Funders Don’t Bail Out Sinking Ships

April 11, 2017       The NonProfit Times      

Most nonprofits are pros at navigating the turbulent waters of financial insecurity. But from time to time those rough waters roil up into a full scale financial crisis — a major grant ends unexpectedly, a facility burns down, or another unexpected catastrophe occurs.

When financial crisis hits, nonprofits managers often turn to their strongest foundation partners in hopes of emergency grant funding. “Sometimes the sky does fall unexpectedly, and in some situations an emergency grant request is reasonable,” said Barbara Floersch, executive director of The Grantsmanship Center in Los Angeles, Calif. “But emergency grant requests are tricky. Some organizations are well positioned to ask for this type of help, and others aren’t.”

When an organization has a track record of effectiveness and prudent financial management, funders can reasonably view a one-time emergency grant as an investment that will pay social dividends as the organization continues its good work into the future. “In these situations, funders have every reason to believe that once the crisis is past, the organization’s ongoing operations will keep the ship safely afloat and in good order,” said Floersch.

But a grant request for a financial life preserver has little chance of success when the nonprofit applicant is constantly in crisis and the situation is the result of ongoing administrative problems and financial short-sightedness. “What’s the long-term payoff for bailing out a sinking ship that’s still full of holes?,” asked Floersch rhetorically.

Sound management, effective programs, prudent financial administration, and far-reaching community support are the hallmarks of a credible nonprofit organization. “Credibility pays dividends in numerous ways, and is certainly a major factor in a nonprofit’s ability to rally financial support in a crisis”, said Floersch. Transparent partnerships with grantmakers are also important, and are essential when difficulties arise.

Established nonprofit organizations are strong applicants for emergency grant support. Struggling nonprofits with an uncertain future are not. The characteristics that make a nonprofit stable and successful are the same characteristics that make it a good applicant for any type of grant funding, and especially for emergency grant support. © Copyright 2017 The Grantsmanship Center.