Big change is coming to the local nonprofit sector, and like most change it won’t be easy, writes Business Report Editor Stephanie Riegel in her latest column.
“In the next few weeks, dozens of area nonprofit organizations will find out if they will continue to receive funding from the Capital Area United Way, which has been the lifeblood of many nonprofits, particularly some of the smaller ones,” Riegel writes. “CAUW has reorganized the way it allocates funding to its so-called partner agencies, and under the new system some of the old partners will be left out in the cold.”
Riegel adds that CAUW has made this change is a good thing in the long run.
“The agency itself, like the organizations it funds, needs to become more strategic, efficient and effective,” she writes. “It has to rebuild trust among the donor community, which is aware of the high-profile scandals and high overhead rates that have tarnished United Way’s reputation at the national level in recent years.”
Riegel says CAUW has to better demonstrate to the donor community, through metrics and data, that the programs and organizations it funds are making a real difference. There are too many other places for those donors to spend their philanthropic dollars, she writes.
“Still, the short term will be painful. Some local nonprofit organizations receive as much as 50% of their revenue from CAUW. They don’t know how they’ll make up the difference if those funds go away,” she writes.
The change at CAUW has been years in the making, and for months dozens of volunteers have spent countless hours evaluating each nonprofit organization that applied for funding, Riegel says.
“It’s a far different system than the old one, under which CAUW basically functioned as a clearinghouse, raising money for its partner organizations then doling out funds to the same ones, year after year,” she writes.
According to Riegel, CAUW Chairman Ralph Bender recently likened the old system to being in a private club: It was very hard to get in and, unless you did something wrong, it was hard to get kicked out.
She notes the new system is about accountability and is based on an impact model, which, as its name implies, rewards those that deliver the most bang for the buck. The CAUW opened the funding process this year to any nonprofit agency service area that provides human services, including nontraditional entities like school districts and parish governments.
“It evaluated them all on a much tougher, standardized basis; the agencies it funds will be required to file quarterly reports using a new detailed series of standardized metrics,” she writes. “Now that the process is open, competition is fierce. CAUW funded 49 partner organizations in 2015. This year, 75 hopefuls applied.”
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