Jody Levison-Johnson, Ph.D., LCSW

What makes Elon Musk and Jeff Bezos successful entrepreneurs is their ability to innovate and think outside of the box. That freedom has enabled them to conquer new horizons in business, revolutionizing online retail, the electric car market, and even the commercial space market.

Central to that success is their ability to leverage their innovation capital — the trust that funders place in their ability to solve problems and break new ground.

Now imagine if they had been constrained by funding streams that stipulate how, when and where to spend money. What if those funders stipulated that they could not spend a penny covering their overhead costs or investing in technology or talent? That is exactly what is demanded of nonprofit social sector leaders who are tasked with solving the most intractable social issues of our time.

Government and philanthropic funding for the nonprofit social sector routinely fail to cover the full cost of providing services and restricts how nonprofits can use that funding by disallowing or limiting investments in necessary infrastructure, such as technology, marketing, and talent.

Nonprofit donations have dropped, aside from a brief rise during the COVID-19 pandemic, and the latest data available suggests that rates have dropped below 50% for the first time.

The strain on the nonprofit workforce is also evidenced by recent data from Independent Sector and United for ALICE (Asset Limited, Income Constrained, Employed), which shows that while workers within the sector comprise 9% of the workforce in the U.S., 22% of those workers are living below or just above the poverty line. As the report’s authors noted: “Many of the lowest-paid nonprofit employees are human services workers. Research has shown that these jobs are often undervalued relative to their required levels of skill and difficulty. Occupations in for-profit companies and in other industries with these same requirements receive higher pay, despite nonprofit human services workers sometimes having a higher level of skill and responsibility.”

Most importantly, the financial constraints facing social sector nonprofits impede their ability to apply their expertise to solve for root causes. Imagine, for example, if nonprofits could use funding earmarked for housing services to address the underlying issues leading to homelessness, such as substance use or mental health disorders. Lenora Hardy-Foster, president and CEO of the Farmington Hills, Michigan-based Judson Center, explained the tough choice nonprofit CEOs face: “As mission-driven organizations we have a unique lens on what the communities we serve most need, and yet funding streams are too often focused on specifics that don’t line up with those needs. That leaves us in the challenging position of essentially cobbling together funding to address our community’s most pressing needs. You can’t really solve problems that way.”

And while public trust in nonprofit social sector organizations finally this year reversed four years of decline, the fact remains that too often, the sector is called upon to do more with less.

Consider instead the impact the social sector could have if it were freed of these constraints and enabled to address root causes.

The nonprofit Akin is one such example. Formed through a merger of Children’s Home Society of Washington and Childhaven, Akin was one of numerous social sector organizations that received unrestricted funding from philanthropist MacKenzie Scott. Scott is breaking barriers in her unrestricted support for a broad range of social causes, enabling organization leadership the maximum flexibility in how to spend those dollars. Thanks to this investment, Akin established the Washington State Family Network and launched an effort at the state and federal levels to support sustainable public funding for Family Resource Centers, community-based resource hubs where people and families can access formal and informal supports to promote their health and well-being. Family Resource Centers pay flexible funding forward by design by reflecting and responding to the needs of the communities in which they are based.

The film, UnCharitable, is an example of how we can work to shift the dialogue around nonprofit impact by pointing out the incongruities of expecting nonprofits to solve our most pressing social problems while keeping operating costs low and paying bare minimum salaries. While those of us working in the social sector welcome this narrative shift, we know it is just the start of a much larger conversation.

Nonprofit social sector organizations are at an inflection point where we must stand up for all that we bring to the table and advocate for ourselves among the public, policymakers, philanthropic community, and even our own colleagues. We know how to solve problems, and we understand the communities in which we operate. Until we are empowered and charge ourselves with ways to truly drive innovation and apply that learning, we will continue to be undervalued and underpaid.

The work we do is vital. We do our work even as we battle against public attitudes that devalue the impact of the sector and pigeonhole our efforts as focused solely on the “needy and less fortunate.” We do our work while funders chronically fail to cover our full costs and express little concern that galas and golf tournaments are necessary just to keep our lights on and our doors open.

We do our work under the continued misperception that it is our moral obligation to fill community needs while not considering the moral imperative to ensure our staff can make a living wage and support their own households.

It is time for us to consider with different lenses how we approach our work and how we support our workforce. It is time that we take a unified stand and apply the strategies that fuel our nation’s capital investment and innovation to truly move the needle on social change.

This is an investment that must be made by the sector, its funders, and society as a whole. It is one that will ultimately be measured not just in dollars but in improved lives.

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Jody Levison-Johnson, Ph.D., LCSW, is president and CEO of Social Current, partner and solutions provider to a diverse network of more than 1,800 human and social service organizations.

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