In March 2020, as the world shut down, nonprofits stepped up. As businesses closed – some forever – people lost jobs, and everyone struggled to find their new normal, the nonprofit sector distributed food, found masks and gloves and hand sanitizer when they were in short supply, and generally were holding things together for their communities in ways large and small.
That effort did not come without a cost. Few nonprofits were able to access bailout programs such as the Paycheck Protection Program. While many donors used the influx of cash from the government stimulus payments to increase their charitable giving, that money has dried up. Meanwhile, demand for services has continued to be high and is increasing as many of the government programs that helped get people through the worst of the pandemic, such as eviction protection and universal school meals, come to a close.
The Michigan Nonprofit Association was aware of the challenges its members were facing, and began to think about ways they could help meet them.
“Of the 23 (relief) programs that were aimed at helping businesses, only three of them were open to nonprofits," says Joan Gustafson, external affairs officer for MNA. “Even when they were eligible, that sometimes wasn’t clear, and the administration of the funds wasn’t ideal for the nonprofit sector.”
MNA decided to lobby for a state relief fund for nonprofits that would be funded with American Rescue Plan Act money. Their original ask was for $35 million, but the state legislature upped that to $50 million when they included the fund in the state budget for the 2023 fiscal year. The funds are a one-time infusion of cash, are aimed at small nonprofits with budgets of $1 million or less, and, most critically, are general operating funds. General operating funds are unrestricted, allowing nonprofits to use the funds as they see fit rather than for a specific project or program. Grants will range from $5,000 to $25,000, based on an organization's size and needs.
A particularly innovative aspect of the fund is the participatory grant-making model MNA is using in partnership with the Michigan Department of Labor and Economic Opportunity, which will administer the funds. The aim is to respond to the unique needs of nonprofits, especially small ones that often run very lean with small staffs and limited resources. An advisory board made up of community stakeholders will design the application and help ensure the process is helpful to the nonprofits that apply whether they receive funds or not. Regional advisory hubs will offer technical assistance to applicants and have input on the process as well.
“We are working through a community-driven strategy to deploy the funds,” says Nellie Tsai, social innovation officer for MNA. “Knowing how grants can be extractive and done in a harmful way, we’re designing the application process in a way that will actually benefit small nonprofits.”
For example, the application will be fairly short and designed to uncover the organization’s capacity to use the funds well, without expecting a smaller nonprofit to provide unnecessary detail. Larger nonprofits often have grant writers on staff who can devote time and effort to funding proposals; in smaller organizations, one staffer can juggle grant writing and grant management with a myriad of other administrative and programmatic responsibilities.
To that end, the process will begin with an interest form designed to take only 5 to 10 minutes to complete, asking for basic information about the nonprofit and presenting a series of yes and no questions designed to uncover the nonprofit’s needs. After that phase is complete, it moves on to a more extensive, but still succinct, full application.
“We are really looking at the expectations and goals of this relief funding and also the needs of the nonprofit. We’re looking at how we can ask questions that get at all of these (necessary) points and identify not only the right question but the right length so that the effort meets the output,” says Tsai.
MNA and their partners will offer technical assistance to nonprofits for needs highlighted by the initial screening application. For example, if a nonprofit lacks a conflict of interest form for board members, MNA or their partners will offer assistance in creating and completing one. This means that even if a nonprofit is not selected for relief funding, they will come out of the process with something to show for it.
Amy Quinn, CEO of Grow and Lead Community and Youth Development in Marquette, is serving on the advisory committee. Her organization is also one of the regional capacity building hubs that will partner with nonprofits to offer technical assistance through the application process. She says the participatory grant-making process MNA is employing can help overcome inequities in who gets funding and make sure funds are distributed in a way that is both responsive to the needs of nonprofits and responsible with state funding. “We’re making sure we’re not having to deal with the bias of people making funding decisions, and we also want to make sure the process isn’t overly burdensome for the amount of money they would receive, but is enough that, as a committee, we feel the funds are spent well, efficiently and equitably,” she says.
The advisory committee is working on the initial interest form now and expect that it will be available in mid-January, with the full application available a few weeks afterwards and funds disbursed in the spring. Nonprofits that would like to apply for funding, as well as organizations that would like to assist in the advisory committees, can email firstname.lastname@example.org for more information, and MNA’s newsletter will also be providing updates on the process.
The relief fund represents an unprecedented opportunity for the nonprofit sector to build capacity and think about how they can refocus and move forward stronger after a challenging time. “I hope in a few years we can look back and say 'that was really a changing point for Michigan nonprofits.' We’re encouraging them to step back from the daily grind to say ‘this is what we really need’.”
NOTE: When this story was originally published, it stated that funding was for nonprofits with less than 15 employees; this is not an eligibility requirement.
This feature is part of our Nonprofit Journal Project, an initiative inviting nonprofit leaders across Metro Detroit to contribute their thoughts via journal entries on how COVID-19, a heightened awareness of racial injustice and inequality, issues of climate change, and more are affecting their work--and how they are responding. This series is made possible with the generous support of our partners, the Michigan Nonprofit Association and Co.act Detroit.