for help with a very specific question that I hear rather often:

How can I engage in grassroots grantmaking when I can't legally provide grants to organizations that have not been recognized as 501(c)(3)'s by the IRS?

This session was led by led by Andrew Schulz, Deputy Counsel for the Council on Foundations. My assumption was that Andrew, an attorney, was going to present a list of "thou shalt nots". I was prepared to live with the idea that policy associated with philanthropy was going to continue to contribute to the proliferation of 501(c)(3)s that we've seen over the past fifty years - the same fifty years that organized philanthropy has seen tremendous growth in depth and breadth. So prepared, in fact, that I had already begun to write about the unintended consequences of well-intentioned policy. About how the expansion of the non-profit service-providing sector, fueled by foundation grants, has "clientized" so many of our communities.

I was surprised by Andrew's message. It was "start with what you want to do" vs. what you only think you can do. And, that much of the "thou shalt nots" are part of philanthropic mythology.

I already knew from years working for a community foundation that community foundations, as 501(c)(3)'s themselves, can legally make grants to non-501(c)(3)s - but that many community foundations opt to behave as private foundations, and establish their own policies that restrict their grantmaking to 501(c)(3)s.

I was curious about the world of private foundations. And was surprised when Andrew said that private foundations also had a lot more leeway than is commonly believed. This is where he talked about myths associated with private foundation grantmaking. If you read the tax code just so far, it appears that a private foundation can't work outside of the 501(c)(3) realm. But if you read further, you find that they have a lot more flexibility.

It all boils down to what you want to do and what you are willing to do to do it. If you want to make grants that are as straight-forward as possible, have no possibility of raising any questions anywhere, and require as little staff time as possible, stay with grants to established 501(c)(3)s. But if you want to engage the community in a fuller and deeper way than is possible through a 501(c)(3) monofocal lens, you can legally make grants to groups that do not operate as 501(c)(3)s. Might be a little more trouble, might take more of a relationship, but you can do it.

So let's be clear when talking about providing grants to the types of resident-led groups that are central to the grassroots grantmaking picture. Whether or not you want to go that way is a choice. And, from my perspective, if you are a place-based funder and want to be creative AND legal, this is right choice.

A footnote: I asked Andrew what resource he would recommend to foundations who wanted to grant outside of the 501(c)(3) domain. He recommended Fiscal Sponsorship: Six Ways to Do It Right by Gregory Colvin.

Are We Asking the Wrong Question?

I've been reporting from the road these past few weeks. I'm home now, thinking about a thread that's been there in a number of conversations among funders. There's some irony to this for me - makes me wonder about the monofocal glasses that many funders may be wearing. Here's the essence:

Six months ago: There are too many nonprofits.

Today: What can we do to make sure that no nonprofits go out of business in these economic times?

Missing Question: How can we best use our resources to increase the likelihood that change can occur and communities and people have the resilience to deal with the next set of challenges that come their way?

Don't get me wrong. I appreciate the work of nonprofit organizations. I'm part of a nonprofit organization. I get how challenging these economic times are for nonprofits.

The last time I heard the "what can we do to keep nonprofits from going under" conversation was the same day that GM announced that they were eliminating Pontiac from their product line and laying off 22,000 more people. Do you see the irony?

I spend my time thinking about funding that is not limited by the belief that non-profit service delivery is the vehicle - the only vehicle or even the most reliable vehicle - to take us where we want to go in our communities. I've spent a lot of time in distressed neighborhoods. And distressed neighborhoods are always full of nonprofits. It almost seems like the more there are, the more entrenched the distress. Chicken and egg? No, probably not. Nonprofits that provide services flock to distressed communities because that is where the need for services is most obvious - and where the case can be made for funding. These are needed services, good services.

But not the vehicle tor change and resilience. I believe that change comes from many places and in many ways, but that an essential ingredient to change that is sustainable has more to do with the people in a neighborhood than the services (aka nonprofits) in a neighborhood. And that maybe it's more about resilience than change. Let's address the problem now, but then build the strength and connectedness that equips a neighborhood to deal with the next one, whatever it is and whenever it comes along. That's why I'm so passionate about grassroots grantmaking and the funders who are wearing multi-focal lenses that allow them to look beyond investing in nonprofits to see opportunities for strategic investments that activate and strengthen residents and residents-led groups - the people and groups that are there and will be there, funding or no funding, doing what they do because of their own self-interest and their relationships with their neighbors.

Aren't these challenging economic times offering us the perfect opportunity to revisit some basic assumptions about what types of investments lead to change and resilience, and to readjust our funding portfolio accordingly?