Foundations Don’t Fund General Operating Costs – Or Do They?

March 26, 2009

Do you still believe the old fairy tale about how difficult it is to find foundations that support general operating expenses?

It’s one of the grantwriting myths that even I bought into.

Why not? The foundation that I worked for for a number of years most generally dissuaded grantseekers from applying for general operating expenses, preferring to fund specific programs and capital. Foundation trends did, for a number of years, steer away from funding organization general operating expenses.

Because foundations’ founders and their leadership tended to be from the corporate world, there was a major push in the 1980’s through the 90’s for nonprofits to be accountable and goal driven. Funding was directed to short term projects – ones that could deliver measurable outcomes.

But we all know that project-based accounting often forced grantees to sacrifice long term effectiveness.

After all, if your organization is continually adding more programs or sites while your underpaid (frequently revolving) staff is working on obsolete computers without proper supplies, where will you be in five years?

I am pleased to report that that is changing.

In 2004, the Independent Sector Board of Directors unanimously endorsed a statement to “opt for general operating support over project support when feasible and when the goals of the two organizations are substantially aligned.”

Further, they encouraged foundations, when providing project support, to pay “the fair proportion of administrative and fundraising costs necessary to manage and sustain whatever is required by the organization to run that particular project.”

And now a recently issued report from the Foundation Center notes that, not only has foundation giving increased by 14.6% in 2006, but foundation grants for overhead costs grew by 6.7%. Likewise, the Center for Effective Philanthropy, after surveying 20,00 grantees and 79 foundation executives, noted that foundations “should make larger, longer-term operating grants” of unrestricted funds that can be used to support the organization and its overall mission, not just specific projects or programs.

Hallelujah! Foundations are finally recognizing that nonprofit organizations don’t operate in a vacuum!

So where do you find foundation grants for general operating costs?

Check out your core of current donors, those who have been most consistent in the past, who are already enthusiastic supporters of your programs. If you’re doing your foundation research on a regular basis, you should be compiling a steady roster of new foundation prospects. And don’t forget those foundations to which you’ve applied but have never funded you.

Make your case for support not only as clear as possible – but as compelling as possible as well.


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