Why the Sustainability Myth is just as destructive as the Overhead Myth

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unicorn headHi everyone, thanks to the latest episode of Game of Thrones, I’m depressed out of my mind. And I’m hungry. So this post will probably be slightly bitter, and have food metaphors. Last week I mentioned my piece in the Chronicle of Philanthropy regarding sustainability. Unfortunately, since the piece is for paid subscribers only, many of you were not able to read it, leading to several angry comments, and one reader who sent me a severed stuffed unicorn head.

All right, no one sent me a stuffed unicorn head. But that gives me a brilliant NWB merchandizing idea: Stuffed unicorn heads that you can buy and send to board members who don’t show up to meetings. Or funders who make you write a ten-page proposal with eight attachments for a $5,000 grant. Or coworkers who keep leaving their containers of food in the fridge until they get all moldy. Take your butternut squash and quinoa salad home, for the love of GOF (General Operating Funds)!

But, getting back to the topic, there were a few readers annoyed that they couldn’t read the article, so I want to recap and elaborate on the main points here. I know, I know, we’ve been talking forever about this. I hope this will be the last time we bring up Sustainability for a while.

The Overhead Myth

When Charity Navigator, Guidestar, and the BBB Wise Giving Alliance got together in 2013 and wrote a letter denouncing the Overhead Myth, I was ecstatic. The Overhead Myth is one of the dumbest and most damaging concepts ever inflicted on nonprofits and the communities we serve. Imagine if we go on Yelp to find help deciding which restaurants to frequent, and all the reviews are like this:

“We were disgusted that the Happy Chicken spends over 30 percent of their revenues on rent, water, insurance, and accounting software. Go a block down the street and eat at the Flying Lemur instead; the owner assures me she only spends 10 percent on things like electricity.” 

That’s what the Overhead Myth is like, and since it is down, we all need to kick it so that it never gets back up to terrorize us again. There is still a lot of people in society we need to educate regarding this issue. Let’s send them severed stuffed unicorn heads…

The Sustainability Myth

But now, we need to turn our attention to a more subtle, but equally insidious concept, the Sustainability Myth. Many funders and donors seem to define “sustainability” morels gnochias “self-sufficiency,” and have this romantic notion of a world where nonprofits don’t depend on them at all. Here is how I imagine the Sustainability Myth if it were applied to a for-profit restaurant:

Employee: Hi, welcome to the Happy Chicken. All of our dishes are organic, vegan, and gluten-free.

Customer: I saw a review on Yelp that you spend 30% of your revenues on overhead. Well, I only care about whether your food is good or not.

Employee: Oh thank you, thank you! Yes, let’s focus on the food! Today’s special is amaranth gnocchi with roasted morel mushrooms and fiddleheads, served with a wild nettle and sunchoke soup drizzled with a balsamic reduction and topped with truffled pepitas.

Customer: That sounds amazing. But tell me, how are you going to sustain this restaurant when I am done with my meal?

Employee: Pardon?

Customer: I only eat at restaurants where I know they have a strong plan to diversify their customer base so they can keep cooking after I have paid for my meal and am gone.

Employee: …Uh, well, we, um, we will…let’s see, increase our marketing and communication, hold a tasting event, and send our chefs and sous chefs out to spin signs on the street corners to attract more people…

Customer: You know what, your food sounds good, but I’ll come back when you have a stronger plan to ensure you are still around in five years.

Employee: Sigh…

Customer 2: Hey, are you guys open? My friend told me your butternut squash and quinoa salad is good. But I heard that 90% of your revenues come from catering. If that’s true, I can’t eat here, since that’s just not sustainable.

As I have mentioned in previous posts (here, here, and here), this magical land of Nonprofit Sustainability does not exist, and forcing nonprofits to search for it is futile and frustrating and ironically decreases likelihood of sustainability. But as I’ve been thinking about it more and more, I’ve realized that it’s not just irritating, but extremely destructive to our field. Unlike for-profits, as nonprofits become more successful, there is an increase in costs without an equal increase in revenues. Self-sufficiency at scale is impossible for all but a few orgs. Besides, half of start-up businesses fail after four years, and they spend all their time on earned-income, so it’s absurd to expect nonprofits to be successful at generating revenues while also running programs. Also, chasing after earned-income ventures may lead to mission creep, wasted time, poor image, and possibly even loss of nonprofit tax status. And despite the budding opposition to the Overhead Myth, we still have resistance to funding things that would increase nonprofits’ chances of succeeding, things like admin and fundraising staff, existing staff at existing programs, professional development, marketing, databases, chairs that don’t suck, etc.

The Myth of the “Nonprofit Welfare Queen”

cantaloupe-black_pepper_sorbet-458x326However, the most destructive result of the Sustainability Myth is that it perpetuates a terrible mindset in society, one that actively prevents us nonprofits from effectively doing our work. A colleague in the field asks, “Is there a nonprofit version of the welfare queen myth?” She was referring to how public assistance has been damaged by this ridiculous but sticky image of an irresponsible woman abusing the welfare system. “Did someone make up some nonprofit welfare queen to convince funders that they needed to micromanage their funding streams or some nonprofit would use it for diamond-encrusted seat warmers?”

The Overhead Myth and the Sustainability Myth both seem to stem from this unconscious image of nonprofits as moochers. Overhead is about making sure we don’t spend funding in frivolous ways (such as on staff salaries and healthcare). Sustainability is about making sure nonprofits are not going to be dependent on funders forever, like that irresponsible woman and her twelve kids who just plan to stay on welfare indefinitely and use their monthly checks to buy booze and Hot Cheetos.

But here’s the thing that we must accept if we are going to solve entrenched problems: Nonprofits depend on funders for support, and funders depend on nonprofits to run programs. Frankly, after answering yet another Sustainability Question on a grant application this month, I kind of wish that more foundations would start running programs. Yes, just run a great program and fully fund it each year, and I’ll apply to be a program director, and it will be so awesome, since the program will be completely sustainable, and I won’t ever have to fundraise again but can just focus on that sweet, sweet service delivery.

The more we keep reinforcing this unconscious belief that nonprofits are leeches, the more restrictions put on us, the less effective we will be in tackling society’s growing problems. Funders have to accept that nonprofits are partners, not parasites, or our communities lose. Yes, of course there are some nonprofits that suck and are actually parasites on society, just like there are people who abuse the welfare system, but they are few. We must accept and appreciate that funders/donors and nonprofits must complement each other, like cantaloupe and black pepper, or jicama and grapefruit, or watermelon and rosemary. Or whatever other pairings the Food Network tells us are good.

Let’s end the #SustainabilityMyth

humming birdThe quest for this elusive thing called “sustainability” has become as damaging as the obsession with “overhead.” It divests funders from their role as equal partners, and forces nonprofits to waste time justifying our work instead of actually doing it. It leads to small one-year grants and grants “no more than 10% of your org budget” or something, all of which just turn nonprofits into exhausted hummingbirds who spend much of our time and energy flitting from funder to funder. And it should be stressed that due to cultural and other contexts, many communities-of-color-led organizations do not yet have the capacity to build a robust pipeline of individual donors, so foundation grants are what’s allowing them to continue doing their jobs.

As I mentioned earlier, it seems perfectly normal for us to expect “sustainability” of nonprofits, but imagine if we applied this to other public services, such as the police, firefighters, paramedics, and public-school teachers. Imagine if firefighters had to spend half their time writing grants, planning events, and cultivating individual donors year after year to keep their work going. Imagine if we ask public defenders and judges, “So, how will you keep your programs running once our support ends in a year?” Or tell a teacher, “Hey, I really like your mission of teaching kids and stuff, but I am not going to support your school unless you have a better sustainability plan.”

Sure, if we force teachers to do more to raise funds each year, they’ll find ways to do it. But is this a good use of their time? And I’m sure paramedics would make amazing grant writers if necessary, but is that a good use of their time?

And yet it seems completely OK to expect “sustainability” of nonprofits. We have a lot of societal issues to address, and they are growing. Our communities can’t afford for us nonprofits to continue wasting thousands of hours each year defending our work instead of thinking of solutions and working together to implement them.

It is time for us to kill the Sustainability Myth—the myth that nonprofits can be self-sustaining. It is a terrible and destructive mindset that plagues our field. Think of your favorite restaurant. If it has good food and you want it to be around, you go and eat there and you tell your friends to give it a try. That’s how a restaurant thrives. It is sustainable when it does what it’s good at—making food—and we all pay for the food as long as it continues to be good. That’s the only thing that should matter; that, and whether the restaurant is treating its employees and the environment well. You don’t go to the owner and say, “Your food is good, but I’ll only eat here if you can prove you have a plan to be around in five years.” If all customers have that philosophy, the restaurant is screwed.

If society values public services, it needs to pay for them. If foundations and donors value what we nonprofits do, then they need to support our work. It is a mutual symbiotic relationship, with everyone having a role to play. If you think a nonprofit’s work is awesome and you want it to be sustainable, then sustain it.

What we should do:

Nonprofits: We need to stand up for ourselves and our field. We need to give honest feedback more often to our funders. Because of funding dynamics, we’re terrified to do it. But that just perpetuates the systems that we hate and we complain about to each other. Publicly recognize funders who provide multi-year, unrestricted funds. And if you are tackling earned income, reassess whether your business venture is in line with your mission. Push back against funders and board members when it makes no sense for your organization to pursue earned income.

Donors: Thank you for not restricting your gifts or asking about sustainability. Think about providing your donation regularly so we nonprofits don’t have to constantly freak out about fundraising. Push back on peers who perpetuate the Overhead or Sutainability myths. I wrote earlier about the community-centric fundraising model, where donors and nonprofits are equal partners in helping people; thank you for contributing to the work, focusing on outcomes, and then allowing us nonprofits the flexibility to carry out our missions.

Funders: Have a discussion with your team about your philosophy on nonprofit sustainability and the dynamics between nonprofits and foundations. What are your underlying assumptions? Are your expectations realistic? Talk about why you ask the Sustainability Question, and whether the answers given to you are honest or just BS that we nonprofits say to appease you. If you decide to stick with the Sustainability Question, consider changing it to “How will you sustain this program after our support ends, and what can we do to help you reach those goals?” Better, just stop asking it and instead provide multi-year unrestricted funds. And think about providing more than 10 or 15% of an org’s budget for small, grassroot organizations, especially those led by marginalized communities. And get a beer once a while with your grantees.

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And with that, I hope we can start to put an end to the #SustainabilityMyth and the philosophy that fuels it. I am tired of talking about it, as I’m sure you’re tired of reading about it. But, we need to keep chipping away at it until we end it for good. However, we have a lot of other stuff we need to pay attention to as a field. 

Next week: “Weaponized data: How the obsession with data has been perpetuating inequity.”

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  • Devra Thomas

    It would seem to me, that in a lot of cases, nonprofits are doing work that (should) (traditionally) has fallen to churches to take care of. Helping the homeless, caring for the poor, taking care of kids, etc etc. I wonder if this is where the “sustainability” question grew out of, maybe subconsciously. Churches don’t write grants, as far as I know. They have legions of acolytes dumping money in their coffers in exchange for salvation. Their business model is sustainable: as long as they can convert/birth more members, they’ll have a steady income stream.

    Perhaps if more congregations were ministering to these Whichever-God-You-Believe-In-given needs, then nonprofit businesses and grant-funders could focus on the areas that fall outside of the church’s purview.

  • Julie Reiskin

    “Imagine if we ask public defenders and judges, “So, how will you keep your programs running once our support ends in a year?”

    This is exactly what we DO to civil legal aid providers, who are non-profits. They provide access to justice to a large group of people who are abused by landlords, who are at the mercy of unfair governmental decisions or victimized by consumer scams. They also provide services to our low-income military members. But we do not fully fund them–and they are just as important as public defenders.

    As usual I agree with what you write here–thanks!

  • Andrew Mack

    Moreover, most donors specifically will not support the things that would make a nonprofit at least a little more sustainable. E.g., Let us buy a building so we don’t have to pay killer rents… or how about endowments? If they really want us to be “sustainable” then they should fund the mechanisms that would actually be a step toward sustainability (and lower overheads)…. and of course acknowledge actual sustainability is a myth.

  • Mat Despard

    Vu – there is such a thing as the nonprofit that can sustain itself – actually there are 2: universities and hospitals/health care systems. Of course, we all know that these nonprofits (which questionably meet charitable purposes) are actually propped up by massive taxpayer and employer subsidies (Pell grants, Stafford Loans, Medicare, etc.). Could these nonprofits sustain themselves without these subsidies? Probably not. So-called sustainability is really just a matter of choice and priority – as a society we have chosen to spend loads of money on healthcare (highest per capita spending, yet mediocre results) and higher ed (ever increasing tuition).

  • Thatcher

    What is truly unsustainable long term is heavy reliance on institutional funders. A lot of them have systems of internal accountabilities that are are barriers to the kind of nonprofit partnerships you pine for. And despite the fact there are some mega foundations, some of which are doing really great work, in aggregate there’s just not enough money in that sector to address meaningfully the needs of all the nonprofits who seek support from that sector. I think you too quickly dismiss the universe of individual donors as being too inaccessible to smaller and newer nonprofits focusing on delivering programs for and by communities of color. I understand there is a gap and it may at times seem like a chasm, but the work it would take to cross that is well worth it because on the other side are infividuals with resources, who care deeply about mission, are not hidebound by an institutional mindset, and who can stay with you for years and years as great partners. Sustainability? It lies in developing relationships with the network of committed individual funders. There is a huge universe of individuals who want to support the kind of work you were talking about. They are nimble and want to learn how to be more effective funders. You have a lot to teach them and they are open to it. And there is the added bonus: many great friendships will result from this work.

    • verucaamish

      This varies community by community. Both rates of individual giving for AAPIs and LGBTQ folks hovers around 2%. Reflective of other communities, the large proportion of AAPI giving is to religious institutions. The money is there, but there’s a profound cultural gap when it comes to individual giving to advocacy, service, and support organizations. I’ve worked for National AAPI and LGBTQ organizations and I’ve made those asks and written those appeals. For most of the organizations I’ve worked for, we don’t even get 100% Board participation. Strategies that may work for a predominantly white or predominantly cis and straight organization may not work for other communities.

  • Rachel PV

    As always, I appreciate the way you speak truth to power, and on a public forum to boot! It also makes me wonder if this tendency has jeopardized any of your relationships [read: $$$] with those institutions/systems you critique. What I’m trying to say is that you are very brave, and I’m curious about how you have achieved a position that allows you to speak out in the way that you do while still running a successful organization.

    • Rachel, thank you for the comment. I am not sure if this has jeopardized funding for my org. Honestly, I think that we underestimate our donors and funders’ abilities to rise above the petty and to work together. We don’t give enough feedback. If anything, it has led to a net increase in funding for my org, because people appreciate the no-BS perspective. They know that I say exactly what is on my mind, and they never have to guess; this makes for stronger relationships

  • Julia Foster

    Thanks for another spot-on post, Vu!
    I’d add that the need to keep finding new sources of funds (through different grants or through finding more individual donors) in order to become “sustainable” is in direct opposition to the problem of overhead. As a nonprofit is forced to find more and more new corporation/foundation/individual donors (or more earned revenue streams, for that matter), the organization typically must hire more fundraisers and staff. Those fundraisers cost money. They add to the overhead of the organization. Now the organization is criticized for too much overhead. It’s a lose-lose for the nonprofit. And should the nonprofit not invest enough in fundraisers/databases/systems to properly acknowledge/thank/pay homage to its donors? Look out! Now donors have another reason to pull funding.
    I hope we can work to encourage all funders to become true partners with their nonprofits…with eyes wide open to the realities of how much time is spent in chasing after money.

  • Laura Carpenter Myers

    Why is it only the “not-for-profit” sector is held to an impossibly high standard of sustainability? Municipalities all across the country willingly participate in capital construction projects that provide money for infrastructure but nothing whatsoever for ongoing maintenance. It’s a vicious cycle where millions of dollars are spent on new, nothing is allotted for maintaining the new, it rots and molders until it is too broken down to save, and voila, BUILD AGAIN NEW! And we bemoan planned obsolescence in the appliance industry?

  • Ari Wohlfeiler

    Hi Vu – longtime reader, firsttime commentor. With all love and respect, I think there is something missing from your analysis of all the damage “sustainability” does to nonprofits – although all the damage you itemize is totally true.

    I think while we need to educate and challenge funders to give enough money over a long enough period to do what we’re trying to do, I also think we need to look at our own fundraising plans (or lack thereof) with the same loving glare: do we actually have a plan that gives us a reasonable shot at having the resources we need to have a reasonable shot at bringing about the change we desire?

    And, most obviously for those of us dependent on foundations for any kind of structural social change work, the answer is very very very often “not really.”

    I guess my point is that I don’t want – and presume you don’t want – us to throw out the baby of powerful health organizations along with the bathwater of the sustainability myth. We can – and must! – build organizations that can endure for however long it takes to get where we’re going.

  • So good, so true. I feel as tho’ you’ve been moving toward this open and brave declaration since I began reading this blog; ¿at least a year? Anyway. MY RESPECTS!! As I’ve commented before, so much of what you say, in equal measure and with only small modifications, applies also to the arts world, at least to the music part of it … a world which also has to do with the health of society in general.

    Anyway, BRAVO. Keep speaking out!

  • Mark Lutwak

    Sadly, we are seeing the growth of the demand that schools, prisons and other public services be “sustainable” — through privatization and otherwise running down resources.

    And don’t even joke about foundations running programs. A subject in of itself.
    thank you for your insights.

  • Valerie Spain

    I love GOT too but the last episode was awful… anyway I agree with everything you say- you’re so articulate and spot-on. Thank you!

  • Vu, here’s another “take” on who decides what outcomes to measure. How about empowering beneficiaries. I like the example with doulas. http://www.marketsforgood.org/are-proxy-buyers-stunting-the-growth-of-the-nonprofit-economy/