Growth not without struggle for Austin’s philanthropic groups

Most of Austin’s nonprofits are small, short on cash and operate without paid staff, according to a new report detailing the state of the city’s nonprofit sector.

There are more than 5,800 nonprofit organizations in Austin, a 36 percent increase since 2004, according to the Greenlights study. That is higher than the state—28 percent—or national—20 percent—average increases during that time. However, nearly three-quarters of area nonprofits have annual incomes less than $100,000, and less than 40 percent of sector leaders report having strong organizational financial health.

“We owe it to those in our community who are struggling to do better,” said Matt Kouri, CEO of Greenlights, a local nonprofit that helps organizations tackle complex community issues. “We know big, complex social problems in Austin can never be solved by any single entity, whether it’s a government agency or nonprofit group.”

Small and new nonprofits are particularly struggling to meet their missions, the report reveals. Greenlights recommends nonprofits perform self-evaluations to learn strengths and weaknesses.

“We want organizations to begin to really think about sustainability and how they can become more sustainable over time,” said Marisa Zappone, Greenlights research manager and the report’s lead analyst. “The way to do that is to increase earned income and continue to grow programs without relying solely on grants or individual donations.”

Funding solutions

Amplify Austin has become one way for area nonprofits to capture new sources of donations. More than $7.7 million was raised March 5–6 during the 24-hour fundraiser, topping this year’s $7 million goal. The Boys & Girls Club of the Austin Area raised $402,952, the most of any organization during the third annual marathon. Eighty-six percent of that money goes back into Boys & Girls Club programs, said Misti Potter, who became the club’s Austin-area executive vice president two months ago.

Boys & Girls Club initially anticipated raising only $200,000, Potter said, and increased its goal to $300,000 after receiving upfront donations. The higher-than-expected amount of donations provides a huge financial boost to start 2015, she said.

“The people of Austin are genuinely concerned with helping others, which is wonderful,” Potter said. “It’s such a wonderful, refreshing feeling to be in a community that gets it and understands there’s people in need, and if they have the ability to help they’re going to help. That’s not common.”

The state of the sector report recommends organizations forge more partnerships, a philosophy Potter said she embraces.

“There is not a single nonprofit that is an end-all, be-all source for services they’re providing to their clientele,” she said.

Social enterprises, or businesses that help generate revenue for nonprofits, are also strongly encouraged by Greenlights. The group’s report details a social enterprise benefiting Easter Seals of Central Texas called Easter Lawn & Landscape Services, a profitable business that provides jobs to adults with disabilities. Austin was also the first U.S. home of a Habitat for Humanity ReStore, a home goods thrift shop operated by the organization’s Austin chapter.

This summer Habitat for Humanity will relocate its East Austin ReStore to a significantly more visible location at the corner of South First Street and Ben White Boulevard, Austin chapter CEO Kelly Weiss said. That could help boost annual ReStore revenue from $500,000 to between $800,000 and $1.7 million, she said.

“A lot of people don’t realize the ReStore goes to support most of our operational costs and allows us to put more money into building more houses,” Weiss said. “It’s a key component to growing our production.”

Other nonprofits lean more heavily on donated goods and volunteer hours. Ronald McDonald House Charities of Central Texas provides a home away from home for families whose children are undergoing medical treatment—typically at the adjacent Dell Children’s Medical Center of Central Texas. The house is run primarily by volunteers, RMHC Central Texas CEO Carolyn Schwarz said.

“We know involvement leads to giving, so when someone gets involved as a volunteer that’s the gateway to becoming a potential donor because you get to see how much we do on so little,” Schwarz said. “We are fortunate to have people who not only give their time and talent but also their treasures.”

RMHC, which celebrates it 30-year anniversary in 2015, has benefited from approximately $4 million in donations from McDonald’s owner-operators since opening in 1985. Those contributions only make up 10 percent of RMHC’s budget, Schwarz said, leaving her organization to fundraise the rest.

Innovative social funding models

A new concept called social impact bonds could provide another funding avenue for Austin’s philanthropic organizations.

Austin-Travis County area and six other communities nationwide were selected to receive federal-issued social innovation funds. The money enables city and county officials to conduct a feasibility study to see if this area can support Pay For Success, a social-impact bond that pays back investors for money spent on programs that prove successful and capable of being expanded upon. The study will focus on whether a Pay For Success model could effectively expand existing programs that attempt to reduce teen pregnancies among Hispanic youth and another program that seeks to improve birth outcomes among African-Americans. A third Pay For Success feasibility study grant from a separate grantor was received by Ending Community Homeless Coalition Inc., or ECHO, to consider expanding efforts to house vulnerable Austin populations.

Austin Mayor Steve Adler will keynote a June 3 Greenlights event called AustinNext, a town hall–style gathering of community nonprofit and business leaders, Kouri said. Adler is likely to talk about the Greenlights’ state of the sector report as well as the potential for social-impact bonds in Austin.

“It’s all in an effort to continue to try to have Austin become a social innovation hub nationally,” Kouri said.