Saturday, February 19, 2011

How will the Senate moratorium on earmarks affect your nonprofit?

Despite the good nonprofits do, they're being hit six ways to Sunday with funding cuts.

The Senate Appropriations Committee recently announced a two-year moratorium on earmarks. Many nonprofits have depended on earmarks, especially for capital projects or start-up funding for new projects.

How will the moratorium affect the people your nonprofit serves?

How many of your employees will be out of work because of the cuts?

How close is your agency to closing your doors?

Wednesday, February 16, 2011

What is a Social Impact Bond?

The Nonprofit Finance Fund just received a $400,000 grant from the Rockefeller Foundation to explore the feasibility of social impact bonds in the United States.

I’ve been missing in action from this blog as life, budget cuts, and same old, same old got in the way. But suddenly I’m feeling energized again, thinking about how nonprofits will survive the aggressive budget cuts that the Republican House is proposing.

So, what do you think about this idea? NFF press release

A Social Impact Bond is a concept that aligns the interests of the public, private and philanthropic sectors around a shared vision of desired social outcomes. Instead of creating compensation based on the number of services delivered, incentives are tied to positive results. Social Impact Bonds have the potential to save taxpayers money while concentrating investment in proven, high-impact interventions that create measurable social benefit.

The Social Impact Bond was piloted in the U.K., where investment is focused on a program designed to reduce re-offending rates among released prisoners. The U.K. government will make payments to investors based on the program's measurable success stemming returns to prison. If the Social Impact Bond model is moved beyond a pilot and brought to scale, it is expected that the payout to investors will cost the government significantly less than housing re-offenders in prison – thus saving the tax payer money in the end and providing a sustainable, long-term solution to a social problem. Adapting the Social Impact Bond model for the U.S. could have tremendous implications for the way social needs are funded.

If you’re interested in following this development, check it out here.

NFF also just launched a new open, online community for any organization interested in exploring this topic and sharing resources. The group will host its first in a series of web chats on February 23, 2011 at 1:00 pm EST. The first chat will feature expert panelists on the topic: 'The Federal Government's Role in Implementing the Social Impact Bond in the United States'. All are invited to join the group and the web chat, which are designed to facilitate idea-sharing around this new concept. Visit for details.

How the Obama Administration Will Grant Money

This Washington Post article by Ezra Klein lays out how the administration will spend it's program grant money. It’s great to see this rationale in plain English. In the past, we’ve usually had to read between the lines. Each RFP and each agency handled each project differently.
The Obama administration's favored funding structure involves a three-tiered test. The top tier is for programs that have tested themselves using a randomized control trial in multiple sites, or something close to it. That's the gold standard in evidence, and those programs get the most money. The second tier is for programs with preliminary evidence, and they can get some money. And then there are programs that can make a case for why they're worth trying, and they can get a bit of money -- enough, essentially, so they can develop evidence and come back to qualify for a higher tier. Program funding is being moved to this model across the government, in education and energy and transportation and more. "This is one of the few times I've regretted being a Republican," Haskins says happily. "I just think this is the exact right thing to do, and they’re being so thorough about it."
Then there's the systemic level. The model here is the Race to the Top program, which has been at the core of the administration's efforts in the education space. That initiative ran a competitive grant program in which states needed to submit a reform plan, then pass it through their state legislatures, before they could qualify for cash. The money, essentially, was used to buy votes for a broader reform vision.
I love the Ron Haskins quote. Haskins was senior advisor for welfare policy in the George W. Bush administration.