What Does the Future Hold for Nonprofit Infrastructure Organizations?

If you work at a nonprofit, you really need to read this report by the Nonprofit Quarterly. The Nonprofit Quarterly’s Study on (U.S.) Nonprofit and Philanthropic Infrastructure maps and examines the strengths and weaknesses of the network that supports nonprofits and philanthropy in the U.S.  The report is even more relevant now considering how the current recession is affecting nonprofits. In a time when nonprofits most need timely information, advice, training, convenings, and sector advocates, where do they turn?

This research is especially important for you to read and digest if you actually work at a nonprofit infrastructure organization. As a broad definition, nonprofit infrastructure refers to those organizations (that usually have a membership component) who provide capacity building, technical assistance, consulting, workshops, training, conferences, advocacy and research for the nonprofit and philanthropic sector. Most, if not all of them are nonprofit organizations themselves. A few examples: Independent Sector, Council of Nonprofits, Alliance for Nonprofit Management, Nonprofit Technology Network (NTEN), Guidestar, Council on Foundations, Fieldstone Alliance, Association of Fundraising Professionals, Hispanics in Philanthropy…as well as all of the state nonprofit associations like Minnesota Council of Nonprofits. Even the Chronicle of Philanthropy, “the newspaper of the nonprofit world” now falls under this umbrella because they have recently begun providing webinar trainings for nonprofits.
The Nonprofit Quarterly’s research findings hold many implications for nonprofit infrastructure organizations and the future of nonprofit capacity building. For those of you that don’t have the time to read the entire 72-page study, here is the most important finding of the research that we all need to be thinking about:

The major finding of this study is that the current financing system for nonprofit infrastructure-including foundation funding-favors organizations that support and represent the larger nonprofits of the sector (which make up a small fraction of nonprofits overall) while networks and infrastructure organizations that serve tens of thousands of small to midsize nonprofits have been consistently under-funded.

Which raises the million dollar question: in an economic downturn where we are all struggling, who is supporting the small-midsized nonprofits? Are nonprofit infrastructure organizations really helping those who need it the most?

According to the Nonprofit Quarterly’s recent research, the answer is a resounding NO. Most nonprofit infrastructure organizations are set up (through their financial models) only to help those who can afford their services. Their revenue models determine what kinds of programs they can offer to nonprofits. As the report points out:

For research, policy development, and advocacy programs, foundation support is the most important source of funding; for training, conferences, communications, and member services, earned income is the primary source of financial support.

This means that if a nonprofit membership association or other infrastructure organization receives most of its income from conferences, etc. they must be sure to price the offerings such that they recoup their costs as well as cover overhead. For instance, if you’re the Maine Association of Nonprofits and you receive “more than 80 percent from earned income,” membership dues and conference/event registration fees become pretty important. Same goes for Independent Sector, which receives 70% of its revenue from earned income.

This revenue generation dilemma has always been a thorn in the side of most nonprofit membership organizations, including ones I have worked for or consulted with in the past seven years. If earned income is becoming increasingly more important as foundation grants decrease or dry up, how do organizations keep costs low for conferences and trainings? On the one hand, we need to make money, but on the other hand our mission is to help other nonprofits. In this economic environment, is it possible to do both?

Yesterday on Twitter and Facebook, I started what turned out to be a provocative discussion thread asking what folks thought about the price of the Chronicle of Philanthropy’s new webinars on mergers and fundraising. While the newspaper offers consistently useful, live discussions about nonprofit issues as well as their new podcasts for free, to participate in one of their webinars would set you back $95-$165. Regarding the webinars, web editor Peter Panepento responded with this:

It’s not for everyone & we recognize that. We also have the weekly live discussions, which are free. We see our webinars as a low-cost alternative to attending a conference or off-site. We pull together some big-name experts who deliver some incredible information. We encourage participants to make these sessions into office-wide events.

No, in this economy, expensive training is not for everyone. But many nonprofit infrastructure groups are now offering more services for free, as well as discounts or scholarships to their conferences. I’ve often also lamented the high cost of Boardsource tranings, which can cost up to $600, but they are beginning to offer lower-cost options. Same thing with Independent Sector’s annual conference, which is, in my opinion, a valuable experience. However, it could cost up to $1,000 (for non-members) to enjoy that experience, though their new scholarship program for next generation leaders offers some relief. I think that any disapproval of these high training costs are due to the fact that we are assuming those types of trainings are geared toward ALL nonprofits, even the itty bitty ones. We now know that to be an incorrect assumption. According to the Nonprofit Quarterly report:

There has been a relative lack of attention to building an appropriate overall financing system for the infrastructure. A skewed reliance on foundation funding and the lack of capacity (and resources) to pursue more diversified funding streams, including government money and capital funding, has not only led to dwindling resources for infrastructure groups but also, led them to create business models that pull them away from their missions and/or serve only those who “can pay the fee.

Though the current financial models seem to be “working” for some nonprofit infrastructure organizations, they are certainly not working to address the overall capacity building needs for the majority of the nonprofit sector. To be true to the core mission of capacity building, which is essentially to help nonprofits operate better (including in this new economy), membership organizations, technical assistance groups and others must recommit to examining the way they do business. As the report states:

To respond to this challenging environment in a rapid and well informed way, nonprofits of all sizes and shapes, but especially, the majority which are small or mid-sized, need the connective tissue of infrastructure to, among other things:

• restructure their practices, services, and organizations to fit a resource-scarce environment;
• identify and pursue available resources;
• track important trends in government and communities;
• identify potentially useful innovations in practice, financing, and organizational structure occurring elsewhere;
• engage in collective policy development and advocacy.

So what does the future hold for nonprofit capacity building? Will we start catering more to the larger organizations who can pay expensive training fees or will we begin to think creatively about how to meet the need of smaller groups? What do you think nonprofit infrastructure groups should be doing right now?

Rosetta Thurman is an emerging nonprofit leader of color working and living in the Washington, D.C. area.  She holds a Master’s degree in Nonprofit Management and blogs about nonprofit leadership and management issues at Perspectives From the Pipeline.

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