Ten Nonprofit Funding Models

6. POLICY INNOVATOR Some nonprofits, such as Youth Villages, rely on government money and use a funding model we call Policy Innovator. These nonprofits have developed novel methods to address social issues that are not clearly compatible with existing government funding programs. They have convinced government funders to support these alternate methods, usually by presenting their solutions as more effective and less expensive than existing programs. (By contrast, Public Providers tap into existing government programs to provide funds for the services they offer.) An example of a Policy Innovator is HELP USA. This nonprofit provides transitional housing for the homeless and develops affordable permanent housing for low-income families. Andrew Cuomo (son of former New York governor Mario Cuomo) founded HELP USA in 1986 as an alternative to New York’s approach of paying hotels to house the homeless in so-called “welfare hotels.” HELP USA’s innovative approach to the housing crisis came about in an era when homelessness was a prominent public issue and government funders were willing to try a novel approach. Cuomo gained the initial support of government decision makers by positioning his solution as both more effective and less costly, which was critical during New York’s fiscal crisis. In 2007, HELP USA’s revenues were $60 million, almost 80 percent of which came from government sources, half federal and half state and local. The organization was operating in New York City, Philadelphia, Las Vegas, Houston, and Buffalo, N.Y. Nonprofit leaders considering the Policy Innovator funding model should ask themselves the following questions:
* Do we provide an innovative approach that surpasses the status quo (in impact and cost) and is compelling enough to attract government funders, which tend to gravitate toward traditional solutions?
* Can we provide government funders with evidence that our program works?
* Are we willing and able to cultivate strong relationships with government decision makers who will advocate change?
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* At this time are there sufficient pressures on government to overturn the status quo?