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  • Writer's pictureTaha Habib

Why Support Isn't Sexy : Outcome-Based Funding is Failing the Non-Profit and Charity Sector

Updated: Jun 20, 2022

Revolutionary. Essential. Innovative. These are the words used to describe the granting and funding model nonprofits and charities receive from governments in North-America. The outcome/project/program-based funding model is thought to improve community action and social good because they encourage organizations to focus on the impact of their work that is directly quantifiable in reports. What better way to hold non-profits and mission-driven organizations accountable to their word : pay them for doing what they said they were going to do. This sounds great, so what’s the catch? This model of funding widely available from governments and public foundations are incredibly competitive, they promote growth in silos, and they often don’t include funding for support staff/resources.

You’re a community-oriented organization proving to funders your work is more important than other community-oriented organizations’.

Everyone who has worked in the social and community sector knows that money is perpetually tight. Although there is a lot of money is government budgets to go around, considering there are over 170,000 charitable and nonprofit organizations in Canada (85,000 of these are registered charities with the CRA), competition for funding is a real thing. The design of the funding landscape, whether it be public or corporate, is not only based on an organization's ability to prove how it is doing a better job at delivering a service than a competing organization, but also how big the organization is and how many resources and staff members it can dedicate towards grant applications. The more people you have hammering away at a keyboard making connections with granting officers and applying to a vast databank of available grants, the more likely you are at scoring some dollars for a given program, and the resources always fall on the side of well-established nonprofits and charities, leaving the grassroots initiatives and small organizations scraping the bottom of the barrels that were empty to begin with.

Moreover, given the highly competitive nature of the federal granting process, a reasonable course of action would be to attempt to quantify the probability of getting grant x or grant y - except that because of an utterly unacceptable delay in the publication of government statistics for granting programs and the completely unnecessary reluctance of granting officers to share material information with potential grantees, it is basically impossible to assess these probabilities with any meaningful degree of accuracy.

I once spent a month on a grant application for which I had zero chance of success - there was no money left in the funding program - because the federal grant officers could not or would not tell me that there was no money left. Basically, they lied to me and suggested that I apply, even though they knew full well that approval, in this instance, was impossible. I was constantly having to allocate time to apply for grants with no hard sense of my odds for success.

- Phil Dumouchel, former Fund Development Coordinator at Apathy is Boring.

The whole point of being in a community is recognizing that everyone has an area in which they shine, and we are taught to uplift members in the community through the sharing of knowledge and wealth. However, outcome-based funding, unintentionally or not, pits organizations and community initiatives against each other by creating a sense of competition to make it out alive.

You only seek exponential growth in one department of your organization leaving other departments to play catch-up.

They say high tides lift all boats, but that's not always the case when organizations depend on outcome based funding, especially the ones coming from the government. The charity sector is the recipient of billions of dollars in grant money from the Canadian government and many of these grants are based on a project or a program offering a community service that aligns with the government's policy or area of interest. This means that organizations will apply for these grants and readily expand the program, by adding staff and increasing the number of participants and cities where the program is delivered, in order to be able to renew the funding over the years. This one track expansion often does not come with the money to adequately equip other departments to carry out the work of the organization AND support growth in service delivery.

Departments like finance and fund development are often left out of grant applications and have to continue to struggle with overworked staff, growing list of transactions to oversee and charges to reconcile. The delays in payment processing due to limiting capacities in these supporting departments result in an increasing number of contractors needing to rework their service delivery schedules and can put strains on business relationships program leaders are trying to build in the community.

When the organization puts off securing, or prioritising, funding for a more well-rounded expansion of their departments that can benefit all employees and build stronger and sustainable support processes in different departments, they are working towards creating harmful and intangible expectations for their employees, especially the ones in vulnerable positions working on the ground.

Your service delivery increases, and so does your staff turnover rate.

As mentioned above, in order to keep up with the funding model in most nonprofit and charities, the programs receiving the money are expanding exponentially. We see the program-specific staff number double or triple in a short amount of time without consideration about making the roles sustainable for new employees coming into the organization. What ends up happening is that the work load expected to be shouldered by new employees in these expanding programs are astronomical and impossible to carry in the long run, causing a seasonal staff turnover. Nonprofit work usually has a direct community service delivery model, so program coordinators are always public facing, interacting with participants of all kinds, building relationships of trust and resourcefulness to ensure the program's success. Along with all the administrative and financial responsibilities of running a program, these ground-level employees need excellent and sustained interpersonal and emotional skills that make them approachable and relatable to the participants/community members they work with.

Unfortunately, there is no money left over to actually provide the employees with the support and training they need to complement the extra vulnerable and emotional labour that they need to take on when working directly with community members. For example, a program coordinator needing to talk a participant their own age off a ledge during a pandemic, because they were the only person with whom the participant was able to develop a relationship. Employees doing the ground work are just not getting the resources or training they need to deal with these situations because the grants that pay for their positions don't have these considerations written into them. These positions are also often entirely dependent of the organization's ability to secure grant money for salary, so they are all working on contracts with no certainty of renewal.

“Charities and nonprofits deliver a wide range of public services and help maintain the social fabric of our country. But they often do so with short term and inadequate funding that doesn’t cover the real costs of services. This leads to a perpetual ‘starvation cycle,’ resulting in precarious jobs and an inability to plan strategically or to innovate.”

- Susan Phillips, Professor in the School of Public Policy and Administration, Carleton University

All these factors put together make these positions the perfect "coaster" positions for young employees to come in, get paid while looking for another more stable position where they have be supported and have an opportunity to grow. And this flow of employees leaving the organization is what also limits institutional knowledge, causes management to remain busy constantly hiring rather than managing and planning for the future. Your hunger for expansion is what leaves you starving.

So whose responsibility is it to tackle these disparities in funding?

I'm torn here. I very much feel like there needs to be a review of how money is granted to organizations who are meant to uphold the fabric of our societies. There is so much emphasis on reporting on how every cent is spent from the government grants, that a huge portion of a fund development employees time is allotted to filling out exit reports from existing grants rather than finding solutions to how to diversify revenue streams for organizations. This means that smaller and grassroots organizations have to spend all their time, or consistently rely on volunteers, to actively seek grants for their projects and then report on how they used the grants and how their project has changed lives. From what I can see, and from what nonprofit and charity leaders are saying, reworking limitations and the rigidity of fund reporting will really help organizations spend some time expanding their donor base and working on a more sustainable solution to their funding.

Here are some questions I'll leave here and maybe someone can share some answers.

  1. Is it really the government's role to take such an active role in shaping the views of its citizens?

  2. Shouldn't it be the other way around?

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