A great many lottery winners can attest to the paradox that the blessing of receiving a large sum of money can also be a great curse.
Some in the nonprofit world have learned the same lesson as well.
A grand gesture of goodwill can sometimes leave charities in jeopardy, such as when a donor’s financial gift isn’t enough to do the work requested.
NeighborWorks America, a national nonprofit headquartered in the District, is trying to avoid those perils.
The 36-year-old charity focuses on providing community development and affordable housing through its 240 affiliates around the country. Most of its revenue comes from congressional appropriations, government agencies and the generosity of foundations and corporations. But occasionally, that generosity contained hidden costs.
A donor “might come to us with a big picture concept of a program idea and wants us to flush that out,” said Eileen M. Fitzgerald, NeighborWorks America’s chief executive. “If you don’t have the discipline to say no when you know you’re not getting enough resources to do it successfully, it will hurt your brand, undercut your ability as a nonprofit and burn out your entire staff.”
Fitzgerald knows this firsthand. She recalled a time when a donor wanted to give NeighborWorks a grant to execute a broad-based community housing program. After reviewing the scale of work, Fitzgerald realized NeighborWorks and its affiliates would need much more funding to complete the job. But before the program staff had completed its analysis, the fundraising staff had closed the deal.
It didn’t take long for the effort to run into trouble.
“We were under-resourced in our administration and we had a huge problem executing,” said Fitzgerald. “We didn’t get the outcomes the donor hoped for.”
In the end, the donor walked away. Distrust grew between the fundraising department and the program department. Morale tanked.
That experience is a common one for many charities.
“The art that the nonprofit has to learn is how to be welcoming to donors without getting themselves into trouble,” said Tracy Savage, a fundraising consultant and principal at Marts & Lundy.
In 2008, after reaching a breaking point, Fitzgerald decided to be more proactive. The organization began having what it calls, preconcurrence meetings. Every week each department — budget, fundraising, program, communications and public policy — comes together to discuss the terms of a proposed grant.
During the meetings, the program staff can voice concerns about timelines, while the budget staff can identify funding shortfalls or concerns with compliance. All parties must agree on the terms of the grant before it is brought back to the donor to close the deal. Often times the group winds up turning down the money.
Since 2012, the organization has retained all of its donors and landed its largest grants, including $77 million from Wells Fargo, which had previously offered grants of less than $1 million.
“Preconcurrence has increased transparency, collaboration, efficiency, and in the end its mission-centric,” said Carmen Miller, director of stewardship. “It has really made the difference.”