ICPJ responds to coordinated funding proposal

As budgets tighten, several area government and charitable organizations have proposed merging their funding processes. While ICPJ recognized the potential benefits of this process, we also see potential dangers. Read on to see the memo we’ve presented to the City of Ann Arbor, Washtenaw County, Urban County, Ann Arbor Community Foundation, and Washtenaw United Way regarding these concerns.

To:       Mayor John Heiftje, Washtenaw County Board of Commissioners, Ann Arbor City Council, Ann Arbor Community Foundation, Washtenaw County United Way, Ann Arbor City Administrator, Washtenaw County Administrator, Mary Jo Callan

From:   Racial and Economic Justice Task Force, Interfaith Council for Peace and Justice

Date:   Thursday, October 28, 2010

Re:       Proposed Coordinated Funding Initiative

The Racial and Economic Justice Task Force of the Interfaith Council for Peace and Justice has been following with interest the proposal to coordinate human services funding for the city of Ann Arbor, Washtenaw County, the Urban County, the Ann Arbor Community Foundation, and the Washtenaw United Way.

We are grateful for the commitment that the parties involved have shown to human services, and we recognize that there are real potential benefits both to the funders and to the service agencies. However, we also have several concerns about the proposed collaborative funding mechanism.

1. Any coordinated funding system should not create institutionalized gaps in coverage. While the six priority areas identified for funding cover a broad range of initiatives, they are not exhaustive. Where is funding for literacy, domestic violence treatment and prevention, and services for the disabled? While these concerns could be funded under a loose reading of the six priority areas, they could also be excluded under a strict reading of the six areas. Therefore, we are concerned that the proposed consolidated funding mechanism could institutionalize gaps in coverage and exclude needed human services from the funding process.

2. Any coordinated funding system should recognize the different costs for serving different constituencies as it evaluates outcomes. Discussion of the proposed consolidation has focused on how funding decisions would be based on outcome measurements for the participating nonprofits. Outcome-based and data-based funding decisions are in principle a sound idea, but the details are important. Some populations are more expensive to fund than others. For example, a program that serves the chronically homeless will likely have a higher cost per client than a program that serves people who recently lost their homes. The evaluation process must consider these subtleties as it reviews the costs and benefits of different programs.

3. Money saved by coordinated funding should go back into human service programs. One of the biggest potential advantages of the coordinated funding proposal is that it may reduce the total overhead costs of reviewing, administering, and evaluating human service funding. We believe that any funds saved by consolidating funding should stay within the human services budget, not diverted to other areas of the budget.

4. New projects and small nonprofits should have access to coordinated funds, and money should be set aside for startup funding to help launch new projects that have potential for big results. Many of the large and respected social service agencies in Washtenaw County began as small startups that were initially unable to compete for institutional funding. Previously, the Interfaith Council of Congregations (IFCC) served as a source of startup funds for groups such as these. For example, IFCC provided startup funds to help establish the Interfaith Hospitality Network, Family Learning Institute, and The Corner Health Center. Likewise, IFCC provided funds to other groups such as Peace Neighborhood Center, Safe House, and Community Action Network when they were, as one former IFCC member describes, “too small and not yet respectable enough to get United Way or City funding.”

Coordinating human services funding could make it harder to fund the next generation of social service agencies. Or, the coordinated funding could open new doors to providing startup funds to innovative social service agencies that have the potential to show improved outcomes or meet emerging needs.

5. The proposed coordinated funding system would concentrate power over funding decisions in the hands of the Office of Community Development, and therefore will need to have robust checks-and-balances to provide accountability. Any decision-making authority runs the risk of cliquishness, resistance to new ideas, or operating without adequate transparency and accountability. As a decision-making authority grows more powerful, the potential damage caused by these behaviors also grows. Including input from the five funding groups and the collaborative bodies addressing the six focus areas provides some level of accountability is a good start at providing accountability, and we encourage the Office of Community Development to go farther in this direction.

6. Community funding efforts should recognize the different roles of funders and agencies and maintain appropriate separation of duties. As stated previously, we applaud the engagement of groups such as the Housing Alliance, Blueprint for Aging, and other collaborations of service providers to inform funding decisions. However, the roles of funder and fund-recipient are different, and care should be taken to maintain appropriate distinctions between the roles. Two specific concerns arise here. First, when grant recipients are directly involved in grading their peers over the distribution of limited funds, there is danger for a perceived conflict of interest. Second, participation in these collaborations tends to be weighted toward larger, established nonprofits with sufficient resources to send staff to multiple meetings. This imbalance in participation risks creating an uneven playing field that disadvantages smaller nonprofits.

How we as a community spend the too-few public and charitable dollars available to help those in need is a deeply moral and spiritual decision, one that cuts to the core of the mission of the Interfaith Council for Peace and Justice.  We appreciate the efforts of the Office of Community Development, City of Ann Arbor, Washtenaw County, Washtenaw United Way, Ann Arbor Community Foundation, and Urban County to better meet the needs of the vulnerable in our community and the groups that serve them.