Doug Stamm's Blog

My message this month continues our promise to keep you informed about MMT’s ongoing efforts to find strategic ways to help nonprofits in Oregon and southwest Washington navigate the economic recession that has affected our area so significantly.

Holding Steady

First, in direct response to what we know to be profound needs in our communities, MMT has decided to “hold steady” and not reduce our grants budget during our current fiscal year, even though our corpus is still much lower than it was this time last year (most recently at $510 million compared with an all-time high of about $750 million in October 2007). Grantmakers of Oregon and Southwest Oregon recently reported that more than half of foundations in Oregon plan to reduce giving this year in response to their own diminishing economic fortunes.

In its recently published Smarter Grantmaking in Challenging Times: Insights for Foundation Leaders, Grantmakers for Effective Organizations outlines a number of actions grantmakers can take to provide the best support to nonprofits during these challenging economic times. MMT is holding itself accountable to the challenges set forth by this nationally acclaimed grantmaking group.

Nonprofits Sharing Resources

Last month we announced the results of our Shared Resources RFP, enabling more than 100 nonprofit organizations to reduce costs and operate more efficiently in eight projects across Oregon.

Operating Fund Awards and Findings

This month we awarded the first grants under MMT’s 2009 Operating Fund that recently invited proposals for up to $50,000 for core support from small- and mid-sized organizations that play a critical role in their communities, whose stability is seriously jeopardized due to current economic conditions, and for whom a modest cash infusion will be critical to weathering the next 12 months. We set up an internal process to provide quick, collective and thoughtful review of requests.

We received 53 requests to the Operating Fund from eligible organizations across the state, spanning human services, housing, arts, and the environment. At the June program meeting, MMT’s trustees awarded funding to nine of the applicants:

• Arts Central (Bend) – $50,000
• CASA of Lane County (Springfield) – $50,000
• Clackamas Community Land Trust (Milwaukie) – $40,000
• Columbia Arts (Hood River) – $18,000
• Deschutes County Children’s Foundation (Bend) – $49,000
• Hacienda Community Development Corporation (Portland) – $50,000
• Housecall Providers (Portland) – $50,000
• MountainStar Family Relief Nursery (Bend) – $50,000
• Portland Institute for Contemporary Art (Portland) – $50,000

Consistent with the intent of the Operating Fund program, these suggested awards include:

• Four social service organizations that have made cuts and for whom additional contraction of services would have significant impact on vulnerable children, families, and people with serious health needs in their respective communities
• Three arts organizations, two that serve as arts hubs in rural regions and the other playing a unique role in the Portland metropolitan community
• Two Portland metropolitan area housing organizations, one focusing on the Latino and Somali communities and the other serving rural Clackamas County.

The successful applicants shared these qualities:

• The organization plays a critical role in its community
• The organization’s stability is at risk
• The organization’s financial challenges have a significant economy-related component
• The organization’s leadership has taken strategic and prompt actions to address their situation
• An award of $50,000 would likely have meaningful impact on the organization’s situation over the coming year

Beyond providing direct assistance to these nine organizations, we want to offer up what we learned about the early effects of the recession on our grant applicants as a result of reviewing these requests as a group and examining specific information about organizations’ financial situations.

The stories we heard and fiscal conditions described were nearly uniformly compelling. We wish we could fund all needs. But since we can’t, we are sharing what we learned from our applicants. Not only do we hope these findings will help potential applicants in our next round of Operating Funds awards (those turned down in the first round are eligible to reapply), we hope sharing them might be useful to other nonprofits and foundations as they encounter and respond to the negative effects of the recession.

• Many nonprofits are facing difficult and painful decisions as donations decline, corporate sponsors reduce contributions or pull out entirely, foundations reduce or suspend giving, government funding is reduced, and program fees decline.
• The strongest organizations have taken meaningful steps to reduce expenses and/or made significant efforts to increase revenue to address their situations. In comparison, organizations that are slow to react run the risk of exacerbating their situations and raising concerns about their capacity to effectively manage under changing external conditions.
• While most organizations are likely not yet at risk of closing, for some, additional cuts or draws on reserves or credit will further degrade their overall financial stability and compromise their ability to meet their mission.
• Some organizations are hesitant to focus efforts on core services, wanting to evade any type of program or staffing reductions and avoiding hard choices even as their financial situations continue to deteriorate.
• Organizations experienced with earned income are generally better prepared to react to changing external conditions. Specifically, arts and housing organizations appear to have been quicker than social service organizations to contract and make hard cuts.
• Some organizations perceive a moral responsibility to serve without regard to financial constraints. This is most noticeable among human services organizations, and while understandable in some situations, it may be undermining organizations’ stability and long-term viability.
• Availability of reserve funds and philosophy for use of reserves varies widely. Many organizations have no or limited reserve funds; others appear to have funds upon which to draw, but have chosen to look for external funding before tapping their own resources. Some of the stronger organizations had reasonable reserves in place and have drawn from them over the past year; however, they are, understandably, hesitant to deplete them considering future economic uncertainty.
• Risks that were reasonable in a good economy have left some organizations – otherwise generally strong – especially vulnerable to economic shifts. Some good, solid organizations simply got caught in the downturn while in the midst of implementing thoughtful plans to expand services and/or strengthen capacity. For some of these organizations, bridge funds are needed to sustain stability until revenue sources such as home sales, developer fees, or other earned income strategies underway, can be realized.

Although we are happy to have responded quickly to find proactive new ways to help nonprofits meet current economic challenges, we are not yet content we are doing enough. We continue to look for ways to provide support and invite you to submit your ideas and suggestions here. We are listening and want to do more.

Doug
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Doug Stamm, CEO

Comments

Posted by: Ellen Johnson | June 12, 2009 01:26 PM

Are there going to be any more operating fund opportunities coming up again with MMT?

Posted by: Marie Deatherage | June 12, 2009 01:52 PM

Yes, we anticipate the next application deadline will be Oct. 15, 2009. Keep watching our website for further information!

Posted by: David Zemel | June 12, 2009 02:23 PM

Looking forward to learning more about your shared resources /facilities initiative. It's a great idea and (I think) very successful where tried before (See Donald W. Reynolds Fdn.). Congrats.

Posted by: William P. Russell | June 12, 2009 03:35 PM

Thank you for your words of encouragement. Have you heard how slow the IRS has been answering requests for 501(c)3) determinations. We hear that if an applicant has a time sensitive offer of funding, they can request and get expedited consideration. We are working to convert a Primary Care Doctor's practice into a Rural Health Clinic and are stymied in our requests by lack of tax exempt status. Is there any chance that MMT might make such an offer? Since non 501's can not get started with the on-line process, how would a non-profit corporation make such a request?