Finding New Ways Forward: How Philanthropy Can Lead Alongside Nonprofits

Matt Morton

President

Community Foundation for Southwest Washington

Nonprofits have shaped and strengthened the foundation of American society for nearly 400 years. Yet it only took a matter of months for federal changes to expose how vulnerable the sector is today.

Our newly released report, Finding New Ways Forward, maps how southwest Washington nonprofits are doing amid a perfect storm of funding cuts, legislative actions and executive orders. The data speaks for itself, but it’s the voices of our nonprofit leaders that echo loudest in my head. They represent more than 100 nonprofits, and many shared first-hand accounts of how federal funding and policy changes are affecting their operations.

I’m incredibly grateful for the candor and bravery these leaders showed. In October, we asked a few of these leaders to share their experiences and expertise at Giving Elevated, an event series we host for donors and fundholders. Our conversation revealed both the hope and desperation many organizations are feeling. It also shed light on some deeper truths — especially when asking what this moment requires of us as funders and supporters.

Truth One: The sector is restructuring

This is not a brief disruption. We’re witnessing a structural shift. The upending of funding models may have been the last straw, but this conversation has been brewing for more than two decades. From declining civic engagement and public trust to rising community needs and employee burnout, nonprofits have been juggling multiple systemic failures for too long.

This is our new normal, and nonprofits have to take renewed ownership of our business approaches and how we run our organizations. Thanks to private philanthropy and shifting toward a business mindset, EOCF has more than doubled its operating budget over the last eight years. The return on investment for our community has been close to $100 million. This is what we can do as economic drivers and contributors to this community.

— Rekah Strong, Educational Opportunities for Children and Families (EOCF)

The reckoning has arrived, and many organizations are experimenting, collaborating and rethinking their business models out of necessity. Funders should assume this is not a small storm to “wait out,” but a long-term recalibration of the entire sector that requires more focus and more resources.

Truth Two: Change requires resources

Restructuring comes with both financial and human costs. We’re already seeing layoffs and program closures. This cost also lands on our communities as public divestment threatens to slash an already frayed social service network. The immediate goal is simple: maintain what we can.

Nonprofits are prepared to navigate mergers, update models and expand collaboration, but they need general operating support to do so. Not only does it provide an immediate stopgap, but it can also help the organizations plan for their next steps, so they can begin to develop their growth strategy even in the moment that we're in right now.

The most important thing community members can do is provide unrestricted dollars for infrastructure investments. There are examples in our community — and nationally with figures like McKenzie Scott — where donors have identified and funded organizations that are running critically important and effective programs. Southwest Washington has dozens of nonprofits that could be doing bigger and better things if they just had more general operating support.

—Daniel Smith, Columbia River Mental Health Services

We need to set a new norm. We must replace “transactional giving” with flexible, multi-year commitments. Much like how we approach our investment portfolios, funders and donors must commit to a long-term philanthropic strategy that supports organizational health, leadership development, innovation, infrastructure and operating reserves.

Now is the time for philanthropy to step beyond business as usual — to recalibrate our approaches and practices for a new funding landscape.

Truth Three: Philanthropy must find “new ways” too

Leaders told us that philanthropy and communities have significant roles to play in this moment. Finding New Ways Forward provides recommended actions for everyone involved, but the greatest truth is that we have to look at ourselves.

Innovation cannot rest solely on the shoulders of nonprofits. Many communities, including ours, are not in a position to chase novelty for novelty’s sake. Right now, we need deep, sustained investments in programs and organizations that have consistently demonstrated value, impact, and outcomes over time. At the same time, the way organizations apply for funding must be reimagined and redesigned. True innovation requires transforming not only what gets funded, but how the funding process itself supports long-term, community-rooted work.

—Diana Avalos Leos, Latino Leadership NW

If nonprofits are being asked to evolve, so should we. And it starts with asking some honest questions: Are we holding true to our values? Can we spend more when the need is greatest? Who are we listening to in our community? Are we willing to fund in the ways they are asking us to?

Ready to Find the Way Forward, Together

The clearest truth is that nonprofits are showing us what leadership looks like. Despite significant and ongoing threats to their funding and work, they remain deeply committed to their missions and the communities they serve.

Now, the question is whether philanthropy can do the same. At the Community Foundation, we see encouraging signs. Our community of givers set a record last year, granting nearly $40 million to support local causes.

The right conversations are also happening through Giving Elevated and in other spaces across our community. We are reorienting our approach to funding. Using the truths listed above as guideposts will allow funders and donors to play a stabilizing role for nonprofits. So let’s set a new course:

From short-term relief to long-term partnership
From restricted projects to flexible investment
From transactional giving to shared responsibility

Now is the time to lock arms with the organizations we have grown to love and understand over the years, because nonprofits can continue showing up for southwest Washington communities only when we show up for them first.

Our full report offers a deeper look at what this means and the steps our entire community can take to support them. I encourage you to read it, reflect on what it means for your own giving and consider your next step forward.