Thoughts on General Operating Support in Uncertain Times

The Hewlett Foundation has long been an advocate of making general operating support grants when appropriate alignment between an organization’s goals and strategies and those of the Foundation programs exists. Our President’s statement in the Foundation’s 2008 Annual Report covers this topic in detail. The large majority of the Performing Arts Program’s grants are multi-year general operating support grants of significant size (relative to grantees’ annual operating budgets) because such an alignment does exist.

As Paul Brest mentions in the above-linked statement, nonprofit organizations place a high value on this type of support for a number of reasons. It gives organizations the financial stability, autonomy, and flexibility necessary to direct their spending where it is needed. It enables innovation and risk-taking, providing nonprofits with resources to take advantage of new opportunities as they arise. It eases the fundraising burden and mitigates the potential for mission creep.

In challenging economic times such as these, the benefits that general operating support can provide to nonprofit organizations are placed in high relief. In addition to financial challenges, there are many other environmental factors creating great pressure on nonprofit arts organizations — changing demographics, technological innovations, and shifts in consumer preferences, to name a few. (Note: If you’ve got a moment, check out this fabulous speech by Diane Ragsdale, formerly of the Andrew W. Mellon Foundation. Actually, you should just carve out some time to watch it. She provides a clear analysis of the challenges that arts organizations face and offers some potential paths forward).

All of this environmental uncertainty is challenging some basic assumptions about best practices. Here’s an example. I recently asked the leader of a local nonprofit arts organization what he was learning through the strategic planning process that his organization is undertaking. He said something to the effect of, “You know, Ron, we’re creating a strategic plan that doesn’t look like anything we’ve used before. There’s too much uncertainty to plan three years out, so we’re working on a new vision for the organization. Then we’re going to develop an operational plan for the year and start piloting new ideas, monitoring the whole way.”

His answer was refreshing and realistic, and I appreciated his candor. Organizations need to set visionary and achievable goals and require the flexibility to pursue them in ways that make sense given the rapidly changing environmental context in which we find ourselves. General operating support is one way in which we provide our highly aligned grantees with that opportunity.

Ron Ragin is an associate program officer in the Performing Arts Program at Hewlett Foundation.  The views expressed are his own. 

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