Filed under: the more things change, the more they stay the same

September 11, 2019

Just last week, in an article titled Five CEOs of Wealthy Foundations Pledge to Do More to Help Charities Pay Overhead, The Chronicle of Philanthropy giddily announced an effort in which five of the wealthiest foundations have joined forces to help their grantees pay their costs, including rent, decent wages, technology, and other overhead. To embark on this mission and gain a clearer understanding of grantee underfunding, as well as their own grant-making practices, the five CEOs selected Bridgespan, a nonprofit consulting group, to help advise them.

It’s interesting to note that “heads of Ford, Hewlett, MacArthur, Open Society, and Packard said they had spent two years studying the challenges faced by nonprofits and learned that many of the organizations they supported — including large, prominent, household-name organizations — face major deficits because of stingy policies that provide just a sliver of the money they need to operate and run projects.”

Two years!

As I read the Chronicle piece, I experienced an unsettling, yet an all-too-familiar sense of deja vu…

Ah, what could it be? Oh, now I remember. Oh yes, this. I recalled writing about *this* very issue in 2008…

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 note 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!

Yet, even before this change began, my grants system strategy advocated targeting small to mid-sized foundations that supported general operating support. Why? Put simply:  It makes sense to tailor two or three boilerplate proposals for general operating support from twenty to thirty smaller grantmaking foundations than spend that same amount of time dealing with the headaches of one proposal from a major funder.

Here’s an illustration of my point:  In one year alone, the Ford Foundation received 144,000 grant applications. Two thousand grants were made.

While you’re in the process of evaluating what you want to achieve from foundation funding and setting up your calendar for the year, you need to take into account the absolute best possible use of your time. By developing a solid system for researching prospective foundations — and consistently devoting 2-4 hours per week on research alone —  you will eventually develop a core of foundation support. For every community and mission, there are the standard “known” foundations … take the time to find the unknown.

It would be comical if it weren’t so tragic.

Call me a cynic, but I wouldn’t hold my breath waiting for a change in the family foundation world.

When I started out as a grant writer back in the very early aughts, I always made it a point to create a base of general operating support from small to mid-sized foundations. In fact, despite living in the Philadelphia region, I have applied for *one* grant from one of the largest foundations in the city. And, while that proposal was funded (three-year programmatic), the resulting administrative paperwork did indeed turn out to be the tedious, time-consuming, godawful monotonous chore I knew it would be.

It was years before the nightmares subsided.

Now, imagine generating the same amount of funding — most of it general operating support — broken up between 15 – 30 foundations. Well, there’s no question which was easier to manage. And, in a small nonprofit, losing a $2,500 funder is also easier to replace than a $50,000 funder.

And then I thought about who does provide funding for general operating support.  

You guessed it. Individual donors! It’s a fact: lots of individual donors provide lots of GOS funding. In fact, Giving USA reports that individuals comprised 77% of American giving in 2018 (including bequest giving). Growing your individual giving funding does take work. It involves understanding your supporters’ reasons for giving. It involves building systems designed to take your donors on a journey, from that vital first gift to lifetime.

It involves treating your donors like you wished foundation funders treated you.

But yeah, go on ahead and keep dreaming. That next big grant will be your savior. 😉

Or will it?

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