The Progressive Stimulus Project

“One crucial way that philanthropy should support [progressive] organizations is to do what Congress does: adopt a stimulus package.”

- Gara LaMarche, President, Democracy Alliance, Sonal Shah, Executive Director, Beeck Center for Social Impact & Innovation, Phil Radford, Executive Director, Progressive Multiplier

Executive Summary

The Organization for Economic Cooperation and Development’s recently stated that COVID-19 presents the greatest danger to the global economy since the financial crisis of 2008. Recessions hit the most vulnerable in our society the hardest – the sick, the elderly, people of color, and low-income Americans. This increases demand on nonprofits serving the most impacted people to do more with less. But that is not a solution. Instead we need systemic change — and that means bolstering the nonprofits that can successfully press for it.

But here’s the problem: During recessions, foundation giving declines on average over the following three years, and foundations cut funding for financial sustainability even more dramatically. Nonprofits cut their fundraising budgets to minimize layoffs. And this time this contraction will happen exactly at the bust of the boom-and-bust cycle of civic participation funding. One of the most surgical, strategic moves that philanthropy can make is to fund nonprofits’ revenue generation efforts through the next three years of declining foundation giving.

The Progressive Multiplier (PM) is a 501(c)(3) and 501(c)(4) funder that provides progressive organizing and advocacy nonprofits financial and technical support for independent revenue generation projects. To date, for every $1 the PM has granted, our grantees have generated over $4 in income.

In the face of the novel coronavirus and the economic recession it has touched off, the Progressive Multiplier invites you to join us in launching a $15 million pooled fund: The Progressive Stimulus Project.

The Progressive Stimulus Project will partner with 100 state, local and national advocacy groups over a three-year period. The initiative includes:

1. Rapid response funding and technical support for those groups whose work is increasingly urgent and resonant during the pandemic and the recession; 2. Optimization of current revenue streams to help organizations with existing revenue generation programs to weather the storm; 3. Testing and deploying revenue streams based on what is “shovel ready;” 4. Revolving financing for existing revenue streams at risk of being cut or reduced; 5. Sharing best practices, lessons learned, and providing free trainings and one-on-one support to progressive nonprofits to replicate successful projects; and 6. Helping fill the sudden funding gap for 501(c)(4) organizations in the Rust Belt and Sunbelt using the PMF’s unique, IRS-approved method to fund existing capacity building projects in 501(c)(4)s using 501(c)(3) funds, freeing up the (c)(4)’s funds for other priority work.

In certain circumstances, the PM will work directly with foundations to support their grantees through these troubling times.

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The Progressive Stimulus Package builds on the Progressive Multiplier’s track record, supporting a larger group of grantees to generate $15 million in revenue for the progressive sector from the first year’s investments. As our revolving fund is replenished, Year 3’s grantmaking and sharing activities should result in nearly $30 million of income for progressive nonprofits.

Why Does the Nonprofit Sector Need a Stimulus Package?

The response to the COVID-19 crisis from the philanthropic community has been swift and continues to evolve. Many foundations have quickly stepped up to support their grantees by loosening funding restrictions, advancing future grant payments and pausing reporting requirements. Others are working alongside the government, universities and public health facilities to stem the spread and support cure and vaccine development. But even with these measures, the pandemic has exposed and exacerbated the need for more systemic change, including protections for children and adults being held in detention, a better health care system, paid family leave, job and income protection, and more.

The pandemic has also exposed and exacerbated the need for systemic change in how nonprofits are funded and operated. The underlying problems exposed include:

• Undercapitalized organizations: A recent report released by Candid shows that half of all U.S. nonprofits are operating with less than one month’s cash reserves, leaving these organizations particularly vulnerable.

● Undiversified revenue: Nonprofits are largely dependent on grants from government or foundations, primarily restricted revenue. This means that nonprofits have little funding to test new ideas or financing to scale successful ideas. Research by the Progressive Multiplier shows that organizations need the ability to test independent revenue generation and scalable fundraising programs.

● Boom and bust cycles: Civic engagement and advocacy organizations face extreme boom and bust cycles. They receive excess funding in even years, but inadequate funding in off years. This prevents organizations from building during off cycles to more effectively scale during boom times.

Even as foundations responding to the present crisis step up to loosen restrictions and advance scheduled payments, continuing reliance by nonprofits on grant funding as their sole or primary funding sources is risky. Generally, foundations give up to 5% of the average value of their endowment from the past three years, meaning a steady decline in giving during and after a recession. While the effect is to lessen the blow to nonprofits from stock market fluctuations, it also squeezes the budgets of nonprofits for years after recessions.

What compounds the problem, according to new data provided by Candid depicted below, is that foundation investments in financial sustainability dropped more precipitously than their overall giving after the last recession. Nonprofits should not have to sacrifice long term fundraising investments during economic downturns by cutting member and donor acquisition budgets. These investments are critical to raise money over the long term but require an investment.

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During a recession is precisely when greater investment is needed to strengthen sectors that are at risk. We are calling on philanthropy to increase our investment in financial sustainability efforts to bolster the sector that protects, defends and expands the social safety net for those who are most deeply impacted and place-based nonprofits on the front lines that serve, organize with and advocate for the most vulnerable.

About the Progressive Multiplier

Progressive Multiplier is a 501(c)(3) and 501(c)(4) funder helping progressive organizations build their power by providing financial and technical support for program-related revenue generation and capacity building projects.

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Examples of projects funded by the Progressive Multiplier include:

• PushBlack – In 2019, PM provided $25,000 to PushBlack, the nation’s largest nonprofit media platform led by and for black people, which engages 4.6 million subscribers with emotionally driven stories about black history, culture, and current events. The grant allowed PushBlack to develop a model to “supercharge” its experiments with subscriber donations. As a result, the organization increased the number of people who make recurring gifts from 2,000 to 8,000 and is now generating $50,000 a month from those supporters.

• People’s Action -- People’s Action Institute, advances racial, economic and gender justice by investing in state and local organizations and campaigns to win real change in people’s lives. Thanks to experimentation, People’s Action has expanded its fundraising program to build a more robust planned-giving program. To date, it has secured more than $400,000 in planned gifts.

• The Texas After Violence Project (TAVP) – TAVP works to reduce the trauma created through the criminal justice system. The organization has developed expertise in legal training and, in partnership with PM, has created a continuing-education program that lawyers pay to attend. At the same time, the organization is creating a network of pro bono lawyers to support its mission. The organization’s executive director, Gabriel Solis, said that support from Program Multiplier “allowed us to experiment with this concept without compromising our already limited funds. Without it, this new channel would have never opened up for us. [Now I’m] incredibly optimistic about the long-term viability of this organization."

In total, for every dollar the PM has granted, its grantees are on track to generate an average of four times the amount distributed by the PM.

Project Detail

Power for these groups in this moment – beyond the bases they have already built - will be rooted in financial resources dedicated for rapid response and weathering the economic downturn. In the face of the novel coronavirus and the economic recession the policy solution to the virus has touched off, the Progressive Multiplier is launching the Progressive Stimulus Project.

We aim to partner with 100 state, local and national advocacy organizations over the next 36 months. The partnership involves financial and technical support. Technical support includes free consulting, help in designing the projects, monthly consulting calls, and facilitated collaboration peer groups to help organizational partners succeed.

The major initiatives in the Progressive Stimulus Project, based on meeting our funding goal, are:

Rapid response funding and technical support for groups whose work is increasingly urgent and resonant during the pandemic and the recession. These projects will help groups turn increased public awareness into long-term financial viability, donor acquisition and base building opportunities. Organizations can only capitalize on this moment and turn new donors into an active power base if they have the funds, expertise and capacity to do so. PM’s rapid response funding grants are largely focused on testing messaging and techniques to acquire new members and supporters in a cost-effective manner amidst coronavirus and the recession.

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In Year 1, the PM will provide 30 grants, averaging $10,000 each. Organizations will be eligible to receive successive grants to build on what they are learning. This will be a shift in how many organizations work, and we expect 20% to show dramatic success, meaning that the project generates substantially more than $2 for every $1 granted, and that the project could raise the organization $1 million if scaled. We expect 70% to raise the same amount that we grant them, and 10% to fail.

Testing and deploying “shovel ready” revenue streams. These projects will help quickly develop new revenue streams that play to existing fundraising programs and organizations’ strengths. The Progressive Multiplier has been working with several grantees to create these new revenue streams based on available assets. To date, the Progressive Multiplier’s results on grants funds for such projects has generated $2.30 for every $1 granted.

In Year 1, PM will provide about 24 grants averaging $25,000 each. We expect 20% to show dramatic success, meaning that the project generates substantially more than $2 for every $1 granted, and that the project could raise the organization $1 million if scaled. We expect 70% to raise the same amount that we grant them, and 10% to fail.

Optimization of current revenue streams to help organizations with existing revenue generation programs to weather the storm. These projects will help groups quickly optimize their existing fundraising programs through rapid testing. During recessions, some individual donors give less or less often. For organizations with existing profitable fundraising tactics, investing in improving and scaling those now is paramount and lessens the blow from any future declines. To date, the Progressive Multiplier’s results on grants funds for such test projects has generated $2.30 for every $1 granted.

In Year 1, the PM would provide about 24 grants averaging $25,000 each. We expect 20% to show dramatic success, meaning that the project generates substantially more than $2 for every $1 granted, and that the project could raise the organization $1 million if scaled. We expect 70% to raise the same amount that we grant them, and 10% to fail.

Revolving financing for existing revenue streams at risk of being downsized. This program provides short- term financing in the form of recoverable grants for nonprofits that are reducing their investments in successful revenue generation tactics because of budget contraction. Recovered funds from completed projects are then redeployed to provide financing to other nonprofits.

In Year 1, the PM will provide about ten grants averaging $150,000 each. We expect 100% of these projects to succeed, generating a $2:1 return for the nonprofit, and being fully repaid to the PM to regrant.

Sharing best practices, lessons learned, and providing free trainings and one-on-one support to progressive nonprofits to replicate successful projects. The Progressive Multiplier will launch Progressive Plus, a unique free membership program for all progressive nonprofits, including those that would not qualify for Stimulus Project grants or financing. Membership benefits, provided at no cost to nonprofits, will include access to PM’s online peer learning community, revenue generation resource library and toolkits, fundraising consulting virtual office hours, weekly fundraising training webinars, and facilitated collaboration groups. PM also will conduct aggressive outreach to groups to share revenue generation projects that have worked for similar organization to ensure broad-scale adoption and replication of successful techniques. To date, groups that attribute their trying a revenue generation technique to the PM’s outreach have raised a combined $2.8 million dollars.

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In Year 1, we expect that a new staff person entirely dedicated to outreach to nonprofit organizations, sharing what we are learning, and promoting the implementation of successful techniques will be able to help progressive nonprofits generate an additional $7.5 million in revenue.

Helping fill the sudden funding gap for 501(c)(4) organizations in the Rust Belt and Sunbelt. The Progressive Multiplier has received unique IRS approval to provide 501(c)(3) funds for certain capacity building and revenue generation projects in 501(c)(4) organizations. Because no other organization has this permission, 501(c)(4)s focused on the Sunbelt and Rust Belt, which the PM believes have been underinvested in by philanthropy, are spending about $200 million dollars each year on projects that can now be funded with 501(c)(3) dollars through the Progressive Multiplier. The PM respects and complies with any restrictions placed on funding that would prohibit the use of funds for this purpose.

Combined, the first year’s $5 million investments from the Stimulus Package should yield $15,430,000 in expected revenue for the progressive sector. As our revolving fund is replenished, Year 3’s activities should result in nearly $30 million of income for progressive nonprofits.

Conclusion

Economic downturns will always be with us, whatever their source. They create suffering and dislocation, but they also create moments for leadership and change. This is the time to invest in people and organizations. We know that not every nonprofit organization will survive a recession. We also know that a Stimulus Package does not mean that every nonprofit will have a 4:1 return on its revenue generation projects. But, when we act with courage and rigor, we can drive a step change in the scale and capabilities of nonprofit groups.

A change in philanthropic investment strategy is required if our sector is to strengthen the social safety net that has atrophied over the past three decades and especially during the Great Recession. Philanthropy has acted wisely to gradually, and not suddenly, adjust their funding over the years following major market crashes. Many philanthropic leaders are showing great thoughtfulness in creating more flexibility for organizations, switching grants to general support, and offering other forms of support. One of the most surgical, strategic additional moves philanthropy can make is to fund nonprofits’ revenue generation efforts through the next three years of declining foundation giving through the Progressive Stimulus Project.

Budget (see attachment)

Project Leadership

PM Team:

Phil Radford, Executive Director of the Progressive Multiplier and President of Progressive Power Lab. He has served as the youngest executive director of Greenpeace USA, co-founded the Democracy Initiative and Membership Drive, was founder and executive director of Power Shift, and is a board member of the Mertz Gilmore Foundation. He has a background in grassroots organizing, fundraising, corporate social responsibility, climate change, and clean energy.

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Bethany Maki, Director of Programs. She is a skilled nonprofit strategist with a passion for working at intersections – where fundraising and marketing meet, where consumer experience affects philanthropic behavior, where technology enables strategy, and where brand understanding incites activation. She has a 19-year track-record of developing integrated fundraising plans, creating new revenue opportunities and delivering optimal constituent experiences for some of the nation’s most respected charities. Before joining PMF, Bethany spent the first half of her career as a fundraiser at local, chapter and national nonprofits and the second half agency-side as a fundraising and marketing strategy consultant.

Neeti Kaur, Chief Financial Officer, Progressive Power Lab. She brings 20 years of finance and accounting experience in the corporate, political and non-profit sectors where she has held various roles managing the fiscal functions of the organizations. Before joining Progressive Power Lab, Neeti held agency CFO & Director of Finance roles in the Media and Advertising industry at CLS Strategies, and at Bully Pulpit Interactive. She built the foundation of her accounting and finance expertise over the course of her 12- year career at CNA Insurance, a publicly-traded company. Neeti also worked on President Obama’s 2012 re-election campaign, the 2013 Presidential Inaugural Committee, and at Organizing for Action.

Mina Devadas, Director of Strategic Partnerships. She brings more than 20 years of 501(c)(3) and 501(c)(4) fundraising and nonprofit management experience. Prior to joining PMF, Mina served in executive and senior roles for organizations spanning the public interest, higher education, and progressive ecosystems, including United We Dream Network, Center for Public Integrity, Children’s Defense Fund, Lourie Center for Social & Emotional Wellness, and the University at Albany.

Sandy Lawrence, Director of Operations. She brings 14 years of operations and project management experience in the progressive nonprofit world to the PMF. She’s worked domestically at the Sierra Club and Greenpeace USA, as well as internationally at Aflatoun, Child Social and Financial Education, and brings a strong foundation of community organizing and planning process from her urban planning days in New York City.

PM Board of Directors & Advisory Board:

• Jigar Shah, Board Chair • Keith Mestrich • Al D’Alessandro • Vanessa Pierce • Deborah Ashford • James Rucker • Deepak Bhargava • Sonal Shah • Henry Gentenaar • Linda Wood • Jee Kim

Project Advisory Committee: Staffed by PM’s Executive Director, a group comprised of PM leadership, anchor funders of $1MM+ annually for three years and movement partners will meet twice annually to gather strategy input and discuss the project’s progress against established goals.

For more information, please contact Phil Radford by email: [email protected] or phone: (844) 634-6363 or Mina Devadas by email: [email protected] or phone: (240) 994-8654.

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