PROCESS

The strategies developed for the BEST Pilot Project continue to inform the overall structure and implementation of the initiative today.

Phase I funds a team of external consultants to conduct a thorough organizational assessment for each nonprofit admitted to BEST, and deliver findings in a confidential report to the nonprofit that is not shared with the FFC. Confidentiality allows nonprofits to interact candidly with the consultants, without fear that the information they provide would in some way hurt their standing in the community or jeopardize future potential funding.

Phase II awards grants directly to nonprofits. The agencies use these monies to hire BEST consultants and technical assistance providers to help them tackle specific areas identified by the Phase I assessment. Nonprofits submit proposals to the FFC, with a copy of the Executive Summary from the Phase I report, which outlines the consultants’ recommendations.

Three additional strategies contribute to the project’s success.

BEST requires full board support and engagement in both the assessment and capacity building phases.
BEST requires agencies to agree to participate in an external evaluation that gathers qualitative and quantitative data about the changes, if any, in the nonprofit’s capacities.
BEST requires a technology audit conducted by an expert consultant, who delivers a separate assessment of each organization’s IT capacity and resources and makes recommendations for assistance and upgrades.

Phase I: Assessment

Research conducted during the BEST planning stage brought to light many potential benefits for incorporating a comprehensive organizational assessment that would allow funders to award grants with greater confidence that their investment would have real impact. The assessment itself is a meaningful form of technical assistance for agencies– testing needs, differentiating between assumptions and facts, gathering input from multiple key stakeholders, and providing organizations the opportunity to work with objective evaluators and consultants.

The assessment portion of the BEST Project is highly customized to each agency and is designed to help them understand potential opportunities and needs for capacity building. The work takes advantage of the methodology developed by Susan Kenny Stevens and documented in her book, “Nonprofit Lifecycles: Stage-Based Wisdom for Nonprofit Capacity.” (See Bibliography section.) Consultants are expected to assess each nonprofit using the precepts of this book. The results help agencies understand how to prioritize their needs and structure a capacity building grant proposal in the areas that will help them the most.

Agency selection

To participate in the BEST Project assessment, nonprofit organizations are required to meet the following selection criteria:
classification as a 501(c)(3) organization;
staff size of at least 1.5 FTE;
an annual operating budget of at least $150,000, up to a maximum of $3,000,000 (increased to $5M in 2005); and unanimous support from their board of directors. To ensure broad impact and increase learning during the Pilot Project, approximately 25% of the organizations in the BEST Pilot Project represented arts and culture; 50% were health and human service agencies; and up to 25% were from a single sub-sector (such as housing, child-focused agencies, etc.). The selection process for nonprofits works as follows:
BEST holds an initial open meeting with nonprofit agencies and community leaders to talk about the BEST Project approach and its requirements.
Nonprofit agencies interested in participating in the consultant-led assessment process are asked to submit an application.
Nonprofits and their boards agree to a substantial time commitment to participate in specific components of the Phase I assessment, including: internal survey; review of bylaws, policies, plans, financial reports and other documents; interviews and focus groups; workshops and presentations; internal and external surveys; and project evaluation. Time required is approximately two days per month for both the Executive Director and Board Chair, or other designated representative.
The members of the Flint Funders Collaborative review all applications and select those that will be supported.
United Way of Genesee County serves as host agency for the project, managing all financial transactions and contracts, including grant awards.

Grant allocations are determined by proposal quality, case for support, project scope, degree of institutional commitment to capacity building, and potential for community impact.

Consultant selection

In most cases a team of two consultants coordinate the in-depth organizational assessment. BEST staff provides recommendations for each agency, and/or agencies select consultants from a vetted roster. If the nonprofit wishes to work with someone who has not been vetted by BEST, the consultant must apply and qualify for membership into the BEST consulting pool.

Budget and consultant contract

The budget for each agency assessment is determined during the proposal review, prior to the beginning of the engagement. The Lead Consultant and Director of Programs make recommendations on the scope of work; complexity of each assignment based on proposal documentation and interviews; and consultants who seem to fit the agency’s mission and needs. All consultants are paid at a predetermined rate based on market conditions and the BEST budget.

Consultants submit an invoice for 25% of the project upon completion of the work plan, an invoice for 50% once the interviews have been completed, and the remaining 25% at project completion. Invoices in the assessment phase are submitted directly to the BEST office and paid by the host agency for the collaborative. A detailed contract outlines professional standards, a list of report requirements and performance expectations for all parties.

Assessment process

For approximately 4-6 months, consultants undertake a complete document review, conduct internal interviews with board and staff members, and examine all management systems. They work closely with board and staff leaders and conduct at least one organizational retreat. Also during this period, the Center for Nonprofit Management in Nashville, TN administers a quantitative survey on internal capacity and provides a customized analysis of the data for each agency.

The organization undergoes a technology audit by an independent professional contracted by BEST. Due to the complexities of information technology requirements, the consulting team is not expected to have detailed knowledge of this topic.

Report submission and Phase II application

At the end of this process of affirmative inquiry, research, and data collection, the consultant team prepares a confidential detailed report and recommendations for each organization, presenting it first to the leadership team, and then to the board and staff, usually at a combined retreat. The assessment report thoroughly documents all areas of the nonprofit agency, noting lifecycle stage, strengths, weaknesses and opportunities for improvement. The report also must contain a two page Executive Summary suitable for use in the capacity building grant application. Although the FFC does not receive the detailed report, the Executive Summary must be submitted with the application. (Note: many organizations choose to attach their full report with their application.) A copy of the final report is sent to the BEST office and reviewed for quality control purposes.

Phase II: Capacity Building

Following the BEST assessment, agencies are encouraged to submit a capacity building grant proposal two months after completing the assessment. Although participation in the assessment phase does not guarantee a successful grant application for capacity building, most organizations that participate in Phase I also receive grant money for Phase II.

In Phase II, dollars are granted directly to the agency and consultants contract directly with them. This simplifies the paperwork and record-keeping for the collaborative, allows the agency to work at a pace appropriate to their internal needs, and builds on what has been learned about managing a consulting engagement during the assessment process.

In addition, each nonprofit organization is expected to:

meet the objectives set forth in its own proposal on time and within budget;
participate in peer learning opportunities;
complete the required internal and external performance assessments;
provide ongoing feedback and input for program activities;
participate in the overall project evaluation;
submit interim and final reports on each year’s projects and grant expenditures;
develop and submit a sustainability plan at the conclusion of their BEST participation.=

The external performance assessment measures client perceptions and is implemented before and after the capacity building initiative to determine what changes, if any, have occurred. The internal assessment tool is also re-administered to determine change. Agencies receive an in-depth confidential report; however, only an executive summary of findings is given to the Flint Funders Collaborative.

Consultant selection

Consultants for the capacity building phase are selected from the BEST consultant pool by the agency, using much the same process as in the assessment phase.

Particular care is given to help match consultants who have appropriate technical skills and working style with the needs identified in the capacity building proposal. The BEST Lead Consultant, in partnership with the Director of Programs, recommends two to three consultants for each capacity building area for which the agency applies. As with Phase I, the agency can choose from these recommendations, or select a different consultant from the BEST consultant roster. Any consultant chosen by the agency, however, must be part of the vetted pool. If the nonprofit wishes to work with someone who has not been vetted by BEST and wants to use project grant funds for payment, the consultant will be asked to apply and qualify for membership.

Budget and consultant contract

Nonprofits are given a consultant contract template to use or adapt for the capacity building phase. The consultant fee structure may remain the same as in the assessment phase, or it may be negotiated on an individual basis between the nonprofit and the consultant.

Report

A report is due upon completion of the work outlined in the consultant’s contract. In addition, consultants are required to meet with the board of directors to present key findings and recommendations. As noted above, a sustainability plan is required in the final report.

C. Workshops

Workshops can play a valuable role as part of an overall strategy. BEST research found that certain themes are common in all the capacity building grant proposals: executive transitions; board governance and leadership development; resource development/ fundraising; and human resource management. It would be easy to rely on workshops as a cost-saving strategy to solve the capacity issues of nonprofits. However, BEST research confirmed that workshops are only one piece of the puzzle. Common themes surfaced from focus groups and interviews during the research process prior to the pilot:

Workshops are best for building awareness, but follow-up is needed for lasting impact.
Many workshops are repetitive or are not directly applicable to organizational needs.
There is too much “canned” material and not enough interaction in sessions.
Small organizations, with limited (or no) professional staff, question whether the return on investment is worth the time or money required.

Therefore, the BEST Project provides targeted group training on the more commonly requested topics, with customized follow-up support provided through a variety of methods, including one-on-one sessions with consultants and/or email and phone conversations. This approach addresses common needs while helping to build relationships within the participating agencies.

Workshop topics are chosen by the agencies. In most cases, sessions are accompanied by opportunities for one-on-one consultations. The workshops have covered topics such as whole system change theory, board development and strategic planning. Workshops continue to provide a challenge for two primary reasons:

1. Agencies do not all want or need the same topics, format or timing. BEST has tried to balance competing priorities and has done a better job on all counts with each new cohort, but it still isn't perfect and may never be when the cohort includes multiple sub-sectors, budget sizes, lifecycles and leadership experience.

2. Agencies still report that workshops are not as effective as one-on-one consulting, even when specific attempts are made to tailor the content more closely to their needs.

Financial Summary

The four foundations represented in the Flint Funders Collaborative are responsible for funding the administrative and programming expenses for the BEST Project. Each funder makes an annual grant to the BEST Project that is proportionate to their institution’s discretionary funding. As part of the FFC Memorandum of Understanding, voting power is equal among the four funders and is not tied to funding levels. The MOU recognizes United Way of Genesee County as the grantee of the other funders and the official grantor and host agency for the Best Project. As such they sign contracts, issue grants to agencies and provide financial management on an in-kind basis, which is recognized as both a contribution and an indirect administrative cost.

Budgets are established based on the number of nonprofits served and other factors, such as administrative demands, staff size and experience of agencies in each cohort, and potential need for resources to address troubleshooting and crisis management. Budget projections for each cohort’s three-year cycle are created and submitted prior to initiating each year of assessment and capacity building. Once the FFC approves the budget, the budget is turned over to the FFC Finance Committee which monitors income and expenses.

Costs

Comprehensive capacity building is not only time-consuming, it is also expensive. Approximately $80,000 was spent on research prior to the Pilot Project implementation. These costs were shared equally among the four funders. Annual budget projections depend largely on the project’s three year cycle: the assessment phase is substantially less expensive than the capacity building phase, when grants are awarded to agency participants. BEST found that simultaneous programming for multiple cohorts (the first and second cohort) increases both the administrative and programming costs. There are some efficiencies and programmatic advantages in overlapping cohorts, but not many savings.

Annual budgets for the first cohort (approximately 15 agencies) have ranged from $650,000-$700,000 during each year of the capacity building phase. The chart on the following page illustrates the approximate budget breakdown by line item. Each area is listed as a percentage of the total for comparison purposes. Percentages are based on the approved 2006-2007 budget and are consistent with previous budget years that included only one cohort. Administrative Line Items Percentage of Total Financial flexibility and adaptability have been critical to the success of BEST administration and its program activities. As funders and contract staff identified needs for additional services during the first and second cohorts, these needs were met through budget modifications and variances. For instance, additional technical assistance was provided when agencies needed to adapt to internal and external challenges, such as an unexpected leadership transitions, or local political and economic developments that required crisis management support.

The following notes provide additional information about the first and second cohort allocations, along with observations about various line items.

Pilot Project (First Cohort):

BEST conducted fifteen assessments in the first cohort, using one or two consultants per agency. The contracts ranged from $8,000 - $20,000.
The consulting rates for the first cohort were set at $100 per hour for offsite work (phone interviews, correspondence, reporting, etc.) and $125 per hour for onsite work. This was slightly below average for senior consultants working in southeastern Michigan when the Pilot Project began. The same rate applied throughout the first 3-year cycle.
BEST made thirteen capacity building grants to first cohort organizations. Grants ranged from approximately $35,000—$50,000 per year.
The original budget for startup did not include Training and Professional Development for all key stakeholder groups. Developing a “learning community” within the BEST Project became a key feature and is now a valuable asset.
In 2003-04, during start-up and program creation, approximately 34% was spent on administrative costs. In 2004-05, administration was less than 20% of total BEST expenditures – a vast improvement, and well under the amount for any of the national models researched. In 2005-2006 BEST acquired and renovated its first permanent office. This accounts for the increased administrative costs in the previous chart. BEST anticipates that in subsequent budget years total administrative costs will return to less than 20%.
The start up and roll out process was almost a full-time job for the Lead Consultant during the first eighteen months. Second cohort:
BEST conducted eight assessments for the second cohort.
Based on experience from the first cohort, BEST determined that a consulting “team” led to a better result. Therefore, the cost of assessment contracts increased to $18,000 - $25,000 per agency.
The agencies selected for the second cohort were also more complex, requiring more in-depth assessment and thus more funding.
Consulting rates were increased in 2006 to reflect local market conditions. BEST will now pay consultants their standard rate, up to a maximum of $125 per hour (offsite) and $150 per hour (onsite).
The cost for the technology assessment also increased in the second cohort, to approximately $2500-$3500 per agency. This allowed for an onsite, professional review of systems and usage, rather than a self-assessment.
BEST budgets approximately $5,000 for each workshop it conducts, which includes planning with a representative participant group, implementation and follow-up consultations.

Questions for Consideration

How will agencies be approached to participate in the assessment phase?
What process should be used to evaluate potential assessment opportunities?
Upon what framework should the assessment process be built?
How much time and money should be allocated to the assessment phase?
Should assessments go deep and narrow (meaning a thorough review of a few agencies) or broad and wide (a less thorough review of more agencies)?
Should assessments be self-administered, or facilitated by an external consultant?
How should the assessment report be structured?
What type of grant is the collaborative willing to consider for capacity building?
What skills will be needed on the consulting team?
How will providers be screened?
What quality assurance methods and evaluation strategies will be utilized?
How will funds be managed during this portion of the process?
What type of training should be provided and to whom?
How should training be delivered?
What training resources already exist?
To what degree do the agencies feel that these resources meet their needs?
How will training be evaluated?

--Project Guide Table of Contents--

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