Development Planning

Today, Trina Almond, Development and Communication Director, and I attended the third of a series of four seminars on Strategic Fundraising for Nonprofits put on by the Nonprofit Services Consortium in St. Louis. Today we covered corporate and foundation relations, and board and staff leadership. The second part was particularly interesting to me as our agency wrestles with how best to engage our board in the process of fundraising. Because of our funding sources we are required to have a "tripartite" board of directors made of 1/3 low income representatives, 1/3 elected officials, and 1/3 private sector representatives. Within those sectors we have to have expertise in legal issues, finance, and early childhood education. This is a very important operational board but it isn't really geared towards fundraising. With that in mind, one of our board members suggested that we establish a Development Advisory Board that would be established with fundraising in mind and specifically recruit community members with the experience, network, and resources to make such efforts successful. We are moving forward with this concept and the board member that brought this concept is going to serve as the first chair of our advisory board! We have been slowly preparing our board to support fundraising efforts to supplement our program funding and I am looking forward to implementing our development plan.

Some people ask why we need to establish a development plan when we receive federal and state funds to operate our programs. The generic answer is that none of those sources is designed solely to "empower individuals and families to achieve self-reliance" as our mission suggests. All of our services play a role in our strategic plan, helping people to achieve their goals regardless of their starting point along the human development continuum but ultimately, it is important for CMCA to generate unrestricted funds to fill in gaps in those services. Specifically, unrestricted funds will be used for quality control and expansion of existing programs, capacity building within the agency (training, support, salary structures), client asset and business development, and our Circles approach (which is a comprehensive approach to ending poverty that is relatively unfunded at this point). With a more diverse source of revenue CMCA is more likely to achieve it's mission.

Board Challenge

The CMCA board met last night and had some excellent discussion. Thanks to all who attended. The general theme for the evening revolved around our housing responsibilities, most of which fall under our first and third strategic commitments. 1. Engage the community to assure that all people have their basic needs met; and 3. Build community capacity to enhance economic and community assets. Some of the board members expressed some concern over our involvement in tax credit development deals. In a nutshell, the state of Missouri created the Missouri Housing Development Commission to support the development of affordable housing throughout the state. Developers apply for tax credits to fund their development, they sell those credits to syndicators (investors) that turn the credits into cash for the building project. The developers are required to have non-profit partners to keep the playing field level. That's where we come in. As non-profit partner we generally get some small portion of the developer fee (the profit from the development) and have the responsibility of certifying that the new development makes apartment units available to tenants with low-income and that rents constitute less than 30% of their household income. Generally there is a sense that developers are getting rich by taking advantage of these arrangements and that not enough of the tax credit dollars actually make it into the project itself. A couple of things come to mind when I hear that. First, without this arrangement I do not believe that we would see the development or rehabilitation of quality affordable housing in Missouri. If a developer can't make a profit, why would they do it? Also, the developers are the ones taking the risk. Their entire profit comes immediately after the completion of the building phase. Apartment rents are kept so low that there is little or no profit to be made managing them over the life of the structure, unlike market rate developments where the rent provides ongoing profit. Most importantly, the conclusion I have come to (and more importantly, that the board has endorsed), is that as a non-profit with commitments to provide affordable housing, WE should be in the driver's seat on these developments. If CMCA acts as the developer, the "profit" goes back into our programs and services to serve our communities even better. That leads me to the challenge the board presented last night. One of our directors attended the Community Action Capitol Development Enterprise conference with two of our staff and came back fired up about new opportunities and thinking outside of the box. She challenged us to follow through on our Transformation Plan (more to come on that) by generating revenue for the agency in all new ways. Federal funding for our programs has been stagnant or declining for years and we have to think differently about our revenue options if we take our mission seriously. I heard that message loud and clear and am excited to continue moving our organization in that direction.

The Great Funding Roller Coaster

Funding for community action agencies is like a roller coaster. Six months ago I was worried that we were going to use more than $300,000 in agency reserve funds to account for deficits in Workforce Investment Act (WIA) programs, Low Income Home Energy Assistance Program (LIHEAP), Community Services Block Grant (CSBG), Head Start, Weatherization, and Foster Grandparents. Today, I am confidant we will make it through the year with a balanced budget for the first time since I have been at CMCA. We have leveled the roller coaster through tireless advocacy, innovative and responsible management and budgeting, and a little bit of luck. Let me explain. Two of our programs experienced "rescissions" this year. Essentially that means our federal funders decided that they can't really afford the contracts we have in place. WIA experienced a rescission of more than $100,000 and Foster Grandparents experienced a $7,000 rescission. Our employment and training department was already spread thin by hiring freezes required by our contractor and ever increasing demands. We planned to maintain our current staffing and absorb the deficit from our CSBG reserves to see if funding is restored next year while seeking additional grants elsewhere in the meantime. Joyce Davis was relentless in her pursuit of additional funds and worked with Anita Sanderson and the Central Region Workforce Investment Board (CWIB) to restore the entire deficit last month. LIHEAP and CSBG were written as deficit budgets last year because there is just more work than we have staff to accomplish. In January and February however, Missouri granted more LIHEAP funds that both filled our staffing needs and compensated some of our CSBG staff who had been doing LIHEAP work. Angela Hirsch and Anita worked diligently to rework the budget with these changing parameters to live within our means. Head Start funding has been stagnant for years. The only increase we have seen in the last seven years has been a 1.5% cost of living increase that didn't even come close to catching up to all of our rising costs. During that time more of our teaching staff has earned degrees and national accountability measures have squeezed our budget tight. Mernell King is a brilliant manager that has been able to re-organize our Head Start structure (twice in the last two years) in a way that both makes our budget work and maintains a high level of quality. Significant grants have been written and awarded to her team for Healthy Smiles, Connect for Kids, and Fathers First, and more are on the way. The initiatives help to support our administrative costs and enhance the quality and comprehensiveness of our Head Start program and agency. Our Weatherization program (Wx) also experienced a budget hiccup that was just bad timing. The state changed one of its regulations about how we are funded and the end result was the $47,000 from a '07 contract with Ameren got lost in the shuffle. After going around and around with Ameren and the Department of Natural Resources (our Wx funder), Teresa House found a solution that everyone can agree on. It is not a perfect solution as we still feel like we are losing $47,000 but it won't hit us until next year when we can at least plan for it. The point of all of this is that this is no way to run an organization. Our state and federal governments are not supporting our programs consistently and I believe that we have to find revenue from different sources that at least give us some control over how much we get and how we use the funds. To that end, we continue to plan for fund raising strategies and social enterprises that will generate revenue we can use to plug holes in our grant budgets and ultimately move us closer to our mission of empowering individuals and families to achieve self-reliance.