Recently, a grantee sent us an email to request an early disbursement of their organization’s multiyear grant installment. The executive director explained the organization had a one-month gap in covering operational expenses. By moving our annual disbursement up a couple of months, the organization would be able to bridge that gap.
This is an organization that is making a big impact locally and globally, and was recently praised by the Stanford Social Innovation Review for its impact in the community. Given all of its success, how could the organization still be facing a shortfall?
Two reasons: immediate funder strategy changes and a lack of general operating support. The latter reason is one that the philanthropic sector should be working to overcome.
In April, Grantmakers for Effective Organizations (GEO) released General Operating Support: A Guide for Trustees, which finds that, despite the evidence that general operating support can help nonprofits increase their impact, “the percentage of funding given as general operating support has not increased over the past decade.” Taking this context into account, we are proud to say that the opposite has been true for the Claneil Foundation — we have increased the amount of general operating support we provide in the past 10 years. Today, 100 percent of our grants are for general operating support.
Prior to 2017, we offered a mix of project-specific and general operating support grants. While it seemed intuitive that project-specific support gave us more control over how funds were being spent and allowed us to tell a better “story” about the impact of the grant, we actually found the opposite to be true. Project-specific support only provided a narrow lens into the organizations we were supporting. We would create a dance for ourselves and our grantees where we each pretended that the organization knew exactly how the funds would be spent in the following year of the grant. It was like we were on a tightrope together, holding on to a strand of a story that could shift at any moment if the winds changed direction or speed.
The impetus to switch to providing general operating support came when we asked grantees to describe best practices in the field that helped them do their work better. One of the top answers was the importance of, and need for, multiyear general operating support.
Now that every one of our grants is for general operating support, we see the depth in which we are able to learn from our grantees. We also see the successes that come when organizations feel trusted and have the flexibility to make decisions on how to best fulfill their mission at any given time.
Instead of having conversations with grantees about how they can make their next proposal the most compelling, we are able to have conversations that allow us to truly learn what grantees are facing that creates challenges or opens up opportunities for them to fulfill their mission. We found that grantees feel more comfortable talking about sensitive topics like power imbalances and equity when they don’t feel the pressure to create a new, compelling proposal. Our grantees and trustees alike are delighted about general operating support since it provides consistency and capacity as nonprofits respond to funding cuts, deal with an increase in demand, and navigate an uncertain policy environment.
The National Committee for Responsive Philanthropy (NCRP) points out that in our sector, only one in six grant dollars is awarded for general operating support. Imagine for a moment what could be possible in the communities we fund if this trend was reversed.
We believe that our success as a grantmaker is critically linked to the success of our grantees. Imagine if the grantee that we described at the beginning of this post had received all general operating support. The executive director would not have had to spend 80 hours trying to find flexible funding, and instead could have been working directly toward furthering the organization’s mission — which is what we as foundations want them to be doing! Not once have we heard an organization say, “We know that you once provided project support in the past, can you please do that again?”
If funders can reverse the trend of the past decade that GEO’s report uncovered, we can better support organizations to focus on their missions and create the change in the world that funders and grantees alike want to see.
Mailee Walker is executive director of the Claneil Foundation.
Andrea Bretting is senior program officer of the Claneil Foundation.
Michael Jordan is board chair of the Claneil Foundation.