Giving to nonprofits produces huge dividends, report finds

RALEIGH, N.C. — Investing in nonprofit advocacy and policy work and in efforts by nonprofits to engage their constituencies in solving problems can have a big payoff, a new report says.

Thirteen groups that work with underrepresented constituencies in North Carolina received $20.4 million from 2003 through 2007 to support advocacy and community organizing, an investment that generated benefits worth over $1.8 billion, says the National Committee for Responsive Philanthropy.

That represents $89 in benefits for every $1 invested.

And foundations contributed $17.5 million, or 86 percent of total funding for advocacy and organizing among the nonprofits studied.

"Having nonprofit advocates who can raise the levels of public discourse and action about important issues of the day is critical for a healthy democracy, Joy Vermillion Heinsohn, director for programs at the Z. Smith Reynolds Foundation, says in the report.

"Their voices on behalf of those who are marginalized or underrepresented," she says, "must be present in the public policy arena, and foundations have a role to play in making sure that these organizations thrive."

The Z. Smith Reynolds Foundation and the Mary Reynolds Babcock Foundation, both in Winston-Salem, were cited most frequently for being "exemplary partners with the nonprofits they fund," the report says.

The report is the second in a series the national watchdog and advocacy group has undertaken to track and promote foundation support of advocacy and community organizing.

The first report, released in 2008, looked at the work of 14 groups in New Mexico and found $16.6 million in advocacy funding provided between 2003 and 2007 generated $2.6 billion in benefits, or a payoff of $157 for each dollar invested.

"Institutional philanthropy plays a critical role in supporting nonprofits to solve pressing problems in North Carolina,' the new report says.

It also says funding of advocacy and community organizing in North Carolina reflects "philanthropic best practices."

Those include providing grants for "core support" and over several years, soliciting input from nonprofits and helping to build their "capacity," exercising leadership in issues, and reaching out to other funders to expand available resources.

Nonprofits participating in the study reported that receiving "flexible, consistent funding is the grantmaking practice that most allows them to be effective advocates," the report says.

Some nonprofit leaders said that "improving programs and systems often takes several years to achieve, yet many funders expect outcomes to occur based on one-year grant cycles," it says. "Multiyear support allows organizations to stabilize their capacity, set long-term goals and respond strategically to community needs and policy opportunities as they arise."