A pilot to significantly expand the scale and effectiveness of selected US non-profits has been undertaken by major US foundations while, closer to home, a local philanthropist raises funds to house children in need. SIMON MUMME and CATHERINE JAMES report.

US philanthropic grantmaker The Edna McConnell Clark Foundation (EMCF) is leading a co-investment effort with 19 other funders to commit $US120 million to build the capacity of its three top-performing grantee organisations.

The Growth Capital Aggregation Pilot (GCAP) aims to provide the non-profits with the immediate funds required to fuel their expansion, build capacity and achieve long-term financial sustainability. The EMCF believes that significant, long-term investments in proven organisations that exhibit growth potential is an efficient and effective way to meet urgent social needs.

Woody McCutchen, portfolio manager of the $US900 million foundation based in New York, says that that while many non-profits can raise money to roll out specific programs, securing money to enhance capacity is more challenging. “Foundations have been very slow to fund operating expenses and overheads. If [non-profits] are always chasing money, then you’re not going to see the organisation growing,” he says. “We understand that non-profits need serious help with building capacity and not just delivering programs.”

The EMCF focuses on improving opportunities for low-income youth. The five-year pilot focuses on three long-term EMCF grantees: the Nurse-Family Partnership, which develops self-sufficiency among children born into first-time low-income families, will receive $US50 million; Youth Villages, which intervenes to help youth in juvenile justice and foster care systems stay in or return to their homes, will be granted $US40 million; and Citizen Schools, which provides after-school tuition and support to students, will gain $US30 million.

Four of the largest US foundations – the Bill & Melinda Gates Foundation, Robert Wood Johnson Foundation, W.K. Kellogg Foundation and the Kresge Foundation – are among the grantmakers. “We consider the investments as final investments,” McCutchen says. “The organisations are basically saying to us and Gates: ‘If you fund us for this we will never have to come back to you again to pitch for capacity-building funding’.”

The non-profits were chosen for their past performance, histories of consistently attracting program funding, sustainable operating models, excellent governance and potential for growth. “These non-profits are taking on some really tough work,” McCutchen says.

On a growth trajectory that could propel their organisations from being $2 million to $30 million in size, chief executives and boards must be prepared to manage this rapid increase in scale, which could entail hiring specialist operations and financial officers and buying more equipment.

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