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Rex Endowment invests in nonprofit capacity

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Kevin Cain

Kevin Cain

Ret Boney

RALEIGH, N.C. — The John Rex Endowment in July awarded $108,500 in grants to help four local nonprofits improve their internal operations so they can better serve Wake County children and youth.

For Haven House Services, which received a $37,000 grant, that means the Raleigh-based nonprofit now can design and implement evaluation systems that will help track outcomes of their efforts.

And for the group, which helps struggling young people in Wake County develop positive relationships with their families and succeed in school, evaluation is about more than counting the number of people served, says Michelle Zechmann, executive director of Haven House.

“We want to be able to show that we’re changing lives,” she says of the 3,000 youth her organization serves annually, who typically are from poor families, are at-risk for being involved in gangs or crime, or struggle behaviorally or developmentally. “Not just getting rid of problems, but showing how we are really preparing youth for the future.”

Rex’S latest round of grants brings to $650,000 the amount endowment has invested in its Capacity Building Initiative since it was launched in late 2009, just as the recession’s full impact was being felt by local nonprofits and the people they serve.

“Our commitment to this was an outgrowth of the recession,” says Kevin Cain, president and CEO of the endowment. “Nonprofits have to live in a different environment now.”

The shift into capacity-building grants, which are awarded three times a year, coincided with a withdrawal from project-based grants, which focused on only one effort and are difficult to sustain over time.

Capacity-building, on the other hand, is an investment that can strengthen a nonprofit infrastructure for the long-term, and the more capacity-building an organization does, the more agile and receptive to change it becomes, says Cain.

“Agencies get very good at this over time,” he says. “It’s not a specific event; it’s a way of doing business. It can take a while to make these changes, but you get positive reinforcements.”

Haven House, which just received its third capacity grant, is seeing those positive signs.

The first two grants, both of which focused on strengthening the nonprofit’s board and fundraising efforts, have transformed the organization, says Zechmann.

“We have many of the same board members, and new ones, but now all understand their roles and we’ve pulled in a lot of community members to fill in areas of expertise like marketing and fundraising,” she says. “Our focus is to make this self-sustaining.”

The endowment itself suffered because of the recession, watching its assets fall from a high of about $85 million to a low of about $55 million.

In response, Rex curbed its grantmaking, froze salaries and cut back on administrative expenses.

And in lieu of its previous annual celebration event, the endowment provided grants of $2,000 to $2,500 to active grantees for staff education, and launched the Capacity Building Initiative.

Assets have recovered somewhat and now stand at about $75 million, and overall grantmaking is on track to hit $3.5 million this year, just shy of its pre-recession total of $3.7 million.

The majority of those grants are awarded in the areas of positive youth development, physical health of children and youth, and accessibility to health care for young people.

And while the endowment’s capacity-building effort was born of the recession, it likely will continue and become a key part of the endowment’s core funding strategy.

Based on an outside assessment of the effort last year, the endowment is tweaking its approach.

It has increased to $10,000 from $5,000 the cap on grants for planning and assessment, which typically readies a nonprofit to launch and manage an effort to build its capacity.

“We found sometimes agencies didn’t get what they expected or needed in the assessment phase,” says Cain. “So we’re being clear about what should be covered in the assessment.”

And the cap of $35,000 for implementation grants likely will increase, too, he says.

Rex has set aside about $300,000 for capacity-building grants this year, says Cain.

But if demand is significantly higher, the endowment may consider exceeding the 5 percent it typically pays out in grants, not including allowable administrative expenses.

That is welcome news to nonprofits like Haven House, which have seen demand increase during the recession.

“They really get it,” Zechmann says of the endowment’s focus on creating lasting community organizations. “And it’s hard to see that kind of forward thinking anywhere else right now.”

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