As a grant maker, we generally aim to follow a straightforward process: identify the best nonprofit organizations in the field; meet to define common goals and where funding would be most effective; determine how to measure success; and then make an award. However, funding a charitable vision isn’t always as simple as picking the right grantee, particularly when working in countries other than the U.S. Despite a demonstrated need, there may not be an organization with an existing program in place for the grant maker to support. When this is the case, is it appropriate and even realistic to consider creating an organization?
This is the situation The Peter and Carmen Lucia Buck Foundation (PCLB) faced several years ago. Carmen Lucia Buck, one of PCLB’s co-founders, committed the Foundation to assisting the poorest people in her hometown of Vila Velha, Brazil, a port city with a large population that lacked access to basic health care. Her vision for improving health care in the community posed many challenges and raised several questions for the Foundation to address:
1) Will it be possible to find a grant partner we trust and can work with in the community?
2) What controls over the project are necessary, and should they reside with the local organization and community or with the Foundation?
3) Is the commitment sufficient to warrant a full-time, on-site program officer?
4) Whether working with a partner or creating a new entity, will qualified, local staff be available (at local market wages) to manage both the business operations and service delivery?
PCLB strongly favors supporting existing organizations rather than creating new nonprofit organizations. However, there are occasions where there may be compelling reasons to create a new entity. In either case, PCLB recognizes the importance of local community involvement and support. The community must own the project as much as the grant maker. To lead the project, connect with the community, and navigate the cultural conventions, PCLB sought and retained an individual experienced with the language, culture, government, and nonprofits of Brazil.
“Early in the process, we realized that we needed to address a range of expectations, some cultural and some family-driven,” said PCLB Executive Director Ben Benoit.
Cultural and language barriers definitely added logistical challenges to the project. An informal exploratory committee was formed to brainstorm the project now known as Cl√≠nica Carmem Lucia (CCL) in honor of PCLB’s co-founder (and keeping the traditional Brazilian spelling of her name).
Members of this committee included PCLB staff, a local consultant, Carmen’s extended family living in Brazil, and other interested parties. The exploratory committee identified a few key steps:
1) Complete a comprehensive needs assessment to determine not only the health-care needs of the community, but also what other health-care organizations might already be in place;
2) Identify community organizations that could serve as partners to assist with navigating the local bureaucracy;
3) Immediately seek community involvement to ensure success of the clinic;
4) Consider the possibility of partnerships in addition to the plan of creating a new organization.
Through a grant to MOVIVE (a nonprofit community organization in Brazil), a needs assessment was conducted in a particularly troubled region of Vila Velha. A survey of more than 1,350 households showed overwhelming support for a medical-dental clinic, with demands for general medical and dental care as well as specialty services in pediatrics and gynecology. A second survey of 98 health-care professionals (community health agents, nurses, dentists, and other professionals in public health posts) in the same area provided data on common ailments. The second survey provided a baseline for measuring the long-term impact of a clinic.
Data from these two surveys and other demographics (population, income, number of people per household, distance from health facilities) helped identify an ideal approximate location for Cl√≠nica Carmem Lucia on a major road between underserved communities.
To fund CCL, PCLB awarded a project grant to Funda√ß√£o Ceciliano Abel de Almeida (FCAA), a large Brazilian nonprofit operating in conjunction with Federal University of Esp√≠rito Santo. FCAA operated similar to an extension service of an American university.
“Finding a good partner organization, even though able to assist only with part of the project, helped navigate a very different business culture, particularly when it came to liability, human resources, and employee issues,” said Ben Benoit.
The grant was a true partnership: PCLB would monitor and handle program features of the clinic with an on-site program officer, and FCAA would handle everything else: human resources, facilities, maintenance, administrative functions, etc. Though the grant segregated functions, all decisions were made jointly. This allowed PCLB to manage program goals and purposes, while leaving supervision of employees and other operations under the control of a local nonprofit.
The grant to FCAA, as a foreign entity, required expenditure responsibility. Applications and award agreements were written in both English and Portuguese, and, although funding was approved in advance over a multi-year term, PCLB reserved the right to renew funding on an annual basis. With a PCLB program officer on site in Vila Velha, regular reporting and monitoring required by the IRS was easily accomplished. Because PCLB did not control the grantee, but only the terms of the award, no additional compliance was required to document the grant as a qualifying distribution.
IRS-driven compliance for these grants was fairly straightforward, but a few key administrative changes had to be made. Although awards were eventually made in local currency (to shift the exchange rate risk to PCLB), Brazil does not allow its currency (R$) to be traded outside of Brazil; thus, funds were still wired in US dollars. This required careful monitoring. Although PCLB and FCAA had a relationship that spanned several years, the Brazilian banks sometimes held funds for several weeks (and even months in several instances) for their own compliance reviews before converting the wires to R$ and releasing funds to the grantee. As a result, PCLB began disbursing funds further in advance, before expenses were incurred, to avoid placing the program in financial jeopardy.
“We (PCLB) understood that this was a legacy project of one of our founders, but if it was to be successful, it would be critical to have the input, support, and eventual ownership of the community,” said Daniel Weiss, the PCLB program officer. “The only way to do that was to let go and give the community control.”
PCLB created a CCL community commission to supervise the project and establish the services that would be provided. Unlike the initial exploratory committee, this CCL commission was comprised of formal and informal community leaders, local organizations, and FCAA. “Though I participated on the CCL commission with other community leaders, I was still skeptical,” remarked Jos√© Pedro Pascoal, presidente of Banco Terra, a local community NGO. “Nobody comes here (Brazil) to build a free health clinic without some other agenda, usually political or religious.”
But the CCL commission found that it was free to establish what services would be offered and to create the guidelines for accepting clinic patients. The commission proposed a system of formal referrals by local nonprofits, based on household income and need.
With the guidelines from the community set and a building leased and under renovation, CCL set the clear goal of offering regular comprehensive dental and medical care and outreach to 500 households. Although CCL was not intended as a source for local jobs, more than 1,000 candidates applied for positions at the not-yet-operational clinic.
CCL opened its doors on August 10, 2009. The first patients, a mother and her young daughter, had not seen a dentist in three years. “When the clinic opened, my skepticism quickly vanished,” concluded Jos√© Pedro Pascoal. “PCLB listened to us (the commission) and implemented the clinic exactly as we requested. Today, it is one of the things I am most proud of in my community.”
Adapting to the needs of the community, CCL added procedures and services, including root canals, dental prosthetics, and gynecology. In its first two years, the CCL dental clinic received more than 3,300 patient visits, and the medical clinic had more than 2,200 patient visits.
Creating a New Entity
“Brazilian philanthropy is not as advanced as in the United States,” Christina Pupim, president of MOVIVE, has explained. “The vast majority of funding to nonprofits comes from the government.”
Because of this lack of emphasis on private philanthropy, CCL needed to develop partnerships with the public sector in order to meet the growing demand for services. To build these public sector relationships, an organization independent of FCAA was believed to be the only mechanism to ensure the longevity of CCL. Independence would allow the clinic to partner with multiple nonprofit and governmental organizations as well as conduct its own fundraising.
In order to create the Funda√ß√£o (Foundation) Clinica Carmem Lucia (FCCL), four independent governing boards (not uncommon in Brazil) were created from the CCL community commission: a five-member Board of Directors; a three-member Board of Trustees; a nine-member Deliberative Board; and a three-member Fiscal Board. Only two of these 20 board positions are filled by PCLB staff members. All clinic operations transferred from FCAA to FCCL, and PCLB planned for all future funding to be awarded to FCCL as grantee.
For the first year of funding to FCCL, PCLB exercised expenditure responsibility over the grant, continuing to monitor the outcomes of the clinic through an on-site program officer and regular reporting. The four-board structure of FCCL avoided giving PCLB control (both legally and operationally), and, as a result, PCLB avoided the out-of-corpus rules for controlled entities. This result was also desirable due to a lack of current, agreeable authority on whether a grant to a controlled, foreign entity is a qualifying distribution.
FCCL is poised to grow as it provides comprehensive medical and dental care to an underserved community in Brazil. After one year of operations under its new wings, FCCL is eligible to apply for additional exemption status under Brazilian law. Currently, FCCL is exploring new partnerships with local universities, NGOs, corporate sponsors, and municipal and state secretaries of health, education, and social welfare. FCCL and PCLB are also considering an equivalency determination as a way to ease the grant-making compliance required of PCLB and to encourage FCCL to seek other U.S.-based funding sources.
With the right combination of partnerships, independence, program management, and technical guidance, PCLB was able to move beyond grant-making and transform Carmen’s dream of a health clinic from a fledgling project into an independent nonprofit entity. It has taken more than five years to achieve; nonetheless, the careful progression has created something that will endure.
—John W. Bateman, Administrative Officer, The Peter and Carmen Lucia Buck Foundation, Inc.
—Daniel A. Weiss, Ph.D., Project Director, The Peter and Carmen Lucia Buck Foundation, Inc.