Each year, the Nonprofit Finance Fund (NFF) surveys nonprofit organizations from around the United States to get a pulse on trends, challenges, and opportunities in the sector. NFF makes millions of dollars in loans available to nonprofits, and this survey is part of its efforts to provide insights on improving how money is invested and used in the nonprofit sector.

With more than 4,500 nonprofits responding, the study provides a line of sight on everything from financial forecasts to board dynamics and service demand, providing a critical data set for nonprofits and funders. This year’s survey suggests that nonprofits will again have to do more with less. In fact, 88 percent of nonprofits surveyed expect an increase in demand for services in 2012, while 87 percent said their financial outlook won’t get any better this year.

As a corporate funder, Bank of America looks to these studies to help inform how we can enhance our continued support of nonprofits that provide critical services in communities we serve. We know it’s more than writing a check. So for the past eight years, we have focused a significant part of our philanthropic support in supporting and developing strong nonprofit leaders through the bank’s Neighborhood Builders program, which provides nonprofits with an unrestricted grant of $200,000, paired with leadership training for the executive director and a next-in-line leader.

We created this program after having conversations with community leaders and reviewing what the nonprofit sector needed most. We heard loud and clear that leadership training was an area that could help nonprofits deliver effective programs for their beneficiaries and communities. Like all funders, we want to be strategic with our giving and invest where we know we can add the most value.

As the Neighborhood Builder program developed, we found that our model of leadership training plus flexible funding is highly effective for our nonprofit partners and is helping them navigate the tough economic reality. The trainings are responsive to the needs facing the sector. One area of focus where we’ve seen success is in the increase of nonprofits who have a clear succession plan to manage through leadership transitions—this is the single biggest leadership challenge identified by nonprofits. The number of groups we worked with that had succession plans increased from 21 percent before the training to 57 percent after it.

To date, Neighborhood Builders has grown to a network of more than 1,400 nonprofit executive directors and emerging leaders, and we have learned firsthand much more about the challenges and obstacles that nonprofits face. Since the economic downturn, nonprofit leaders are taking a larger role in building healthy communities than ever before.

One example is Enlace Chicago, an education and economic development nonprofit focused on the Little Village Community of Chicago. Enlace used Neighborhood Builders funding and training to kick-start a renewed commitment to innovation and expansion. Nonprofits rarely get the opportunity to invest in building and sustaining organizational capacity and Enlace was able to leverage Neighborhood Builder funding and training to help them grow and better meet community needs. They grew from a $400,000 a year budget with 8 staff members when it received the award in 2004, to a $4.6 million organization with 38 full-time and 150 part-time staff members today.

We certainly can’t take all the credit for its growth and success, but there is real value in providing opportunities for nonprofits to have the space and training to rethink their models and strategies, and as we see with Enlace Chicago, the benefit this can ultimately have for the community is immense.

Goodwill Industries of San Francisco, a workforce development nonprofit, is another example where Neighborhood Builders training helped an organization recognize the need to revamp its program model. Goodwill used the $200,000 award to revise and improve its services. It used half of the award to hire a consultant, who helped identify additional services they could provide, and services it could either cut or modify to better deliver skill-building programs and help beneficiaries achieve self-sufficient employment. It used the rest of the grant money to implement the new program model, which expanded programs such as financial literacy education. Ultimately, Goodwill tripled the number of people it reached within one year and placed 700 people in local jobs, despite the economic downturn.

Through support of the NFF study, the Neighborhood Builders program and our philanthropic support of nonprofits working on housing, hunger, and jobs, we are aiming to equip the nonprofit sector with tools and resources it might not otherwise be able to afford. We see this as an investment in the nonprofit sector and in the communities themselves.

With the emphasis we put on nonprofits leadership, we are always interested to learn about other models and programs, and to share what we have learned along the way. What do you see as some of the most effective nonprofit leadership investments? How do others evaluate the impact of this type of funding?

Read SSIR’s “Measuring Leadership Development” article for an overview of a third-party assessment of the Neighborhood Builders program.

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