Foundations are warming up to general operating support
General operating support is the Holy Grail of grant writing. Every nonprofit wants foundations to award them general operating grants. These are unrestricted funds to be used how the organization sees fit.
But that often doesn’t meld with what foundations want to do. Historically, grantmakers have been more interested in awarding grants for a specific program, equipment purchase, or some other very specific purpose. They don’t want to fund overhead, though nonprofits need that funding so badly. Foundations usually want to control exactly where the money goes.
But that fractured approach can harm nonprofits, and foundations seem like they’re starting to pick up on that. While nonprofits can (and should!) raise money for their overhead expenses like staffing, rent, and utilities, foundations should also recognize the need for this funding in the form of grants.
Right now, general operating funding accounts for only 20 to 25 percent of all foundation giving. The good news is that number is starting to rise. In fact, the Ford Foundation famously announced it would double the percentage of its budget given to operating support grants, raising that number to 40 percent. That’s a good sign of things to come.
But general operating support may always lag behind programmatic funding, perhaps because funders want to attach a benefit to their dollars. They want to be able to say exactly what their donation is directly supporting. And fair enough! That’s why it’s vitally important that nonprofits not rely solely on grant funding to keep the lights on. In addition to writing grants, nonprofits should be holding fundraisers, soliciting individual donations, and more.
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