How One Funder Uses All the Tools in Its KitIncluding Advocacy-to Improve Children’s Lives

Katie ArnoldJP In The News, News, Other News

By Inside Philanthropy.

Inside Philanthropy

By Dawn Wolfe

IP last touched on Missouri’s Deaconess Foundation in our June article about the state’s Racial Healing + Justice Fund. The funder was one of the first backers, along with the Missouri Foundation for Health and Robert Wood Johnson Foundation, of this unique funding initiative, which uses participatory grantmaking to channel dollars toward communities of color in the St. Louis area.

After learning more about Deaconess in the process of reporting that post, it became clear that the grantmaker deserved a second look. In particular, Deaconess has a lesson to teach other funders and nonprofits about why 501(c)(3) organizations shouldn’t be afraid to either fund or engage in advocacy.

From a hospital to a foundation, investor and advocate

Deaconess Foundation, a ministry of the United Church of Christ, was founded after the 1998 sale of another service ministry, the former Deaconess Incarnate Word Health System. This direct connection to healthcare is reflected in the funder’s nursing scholarship program, which was established after the sale, and in 2020 alone, awarded $200,000 to nursing students.

But rather than focusing all of its giving on direct healthcare, Deaconess has followed a similar path to one of its partners in the Racial Healing + Justice Fund, the Missouri Foundation for Health. While MFFH focuses on a systems-change approach to attack the underlying causes of Missouri communities’ health inequities, Deaconess likewise takes a broad approach while focusing on the issues that impact the health and well-being of the St. Louis region’s children and families.

This makes Deaconess comparable to other forward-thinking health funders like RWJF and the California Endowment, which have fully embraced the idea that health is a product of many social factors that exist outside of the doctor’s office.

In addition to grantmaking designed to provide children with equal access to healthcare, Deaconess channels its money through three additional “strategy screens,” according to Kiesha Davis, director of partnership and capacity building: economic mobility; justice and equity (focused on the region’s juvenile justice, foster care and adoption systems); and early childhood education.

Deaconess moves fairly serious money in pursuit of its ultimate goal, “a community that values the health and well-being of all children and gives priority attention to the most vulnerable.” In 2020, according to its audited financial statement, the funder moved $3.4 million in grants alone out of total net assets of $72.7 million.

Davis and Constance Rush, director of advocacy and freedom schools, told IP that the shift to systems-change philanthropy and the development of its four areas of focus were actually already underway in 2014 when Michael Brown was killed by police in Ferguson. Prior to that, in 2013, the board had approved a new strategic plan to start funding advocacy in an effort to build the entire community’s capacity to care for its children. This allowed the funder to become acquainted with the region’s advocacy organizations, which in turn informed Deaconess’ policy priorities, theory of change, and incorporation of a racial equity lens into its work.

Deaconess, Rush said, had realized that “just making grants isn’t going to do it.” Instead, she said, the question was how to “really move the needle” to change the necessary policies to help Deaconess and its grantee and community partners realize their collective vision.

“As unfortunate as it is, that is also the year that Michael Brown was murdered here,” Rush said. “And so that likely increased the profile of the foundation and the foundation’s work, but it had already begun.”

In addition to its grantmaking and scholarships, for Deaconess, moving the needle also involves mission-related investments. Started in 2017, this program provides market-rate capital loans to entities including credit unions, development finance agencies and social enterprises that meet Deaconess’ criteria. The funder has committed to invest up to 2% of its endowment through this program, or up to $1 million, in an ongoing commitment to redistribute funds as existing loans are paid back.

Financial development nonprofit Justine Petersen, community development organization IFF, and Employment Connection have collectively received $1 million in loans through the program. Deaconess is now calling for the next round of applicants to the mission-related investment program. The deadline is Oct. 15.

While this is a lot of money moving to what look like great programs, Deaconess decided years ago that supporting direct services, no matter how generously, is still not enough unless the government is willing and able to do its part. Getting to a place where lasting good can be done also requires advocacy.

“There is a lot that you can do”

As a traditionally structured nonprofit and a religiously affiliated organization to boot, Deaconess both understands the limitations of its IRS designation and works all the way up to those limits.

Often, nonprofit organizations will steer clear of advocacy because of the ambiguity of tax law around the issue. The IRS states that an organization does not qualify for 501(c)(3) status “if a substantial part of its activities is attempting to influence legislation.” And private foundations are not permitted to lobby under tax law. That being said, there is a lot of advocacy work that doesn’t qualify as lobbying, and there’s been a push over the years for foundations and their grantees to embrace the full range of activities permissible under the law. (Check out Bolder Advocacy’s two-pager on the topic and Inside Philanthropy’s own explainer.)

Deaconess’ comfort with advocacy was most recently evident in the funder’s support of the successful 2020 campaign to expand Medicaid access in Missouri. In addition to investing an initial $100,000 in the Campaign to Achieve Medicaid Expansion and Democracy Reform, the foundation prioritized the campaign in its grantmaking. The funder also got involved in the effort by allocating staff to serve on the campaign’s statewide steering committee; creating and taking part in public education, including press events, social media campaigns, and editorials; and highlighting the work in the foundation’s own publications.

Deaconess not only “operate[s] in a space of comfort,” with its advocacy work, the funder has also taken on the task of educating its grantee partners about what’s possible within the legal structure of their nonprofit tax designations.

As a 501(c)(3), Rush said, “there is a lot that you can do.”

It takes a village to hire a new CEO

Given the deep involvement of its grantees and other community entities in the creation of Deaconess’ strategy areas and decision to include advocacy in its funding and operational toolkit, it should come as no surprise that the foundation also solicited a wide range of input when hiring its next CEO and president.

St. Louis Integrated Health Network CEO Bethany Johnson-Javois, a former Deaconess board member from 2011 to 2018, will take the helm next month. The process of hiring her involved collaboration between members of Deaconess’ board and staff (eventually, the entire staff was invited to give input), grantee partners, the foundation’s funding peers, representatives of national foundations, and a national search firm. And while COVID-19 meant that much of this work was conducted online, Deaconess had already garnered expertise in facilitating online events and groups when the first steps of the search process began in August of 2020.

“We like to have our stakeholders along with us doing the work with us, guiding the work with us,” Rush said.