How the United States Can Help Its Veterans

6 minute read
Douglas P. McCormick is a veteran who works in private equity and sits on the board of several veteran nonprofits. He is also the author of Family Inc.

In the coming years, Vietnam veterans will navigate greater challenges with their health. Younger vets will transition to civilian life at a pace of slightly less than 200,000 a year. Already, the Department of Veterans Affairs indicates that more veterans are utilizing their services, and surveys from veterans groups and feedback from caregivers on the front lines all suggest that demand for their support is increasing At the same time, the American government’s financial support for the veteran community is waning. And thousands of small charities, despite good intentions, are failing to demonstrate compelling impact and, in turn, not inspiring enough donations to keep up with these growing needs. Addressing this failure will require an urgent and great reimagining of veteran support.

For 15 years, America has witnessed a war on terror. Because of this, the public is aware of the service and sacrifices of our veterans. But that awareness has not translated into increased financial support, according to a recent report by the Center for New American Security. Over those 15 years, philanthropy overall has grown 40%. But philanthropy directed toward military and veteran nonprofits has grown less than 4%. Given that nearly a quarter of veteran and military nonprofit revenue comes from Veterans Affairs–sponsored grants and contracts, it seems that private philanthropy has actually decreased since 9/11. The problem will likely get worse, given pressure to cut government spending, fatigue among citizen donors and corporate sponsors alike as well as a shrinking Cold War veteran population that has generously supported these causes.

Donors have not been convinced by the impact of today’s veteran nonprofit community, leading them to allocate scarce dollars to what they see as more worthy causes. Veteran nonprofits are blessed with many passionate, competent leaders. But the community is comprised of many sub-scale, under-resourced and highly fragmented organizations. According to that same CNAS report, there are more than 40,000 veteran nonprofits. Seventy percent report annual revenues of less than $100,000. Less than 1% report annual revenues in excess of $1 million. This fragmentation results in local solutions for a national problem, few charities with recognizable brands and even fewer with the resources to deliver consistent, quantifiable impact. Since its difficult to see which organizations make the most effective use of their money in a crowded space, philanthropists understandably pursue other causes.

The nonprofit community will be more effective—and our veterans better-served—by consolidating their efforts and organizations according to a few principles. These principles should guide efforts for nonprofit leaders and selection criteria for philanthropists alike.

First, organizations should complement—not compete with—­existing government programs. For every dollar spent by veteran nonprofits, the VA spends more than $50. Rather than pursuing redundant efforts, nonprofits must articulate a narrow mandate that either leverages the VA’s investment or fills a gap not already served by government. For example, while charities enacting broad advocacy struggle to attract veterans, Bunker Labs is growing rapidly by offering support for veterans pursuing entrepreneurship.

These narrow mandates, however, should nonetheless be directed across a large part of the veteran community before and during their transition into civilian life and allow them to self-select into the program. Organizations like this offer compelling return on investment for donors, engage veterans at critical points in their lives and stay relevant to the needs of today’s soldiers. For example, Student Veterans of America provides educational support to veterans returning to higher education, supports over 1,300 schools and 500,000 veterans, and also engages veterans during the crucial transition from service to civilian life, when higher education can launch a successful career and stable livelihood.

To magnify their impact, charities must adopt robust operating models which include multiple funding sources beyond donor support, minimal need for real assets such as buildings or equipment, and use of technology that leverages their organizational impact such as CRM software and social media platforms that help organizations more effectively engage with veterans to foster community. Nonprofits with these characteristics allow their leaders to quickly react to market changes—those among both donors and veterans—and increase the number of veterans they can support without requiring significant additional investment. For example, with less than 35 employees, Team RWB leverages its social media presence, existing fitness events, volunteers and a diversified revenue stream—one consisting of donations, event sponsorship and fitness apparel sales—to facilitate over 300,000 annual veteran experiences such as working out, running a marathon, rock climbing, or attending leadership training together.

Last, more veteran nonprofits must scale to a minimum critical mass of between $3 million and $5 million in annual revenue and commit to rigorous, metrics-based evaluation of impact. Larger organizations can afford the investments in not just leadership but the systems required to effectively drive consistent, cost-effective impact. Team Rubicon and The American Legion provide an interesting contrast. Both organizations are significant and generate in excess of $5 million in annual revenue. But their ability to articulate metrics-based impact is very different. Team Rubicon offers disaster recovery services and maintains an active roster of over 35,000 volunteers through which the organization tracks the number of service projects, training events and total emergency operations supported. In contrast, while the Legion has an undeniable positive impact, its decentralized structure results in poor impact reporting with less than 70 percent of local chapters participating in their annual impact report. The Legion’s inability to effectively report its impact makes it difficult to secure support from today’s sophisticated donors who are focused on their “return on their investment.”

Consolidating a dated patchwork of locally based veteran nonprofits is not an easy task—and requires leaders to ask themselves tough questions about whether they alone can achieve the criteria outlined above or if they could be more effective joining forces with another organization that does. But this reimagined nonprofit veteran landscape will benefit everyone. More targeted, better-resourced organizations would allow philanthropists to reallocate existing veteran-focused donations to best-in-class charities. The sector as a whole would more effectively compete for donations. The remaining charities could develop differentiated national brands that are known to both donors and veterans for their specific expertise. And charities with scale could leverage investments in leadership, technology and reporting to drive continuous learning and improvement to address the needs of our veterans.

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