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Nonprofits must keep searching for new revenue: An example using “Communities for Teaching Excellence” and Gates Foundation funding

October 21st, 2012 · by Jake Seliger · No Comments

In the L.A. Times, Howard Blume says that a “Gates Foundation-funded education-reform group [is going] to close,” because the organization—Communities for Teaching Excellence lost 75% of its funding. And that 75% came from a single source: the Gates Foundation. This story holds an important lesson for nonprofits: you’re only as good as your next revenue source.

Actually, Blume says that the nonprofit’s board chair claims that Communities for Teaching Excellence decided to shut itself down:

But Communities for Teaching Excellence was not hitting its marks in terms of generating press coverage and building community coalitions, said Amy Wilkins, chairwoman of the board of directors. She said the board voted to shutter the organization; the Seattle-based Gates Foundation agreed with the decision.

This seems. . . improbable. We’ve rarely encountered a nonprofit that willingly shut down.* But we have encountered lots of nonprofits who ran out of money and then decided that their mission was complete and that they could move on. The situation is analogous to high-level political, military, and business leaders who are told to have their resignations on their bosses’ desks by the morning. All of us have seen that sort of thing in the news: “I would like to spend more time with my family. . .” is usually code for “was fired.”

Nonprofits shouldn’t rely on a single source of income. Plus, once you have income, use that source to leverage more.** A single source source—especially one with cachet like the Gates Foundation—makes it easier to get more, because foundations like a winner and like to be associated with winners.

Foundation and corporate giving programs, like venture capitalists, are herd animals, and they’ll assume that if someone else is funding you, you must be good. Sometimes they’re even honest about it, as an RFP from the Crossroads Fund makes clear: “We fund groups with budgets under $300,000, and look for organizations with diverse funding sources” (emphasis added).  I’ll leave their dubious use of commas aside and point out that they’re just unusually honest. As with the dating market, one victory tends to provide the social proof necessary to beget other victories, and Communities for Teaching Excellence already had one major victory.

But they may have stopped swimming, and as soon as they stop swimming, they died.*** Or they may have tried to keep going and simply done so ineffectively; we can only speculate based on what we’ve seen from the outside. I’m guessing, however, that they succumbed to the disease often caused by success: assuming that you’re golden and can do no wrong.

Communities for Teaching Excellence itself was even doing some interesting work: the Gates Foundation “funded the development of new teacher-evaluation systems,” which is an issue that’s growing in importance. In The Atlantic, for example, Amanda Ripley explains “Why Kids Should Grade Teachers:”

A decade ago, an economist at Harvard, Ronald Ferguson, wondered what would happen if teachers were evaluated by the people who see them every day—their students. The idea—as simple as it sounds, and as familiar as it is on college campuses—was revolutionary. And the results seemed to be, too: remarkable consistency from grade to grade, and across racial divides. Even among kindergarten students. A growing number of school systems are administering the surveys—and might be able to overcome teacher resistance in order to link results to salaries and promotions.

I’m not sure that Communities for Teaching Excellence was working on this particular set of issues, but education reform does seem to have reached a critical mass, so maybe something substantive is actually happening in the field.

By the way, the chairwoman of the board also has a grant writer’s sense of proposal-ese:

“The field was more complex … and building these partnerships was more difficult than anybody had imagined,” Wilkins said. “The inventors of this organization had envisioned more robust activity at the local level than we were achieving.”

What does “complex” mean? What does “more robust activity at the local level mean” in this context? Blume either didn’t ask or didn’t tell us. That he regurgitates this kind of language is indicative of the problems of the newspaper industry as a whole: reporters not only don’t call people on their BS, but they repeat the BS.


* In the rare cases in which a nonprofit willingly shuts down, the shutdown is often caused by the departure of key staff people, or the death or departure of the founder or a major true believer.

** Other businesses face the same basic set of problems. We’ve occasionally been approached by organizations that want to buy the vast majority of our effective grant-writing capacity, and although those discussions have never gone very far, we also don’t want to be beholden to a single client, so wouldn’t take the offer.

*** This is similar to raising money for startups and being an academic (at least until tenure).

Tags: Education · Foundations · Media · Nonprofits