Inside MCF

Smaller Organizations Are Central to Movement Building

February 8, 2019

Zeeba Khalili
By Zeeba Khalili
Learning and Evaluation Officer

Marguerite Casey Foundation supports small organizations.

Marguerite Casey Foundation’s priority is to support organizations that take a family-first approach to movement building, no matter what the organization’s size. This approach differs from other foundations that create special grant programs for small organizations, set minimum budget sizes for eligibility, or apply a formula to identify funding based on budget size. Small organizations — those with annual revenues below $500,000 — have been partners in creating a family-led movement since we began making grants in 2002.

Why are small organizations important to movement building?

Marguerite Casey Foundation makes grants to small organizations that are trusted cornerstones in communities—organizations that can punch above their weight class. These cornerstones are rooted in neighborhoods, so they’re close to the problems families and communities face and close to the solutions. In movement-building work, the ability to be flexible when new challenges arise is essential, and less bureaucracy allows small grantees to test new ideas and embrace change.

For example, Greater Birmingham Ministries (GBM), a small organization that received its first grant from the Foundation in 2002, reported in its application that staff trained hundreds of volunteers in civic engagement techniques each year, part of helping them develop action plans. Sixteen years later, the Foundation is still funding GBM and celebrated alongside the organization as it successfully led the fight for a $10.50-hourly minimum wage in Birmingham, Alabama. When the state legislature then passed a law barring municipalities such as Birmingham from setting their own minimum wage, GBM was able to pivot, continuing the fight for workers’ rights by bringing a lawsuit against the legislature, which continues today.

What lessons have we learned about small organizations?

Small organizations can manage their finances. In 2017, small grantees reported being less likely to run an operating surplus than larger grantees — 58 percent versus 69 percent. They were approximately twice as likely to break even (31 percent) compared to larger groups (16 percent). While small organizations experience financial instability, small grantees are overall stable and financially healthy, bucking the stereotype that small groups cannot manage their expenses without running a deficit.

Small organizations don’t always stay small. Philanthropic investment in small, grassroots organizations has helped many grow. We tracked how small grantees changed over a five-year period (2013-2018) and found that almost 40 percent grew to have revenues above $500,000. Several of the grantees more than doubled in size. The choice to grow isn’t easy, but those who are ready report that they can leverage the Foundation’s reputation and general operating support to obtain other funding.

Small organizations can merit large grants. Foundations are often concerned that giving large grants to small organizations will “tip” them (push them into private-foundation status). While the 2018 average annualized grant amount for small grantees is almost half of what the Foundation grants to larger grantees ($77,500 vs. $146,641), the Foundation’s average annualized percentage of grant amount to revenues demonstrates that we are giving as much as we can before we tip small organizations (26 percent vs. 8 percent for larger groups). These grants represent a significant proportion of smaller grantees’ revenues. Because the grants are multiyear, grantees can confidently plan for the long-term while still responding to short-term needs.

The challenges of small organizations are different than those of larger organizations. When surveyed, smaller grantees reported being more likely to find the following issues extremely challenging:

  • Attracting new sources of funding
  • Measuring impact
  • Developing effective external communications
  • Using technology to improve effectiveness

These findings suggest financial challenges for smaller grantees are more acute, potentially because of being seen by funders as “too” small. Outside of financial issues, smaller grantees primarily experience challenges in internal capacity for areas outside of program delivery: evaluation, communications and information technology. It is likely that due to small staff sizes (average staff size of current cohorts is four), smaller grantees are less able to hire staff who specialize in these areas. That is why the Foundation supports national organizations that undergird local groups with resources. For example, we fund Alliance for Justice, which provides organizations with the knowledge and tools to advocate effectively. We also fund Opportunity Agenda, which supports organizations in developing compelling messaging and stronger communications infrastructures.

This approach reflects the Foundation’s commitment to building a family-led movement from the ground up.

Only about 20 percent of foundation grants in the United States are awarded in the form of general support. Even fewer general support grants are multiyear or of significant size. If the organization is small, getting sizeable general-support grants can be incredibly difficult. At the Foundation, we are proud that small organizations make up almost 20 percent of our portfolio, and we continue to identify potential small grantees in our regions based on our learnings and experience.

Small organizations, particularly those in the South and Southwest, don’t have access to local philanthropic dollars that would enable them to grow into medium and large organizations. The general support provided by the Foundation is a critical part of their growth and success. This affirms our regional approach of granting in states based on poverty demographics/statistics —ensuring grants go to those with limited access to funding.

The Foundation remains committed to supporting small organizations that work directly with families. We know that in grassroots activism, bigger is not always better.

Smaller Organizations Are Central to Movement Building