In late 2015, two formidable leaders in our sector, Art Taylor, president and CEO of BBB Wise Giving Alliance, and Jacob Harold, then president and CEO of GuideStar and now executive vice president of Candid, came to Independent Sector (IS) to talk about reviving their Overhead Myth Campaign.
Art and Jacob, among others, had spent two years appealing to funders to stop using the percentage of nonprofit expenses that go to administrative and fundraising costs — so-called overhead — as a proxy for a charitable organization’s performance and, thus, a factor in determining which charities to fund. But they had grown frustrated by lack of progress. They were anxious to understand whether IS, the only national organization representing both funders and nonprofits, would join an effort to revive the campaign.
IS committed to hosting a series of listening sessions to assess how sector leaders viewed the path forward. After eight convenings with national, state, and local organizations, plus funders, infrastructure organizations, and sector consultants, we gleaned three key takeaways:
- Sector leaders increasingly recognize that the formula for funding nonprofits shortchanges them, which threatens their resilience and harms the communities they serve. That recognition has motivated serious exploration of innovative solutions, including the work of five foundation presidents who have collaborated to recommend new policies and practices to end chronic underfunding.
- Many nonprofit leaders don’t understand or know how to talk about their true costs, especially those associated with overhead. Instead, they recycle old tropes — like “98 cents of every dollar I raise goes to direct service delivery” — that resonate with stakeholders. Nonprofit leaders must have better ways to understand and communicate the total costs required to deliver on their missions.
- Better funding formulas and messages will work only if they nest in a bigger story about the reach, the roots, and the results of the sector. All convening participants agreed that the sector lacks a compelling story about its indispensable role in American life, something the for-profit small-business community has carefully honed. Absent that bigger value-creation story, efforts to change the discussion around fully funding costs become harder.
- Five Foundations Address The “Starvation Cycle”
- The Price Of Real Change
- How Foundations And Nonprofits Can End The “Starvation Cycle”
- How One Nonprofit Prepared For Tough Conversations With Funders
- Why Funders Should Pay for the True Costs of Nonprofits’ Work — Not Just the Direct Project Expenses
- Five Nonprofit Survival Skills for Managing Low-Overhead Funding
- Learning Strategic Financial Management From the School of Hard Knocks
- All Content: Ending The Nonprofit Starvation Cycle
Thus, IS took on the task of creating a sector narrative that would (1) build a growing sense of agency and political clout for the social sector; (2) increase public trust in sector institutions and the results they deliver; and (3) provide sector leaders new ways to talk about the resources they need to deliver those results. Such a narrative could lead to a national branding campaign to lift the visibility of our sector and advance these specific outcomes. We embraced this project, fully convinced of its importance and equally uncertain where it would lead.
Two years on, we have tested messages and assumptions with more than 1,000 sector leaders around the nation, created a national design team to guide us, and engaged Ogilvy and Springboard Partners as communications experts. Our testing has led to a robust messaging framework to inform a national branding campaign and reinforce the recommendations of the foundation presidents’ collaborative.
The framework centers on building a story. As we know, the best stories, from the Wizard of Oz to Star Wars, follow a pattern. They begin with a “Situation” that sets context. There is almost always some “Obstacle” that must be overcome for the story to progress and some plan of “Action” that allows that obstacle to be surmounted. Finally, there is a “Result” that, we hope, brings the audience a satisfying conclusion. We used a similar “SOAR” model to create integrated messaging components that form the bigger story we aim to tell. We tested these messages across the country and got strong, positive feedback. The intent of the framework below is to inform the shaping of messages for a larger branding campaign, although nonprofit leaders tell us these messages could be helpful now to shape the language of annual reports, websites, advocacy materials, and funding proposals. We welcome their use in that way.
Our progress on the narrative initiative is slow, but we are pressing ahead. Like the five-funder collaborative on cost recovery, the sector narrative is ambitious, adaptive-change work. In the case of the funder collaborative, there are signs that their investments are paying off. We see real commitments to change nonprofit funding policies and practices. We also think it’s wise to remember what we heard at the beginning of this journey: “Better funding formulas will work only if they nest in a bigger story about the reach, the roots, and the results of the sector.” That’s the campaign we need now — and it will take similar leadership and investment to bring it to life.
We are grateful to the Chan-Zuckerberg Initiative and the F.B. Heron Foundation for their support of our work and to all those who have helped to move us forward on this issue. We are all in this together. When the nonprofit sector thrives, America thrives.
Jeffrey Moore currently serves as chief strategy officer at Independent Sector, supporting the organization’s critical strategic-visioning efforts as it guides the sector to meet the future needs of democratic society.
Messaging Framework for Nonprofit Cost Recovery
A NEW POSITIONING STATEMENT FOR THE SECTOR
This is the point you make in all your messaging.
America’s nonprofits bring people together as a powerful force for good, putting what is best for our communities ahead of profit and politics.
Here is how this framework can address the issue of paying for true costs.
The world is changing, and those changes are prompting us to ask: How can we bring our communities together to make things better? Everywhere you look across America, there are new sets of opportunities and new sets of challenges.
Delivering results to our communities is not a small task. It requires a sustained commitment to focus on what matters. It takes organizations with solutions and with an understanding of the resources they need to deliver those solutions.
Making the difference that matters most to a community means nonprofits need resources. They need funders who cover their true costs. They need passionate people. And they need a voice on important policy issues.
Our sector was built for good. It does the important work of bringing people together to help move all of us, and our nation, forward. When the nonprofit sector thrives, America thrives.