Bad Nonprofit Business Model: Relying on the Support of an Adversary

September 19, 2017; Texas Observer

Two cautionary tales for social justice nonprofits come to mind in this story from the Lone Star State—first, it’s never a good idea to rely predominantly on one donor for most of your organization’s financial support because when that donor goes, so goes your programs. Secondly, if you are going to rock the boat and engage in vitally important social justice advocacy, you are always at risk of losing support from less-than-sympathetic funders. You better have a plan B.

The story comes from the Texas Observer, a nonprofit news organization known for its investigative reporting and coverage of the state’s culture and politics. It tells the tale of the Texas Civil Rights Project (TCRP), a well-known civil rights nonprofit that lost about $900,000 in funding this year—more than 40 percent of its roughly $2 million budget.

TCRP had received significant financial support from the Texas Access to Justice Foundation since its founding in 1990. The Foundation was created by the Texas Supreme Court to distribute state-mandated fees collected from attorneys to support access to the legal system for underserved and disadvantaged populations. But this past July, the foundation—TCRP’s principal benefactor—decided it would no longer support it.

The nonprofit says its funds were revoked for political reasons arising from their work around voting rights and immigration policy. “Let’s be clear about what just happened: Our success at holding the people in power accountable led to the loss of our funding,” said its executive director, Mimi Marziani.

She told the Observer that the nonprofit was already working to reduce its heavy reliance on the foundation’s funding, and so far, the group has raised around a half million new dollars.

TCRP was founded by civil rights attorney Jim Harrington and has five offices throughout Texas. It has handled more than 2,500 cases for low-income Texans, including suits on behalf of the disabled, victims of police brutality, and undocumented immigrants unable to obtain birth certificates for their children. More recently, TCRP was also one of many plaintiffs to sue the state over the anti-“sanctuary cities” bill in the state legislature earlier this year.

The Texas Access to Justice Foundation distributes millions of dollars each year to about 40 organizations that provide legal services to poor Texans. The foundation, a 501(c)(3), is closely affiliated with the Texas Supreme Court, which launched it in 1984, and its board is appointed by the Supreme Court justices (all Republicans) and the State Bar of Texas.

Even though it has given more money to TCRP than any other group, the foundation cut it all off this year. TCRP called the decision a political “backlash” typical of the Trump era. The foundation says the nonprofit has shifted away from the direct legal services to poor Texans that it exists to fund.

“The Texas Civil Rights Project has made a conscious decision and was in the process of moving out of the direct delivery of legal services,” the foundation told the Observer, specifically citing its “decision to stop helping veterans with foundation funding.”

Harrington, who retired from TCRP in 2015, told the Observer he understood the foundation’s decision, saying that his former organization has strayed from what he called “community-based” cases: “We were very controversial…but everything we were doing was always related to the community. It wasn’t picking up these hot-button liberal issues like redistricting or [the sanctuary cities bill].”

Harrington told the paper that TCRP should have let other organizations handle the lawsuit over the controversial anti-immigrant law. The foundation continues to fund programs that help immigrant crime victims by supporting other legal aid organizations.—Larry Kaplan