Tara Magner, Director of Chicago Commitment, shares insights on institutional support grants and why investing in the financial resiliency of organizations helps create a more inclusive Chicago.
Since the Chicago Commitment team was established in 2016 and was asked to take a fresh look at how MacArthur operates in our hometown, we have sought to help nonprofit organizations focus on their internal operations, develop their strengths, and plan for the future. These activities are integral to our goal of investing in people, places, and partnerships to advance racial equity and build a more inclusive Chicago.
Beginning with our early strategy development phase, we heard nonprofits discuss the challenges they face, all of which have become more acute with the COVID-19 pandemic, the police killings of Black Americans like George Floyd and Breonna Taylor, the related civil unrest of 2020, and the rise of inflation in 2022.
A hallmark of our local grantmaking over the last seven years has been to support community-based organizations, which are deeply rooted in neighborhoods. Nonprofits are often economic engines for a local area, offering both jobs and career pathways to residents. They have taken on a great deal as the needs and aspirations of their constituencies have evolved. We have tried to respond to the requests of nonprofits as they navigate an array of challenges—such as financial management, human resources, fundraising, board development, and staff well-being—because we view these supports as mechanisms to help both the nonprofit sector and each individual it touches. These investments will not only make organizations stronger but will enable them to better serve their communities.
A core commitment to-date has been to assist organizations in building their financial strength. From 2017 to 2020, we gave a special type of award called “institutional support” to 27 organizations. These awards fueled innovation, helped organizations enhance leadership opportunities for staff and constituents, and enabled them to pursue opportunities for growth. I have shared reflections about the first three rounds of these award recipients.
As part of these awards, organizations had the option of working closely with peers to significantly improve their knowledge and management of organizational finances. Funded through a parallel award to BDO FMA, the Chicago Commitment’s institutional support grant recipients were invited to participate in an array of financial management activities—from self-assessments, training, and coaching to individual technical assistance projects and peer group sessions. The goal for this program was to set participating organizations on a path toward more effective financial operations and strategy, ultimately leading to increased financial sustainability and resilience.
BDO FMA completed its work with these organizations in 2022 and produced a reflection piece on the program with evaluation findings. Based on pre- and post-program surveys, it found that participants increased their knowledge and confidence in financial management. Participants also increased their understanding of business models and the capital needed to weather unexpected circumstances. Moreover, they strengthened budgeting, internal controls, financial reporting, and risk management practices. For example, one participant said, “[Our] leadership team better understands not only financial statements, but the importance of a long-term focus on financial management. We are on our way to a more sustainable revenue model, finance team structure, and multi-year plan.”
In future or ongoing programs like this one, participants asked for increased focus on navigating staff transitions within organizations. This request is logical in light of the increased difficulty in recruiting and retaining staff following the pandemic. Participants also sought out more peer engagement opportunities, as they found great value in learning from one another’s successes and challenges.
Lastly, the “wish list” for funders to consider more generally includes multi-year unrestricted funding, higher indirect cost rates, help in building organizational reserves, support for back office infrastructure, and—given continuing economic uncertainty—financial scenario modeling and planning. One participant said, “We really need funders to recognize the fact that strong and adequate support services are crucial for the success of an organization's direct services and its long-term sustainability.”
These needs are by no means unique to the organizations supported by MacArthur, and we know that they are especially felt by smaller organizations and those led by people of color, which tend to be perennially underfunded. In 2023, we will augment the support provided to nonprofits and their staff. As we enhance this area, we will maintain focus not only on the nonprofits that benefit directly but the individuals, clients, and neighbors who can flourish when the service providers around them are stronger. We believe this focus—a key element of our goal of investing in people, places, and partnerships—will bolster all our efforts to advance racial equity and build a more inclusive Chicago.
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