How can we support civil society to promote positive change – now and in the long term? For many of us working in philanthropy, this is an increasingly crucial question. Locally, nationally, and globally, we aim to partner with and empower people and organizations committed to making the world a better, more sustainable, and healthier place to live, where all can thrive. How can we do that most effectively? Well, the good news is that a growing body of research and evidence points to one very effective solution: unrestricted — or “core”1 — funding.
CEP’s latest — and final — report in its three-year study of MacKenzie Scott’s unrestricted giving program is a welcome and timely addition. It examines the effects of Scott’s $19 billion unrestricted support to more than 2,000 organizations, with few to no restrictions on the time in which they must be spent. The study reaffirms the findings from year one and year two. Collectively, the three studies affirm that unrestricted funding:
- Enhances recipient organisations’ resilience and their capacity to adapt and respond to sudden crisis or long-lasting challenging contexts
- Allows organizations to invest in their human resources, as well as in their growth and institutional development
- Enables organisations to think and plan strategically and in long-term and boosts organizations’ financial resilience and security
Importantly, this final report shows how most of the recipient organizations have documented significant contributions to the communities and fields they seek to serve and support. This is because the organizations are stronger and can deliver enhanced and expanded programs, as well as provide higher quality support and services.
At Oak Foundation we also believe in the transformative power of core funding, which represents a significant component of our grantmaking. This is why I wanted to review and learn from available information on the impact of core funding. Even if we limit our search to the last few years, there is substantial and growing research on this topic. Beyond evaluations of large unrestricted funding programs alongside MacKenzie Scott’s — which include Ford’s Build program and the Ballmer Group’s giving — I looked at available evidence and insights from smaller core funding initiatives, surveys, and interviews with different stakeholders and experts, including leaders of not-for-profit organizations that either benefit from or lack access to core funding.
All the evidence that I consulted concurs with CEP’s study and confirms that unrestricted funding helps organizations to expand their reach and engage in new projects. Organizations can focus on their mission, improve staff retention rates and well-being, plan for the long-term, and adapt quickly to changing circumstances. It fosters confidence in leadership, innovation, creativity, and risk-taking. It promotes financial stability, allowing for long-term investments, improved financial health and thus credibility when approaching other potential donors.
Furthermore, the latest CEP report shows that most leaders manage grant funds to ensure their organization’s long-term financial sustainability. They are spending their grant funds gradually and steadily over time, while also working to strengthen and grow their organization’s reserves and investment assets. It is noteworthy that fewer than 10 percent of grantees surveyed in the study anticipate having difficulty covering ongoing costs of initiatives funded by the grant once the support concludes. Finally, core funding also improves the power dynamics and can foster trust between funders and grantees, encouraging collaboration and reducing administrative burdens. You can read more insights from my review of available evidence on core funding here.
As the CEP report notes, some foundations “…remain skeptical about … nonprofits’ ability to handle such gifts well” (page 57). However, evidence suggests that these concerns about core support are mostly unfounded, with many organizations managing large, unrestricted grants effectively and sustainably. This aligns with the findings of other studies, such as The Bridgespan Group’s 2022 review of the Ballmer Group’s large, unrestricted grants made to 21 U.S. nonprofits in 2017, which found no evidence of the challenges that donors sometimes worry that unrestricted grants could create. Instead, grantees’ leadership handled the grants effectively to benefit organizational growth and stability, to enhance fundraising and to improve internal dynamics as well as relationships and collaboration with peer organisations.
Other matters requiring attention are related to the length of the funding, with various reviews suggesting that unrestricted funding may need to be at least five years long for the full strategic planning benefits to materialize. Some funders remain uncomfortable with the difficulty of assessing the impact of core funding and attributing results. Another significant issue concerns disparities in access to core funding opportunities, with organizations led by Indigenous communities and people of color having less access to unrestricted funding.
As the CEP study notes, the most common reasons foundation leaders cite for not providing more large, multiyear, unrestricted support include that the foundation is currently exploring providing this type of funding, or more of it, but has not yet made the change. Nonetheless, available evidence overwhelmingly indicates that core funding is a powerful tool that can transform organizations and amplify their impact. In tricky contexts, it might be what makes the difference between making it or not making it, by boosting resilience and adaptability.
As never before, I believe we need to encourage such change and make the case for core funding, including by continuing to build evidence of its benefits and address remaining challenges, be they real or perceptual. Core funding has the power to unlock more organizations’ full potential and to allow a vibrant and resilient not-for-profit sector to continue to exist — and to succeed in bringing about positive and meaningful changes in our communities and societies.
Silvia Guizzardi is senior advisor for impact in the President’s Office at Oak Foundation.
- Core funding has many nuances and has been called many names, including, among others unrestricted funding, unrestricted giving, general operating support (GOS), framework agreements, or strategic/program grants. In this blog I use core or unrestricted funding to mean them all. ↩︎
