Reprinted from Center for Effective Philanthropy.
It was almost two decades ago that I got my first taste of how frustrating funder restrictions on grants could be. I had recently started working at CEP, and we were discussing a project proposal draft with a potential funder. The funder asked us to add additional elements into the proposed research project, but said they would not be able to cover the costs of those elements. They also informed us that if we didn’t add them, we likely would not receive funding. The irony, which the funder somehow seemed not to see, was that the RFP was for a study about foundations’ provision, or lack thereof, of general operating support.
Funders did not frequently provide general operating support back then. Unfortunately, not much has changed since then, despite years of advocacy by many in the nonprofit sector.
Over the past 10 months, with funding from the Ford Foundation (which covered the full costs of the project and added overhead above and beyond what we had requested in our initial budget), our research team at CEP set out to better understand what gives (so to speak). We collected data from nonprofit leaders about the benefits of multiyear general operating support (GOS) and to what extent they were receiving it. We asked foundation CEOs and program officers about their attitudes and practices when it comes to providing multiyear GOS. We wanted to understand why foundations were not providing more multiyear GOS despite decades of research, advocacy, and examples of change in the sector.
What we learned—which we share today [October 21, 2020] in a new report, New Attitudes, Old Practices: The Provision of Multiyear General Operating Support—was frustrating, to say the least.
From the nonprofits, we saw again what CEP and others have heard many times in previous studies: nonprofit leaders report that receiving multiyear GOS would result in many benefits to the health of their organizations—including the ability to plan for the future, the opportunity to focus on their work, and the capacity to invest in staff—and, ultimately, would increase the impact they can have on society. One leader’s quote from the data we collected stood out to me:
For some reason, foundations expect nonprofits to be miracle workers, when in fact we’re all cutting corners, skimping on resources, doing everything with far less than we should, and then bending over backward trying to find a way to make it sound like we’re succeeding, while also making sure to keep the challenges front and center, but without sounding desperate or as though we can’t handle it. It’s not clear why foundations don’t provide more multiyear GOS grants. The obvious answers are too discouraging to acknowledge, but they could very well be due to keeping the exit door open, asserting influence after the money has been given, among others.
What we saw from the foundation side of the table is that attitudes and practices are not well aligned. Foundation CEOs believe GOS and multiyear grants are an effective means for supporting grantees’ work, and the majority report being in favor of increasing the percentage of grantees receiving multiyear GOS. Yet many foundations provide no multiyear GOS, and those that do only provide it to a small percentage of the nonprofits they support.
Again, what gives? Though we asked foundation leaders many times, and in many ways, we were unable to identify significant barriers they experience in providing or increasing their provision of multiyear GOS. It’s not, as some have suggested, that boards are standing in the way; nor is it that program officers are the barriers, as others have speculated.
The explanation for why multiyear GOS is not being more widely provided seems to be that it simply isn’t seen to fit with a foundation’s approach, hasn’t been prioritized, or, for a subset of community foundations, isn’t seen as possible given constraints. In sum, the clearest reason that came through in the data is that foundations are not interested in changing their ways.
As I said earlier: frustrating. There are, however, a growing number of bright spots.
A subset of foundation leaders who provide more multiyear GOS than typical explained to us that they have made an intentional choice borne of their belief that doing so will build trust with grantees, strengthen relationships, and increase impact. One CEO told us, “If you believe in and trust your grantees, then it should be natural to provide multiyear GOS.” Said another: “Unrestricted giving requires trust. Many grantmakers don’t trust their grantees; they want presumed control over a line-item budget that they can hold people responsible for, which ultimately suppresses impact and results.”
Some foundations that have made this commitment to providing more multiyear GOS, which we profile in an accompanying publication, view the practice as part of an equity strategy.
As Maitri Morarji, director of programs at Foundation for a Just Society, says:
One of our values is that we center those most affected by systems of oppression. We are committed to supporting Black women, Indigenous women, young women, and LBTQ leadership. We want to center the leadership of those voices and communities inside our grantee partners. How that looks is very different in each region. … For example, in our U.S. Southeast portfolio, we prioritize organizations led by people of color, and those organizations get flexible core support.
Our hope is that other funders will learn from these foundations that are leading by example. To help funders contemplating change in practice when it comes to providing multiyear GOS, we’re also releasing a guide.
New Attitudes, Old Practices is based on data collected just prior to mid-March. We know that in the wake of the COVID-19 pandemic, hundreds of foundations have pledged to be more flexible in the ways they support nonprofits. And so the big questions now pertain to what changes in practice the crises of 2020 have prompted, and whether those changes will be more permanent. CEP—once again with the support of the Ford Foundation—is tracking to what extent that’s happening and how long term these changes might be. We’ll be releasing three reports in the coming weeks reporting out what we’re finding.
I, for one, would never suggest to a funder that there isn’t a place for program or project funding. In this research, we saw that many funders provide flexible program or project support, for example when they are supporting an individual project but want to make certain elements of the grant more flexible, or when they are funding a single project that exists within a larger institution that may not be as relevant to them. But more broadly, as our new report reveals, if funders really want to support organizations to achieve shared goals, the overall balance of restricted versus unrestricted—and short-term versus long-term—funding needs to change.