Section 5. Changing Policies to Increase Funding for Community Health and Development Initiatives

• What do we mean by "policies?"

• Why might an organization seek changes in funding policies?

• How do you work toward policy changes that support sustainable funding?

• What should nonprofits know about lobbying?

 

 

Finding the resources needed to sustain a nonprofit or community initiative can take significant time and effort. Organizations may write grant proposals, seek individual donations, charge membership dues when appropriate, develop contracts, pursue sponsorships, hold fundraising events, or combine several sources of support.

A recurring challenge is that many funding sources are temporary. A grant may support a project for one or two years but not provide renewal funding. Another funder may support new programs but not ongoing operations. Small grants may help, but managing many separate funding sources can also require substantial administrative time.

For that reason, organizations may also explore whether public agencies, foundations, businesses, institutions, or other partners could establish longer-term funding policies that support work aligned with their missions and community priorities.

This might involve:

• Asking a public agency, school system, foundation, business, or other institution to consider ongoing support for a program that contributes to goals it has already identified
• Encouraging a funder to reconsider broader policies such as whether it supports operating expenses, multi-year grants, capacity building, participant compensation, evaluation, or other costs necessary to sustain effective community work

The aim should not simply be to secure money for one organization. A strong funding-policy discussion asks whether the proposed investment addresses a demonstrated community priority, whether the organization is well positioned to contribute, what results are expected, and how the funding decision fits within the responsibilities and resources of the funder.

This section focuses on longer-term funding policy rather than short-term fundraising. Policy change often takes time and may involve research, relationship-building, public processes, organizational planning, and continued evaluation.

Policy work is generally not a substitute for an immediate funding plan. If an organization has an urgent financial need, it may also need to pursue grants, contracts, donations, partnerships, earned income, or other short-term and medium-term strategies while longer-term policy discussions continue.

What do we mean by "policies?"

In this section, policies are written or unwritten guidelines that influence how governments, foundations, corporations, institutions, and other organizations allocate money or other resources.

These policies may determine:

• What types of organizations are eligible for support
• What issues, communities, or geographic areas a funder prioritizes
• Whether funding may support programs, operations, staffing, facilities, evaluation, or other costs
• Whether grants or contracts are available for one year or multiple years
• How proposals are reviewed and decisions are made
• What reporting, evaluation, or accountability requirements accompany funding

Funding policies may be public or private.

Public funding policies

Public funding is shaped by laws, budgets, regulations, appropriations, grants, contracts, agency policies, and administrative procedures at the local, state, Tribal, territorial, or federal level.

Examples might include:

• A legislative body establishing or changing funding for a community program
• A state agency creating a grant or contract program to support a particular public purpose
• A local government, school board, or other public institution allocating resources for services that contribute to established community or institutional goals

Public funding rules and opportunities change over time. Organizations should use current official legislative, budget, agency, and grant information when considering public funding rather than relying on older examples.

Private funding policies

Foundations, corporations, businesses, philanthropic organizations, and other private funders also establish policies governing how they use their resources.

Examples of possible changes include:

• A corporation establishing or expanding an employee matching-gift program
• A foundation expanding its funding priorities in response to changing community conditions or evidence
• A funder offering multi-year or renewable grants when longer-term support better fits the type of work being funded
• A funder allowing grants to cover staffing, administration, evaluation, technology, accessibility, or other necessary operating costs

Private funders have their own missions, governance structures, resources, and responsibilities. Organizations seeking changes should understand those constraints rather than assuming that a funder can or should support every worthwhile activity.

Why might an organization seek changes in funding policies?

An organization may consider funding-policy work when a community need requires sustained effort and existing funding structures make that work difficult to maintain.

Possible reasons include:

• To contribute relevant knowledge to funding decisions. Community organizations may have useful program data, professional expertise, community relationships, and lived-experience perspectives that can help funders understand an issue and the resources needed to address it.
• To participate in public decision-making. When public funding is involved, nonprofit organizations and community members may have appropriate opportunities to provide information, participate in hearings or public-comment processes, and explain how budget or policy decisions affect community services.
• To improve long-term organizational stability. Predictable funding can allow organizations to retain staff, maintain relationships, plan services, invest in evaluation and accessibility, and spend less time continually replacing short-term funding.
• To improve funding practices more broadly. Organizations may identify policies that create unnecessary administrative burdens, discourage collaboration, limit community participation, or make effective programs difficult to sustain.

Long-term funding should not be treated as an entitlement simply because an organization has received support before. Continued funding should be connected to the funder's responsibilities, available resources, community priorities, program performance, and other relevant considerations.

How do you work toward policy changes that support sustainable funding?

The process can be organized into four overlapping phases:

1. Research
2. Preparation
3. Participation and implementation
4. Maintenance and evaluation

These phases will often overlap. Research continues as policies change. Relationships develop while an organization prepares information. New evidence may cause an organization to revise its proposal after discussions have already begun.

Phase 1: Do your research

A strong proposal begins with understanding the funding environment, the decision-making process, the community priority involved, and the evidence supporting the proposed investment.

Identify possible funding partners.

Depending on the issue, these might include:

• Corporations and businesses
• Public agencies
• Legislative and governing bodies
• Public or community foundations
• Private foundations
• Local businesses
• School districts and educational institutions
• Other nonprofit and community organizations
• Health systems, colleges and universities, philanthropic networks, and other institutions whose missions overlap with the work

Start broadly, then determine which possibilities actually align with your organization's mission and the potential funder's responsibilities or priorities.

Understand who makes funding decisions and how the process works.

Depending on the organization, decisions may involve:

• Executive leadership
• Elected officials
• Public administrators and agency staff
• Boards of directors or trustees
• Program officers, budget staff, grant committees, procurement staff, or other designated decision-makers

Learn the formal process rather than focusing primarily on personal influence. Determine when decisions are made, what criteria are used, what information may be submitted, who has legal authority, and what opportunities exist for community or organizational participation.

Understand the interests and responsibilities of the potential funder.

Useful questions include:

• What is the funder's mission?
• What communities or issues does it currently support?
• What legal, financial, or organizational constraints affect its decisions?
• What evidence does it use to assess proposals?
• What responsibilities does it have to taxpayers, donors, shareholders, participants, or the wider community?
• How would the proposed funding contribute to its stated goals?

Prioritize opportunities based on fit and potential community benefit.

Organizations usually have limited staff time. Rather than trying to approach every possible funder, identify the opportunities where there is meaningful alignment between the proposed work, community priorities, and the funder's mission and authority.

Consider:

• Mission alignment
• Potential amount and duration of support
• Administrative requirements
• Whether the organization meets eligibility requirements
• Whether the funding would strengthen or distort the organization's mission
• Whether community members affected by the work view the proposed investment as useful

Understand how the relevant policy can be changed.

A private foundation may change grantmaking policies through staff or board decisions. A corporation may use a committee or executive process. Public funding may involve agency budgets, appropriations, legislation, regulations, grants, contracts, or local budget decisions.

Use current official sources to understand public legislative and budget processes, deadlines, hearings, eligibility rules, and opportunities for input.

Understand applicable legal requirements.

Organizations participating in public-policy discussions should understand the laws and rules that apply to their organizational type, funding sources, and proposed activities. Requirements may differ for education, advocacy, lobbying, election-related activity, government grants, and private funding.

Consult current official guidance and qualified legal or tax professionals when necessary, particularly when substantial lobbying activity, restricted grant funds, or election-related activity may be involved.

Review the existing relationship with the potential funder.

Consider whether the funder already supports your work, provides contracts or referrals, shares participants or partners, regulates some aspect of your services, or has another relationship with the organization.

Useful questions include:

• How do current laws, policies, contracts, or funding rules affect our work?
• What requirements accompany current grants or contracts?
• What forms of communication or policy participation are appropriate for our organization?
• What financial, legal, operational, or relationship risks should we consider?

Build professional relationships with relevant staff.

Staff members often understand program requirements, budget processes, technical details, and organizational procedures. Establishing clear professional communication can help your organization understand the process and provide useful information.

Relationship-building should not be treated primarily as a way to gain personal leverage. The goal is to establish reliable communication, understand responsibilities, and make it easier to exchange accurate information.

Identify potential partners.

Other nonprofit organizations, community-based groups, resident-led organizations, professional associations, service providers, researchers, businesses, and institutions may share an interest in improving a particular funding policy.

Collaboration can:

• Provide a wider range of knowledge and experience
• Reduce duplication
• Identify effects of funding policies across several organizations
• Bring the perspectives of people directly affected by the issue into the discussion
• Create opportunities for coordinated recommendations

Major funding-policy changes usually affect more than one organization. When possible, examine the broader community implications rather than framing the issue only around the financial needs of a single organization.

Phase 2: Prepare your organization

Make sure you have the basic capacity to participate.

Organizations need reliable communication tools, staff or volunteer time, current financial and program information, and clear responsibility for coordinating the work.

Identify the people who should participate.

This may include staff, volunteers, board members, program participants, community partners, and people with lived experience related to the work.

Participation should be voluntary and meaningful. Do not assume that people receiving services should share personal experiences publicly simply because their stories might strengthen a funding request.

When participants contribute substantial expertise or time to policy development, presentations, advisory work, or public testimony, consider compensation and other supports when feasible.

Make sure people understand the proposed policy change.

Explain:

• The existing funding policy
• The proposed change
• Why the organization believes the change deserves consideration
• The expected benefits and possible tradeoffs
• Who has authority to make the decision
• How staff, board members, participants, and community partners may be involved

Develop a clear description of the organization and its role.

Your mission, services, community role, partnerships, and intended outcomes should be understandable to someone who is unfamiliar with the organization.

Be clear about what distinguishes your contribution without suggesting that your organization is the only one capable of addressing the issue.

Develop useful evidence.

Combine quantitative and qualitative information when appropriate.

Quantitative information may include:

• The number and characteristics of people participating in the program
• Community indicators related to the issue
• Program outcomes
• Cost and budget information
• Demand, waiting lists, geographic reach, or service gaps
• Findings from formal evaluation

Qualitative information may include participant feedback, interviews, focus groups, community input, staff observations, partner perspectives, or stories that provide context for quantitative findings.

For example, rather than describing "2,000 homeless people," write about approximately 2,000 people experiencing homelessness if that is what reliable local data show, and explain the source, date, population, and limitations of the estimate.

Personal stories should be shared only with meaningful consent. Whenever possible, give people control over how their experiences are described and whether their names, photographs, or other identifying information are used.

Maintain an informative public presence.

Keep community members, partners, and potential funders informed about the organization's work through accessible reports, community meetings, websites, newsletters, social media, presentations, or other appropriate methods.

Visibility should reflect the work accurately rather than functioning primarily as a strategy for gaining influence.

Phase 3: Participate in the decision-making process

As discussions move forward:

• Be concise
• Be clear
• Be accurate
• Explain your reasoning and evidence
• Respond within relevant timelines
• Follow through
• Acknowledge people's time and contributions

Develop an action plan with measurable goals and objectives.

Define the policy change you are asking decision-makers to consider and identify the steps required to participate in the process.

For example:

• Document the need or opportunity
• Meet with relevant staff to understand current requirements
• Gather input from program participants and community partners
• Prepare financial and program information
• Submit information through the appropriate process
• Respond to questions
• Evaluate the result and next steps

Maintain professional communication with decision-makers and staff.

Whenever possible, begin communication before an urgent decision is required. Introduce the organization, explain its work, and learn how the relevant institution handles funding and policy questions.

When public officials are involved, distinguish clearly between providing information, participating in public processes, and lobbying for or against specific legislation.

Become a reliable source of information.

Provide concise, relevant material that explains:

• The organization and its mission
• The community issue being addressed
• The existing funding policy
• The proposed change
• Supporting evidence
• Expected costs and benefits
• Important limitations, uncertainties, or tradeoffs

A short fact sheet may be more useful than a large packet if it allows decision-makers to understand the issue quickly and locate additional information when needed.

Participate in appropriate public processes.

Depending on the issue and organizational status, appropriate activities may include attending public meetings, submitting comments, providing requested information, meeting with officials or staff, participating in hearings, or providing testimony.

When asking community members or program participants to participate, explain the purpose, what information may become public, and what support is available. No one should feel pressured to disclose personal hardship in order to demonstrate that a program deserves funding.

Communicate with the wider community.

Newsletters, local media, websites, community meetings, social media, and other channels can help explain the issue and allow community members to understand and participate in the discussion.

Use terms such as participants, community members, people served by the organization, or the specific population being discussed rather than "target population."

Public communication should distinguish facts from organizational recommendations and should accurately represent significant costs, uncertainties, and competing considerations.

Acknowledge contributions appropriately.

Thank staff, community members, partner organizations, funders, officials, and others who contribute to the process. Obtain permission before identifying people publicly when privacy or professional considerations may be involved.

Phase 4: Maintain, evaluate, and adapt the work

Funding policies and community needs change over time. An organization should periodically review:

• Whether the policy change occurred
• Whether it produced the expected benefits
• Whether the funding remains aligned with community priorities
• Whether reporting or administrative requirements are reasonable
• Whether funding is reaching the people and activities it was intended to support
• Whether unintended consequences have emerged
• Whether the organization should continue, revise, or end its policy work

Long-term participation does not mean continuing to seek the same policy indefinitely. Evidence, community feedback, changing conditions, and the responsibilities of the funder should help determine whether the proposal still makes sense.

What should nonprofits know about lobbying?

Nonprofit organizations can participate in many forms of public-policy education and civic engagement, but the legal rules vary according to organizational status, funding source, type of activity, and jurisdiction.

For U.S. organizations, it is important to distinguish between general public-policy education and lobbying related to legislation.

Public-policy education and lobbying are not always the same thing

Activities such as researching public issues, providing nonpartisan educational information, holding educational meetings, and discussing public policy may not necessarily constitute lobbying.

Lobbying generally involves efforts to influence legislation, including certain communications with legislative bodies or communications encouraging the public to support or oppose legislation.

Organizations should consult current guidance when determining how a particular activity is classified.

Section 501(c)(3) organizations

Section 501(c)(3) organizations may engage in some lobbying, but lobbying cannot constitute a substantial part of the organization's activities under the general federal tax rules.

Eligible public charities may choose an alternative method for measuring lobbying activity by making an election under Section 501(h). This election is made using IRS Form 5768 and measures lobbying primarily through expenditure limits established in federal tax law.

Do not rely on informal rules of thumb such as assuming that a particular percentage of an organization's budget is automatically safe under every circumstance. The applicable rules depend on whether an organization uses the substantial part test or has made the Section 501(h) election, as well as on its specific activities and circumstances.

Some organizations, including private foundations and certain other organizations, are subject to different rules.

Election-related activity is different from lobbying

Lobbying about legislation and participation in campaigns for or against candidates are legally distinct activities. Organizations should not assume that permission to engage in some lobbying also permits participation in candidate campaigns.

Before undertaking substantial lobbying, using restricted grant funds, participating in ballot-measure activity, or engaging in work connected to an election, obtain current guidance appropriate to your organization's legal status.

Tax and lobbying laws can change, and additional federal, state, local, grant, or contract requirements may apply. Use current official guidance and consult qualified legal or tax professionals when necessary rather than relying solely on general summaries.

In Summary

Sustainable funding often requires a mix of strategies. Grants, contracts, donations, earned income, partnerships, public funding, and other resources can all contribute to an organization's stability.

In some circumstances, organizations may also participate in efforts to improve the policies that determine how public agencies, foundations, corporations, and other institutions provide funding.

Strong funding-policy work begins with understanding community priorities, the potential funder's mission and responsibilities, the decision-making process, the evidence supporting the proposed investment, and the perspectives of people affected by the work.

A useful process includes:

1. Research the funding environment, decision-making process, evidence, legal requirements, and potential partners.
2. Prepare the organization by clarifying its goals, developing reliable data, involving appropriate community members, and making sure participants understand the proposal.
3. Participate through appropriate public or private decision-making processes using clear, accurate, and transparent information.
4. Maintain and evaluate the work by examining whether policies produce the intended results and adapting as community conditions and funding priorities change.

The goal is not simply to make an organization appear indispensable. It is to help decision-makers determine whether sustained investment in particular work contributes to community priorities and produces value that justifies continued support.