Fighting for More General Operating Support: Reframing the ASK to Foundations National Committee for

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Fighting for More General Operating Support
Reframing the ASK to Foundations National
Committee for Responsive Philanthropy

• NCNA Nonprofit Congress
• June 2, 2008
• Washington, DC

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General Operating Support (GOS) Where are we now?

• In 2006, 16 of grants were designated for GOS,
  down from 16.9 in 2005
• The average GOS grant was 105,162
• The average program grant was 172,102 64
  larger than the average GOS grant

Source Foundation Center
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Call to ActionNCRP, March 2007

• Focus groups conducted to
• Document nonprofit experience with GOS
• Identify barriers
• Identify potential allies to increase GOS

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Call to Action

• Why Call to Action?
• Previous research by NCRP and others failed to
  produce a nonprofit groundswell for foundation
  behavior change.
• Report identifies potential allies and calls on
  nonprofit leaders to join in building a movement
  for increased GOS

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Call to ActionUnderstanding the Problem
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Foundations do not understand what core operating
support means

• Funders just dont get it, they havent had to
  experience these issues. I dont want to tap
  dance for the funders. They are controlling us.
  I kill myself doing these monthly and quarterly
  and yearly financial reports. Thats time away
  from the mission of my organization foundations
  dont realize how labor short we are.
• - An urban-based domestic violence program

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Foundations do not provide adequate overhead in
program grants

• A majority of the project funding will only
  allow, say, anywhere from 0 to 6 percent indirect
  cost rate and our actual indirect cost rates are
  around 13 percent.
• - Rural health provider

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Nonprofits lack organizational slack or cushion
of resources
How do you have that space to think and plan,
not just reacting to needs and demands? - Urban
religious organization
Core money gives you time for relationship-buildi
ng, for forward thinking. - Urban nonprofit
organization
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Funders assume nonprofits have access to other
resources for operating support

• There are a lot of misconceptions about our
  program, because most of the peoplestill think
  that because we have an Indian name that were
  supported by the tribes or the Indian health
  services. Thats the furthest from the truth.
• Native American health service provider

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Foundations do not understand the actual cost of
running an organization
They still think people can be paid with 25,000
and run an office on a third of what it actually
costs We always have to figure out how to
allocate things so were within their perceptions
of our needs. - Urban advocacy group
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Lack of sufficient core support forces nonprofits
to back into operating support
We had to design our budget where we have to
take a piece from every grant to cover the cost
of the audit and things like that. - Rural youth
group
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You know, foundation policies on core support
grantmaking force you almost to be dishonest.
If you really want to do the work, you have to
compromise your integrity a little to do what has
to be done. - A rural health provider
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General Operating SupportA GEO Action Guide

• Reasons funders do not provide GOS or provide
  less GOS than needed
• Perceived loss of control
• Potential loss of accountability
• Lack of knowledge about how to proceed

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Making the Case for GOS

• Gives nonprofits the flexibility to direct
  spending as needed
• Builds a strong sustainable infrastructure for
  more effective programs
• Eases the fundraising pressure for executives
• Encourages innovation and risk-taking
• Reduces the power imbalance, builds trust

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What are the consequences of no change?

• More of the same
• Nonprofits struggling to meet their missions
• Insufficient infrastructure lowers organizational
  effectiveness
• Burnout in nonprofit leadership
• Lack of trust and openness between grantmakers
  and grantees

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Debunking GOS Myths

• Myth
• We are adequately supporting nonprofit
  infrastructure through the overhead associated
  with our project grants.

• Reality
• Grantmakers rarely cover all associated direct
  and indirect costs of funded projects. In some
  cases, this is because nonprofits lack the
  capacity to account for such costs accurately.
  More often, it is because the percentages
  grantmakers allow are arbitrary and too low.

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Debunking GOS Myths

• Myth
• Supporting projects ensures a better fit with
  our mission.

Reality The alignment between the grantmakers
goals and strategies and the grantees work is a
key consideration. But even if a grantees work
aligns with only one aspect of the grantmakers
mission, general operating support is a viable
option. If the grantee is doing important work
that supports one of the foundations goals, it
may be a candidate for general operating support.
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Debunking GOS Myths

• Myth
• General operating support grants are not as
  accountable as restricted project grants.

Reality Because project grants are designated
for a specific purpose and a specific set of
activities, it is easier to track those funds.
However, if you are interested in understanding
the organizations progress or outcomes, there is
very little difference in accountability between
project and general operating support. In both
cases, the grantmaker needs to work with the
grantee to design evaluation questions that
clarify the impact of the grantees work.
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Which funders provide your organization with
general operating support?
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• How do you make the case for general operating
  support to your funders?

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• Contact
• Aaron Dorfman, Executive Director
• adorfman_at_ncrp.org
• 202-387-9177 x13
• Melissa Johnson, Field Director
• mjohnson_at_ncrp.org
• 202-387-9177 x26
• www.ncrp.org
• Sources
• Cohen, Rick, A Call to Action, NCRP March 2007
• Foundation Center, Types of Support Awarded by
  Foundations, circa 2006
• General Operating Support A GEO Action Guide,
  GEO July 2007