Resourcing the Nonprofit Ecosystem: Our First Line of Defense

Nonprofits and philanthropy have been preparing for a precarious and polarizing political climate. Organizations have been gearing up to tap into rainy day funds to support communities who will continue to be targeted, monitored, and attacked. While this does feel different than 2016 and the current sector is more prepared, many nonprofit organizations are struggling with sustaining their organization while mobilizing for the next four years and beyond.

At NCG, despite the shifting political landscape, our commitment to center racial equity is fueled by our vision for the sector, pushing for a multi-racial democracy in Northern California, and ushering new worlds rooted in our values around racial, economic, and social justice. Ongoing threats to reproductive rights, LQBTQ rights, immigration, housing, and climate as well as new policies dismantling of key government agencies, redefining an organization’s tax-exempt status and diversity, equity, and inclusion programs are more prevalent than ever.

Movement and nonprofit partners are our best defense against repressive policies that directly impact communities on the ground. As we depend on them to lead us in these fights, the collective resilience of the nonprofit workforce must be a sector-wide priority. The support for talent justice in the nonprofit sector is growing. Initiatives at The Walter & Elise Haas Fund, ReWork the Bay, Fund the People, and the James Irvine Foundation are investing in the long-term sustainability, agency, and belonging for nonprofit workers. A year ago we heard from Pui Ling Tam, Leslie Payne, and Rob Hope about nonprofit job quality and joined Fund the People's California Talent Justice Summit this week to discuss the urgency of ensuring grantee partners are sustained and supported. Hear their current take below with clear action for funders.

National State of the Sector

Nonprofit Workforce: by Rusty Stahl

The movement for talent justice in the nonprofit sector has come a long way in a relatively short time – and it’s picking up steam! More funders are aware of the major issues – burnout, compensation, recruitment, executive transitions, and the need for resilience-boosting activities like sabbaticals. An increase of philanthropy’s partnership with groups like Funders and Well-Being Group, Funding for Real Change, All Due Respect, Leadership Funders Group, Leading Forward, Nonprofit Sustainability Initiative, and Fund the People are clear examples of the progress.

Unfortunately, this increased collaboration is largely because of the crises facing our nonprofit workforce. Just during the last decade, the nonprofit workforce has handled political upheaval and instability stymieing many of their missions; borne the weight of serving through a once in a century pandemic, a racial reckoning; shifting from in-person to remote workplaces, and economic volatility that has made planning difficult, and made it challenging to navigate the costs of living and doing business. It makes perfect sense this is leading to increased workload, turnover, worker shortages, and internal conflict.

Actions to Take

Listening to Grantees: by Pui Ling Tam

We can work with grantees to create a real path towards quality jobs in nonprofits by really listening to invest in their resilience. At the Walter & Elise Haas Fund, here are some of the key things we’re hearing from grantees about nonprofit worker well-being and how they want philanthropy to engage.

1. Give Agency: Nonprofits we work with want to be good employers who live their values of justice. They need conditions enabling choice and agency explicitly expressed by funders – conditions allowing them to make the right call for their organization and unique missions, while prioritizing staff well-being. This means substantive grants at a dollar amount that makes sense in our world ($50,000+ a year) over a period that allows an organization to exercise its vision with agility and agency (more than two years).
2. Offer Clarity: We also hear funders are missing the mark when raising the issue of staff well-being. Grantees shared it’s unclear if it is a punitive stance – if the grantee leader should take a defensive posture, because they’re being scolded. Clarity is also lacking in how the issue is to be addressed without any resources towards its worker well-being. Even though an Executive Director is the stated boss of an organization, the funder more often plays a Wizard of Oz role, the player behind the scenes who sets the conditions for a lot of what the ED can do. After all, when you don’t know if your grant will continue year to year, how can you strategically raise wages to retain great staff?

Understanding Government Funding: by Leslie Payne

There’s a belief that philanthropy should fund innovation and test new ideas while government funding can support the scaling of proven ideas. It’s an over-simplification that’s distracting at best, dangerous at worst. Ask any nonprofit with a substantial government grant or contract – these funds are a precarious path to growth that make it difficult for them to stabilize, let alone innovate.

1. Fund the Full Cost: First, like too many grants, they don’t fund the full cost of the programs they support. Overhead rates vary, but administrative rates for local government grants typically hover around 10%, even less than the federal government’s 15%. Beyond overhead rates, because so many grants and contracts are awarded to the lowest-cost provider, these funds don’t always cover full program costs. Nonprofits are left to use critical general operating support to fill the gaps so government funding becomes yet another reason for philanthropy to use full cost funding when aligning grant size and expectations of impact..
2. Understand Cashflow Challenges: Furthermore, many government grants pay on reimbursement, meaning nonprofits can invoice after programs have been delivered and costs have been incurred. While strict rules exist for invoicing (some agencies allow as few as four days after the end of the month) reciprocity with prompt payment is seldom guaranteed, or even common. Ask any nonprofit accountant and they’ll tell you that as soon as (or, even better, before) an organization receives a government grant or contract, it should secure a line of credit to manage cash flow. Foundations can offset this cost by offering free or lower cost lines of credit or covering the interest costs directly.  

With all these restrictions, and given that the vast majority of nonprofits’ budgets are salaries, where are nonprofits supposed to find the money to pay living wages and offer competitive benefits and restorative work environments? Philanthropic funders need a deep understanding of how government funding is impacting their grantees, particularly if they are looking to recreate or grow progress that flexible philanthropic dollars helped seed. 

Interventions for Job Quality: by Rob Hope

Job quality is not an absolute measure. What a worker values in terms of job quality improvements can vary based on individual characteristics (e.g. age, gender, seniority), by sector (e.g. construction, homelessness services, technology), and by regional cost of living differences. For example, hourly pay and scheduling flexibility might be more important than any other job quality aspects for a single father working two retail jobs in San Jose to support himself and his school-age children. Meanwhile, belonging, autonomy and a flexible remote work policy might be at the top of the list for a woman of color software engineer. 

But we’re talking about the nonprofit sector, right? Surely we can draw clearer generalizations within a single sector? That might be true, if the nonprofit sector was as homogenous as other sectors. Most sectors are defined by commonality in the type of work activity that is done or the type of product or service produced. Nonprofit jobs on the other hand vary widely, from shelter worker, research analyst, to public radio production assistant. Where does this leave us? How can we develop and test targeted approaches to improving job quality given the inherent complexity of nonprofit management, finance, and funding? 

1. Direct Partnership: Like with many long-standing social and economic challenges, nothing substitutes for direct partnership with those most impacted by those challenges to inform what solutions are developed. Authentic partnership involves what Pui Ling said above, listening. Only then can an organization get the job quality improvements it needs for its workers. 

ReWork the Bay, in partnership with Jobs For the Future and social innovation studio Path Group (and partner Turning Basin Labs), launched a project in Fall 2022 to develop a framework for this kind of listening based in participatory research. Over the last two years we have recruited and trained 16 frontline staff across 8 California nonprofit workforce organizations to conduct their own research on job quality – interviewing co-workers to understand what is working well, and what isn’t, at their places of employment. 

2. Transparency & Multi-Directional Communication: Final results from the project, including summarized job quality recommendations from across the cohort, will be released in Summer 2025. But one theme we hear again and again, from both the “Worker-Researchers" and their organizational leaders, is how improved multi-directional communication across departments and seniority levels has emerged as a clear priority. This might include more transparency in management decisions and promotion processes, safe spaces for workers to surface concerns and ideas without fear of reprisal, and clearer communication of existing benefits and other resources to ensure workers are accessing the support the organization is already investing in.