Lifting barriers to government funding of innovative, community-driven approaches 

Government funding is crucial to large-scale social change, as the funds available far outweigh private philanthropy. Most grassroots organizations can’t scale their work above about $2 million without government investment. Community multi-service organizations tend to have budgets between $10-30 million, large social service agencies have budgets of $100 million plus, and government agencies operate in the billions. 

However, even after securing government funding streams intended for community-led work, it can be challenging to actually direct funds to small organizations. It’s been said that systemic racism acts on organizations in the same ways it impacts people, manifesting as community-led organizations not having access to capital, to loans, to real estate, or to mentoring and support to grow. Many aspects of the procurement process weigh against small nonprofits. 

Small organizations often do not have a background in writing city funding proposals or complex data systems for capturing outcome analytics to demonstrate impact, and may not have physical space and other resources on hand to launch major new programs. High level hobnobbing influences decision making as well, despite procurement rules, because large social service agencies in NYC are relied upon for the functions of government. Through relationships, they are tied in and connected, become aware of RFPs on the horizon, and have well-resourced development departments able to submit proposals. 

Even when funding efforts are intentionally designed to invest in marginalized communities—for example, a Portland effort to fund women and minority-owned contractors—funding typically devolves to contractors with political power, major budgets, and white and male leadership. Resources and approaches need to be carefully constructed if they are to succeed in directing funds to community-led groups outside of corridors of power. 

This overview shares information on how government procurement processes and the philanthropic sector can be set up for community investment. 

What does government normally fund? What about philanthropy? 

Most government funding in social services goes toward implementation of tested models, not on-the-ground development of new forms of support. Philanthropy is better suited to innovation. Foundations typically operate by identifying a problem they want to support solving, and nonprofits apply to try approaches they’ve developed to deal with the problem. The approach, projects and processes are usually determined by the applicant. In government, it’s the opposite most of the time. The government agency announces the approach and process, and organizations apply to do that work. 

Typically, foundations support grassroots innovation with an expectation that government will continue funding successful modes of impact once a concept is proven. 

One example is restorative justice. RJ practices began informally in communities. Over time, practitioners became funded to formalize restorative approaches into models that could be replicated. Ultimately, government began to fund implementation of proven models in institutions like schools. Many new approaches follow that path, as people develop new methods and structures for meeting needs and, as word spreads, begin to formalize their work so others can replicate and build on it. At the same time, government procurement processes also favor established institutional partners, so community organizations can get shut out of efforts to scale up approaches pioneered by and impacting their own communities. 

For organizations working to develop new approaches, it can be extremely difficult to prove the impact of a new approach. The evidence-based models now used in preventive services, for example, have been extremely expensive to test and implement. However, it’s important to remember that most money in our current child welfare system does not go to evidence-based models, or even to any models. The majority of foster care agencies, for instance, follow no casework model and only a few follow a model to fidelity. Therefore, we can be wary of evidence standards often raised when community seek support. 

How can existing community organizations be better supported in building programming for families? 

In NYC, many organizations already provide “primary support,” meeting a variety of family needs by braiding together multiple specific funding streams across many different city agencies. For example, the Center for Family Life in Sunset Park holds more than 30 contracts with various public agencies to be able to offer a service array that deeply supports local families. Likewise, multi-services agencies such as Chinese American Planning Council, Cypress Hills Community Development Corporation, Arab-American and Make the Road build concrete supports and services for families across the lifespan by keeping aware of funding opportunities through DYCD, Small Business Services, HRA, Dept of Labor, Dept of Education, the Mayor’s Office on Immigration, etc. 

One barrier is the difficulty of managing contracts and audit requirements for so many different agencies. Center for Family Life Co-Director Julia Jean-Francois says, “It really isn’t easy at all. The different city agencies that relate to the lives of families and communities do not speak to each other. They are all working with the exact same families, many doing similar things, and none have any communication.” While the NYC Children’s Cabinet was established to improve this type of coordination, it has not been effective. 

Efforts to strengthen primary supports for families could benefit from the development of a centralized effort to coordinate, streamline and communicate about opportunities; strengthen the capacity of organizations in our most highly impacted neighborhoods to have the ability to apply for and sustain programs crucial to narrowing the front door; and recognize and address service and resource gaps. For example, the Mayor’s Office of Criminal Justice (MOCJ) has coordinated community anti-violence programs and other innovative justice initiatives. Likewise, Mayor’s Office of Immigrant Affairs (MOIA) has been effective at working with multiple agencies to develop coordinated one-stops for ESL, employment, food and legal challenges. By coordinating co-location of services, MOIA brings down not only individual sources of stress on immigrants but the stress of resource navigation. 

How can emerging organizations and innovative practices be better supported by government funding? 

The first step in city funding is for the city agency to develop a Concept Paper that explains what will be funded and why. The Concept Paper is released for a period of public comment, after which it may be adjusted. Then a final RFP—“Request for Proposals”–is released, and organizations can apply for a contract. 

NYC procurement rules are very strict. (“Procurement” means the process of city agencies contracting with nonprofits or other businesses.) Selection is supposed to be blind, to prevent political favors and corruption. Therefore, once the Concept Paper is released, city agency staff cannot discuss the RFP process with anyone; staff involved in developing an RFP are not, by law, allowed to be involved in evaluating the proposals; and agencies usually do not hold site visits to get to know applicants. 

However, city agencies can run the Concept Paper and RFP process in a way that makes it more likely that community-led organizations will be selected. 

Develop a Concept Paper with community co-design and input – City agency staff can work closely with community leaders on the Concept Paper’s program design. For example, when the Department of Probation was funded by Bloomberg Philanthropy and started a “credible messenger” program for youth on probation, partners in the program design included David Muhammad from the Oakland Mentoring Center, Clinton Lacey from the Haywood Burns Center and Ruben Austria from Community Connections for Youth in the Bronx, all of whom had deep experience on community-led work around racial justice and youth. As the team developed the vision, they put out many iterations of the program design to the community for comment and discussion and made changes before issuing an official Concept Paper. 

Make the process really transparent – Networking in the community well in advance of the Concept Paper and sending it out to people in the field to familiarize them with the concept can bring smaller organizations into the fold. City agencies can do outreach, hire a full-time person to go out and get to know organizations, advertise online and do public messaging. 

Incorporate community connections in RFP scoring – The RFP development team can influence selection by giving weight to applicant strengths like being “close to the community,” measured by metrics like volunteers, staff hired from the community, and walk-in participants, and asking about their engagement strategies, racial equity approach, and things like how the impacted community is represented on their board or otherwise hold power. Agencies can also do a site visit, either upfront or in the final decision-making stage, to gauge applicants. In the probation RFP, permission was given to visit every applicant before proposals were read, requiring approximately 100 visits for 12 contracts, which were done by agency staff and community teams. 

Improve the nonprofit ecosystem – Grassroots organizations often have capacity challenges that can make it difficult to operationalize major contracts and may need fiscal partners or pooled resources to make their work affordable and to insulate them from risks and challenges. They may need fiscal agents that do accounting, audits and payroll; provide HR services, health insurance and other benefits; provide support in developing data collection systems; and otherwise help small organizations have the infrastructure to deliver on a contract once they get awarded. In addition, government funding is notoriously late (70% of city human services contracts are paid late) and small organizations often do not have the cash flow pay staff while waiting for funding to come through. Small organizations without reserves need access to bridge loans or other methods of short-term cash-flow support to pay program costs before government reimbursement.

Nonprofit-focused accounting firms, fiscal agents such as Tides or Fund for the City of New York, incubators such as Urban Justice Center, and even large social service agencies may be able to anchor assistance through fiscal partnership and mentoring. For instance, when Cure Violence contracts were awarded to small groups that did not have sophisticated accounting and data collection, the city budget office, OMB, pushed back and the Mayor’s Office of Criminal Justice (MOCJ) ended up requiring organizations to work with the nonprofit SeaChange for technical capacity support. Although expensive, it ensured that small groups on the ground could function under the contracts and survive detailed city audits. 

Engage philanthropy –: Government agencies can engage with philanthropy and educate the philanthropy community by giving a prospective to them about the kinds of investments that would be helpful. For instance, data infrastructure is not covered in contracts, but without it, you can’t measure outcomes. Citywide, nonprofits report that government contracts cover only 80% of program costs. Programs serving families may not be able to pay for formula and diapers under government contracts, for instance, yet may need these supplies to offer strong programs. Government can listen to the nonprofit community and itemize what’s needed.

In NYC, the Nonprofit Resiliency Committee tried to deal with some of these issues and instituted some reforms, such as cash advances. 

Grassroots organizations have capacity to do the work—often, they’re already doing it informally. Yet insuring that community-led organizations receive government contracts requires real intention and sustained attention. Going back to Probation’s credible messenger contracts, the majority now go to established social service agencies such as Children’s Village and Good Shepherd, despite early efforts at inclusion and equity. 

– Reported by Keyna Franklin and Nora McCarthy for the Narrowing the Front Door Work Group

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