Mission Increase Foundation and Effective Compassion

Everyone knows the “give a man a fish…teach a man to fish” parable, but this time-honored principle is strangely absent from the philanthropic world. Some 75,000 charitable foundations in the U.S. give around $43 billion dollars annually to nonprofit organizations. Their direct-service grants help these recipients to do all kinds of important things, from feeding the hungry to mentoring youth to cleaning up polluted lakes. Only a paltry share of this, though, is earmarked towards efforts to help those nonprofits learn how better to sustain themselves – so that their good works can grow and last.

While direct service grants enable nonprofits to do their daily work of running jobs programs or homeless shelters, “capacity building” grants seek to strengthen the nonprofit organization itself. Building capacity is about such matters as increasing nonprofits’ ability to raise and manage financial and human resources, strengthening their governance, and improving their efficiency. It is vital work if they are going to be able to keep on keeping on in their frontline service. Research also shows that there is a direct correlation between nonprofits’ organizational strength and resilience and their success in achieving their goals.[1]

Only about four percent of annual foundation grant dollars go toward capacity building. In 2000 (the latest data available), that meant about $422 million dollars; [2] an increase from $134 million in 1994. But this is nowhere near enough to help ensure the thriving of the nonprofit sector. Nonprofits need investments from donors that help them to grow in their ability to raise funds from diverse sources, to generate earned income, to garner in-kind donations, and to effectively solicit and manage volunteers – because these kinds of investments position nonprofits for productivity and longevity. In other words, donors need not only to provide direct service grants – a.k.a., “giving a fish” – to nonprofits, but to make investments that help those recipients get better at “fishing” themselves.

Mission Increase Foundation (MIF), a foundation in Portland, Oregon, offers an exemplary model of this approach. Over ten years, it has granted about $20.3 million to some 185 organizations. But through its innovative approach, that has generated over $102 million for the nonprofits it helped. That’s over a fivefold return.

Foundations much larger than MIF have engaged in some significant capacity building initiatives. The James Irvine Foundation, for example, operated a five-year program that granted $4.3 million to 20 nonprofits. The Haas, Jr. Fund also offered a five-year granting initiative; it helped 14 nonprofits with an estimated $4.2 million in support. The Mary Reynolds Babcock Foundation spread its $6 million in capacity building grants in its five-year initiative to 102 nonprofits. MIF’s total assets are far smaller than these foundations, but in the five-year period 2005-2009 it helped 496 nonprofits with capacity building grants totaling $9.9 million. Within the small but vital slice of the philanthropic world that we might call “teaching nonprofits how to fish,” the little foundation from Oregon is leaving a significant footprint.

MIF in Context

Name Total Assets Capacity Building Grants During Five-Year Programs
Mission Increase Foundation $30.8 million $9.9 million
Mary Reynolds Babcock Foundation $134 million $6 million
James Irvine Foundation $1.3 billion $4.3 million
Haas, Jr. Fund $621 million $4.2 million

MIF seeks to build organizational capacity among Christian social service nonprofits and transform their understanding of fund development. It offers three main services: training, consulting, and grant-making. This “mixed services” approach is somewhat unique, since many foundations provide grants but no training and many intermediary organizations provide training but no grants.

MIF targets small to medium sized nonprofits with annual budgets between $200,000 and $2 million. Two-thirds of their constituents come with very little background in fund development. They are relatively young and have not received much prior training or consulting for organizational effectiveness.

MIF’s Results

Virtually all of MIF’s grants are set up as matching grants, thus ensuring leverage.

But the degree of leverage achieved has gone in most cases beyond the one-to-one match. In five out of MIF’s six branches, its grants have achieved more than a doubling. Portland, for example, has seen a six-fold return. In Phoenix and San Francisco, there has been more than a tripling of investment. This is obviously an attractive picture for potential donors, for they have good reason to hope that their charitable contributions will achieve a multiplication effect.

Colorado $713,000 $1,276,774
Los Angeles $1,137,500 $2,586,657
Portland $16,186,141 $97,199,071
Phoenix $115,000 $353,159
Seattle $130,000 $266,654
San Francisco $75,000 $266,202

MIF trains nonprofit leaders in a resource development model they call “Transformational Giving.” The emphasis is on donor development, rather than fund development. The goal is to create champions among the organization’s volunteers and donors, people who will spread the organization’s cause among their social networks and “own” responsibility for generating the support the nonprofit needs.

MIF’s training is intensive and extensive: 18 modules that cover everything from marketing to special events to board development. Additionally, grant recipients receive personal coaching from branch staff as they seek to implement the principles and strategies learnt.

A study of 450 of MIF’s trainees show that a high percentage of those nonprofit leaders who take advantage of all that MIF has to offer achieve significant success on key performance indicators. Over 81 percent of those “intensively” involved report that they raised additional revenue as a result of MIF’s training/coaching.[3] Roughly 80 percent report that they were able to acquire new donors and 55 percent say they were able to diversify their revenue streams. 49 percent of the leaders indicated they’d had success in capturing lapsed donors. And – to MIF’s delight – 84 percent of committed trainees reported success in moving donors from what they term mere “participant” status (writing checks) to “ownership” status (where they champion the organization’s cause within their own networks, thus expanding the donor base).

In the past 15 years, the philanthropic community has grown in its appreciation of the importance of nonprofit capacity building. A variety of large foundations, such as the Packard Foundation and the Kellogg Foundation, have undertaken major capacity building initiatives. Grantmakers for Effective Organizations (GEO) began in 1997 with just a handful of philanthropic leaders who saw the need for convening and strengthening donors committed to capacity building. It now has over 500 grant-making organizations as members.

All this is good news, but much more needs to be done. According to some estimates, as many as 50 percent of new nonprofits fail within their first few years.[4] Clearly, investments in capacity building – like the kind of practical training and support offered to nonprofit leaders by MIF – are needed just to help keep nonprofits alive. Moreover, as Paul Light, one of the foremost scholars of the nonprofit sector, argues, even small investments in capacity building can make a significant difference in strengthening organizational effectiveness.[5] If we want healthy, robust nonprofits that fulfill their mission – and that last – we need more of the kind of investments Mission Increase has pioneered.

[1] Torey Silloway, Building Capacity for Better Results (The Finance Project, Sept 2010)

[2] Paul C. Light and Elizabeth T. Hubbard, “The Capacity Building Challenge,” (Brookings Institution, April 2002)

[3] Each nonprofit in the study was assigned an involvement score based on the number of hours the nonprofit staff had spent in MIF trainings, the number of staff attending, the estimated hours of coaching received from MIF, and whether or not the organization received a grant. The entire pool of 450 participants was then divided into four groups: intensive involvement, high involvement, moderate involvement, and low involvement.

[4] Donald Fann, “Organizational Healing: New Hope for Nonprofits in Crisis,” Journal for Nonprofit Management Vol. 10, No. (2006), 26.

[5] See Paul Light, Sustaining Nonprofit Performance: The Case for Capacity Building and the Evidence to Support It (Brookings Institution Press, 2004).