Some social service nonprofit groups fear they can’t survive without government funding. Not so the founders of the Durham Rescue Mission. They don’t regret for a moment their decision nearly four decades ago to rely on private donations to help the homeless and addicted in one the state’s largest cities become productive members of society again. What government funds, government controls, explains Chief Financial Officer Gail Mills of the decision to avoid a strings-attached relationship with public money.
In 1974, Mills co-founded the organization with her husband, Rev. Ernie Mills. She says many who seek the rescue mission’s help are receiving government assistance. “How does that look if we [the rescue mission] are taking government assistance but we’re telling them, you need to get skills and abilities to take care of your own family?” Mills asked. “So it was a competing message if we’re saying one thing but we’re doing another.”
The decision forced the couple to pound the pavement looking for support. There were lean times. Mills estimates the mission’s income between 1974 and 1987 at roughly $1 million. Between 1988 and 2010, donations soared to just over $50 million. Chief Operating Officer Rob Tart believes success came because the rescue mission made good on its promises, which generated credibility with donors and the community.
Last year, 65 percent of mission donations came from individuals, churches, and businesses. Another 30 percent came from mission-operated thrift stores, and 3 percent was generated by Temps to the Rescue, a service matching clients with local businesses that need workers. Miscellaneous sources generated the remaining 2 percent.
To keep providing services — the mission served an average of 200 men, women, and children each day last year — private fundraising never stops. This month the Mills are closing in on a $4.5 million goal to build The Center for Hope, a 20,000 square foot addition to the downtown Durham location. The facility will feature a commercial kitchen, dining room for up to 300 people, three dormitories, 88 beds, and offices for counselors. Donations have ranged from $1 to a monster-size $100,000 gift, which was doubled to $200,000 by the donor’s employer. With another $300,000, the center will be fully funded.
At least eight other North Carolina rescue missions follow the no-government-money model, according to mission staff. Others around the country do take public funds. Mills is reluctant to advise which approach is best. “That’s a decision each organization has to make,” she said.
Mills notes that a Los Angeles area rescue mission recently discovered the bureaucratic pitfalls that can come with the decision to accept government money: late payments and grants that don’t cover all costs. Rev. Andy Bales told www.fulldisclosure.net that the Union Rescue Mission set up a separate, secular entity to receive government funding to pay for much needed winter shelters. Bales said a dispute ensued when the mission had trouble getting reimbursed by the Los Angeles Homeless Services Agency for services the mission had provided. “We are finding that it’s better for us to rely on private funding,” said Bales to ourweekly.com.
Union Rescue Mission’s experience isn’t uncommon for nonprofits. A 2010 survey of its members by the N.C. Center for Nonprofits found that 60 percent of state-funded nonprofits reported being paid late in 2010. More than half of state-funded nonprofits also reported that government funding doesn’t cover the full cost of providing services and that the application process and reporting requirements are overly complex.
In a limited sense, all nonprofits are government funded because they receive substantial tax advantages over other groups, explains Fergus Hodgson, director of fiscal policy studies for the John Locke Foundation. “However, direct allocation of tax dollars to a nonprofit goes much further and changes the nature of a charitable enterprise and its relationships,” Hodgson said.
Ultimately, Hodgson warns nonprofits to consider carefully the implications of their funding mechanism. “Reliance on voluntary donations keeps charities accountable to donors, but reliance on politicized tax dollars keeps charities accountable to government officials.”
For the Durham Rescue Mission, the question of who’s accountable to whom is easy. “We just felt like it was important for this to be a ministry of people helping people,” Mills said.
Donna Martinez is co-host of Carolina Journal Radio and a contributor to Carolina Journal.