Reading about philanthropy, you might think everyone agrees that providing general operating support to nonprofits is crucial. Here’s just a few of the publications on this topic in recent years:
- General Operating Support: A GEO Action Guide and On the Money: A Review of Key Financial Challenges Facing Nonprofits Today and How Grantmakers Can Help by Grantmakers for Effective Organizations (GEO)
- Statement on Guidelines for the Funding of Nonprofit Organizations by an Independent Sector committee of grantmakers and nonprofit leaders
- A Call to Action: Organizing to Increase the Effectiveness and Impact of Foundation Grantmaking by the National Committee for Responsive Philanthropy (NCRP)
- “Smart Money,” and article in the Stanford Social Innovation Review, by William and Flora Hewlett Foundation President Paul Brest
I could go on, but the main message in these publications is the same: foundations should provide nonprofit organizations with general operating support.
At CEP, we have also added to the dialogue. In 2006, we published In Search of Impact: Practices and Perceptions in Foundations’ Provision of Program and Operating Grants to Nonprofits. Based on of more than 14,000 surveys of grantee organizations (conducted between 2003 and 2005), we found that those grantee organizations who receive large, long-term general operating support grants perceived their foundation funders as having greater impact on their organization than grantee organizations who received other types of grants. Today, four years later, with more data from grantee organizations of more foundations, our data indicates this finding still holds true.
So, then, why are foundations not providing more general operating support than they did 2003?
CEP’s data gathered through grantee surveys indicate that the number of grantee organizations receiving general operating support grants has not been increasing. In the past few years, our data shows that between 16 percent and 17 percent of grantee organizations that we surveyed received general operating support – down from about a quarter of grantees in 2005 and 2006. (While the samples of foundations whose grantees we survey change year to year, therefore making it impossible to make a direct comparison, this provides us a sense of what’s going on.) Foundation Center data likewise shows that there has been no increase in the provision of general operating support.
So general operating support remains the exception, and even fewer grantees are receiving a general operating support grant in ways that our research has shown really make a difference: in large amounts over a long period of time.
Why are foundations not providing more general operating support grants? Through our In Search of Impact research, we heard from CEOs that the main reasons for not providing general operating support grants include:
- Difficulty in understanding impact of funding
- A lack of alignment between the missions of the foundation and grantee organization
- A lack of familiarity with grantee organization
- Concerns about grantee dependence
However, there are foundations who have found ways to overcome these challenges and have seen the benefits in providing general operating support grants.
- The STARS Foundation in the UK, while unique in its approach to grantmaking, published compelling counter arguments to the challenges of providing unrestricted funding in a 2010 publication
- Blue Shield of California Foundation recently evaluated its Community Clinic and Consortia Core Support Initiative (that it started in 2003) and found that the clinics used the core support grants to meet immediate operating needs and to leverage additional funding from other sources,
- And F.B. Heron Foundation has, since its inception, provided core support as the majority of their giving. In 2009, 74 percent of the grants they distributed were for core support.
The case for providing general operating support to help nonprofit organizations become more effective and have more impact has been made. But foundation practices do not appear to be moving in that direction.
Andrea Brock is a senior research analyst at CEP.
