Coordinated Funding for Nonprofits Planned

Local governments, funders in Washtenaw seek new model

A strategy for coordinating major funders of nonprofits in Washtenaw County has been in the works for more than a year, and is now being rolled out to governing boards for approval.

Mary Jo Callan

Mary Jo Callan, director of the Washtenaw County/city of Ann Arbor office of community development, described a proposed coordinated funding strategy by local governments, United Way of Washtenaw County and the Ann Arbor Area Community Foundation at the Sept. 28 meeting of the Washtenaw Urban County. (Photos by the writer.)

At Tuesday’s meeting of the Washtenaw Urban County executive committee, members were briefed on the proposal, which involves the Washtenaw United Way, Ann Arbor Area Community Foundation, Washtenaw County, city of Ann Arbor and the Urban County. Together, these entities provide about $5 million annually for local human services nonprofits.

Mary Jo Callan, director of the Washtenaw County/city of Ann Arbor office of community development, told Urban County members that the public/private model would focus funding on six priorities that have been identified for the entire county: housing/homelessness, aging, school-aged youth, children from birth to six, health and food.

The two-year pilot project is grounded in previous coordination between the city of Ann Arbor, Washtenaw County and the Urban County, a consortium of 11 local governments. The office of community development (OCD), which Callan leads, already manages nonprofit funding for those three entities.

Callan also said this could be a national model for communities that are trying to do a better job of delivering human services with constrained resources.

Some members of the Urban County executive committee, while expressing general support, also raised questions and concerns. How do individual nonprofit agencies fit into the funding model, especially if they don’t provide services in the areas identified as priorities? Will small or new nonprofits be able to compete successfully for funding, or will larger, well-established nonprofits have an overwhelming advantage? How well will the different cultures of United Way, the community foundation and local governments work together, and what roles will they play?

Callan acknowledged these challenges, but noted that many of these same concerns exist under the current, more fragmented funding model. Coordinated funding is the best approach to providing needed services to people in the county, she said.

The Urban County is expected to vote on the proposal at its Oct. 26 meeting. The other groups – including Ann Arbor’s city council – are expected to vote at meetings in late October and early November. Callan will also be making a presentation about the initiative to the county board of commissioners at their Oct. 7 working session.

Coordinated Funding: How It Works

Callan began her presentation by noting that Ann Arbor, Washtenaw County and the Urban County have already integrated their funding for human services – those groups combined represent about $2.6 million in annual funding for nonprofits in the county. Callan’s staff – with representatives from the county, city and Urban County – reviews applications from nonprofits and makes funding recommendations. Each governing entity subsequently reviews and approves recommendations tied to their funding sources.

Now, the intent is to include United Way of Washtenaw County and the Ann Arbor Area Community Foundation in this effort. United Way distributes about $2.3 million in grants, while the community foundation gives out around $300,000 annually, according to Callan.

There are already collaborative efforts that involve these groups, most notably a common online grant application system. Over the past few months, Callan said, representatives from these different entities have been talking about how to work even more closely, with an eye toward better organizing the community’s investments in nonprofits. They’ve met with nonprofit leaders to get feedback, as well as with key donors, business leaders and other stakeholders.

Callan said that funders have been asking nonprofits to work together and collaborate, so modeling that kind of approach makes sense. That’s one of four principles that guide this approach: 1) focusing on the consumer of services, not on the organization that provides the services, 2) creating savings and improving the process for funders and service providers, 3) leveraging the assets and strengths of each funding organization, and 4) providing a model of cooperation and collaboration.

The plan is to target investments in six priority areas: housing/homelessness, aging, school-aged youth, children from birth to six, health and food. When reviewing applications for funding, Callan said, priority will be given to these areas: “Our investments will tie in with the community plan.”

Each of those areas will have a planning/coordinating group that will help make recommendations about the kinds of services that the community needs. For example, the Blueprint for Aging consortium could identify needs of senior citizens in the community, while the Washtenaw Housing Alliance could do the same for the needs of the homeless or people needing low-income housing.

Callan stressed that these planning/coordinating groups wouldn’t be making actual funding decisions, but would be providing input and guidance.

Overall, the approach will provide a shared set of funding guidelines, Callan said, as well as a single deadline to apply for funds from all funding entities, a single review process, a single set of funding recommendations, and a single, shared monitoring and reporting process. This more efficient approach will save time and money for the funding agencies as well as the nonprofits seeking funds, Callan said.

Urban County Members Raise Questions, Concerns

Throughout Callan’s presentation on Tuesday, members of the Urban County executive committee asked questions and raised concerns about the approach, though overall they expressed support.

Margie Teall, an Ann Arbor city councilmember representing Ward 4, asked how individual nonprofits fit in to the model. Callan replied that during feedback sessions they’ve held with nonprofits over the past few months, that was the No. 1 question – the nonprofit leaders are understandably concerned, she said, because it’s a change.

Callan then gave an example of the Corner Health Center in Ypsilanti, which provides basic medical care to low-income youth. If the planning/coordinating group for health identifies dental care as a priority, but Corner Health Center requests funding for a theater troupe, they probably wouldn’t get funded, Callan said – it wouldn’t be the right fit, obviously. But it would be crucial for the planning/coordinating groups to reach out to nonprofits, she added, so that those seeking funding would understand the community priorities. “It seems convoluted,” she acknowledged, “but it’s partially what already exists.”

Bill DeGroot

Bill De Groot of Salem Township

In response to questions about how the planning/coordinating groups will be selected, Callan said that the entities already exist. In addition to the Washtenaw Housing Alliance and Blueprint for Aging, the groups include Food Gatherers, the Washtenaw Alliance for Children and Youth, and Washtenaw Success by 6.

Bill De Groot of Salem Township noted that it’s already difficult for new nonprofits to get funded, and this plan seems to make it even harder. It’s important to keep an even playing field for nonprofits, he said.

Callan responded that nonprofits are mechanisms to deliver services. “they are not the be all and end all,” she said. It might be the case that new nonprofits don’t get funded, but the services they want to provide could be delivered through new programs at more established nonprofits, or through partnerships.

Leah Gunn, a Washtenaw County commissioner for District 9 who also chairs the Urban County executive committee, said her problem with new nonprofits is that they might be duplicating services provided by existing groups. Joe Zurawski, York Township supervisor, said his gut feeling was that this new approach might actually make it easier for new nonprofits to get funded, if they provided services that matched the community priorities.

The main goal, Callan said, is to do the most with the resources the community has, “not to make sure everyone gets funded who wants funding.”

De Groot also asked about the Urban County’s role in this approach. [By way of background, the Urban County is a consortium of Washtenaw County, Ann Arbor, Ypsilanti and 9 townships, responsible for allocating federal funding for low-income housing and other community development projects. The funds are managed by staff of the joint county/city of Ann Arbor office of community development (OCD). For additional background on the Urban County, see Chronicle coverage: "Urban County Allocates Housing Funds"]

Joe Zurawski

Joe Zurawski, York Township supervisor

Callan noted that it would be similar to what currently happens. The OCD staff makes recommendations, which are then voted on by the Urban County executive committee.

Darrell Fecho, Scio Township manager, wondered whether this new approach would take away the ability of the Urban County to provide funding for neighborhood groups. Callan said the Urban County executive committee could carve out part of the federal funding they received through the Community Development Block Grant program to fund neighborhood organizations, if they wanted.

De Groot returned to his point about making sure that smaller nonprofits aren’t pushed aside. He said he agreed wholeheartedly that their goal should be to serve as many people as possible with the resources they had. But he didn’t see how the new approach would make it easier for the “little guy” to compete against a larger nonprofit, even if the smaller one provided better services.

Callan drew on her experience as a former nonprofit director, for the Ozone House. Often, funding seemed directly correlated to relationships with funders, and isn’t necessarily outcome-oriented. Part of this plan is to develop a shared set of outcomes by which nonprofits can be measured, she said. The OCD staff is drafting those metrics, and hope to have them in place by November.

De Groot urged her to make sure that existing nonprofits are made aware of those metrics, as they prepare for the next funding cycle.

Overall, Callan acknowledged that the coordinated funding approach isn’t perfect. “But it will be an improvement over how the fragmented system works now.”

Callan said she’ll continue to talk with representatives from these various funding entities, to explain the proposal. The United Way board is expected to vote on the proposal on Oct. 14, followed by votes of the Urban County on Oct. 26 and the community foundation board on Oct. 30. The proposal will be considered by the Ann Arbor city council at its Nov. 1 meeting, and by the Washtenaw County board of commissioners on Nov. 3.

The goal is to have a system in place before the next two-year funding cycle, which begins in July of 2011.


  1. October 1, 2010 at 9:22 pm | permalink

    I well understand the thinking and rationale behind this approach, since its precursor was a process we went through at the BOC while I was a commissioner. At one time the human services funding was often a process of political wheeling and dealing and some non-profits received funding that essentially went to support staff enough to keep them alive, because they had a commissioner who would sponsor them. We set up goals and priorities and turned it over to staff.

    The result was that the more institutionalized, establishment nonprofits received much more money and a number of small nonprofits were cut out. It was all very rational and logical.

    I am concerned to see all potential funding sources centralized into one bureaucratic mechanism. This does not allow for collective wisdom to be exercised in that different boards with different individuals and perspectives make decisions that are slightly differently shaded. I think that efficiency is overrated. It does not promote adaptive responses or allow for innovation and a variety of approaches that may or may not be the most successful in the long term. I agree that public money should be spent wisely for the best outcomes. But highly programmatic approaches may neglect some changes in circumstances or the more global environment. Many smaller nonprofits begin with a vision by an individual or small group who perceive a need that is not being addressed. If all potential funding sources in the county are channeled through one streamlined process, these may be aborted.

    Whether the metaphor one might choose here is the marketplace or simply evolution, this mechanism, with its lack of competition and choices, seems too rigid.

  2. By Leah Gunn
    October 1, 2010 at 10:12 pm | permalink

    After a thorough process of selection, with representatives from each entity, each individual board (County, City, Urban County, United Way and Coummunity Foundation) will have to approve the final contracts. This process includes money from the Community Foundation for capacity building, which addresses the issue of new non-profits. However, a great deal of thought has gone into the selection of the funding categories, according to community needs assessments. It does not set up any additional bureaucracy. In fact, the Office of Community Development has saved many hours by the three goverment consolidations already. We are all having to do more with less, and this is a solution that will better serve our residents, while making sure that those non-profits who receive contracts are accountable, and can show measurable outcomes. The emphasis is on the consumer, not on either the decision makers or the non-profits. How can we best serve our residents? There is no way that any organization in our community, be it private or public, can fulfill all of the pressing need. But this plan enables us to be both more cost efficient, and to address the major categories of need. If we do not base our decisions on logic and rationality, what are we doing here?

  3. By Joan Kauffman
    October 2, 2010 at 11:11 am | permalink

    The services(low cost personal counseling, job search assist., divorce support and education, state/fed tax efile assistance, family legal clinics) we provide at The Women’s Center of Southeastern Michigan clearly do not fit into the stated categories.

    I think it is important to remember, when you help a woman, you help her children.

  4. By Yuriko Morishima
    October 2, 2010 at 12:14 pm | permalink

    1. Now, 3 people from city, 3 people from OCD, 3 people from county review the funding. If the new model/proposal is passed, how many people will review & supervise the funding?
    2. Now, we already have coordinated funding, that’s Washtenaw county, federal, city put all the money together. It’s about $2.6 million a year, OCD already takes away 10-20% admin cost. If “United Way” and “AA Area Community Foundation” join the coordinated funding, how much admin cost will be estimated? Besides, they hire extra staff to deal with the big money, plus hiring consultant companies to find out the best outcomes of the other non-profits, how much will be spent?
    3. Non-profits are not decision makers, decisions will be based on recommendations from OCD, how many people will prepare the recommendations? Will OCD recommendations be influenced by Urban County Exec board as Urban County has administrative power on OCD?
    4. If the decision can be partly established on the relationships between funders and non-profits, as big money involved, public and private money pulled together, confusion might happen. Is there possibility of opening the door to corruption?
    5. Big non-profits have coordinated groups discussion and recommend funding, is there possibility of killing collective wisdom if small non-profits no longer survive?
    6. Big non-profits hire staff, small non-profits are mostly supported by volunteers? How do people evaluate big and small non[profits when they’re entrusted to serve our community? Is big better than small ?
    7. If the coordinated-funding is too big, the new model involving at least five entities, is there any pitfall during the process of operation? Think of a big corporation, the little worker can’t reach the CEO, difficult communication and operation is found. As we see many big grocery store trash lots of food because of wrong estimation and bulky management. Will it happen to the new model?
    8. If around 5 million dollar decision mainly based on several people’s recommendation, is it complete and serve our community well?

  5. October 2, 2010 at 5:33 pm | permalink

    Everything that is said in comment #2 makes perfect sense, especially from the perspective of someone whose responsibility is allocating public funds. What concerns me is bringing the two sources of private money (United Way and the AAA Community Foundation)into this single centralized distribution mechanism. These have served as alternate sources for which nonprofits may compete for conceptual as well as financial support. I don’t have any particular nonprofit organization in mind when I say that newer or less favored entities need to have an opportunity to compete in some arena, even for very small grants and even if some of them prove to be ineffective.

    What I was trying to express in my earlier comment is that if safety net functions in our society are overly centralized rather than distributed, the system may be less able to respond quickly to changing circumstances and needs. Changing times may sometimes require the evolution of new approaches that will not be anticipated by a rigid rule-making process. This system could be like a mechanical device set to extremely high tolerances that operates at high efficiency until the conditions it requires no longer exist. Or to put it more colloquially, every engine needs some grease.

    The argument is for efficiency. But I don’t accept this as the highest guiding principle. I recommend the book by UM professor Thomas Princen, “The Logic of Sufficiency” (MIT Press, 2005). In it, he argues that the elevation of efficiency “thwarts other principles”. Here is an extract from his chapter on efficiency.

    “Societies across time and across cultures organize themselves to use resources…In so doing, they devise rules and procedures guided by general principles. The most prevalent principle has been…power…But other social organizing principles have accompanied power, sometimes displacing it, sometimes concealing it…Today the dominant companion principle is efficiency…efficiency has spilled into nearly all realms of modern life…it has become a social goal in its own right, equating with all that is desirable, and then used selectively to promote agendas often unrelated to true efficiency gains.”

    I don’t at all doubt that the Urban County committee is operating from the very best of intentions, but I hope that those making this decision can step back and consider the consequences of the contemplated step from a broader societal perspective.

  6. By Yuriko Morishima
    October 2, 2010 at 11:56 pm | permalink

    Poverty rate is rising. We need to be very responsible when we allocate funds. My miserable friends living on the streets have just asked me blankets and propane gas. Poor people need urgent help. This new coordinated funding model/proposal gives me a picture. We’re now making a big ship. This ship provides various kind of human services. It looks gorgeous. However, we don’t see the expensive fuel and high maintenance cost. Besides, when a guy get into this ship, he easily gets lost and can’t find the service he wants, or the crews on board just ask him to wait, then go to room A, then room F, then room K, then……..

    This big ship can’t reach the small streams, just stroll along the big river. Two main captains in the operating rooms are arguing the directions. Two captains are steering this big ship. Some sailors are smoking in the cabins while some are playing cards on board, not enough supervision in this big liner.

    This big ship monopolizes the market, now, no more little boats in the small streams to help transport people. Needy people are waiting at the shore for the luck.

    Of course, I applaud the efforts & intention of this new model/proposal. However, cooperation/coordination reaches its maximum benefit when being exercised in a moderate scale but not mega-scale. We can’t expect a giant move very well.

    Another picture also comes to my mind, we’re making a super department store. Very huge! We amalgamate “Kroger” “Meijer” “Home Depot” “JC Penny” “Macdonald” together. Um..! We think we can save management cost, and let customers get efficient services. But, we need to work out who’s in charge of this big enterprise. The personnel might struggle in their united offices to work out how to put the merchandise from “Home Depot” & frozen food from “Kroger” in a harmonic sense. A man might need two hours to finish his shopping trip for two tomatoes.

  7. By Linda Peck
    October 4, 2010 at 9:59 am | permalink

    I don’t approve of more governmental interventions or consolidations here.

  8. By Lily Au
    October 9, 2010 at 12:16 am | permalink

    If we check “United Way” Of Washtenaw County, its financial report reveals that 40-50% of its revenue used on administration cost, pension, retirement plan, LOSS in investment, fund-raising cost….expenditures: about 2 million.

    Is it right to channel the Human Service Fund to support so many staff there, including those already retired? If their investments lose again, how much impact on the needy people? Don’t forget that Office of Community Development also takes away 10-20% administration cost beforehand.

    If this proposal passed, will volunteer attorneys who fend for the small non-profits make a legal case as “Misuse of public money”? Who allows Human Services Fund be engaged in business investment?

  9. By Lily Au
    October 14, 2010 at 10:30 pm | permalink

    Mark Quimet is the Vice Chair of “United Way”. The fund raising cost and endowment of United way was $677,689 in 2009.

    Is he eligible to vote for “Coordinated Funding” on Nov 3 at County Commissioner’s meeting? Is there an issue of “Conflicts of Interest”? If he’s elected again and becomes the chair at “Urban County”, he can order his staff “office of Community Development” to make the recommendations and be voted. Then the decisions will go to United Way. That’s a five million dollar decision. (Fund Allocation).

    What does it mean? Let’s think……