DFW’s Program Funding Model — Member FAQs

What exactly is changing?
DFW is moving away from the 85/15 program funding model that has restricted our ability to effectively fulfill our mission. Your monthly chapter donations will now be used to further DFW’s mission, including all four of its programs: Grants, Member Education and Engagement, Grassroots Advocacy, and Partnerships. Your donations will be used to fund both direct program expenses (such as our grants) as well as program support and administrative expenses. This is consistent with best practices used by nonprofits in the U.S.

How will our monthly chapter donations be allocated? How much of my chapter donation will now go to the grantee?
Our first priority, with monthly chapter donations, will be to fund our grants. Our monthly featured grantee will remain the core of our model and we will continue to award featured grants of up to $50,000 each. We will also fund all of our commitments to our sustained funding grantees.The exact amount of your chapter donation that will go to the grantees will vary each month depending on the amount of chapter donations we receive. We will report and share this information on an annual basis in our audited financial statements, our IRS Form 990, and our Annual Report.

Why are you making this change?
Our highly restrictive 85/15 model is uncommon in the nonprofit industry and is not considered best practice for ensuring the long-term sustainability of an organization. By restricting donations in this way, we have been starving our organization and its ability to grow, adapt, innovate, and effectively fulfill our mission.We need to implement nonprofit best practices so that we can fund all our programs in a way that will ensure our long-term sustainability and allow us to make an even greater impact on the lives of women and girls.

What do you mean by DFW’s four programs?
As Beth Ellen described in The Dish (“DFW’s Four Programs Add Up to Big Impact”), DFW is much more than just a pass-through for grant donations. Although we have traditionally used the term “program” to describe the grantee we are supporting each month, we actually have four distinct programs – all of which are vitally important to fulfilling our mission and changing the way the world works for women and girls in the developing world. We have always had a Grants Program and a Member Education and Engagement Program. As part of our 2020 Vision, we are now adding our Advocacy Program and our Partnership Program. Some examples of each program are:

Grants Program – We rigorously screen and vet more than 150 applicants from grassroots organizations each year, and award approximately $800,000 in grants to highly deserving projects.

Member Education and Engagement Program – Each month, we provide comprehensive educational materials to all our members about our featured grantees. Our two monthly newsletters keep members apprised of gender equity and poverty issues as well as provide tips and best practices to help our chapters succeed. Our Member Education and Engagement Program also supports all the activities which create community and connection between our members and grantees.

Advocacy Program – Through collective, grassroots efforts, such as letter writing campaigns, petitions, phone calls and speaking opportunities, we will influence American policy and legislation so that it benefits women and girls in the developing world.

Partnership Program – The Peace Corps Let Girls Learn grant is our first strategic partnership that will allow us to invest strategically in a key issue affecting women and girls – education.

What are program support expenses? What is the difference between program support expenses and administrative expenses?
Program support expenses include the expenses that are directly related to the programs or services provided by a nonprofit organization. For example, expenses directly related to our Grants Program include staff time to manage the grant making process, which includes reviewing and evaluating grant applications and monitoring the impact the grants made. Another example is our Partnership Program. Recently, we granted $100,000 to the Peace Corps’ Let Girls Fund. This partnership would not have been possible without the staff time invested in putting it all together. In our Member Program, program support expenses include producing our monthly educational materials, managing our chapters, training our volunteer leaders, and communicating with members through our website and newsletters.In the nonprofit industry, administrative expenses are those expenses which are not directly related to the operation of the nonprofit’s programs. Examples include rent, insurance, licensing and permits, financial management, staff training and development, information technology, and donation management systems. These areas are all critically important to DFW’s operations.

With these changes, what will DFW’s overhead ratio be? (i.e. what percentage of DFW’s total budget will go to programs and what percentage will go to overhead?)
Historically, DFW’s administrative and fundraising expenses (commonly referred to as “overhead”) have been less than 25% of our total budget. We will continue to manage these expenses closely to ensure that we are using all donations to make the biggest impact possible in the most cost-effective way. It is important, however, to keep in mind that overhead ratios are a poor measure of a nonprofit’s performance. In fact, we have been talking about this subject with our members for some time (See Marsha’s blog on the The Nonprofit Starvation Cycle). For this very reason, we no longer focus on overhead ratios when we are screening our own grantees. While we still vet an applicant’s finances, we focus more on other factors of nonprofit performance, especially the applicant’s impact and results.

If we should not be focusing on the percentage spent on overhead, how should we judge nonprofits?
According to three of America’s major nonprofit watchdogs (Guidestar, Charity Navigator, and the Better Business Bureau Wise Giving Alliance), donors should pay attention to other factors of nonprofit performance such as impact, results, transparency, governance, and leadership. These factors provide a more complete picture of a nonprofit’s performance. (Read about the Overhead Myth)

Will DFW still work toward keeping its administrative expenses as low as possible? What controls will be in place to ensure that DFW does not get “overhead heavy”? How will DFW be held accountable to its members?
The Board and staff will closely monitor all expenses in order to ensure that we are using all donations to make the biggest impact possible in the most cost-effective way. We will continue to be completely transparent in reporting all our expenses and the impact we are making with your donations. We will continue to hire an independent, third-party CPA to conduct an annual audit and prepare our IRS Form 990. Not all nonprofits do this. Our financial performance is regularly reviewed by both our Finance Committee and Board.There is strong evidence, however, that underinvesting in overhead creates a range of negative outcomes which undermine an organization’s quality and sustainability. For example, if a nonprofit has limited or no staff for administrative roles such as finance, development and operations, the consequence is that the organization will have a limited ability to manage/monitor finance and development. If there is limited investment in staff training and development, there will be increased turnover in staff and poor work quality. (See Overhead Myth.)

Will members be told how much of their program donations go to grants vs program support and overhead?
Yes, this information will be reported in our Annual Report, audited financial statements, and our IRS Form 990, all of which are always made available to members on our website.

Will this change affect the amount of our featured or sustained funding grants? Will our grant amounts be reduced because of this change?
Not at all. Our monthly featured grantee will remain at the core of the DFW model, and we will continue to award featured grants of up to $50,000 each. We will also fund all of our commitments to our sustained funding grantees.This change will allow us to do so much more for women and girls living in extreme poverty, because it will allow us to address the challenges they are facing from all angles: by educating and engaging our members to become global citizens, by advocating in a grassroots manner on their behalf, and by funding partnerships or collaborations that help us “move the needle” and create broad, lasting change. All of these efforts combined are essential to changing the way the world works for women and girls.

Will we still need to raise funds through our annual appeal (13^th Month Campaign)?
Yes. We will still need to raise funds through our annual appeal (known as the 13^th Month, which includes the Founders’ Circle) and from foundations and corporations in order to cover our expenses. Monthly chapter donations are not enough to cover all of DFW’s expenses.

Will we need to raise less funds through the 13^th Month Campaign in the future since our monthly chapter donations will now be used to cover program and administrative expenses?
DFW has always used part (15%) of monthly chapter donations for program and administrative expenses. The goal for our annual appeal (13^th Month) will be established each year based on the amount of chapter donations we receive and the needs of our organization.

One of the things I always liked about DFW was the uniqueness of its model. Is that all going to change now that we are following “industry best practices”?
DFW does have a unique and highly successful model. This will not change. Our monthly featured grantee will continue to be the core of our model, and we are committed to maintaining the small, intimate nature of our chapters. In terms of program funding, it is important that we follow best practices so that we can ensure that DFW is here for the long haul!

Can I just support the grantees?
Your DFW donations support all our grantees and programs in order to further the mission of our organization. You may choose to donate to the grantee organization directly, but your donation will not go to the DFW project, and it may be used to fund the grantee’s own overhead. One of the benefits of donating to Dining for Women is that you know that all the organizations have been rigorously screened and vetted. The staff time involved in managing our grant process and reviewing and evaluating grant applications is part of the total cost of our Grants Program.

Isn’t DFW a grant making organization? Why do we have these other programs?
While funding grants is important and will continue to be the core of DFW, there is so much more that we can and should be doing to move the needle on gender equity and address the problems of women and girls. This includes educating and engaging our members and recruiting new chapters and members, advocating on behalf of women and girls through collective, grassroots efforts, and proactively investing in partnerships that create broad, lasting change. We need to address the significant challenges facing women and girls from all angles, not just by awarding grants.

How will this change be beneficial to women and girls?
This will ensure that we are addressing the problems facing women and girls from all angles: through our Grants, Member Education and Engagement, Grassroots Advocacy, and Partnerships Programs.These changes will ensure that DFW will be here for the long haul. It has been estimated that women’s equity will not be achieved until 2133, and we want to be around until then.