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Nonprofit innovation focus of new fund

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Laura Meyer

Laura Meyer

Todd Cohen

CHARLOTTE, N.C. — Local affiliates of Habitat for Humanity in Mecklenburg County and possibly surrounding counties are researching the possibility of sharing the delivery of mortgage servicing, pre-construction services, advertising, public relations and other functions.

The Charlotte Rescue Mission and United Family Services are building new facilities for women on the same site and looking for ways to lower their expenses by working together to address common needs in developing the site and the two facilities.

And an initiative known as Project Hope has brought together four agencies to help people living in long-term poverty find affordable housing and build financial stability.

Those efforts represent what community leaders believe can become a broader reengineering of the region’s nonprofit sector, and they hope to speed that process by targeting strategic investments in nonprofit innovation and collaboration.

Seeded with a $1 million challenge grant from the Leon and Sandra Levine Foundation that will kick in with local leaders raise another $4 million, the new Community Catalyst Program will invest in nonprofits that aim to find ways of working together to create efficiencies and better address local needs.

“The point is not to create a series of isolated mergers,” says Laura Meyer, executive vice president of Foundation for the Carolinas. “The point is to build connections that will create ‘a-ha’ moments for the nonprofit community to reinvent how business is done.”

Working in collaboration with United Way of Central Carolinas and the Arts & Science Council, the foundation will provide technical and administrative support for the effort, and also is waiving its administrative fee for managing the fund.

A 17-member committee chaired by Cathy Bessant, president of global corporate banking for Bank of America Merrill Lynch, will raise money to meet the challenge grant from the Levine Foundation.

The Spangler family and C.D. Spangler Foundation already have made a $250,000 gift to help meet the match, while the Charlotte Mecklenburg Community Foundation affiliate of Foundation For The Carolinas has given $500,000.

The move for greater collaboration and innovation grew out of ongoing talks among leaders in the local charitable community looking for ways to address the impact of the recession on nonprofits, which have seen a spike in demand for services and a decline in contributions.

To better track that impact and help identify possible strategies to better meet priority needs, Foundation for the Carolinas earlier this year asked The Bridgespan Group, a Boston-based nonprofit consulting firm, to study the local nonprofit community.

Bridgespan found that among roughly 4,000 nonprofits in the region, total revenue for the 769 largest organizations, which do not include hospitals or large colleges and universities, totals over $1 billion.

In the fiscal year that began July 1, 2009, that revenue is expected to fall by as much as $180 million because of reductions in corporate, private and government funding, as well as declines in returns on investment.

The full brunt of the downturn is expected to take effect in the current fiscal year because, when the recession began a year ago, much of the funding for the fiscal year that began July 1, 2009, already had been committed.

Bridgespan also identified but did not rank priority nonprofit subsectors, including after-school and youth development; arts, culture and humanities; health care, excluding hospitals; housing and shelters; human and social services; and workforce development.

Overall, Bridgespan found 40 percent of the largest nonprofits in the region provide health and human services and account for 60 percent of the largest nonprofits’ overall revenue.

And based on significant investment by local foundations, partners in the Community Catalyst Program also identified social capital and land trusts as priority subsectors.

Brian Collier, senior vice president for community philanthropy at Foundation for the Carolinas, says the new fund aims to make investments designed to help nonprofits become more effective and efficient through collaboration, coalitions and mergers, and to advance innovation in the sector overall.

A big focus of investments the new fund will make will be “educating nonprofits about the value of and how to go about collaborating and innovating,” Collier says.

Meyer says a key goal of that investment will be to “drive real results in support of long-term sustainability.”

Consider Project Hope. Its creation initially spearheaded by the Homeless Services Network, a group of over 20 agencies working to end homelessness and close the local gap in affordable housing, the effort received federal stimulus dollars through the city of Charlotte and now represents a partnership of Crisis Assistance Ministry, Workforce Initiative for Supportive Housing, Goodwill Industries of the Southern Piedmont, and the Mecklenburg County Department of Social Services.

Housed at Crisis Assistance Ministry, which carved out existing office space it provides free along with back-office services, Project Hope draws on its partner agencies’ respective core services to better serve clients.

While the collaborative effort can result in economies of scale, its underlying value proposition is “leveraging organizations’ specific expertise to improve customer service,” says Carol Hardison, executive director of Crisis Assistance.

Project Hope clients get financial-management support for rent and utility assistance from Crisis Assistance, for example, and social-worker support from the Department of Social Services.

“Sometimes people make a mistake and try to grow an existing organization to add on these other functions that are not their core mission,” Hardison says. “We are going and finding organizations whose core mission meets the needs of the customer.”

Project Hope also pairs clients with thousands of community volunteers from dozens of religious congregations who receive training and are developing long-term supportive relationships with the clients as they work toward financial stability.

Throughout 2009 and 2010, the catalyst project will provide opportunities for local nonprofits in the priority subsectors to meet with specialists and technicians on such topics as legal, personnel and technology issues.

Human-services agencies that work with the Department of Social Services, for example, might receive training in ways to share data to avoid the need for clients that work with multiple agencies to complete separate forms requiring the same information, Collier says.

The fund will make grants to help nonprofits determine whether capacity-building project are feasible, plan new projects and put new or already-planned projects into effect.

Collier says the effort also aims to help build the capacity of local consultants and professionals who provide services to nonprofits to better understand the opportunities and strategies for greater collaboration and innovation among nonprofits.

The project also should spur more partnerships among funders and inform the way they work.

“We are asking all of the funders to come to the table to discuss issues within the nonprofit sector, rather than responding on an individual basis,” Collier says. “Any of the major funders could undo this effort if we didn’t work together.”

Meyer says that while it “will not come close to filling the gap” will not created by the reduction in funding for nonprofits, the new fund aims to spur new thinking and strategies for collaboration and innovation.

By bringing people together, sharing information, providing training, and investing in promising ideas, she says, the effort will “unleash a new mindset.”

Hardison of Crisis Assistance says the catalyst initiative is giving individual organizations and the local nonprofit sector overall the “opportunity to look at our service-delivery model.”

The new fund, she says, “is allowing nonprofits to move from the mode of immediacy, of raising funds to serve the mission, to dreaming about long-term solutions to the problems that we exist to solve and the people we exist to serve.”

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