This is the fifth post in a six-part series on what nonprofit leaders think foundation funders could improve upon in their work. Findings are based on survey responses from 244 nonprofit leaders who have agreed to be a part of CEP’s Grantee Voice Panel — a nationally representative sample of leaders of U.S. nonprofits across a broad range of geographies, fields/issues, and sizes who confidentially provide CEP with their perspectives working with foundations.
Many nonprofit leaders point to the importance of consistent, long-term, and flexible funding for their ability to do effective work, while also frequently describing challenges that result from short and restricted grants, inconsistent funding, and overhead/administrative cost limits. Modifying grantmaking characteristics so that they are more reflective of grantees’ needs — and the outcomes funders desire — is the fourth most common suggestion we saw in our survey of nonprofit leaders, cited by 14 percent of respondents.
Nonprofit leaders describe the difficulty of running effective programs and building strong organizations without consistent, multiyear funding. As one notes, “We are the ones doing the work and making the changes [funders] hope to achieve, but we need to have funding that is consistent from year to year so that we can do the work most effectively.” Other comments echo this and point to the importance of stable funding for building strong organizational capacity. Others point out a disconnect between expectations of stellar outcomes within a timeframe much shorter than is required to actually make change; as one says, “The funding needs to last long enough to get measurable results. Too often, the expectations are that we can do magic in very short periods of time.”
Nonprofit leaders also raise the importance of flexible funding. These suggestions align with those we see commonly in responses to the Grantee Perception Report (GPR). Further, in CEP’s recent Strengthening Grantees report, we found that nonprofit CEOs see general operating support grants as having the greatest impact on strengthening their organizations.
One nonprofit CEO sums this up: “Without question, the biggest impact that foundation funders can have is by increasing unrestricted operating funding for the nonprofit organizations that fit their funding priorities. While we respect the fact that foundations have their own vision and goals for our society, too many nonprofits contort their work to try to fit these goals instead of staying true to their own missions. Perhaps a good way forward would be to facilitate honest and open conversations that reveal appropriate front-line concerns and opportunities, rather than enact a top-down agenda with time-limited project support.” 
CEP has spoken out about the importance of well-considered grantmaking characteristics — the provision of multiyear, general operating support grants, when appropriate — for well over a decade, and it’s baked into our definition of philanthropic effectiveness.
We’re not alone. Grantmakers for Effective Organizations (GEO) has identified general operating support as one of the most effective strategies grantmakers can use to boost nonprofit performance, and has extensive resources on this topic. The National Committee for Responsive Philanthropy (NCRP) also identifies general operating support and multiyear funding as “good grantmaking practice,” important in creating healthy and effective nonprofits. Vu Le of NonprofitAF blogs regularly about this topic, and has made the case for flexible funding as an ethical imperative.
Some foundations have made big strides on this front in recent years. The Weingart Foundation announced in 2009 that they were moving to giving 60 percent of grant dollars in the form of core support. In 2015, the Ford Foundation pledged 40 percent of its grantmaking budget to general operating support, and in 2017 announced $1 billion over five years to support and strengthen the cores of its grantees. 100 percent of grants from the Claneil Foundation are for general operating support.
Of course, there are even more examples of funders making this important shift. Yet, when we look at the field as a whole, we see very little change over time in grant length or the provision of operating support. When we look at our GPR dataset as a whole, about 50 percent of foundation grants are single-year grants, and this has not changed over time. Similarly, on average in our GPR dataset, we see that only 20 percent of grants are for general operating support. Again, this is not changing over time.
What must happen for this to change? We have some ideas for where funders can start. One aspect of effective philanthropy is for funders to thoughtfully consider their grantmaking characteristics relative to their goals, especially the provision of multiyear, general operating support grants, when appropriate. Long and large unrestricted grants may not make sense in every case, but they should more regularly be part of the conversation at all levels of the foundation — staff and board.
Hearing from grantees can help, too. Funders that have repeatedly used the GPR to gather feedback from their grantees often see how these grant characteristics are associated with more positive grantee perceptions on a number of dimensions, and often read powerful grantee comments about the impact and importance of flexible, consistent, long-term funding. It’s perhaps then not surprising that these funders tend to provide more general operating support and make longer grants (they also tend to provide more nonmonetary assistance).
To staff at foundations, here are some discussion questions to consider as you reflect on your grantmaking characteristics:
- How does your foundation decide what type of grant characteristics to provide, relative to your goals, strategy, and context? How do grantee voices feed into this decision-making?
- In what ways might longer, larger, more flexible, and/or more consistent grant support help your grantees — and your foundation — achieve shared goals?
- In what situations might it make sense to consider providing longer, larger, more flexible, and/or more consistent grant support to your most aligned grantees?
See all posts in the series here.
Naomi Orensten is director, research, at CEP. Matthew H Leiwant is a former associate manager, research, at CEP.
