by Virginia Esposito
This April edition of Family Giving News focuses on
the important choice of funding program/special project costs, providing support
for operating expenses/general support, or funding some measure of both. Family Giving News
Managing Editor Kevin Laskowski has summarized and
analyzed these papers and added our own experience and resources to present you
with a cogent and thoughtful review of this choice.
With reports from the
National
Committee for Responsive Philanthropy and the
Center for Effective Philanthropy, among others, focusing on program vs.
operating costs, I am often asked how donors and family funders are dealing with
this debate. I remember the passionate debate that followed a major paper on
this issue by Michael Seltzer
and Michael Cunningham – and I am sure those who have been in
philanthropy longer remember previous iterations.
The positions are much the same as they were some years ago. Those
who support funding special projects and programs talk about the scarce
resources private philanthropy has at its discretion. They believe these
resources are too scarce to fund operations and fear organizations will become
dependent on them for ongoing sustainability. Further, they hope private funders
will take some risks with their grants and fund important things that others may
not.
Those who fund operating or general expenses seek out grantees that match their
values, mission and goals and provide general support so grant dollars can be
spent as needed. They see themselves as investing in leadership and vision. They
talk about grantees bending over backwards to fit their work into acceptable
projects or, worse, risk their general stability to accept a large proportion of
funding for special projects.
Others don’t see the debate as either/or. They may prefer to fund projects but
will accept or add some percentage to the project total for general expenses.
Others may provide general operating support and note that the grant is to help
the grantee meet organizational objectives. The grant agreement may include some
benchmarks so there is accountability for how and when those goals are met -
what some have called "negotiated general operating support."
Donors and family funders often have a special perspective on this conversation.
Some have a special connection with or personal knowledge of the grantee and the
relationship has gone on for many years. Because the relationship is likely
based on experience and trust, these funders are very likely to make general
support grants. This same experience and trust makes it easy for the funder to
step in quickly during difficult times. In fact, the question is not whether to provide general support or
project funding, but how to ensure the relationship stays fresh and effective
and that communications and accountability are appropriate.
Some donors and families may not accept unsolicited proposals at all. They may
seek out grantees that match their interests and provide project or general
support. While the concept of not accepting unsolicited proposals carries its
own controversy, it is a frequent choice of those who have the staffing help to
identify prospective grantees and those who are volunteer managed and prefer
identifying grantees to taking on the potentially formidable task of responding
to inquiries.
My own feelings about the program or general support debate have evolved since
reading that report in the ‘80s. Some of that evolution is due to the
paradoxical nature of my current job. I spend my work life focusing on what it
takes to establish and maintain an effective family grantmaking program -
but I
can only do that work by managing an effective grantseeking organization!
The National Center for Family Philanthropy is blessed with a truly remarkable
Board of Directors who understands this paradox. They have helped me
understand how important it is to invest in the organizational effectiveness of
nonprofits and have brought that understanding to their care for the development
of the National Center.
Our Board and staff have spent the last year engaged in a business planning
process. The Board recognized that we were at a point when we needed to examine
both our program choices and our sustainability. Their commitment to this
organization prompted them to take this on personally – naming themselves as the
planning committee and providing the funding for the process.
We were fortunate to work with the staff of
Wellspring Consulting who understood
our concerns for both our mission and our financial viability. We learned that
we will always take on some causes and work because of our values and mission,
even if there may not be an immediate market for that work. We learned that our
ongoing supporters – our
Friends of the Family – are critical to our ability to
be available for all donor families in need. We renewed our appreciation for funders who saw the value of our projects and were willing to invest in the
potential of those projects. And we learned that we must structure the resources
and services that earn critical income to ensure our sustainability.
The implementation of this business plan is off to a great start because of a
family foundation that took the time to share their experience with other
grantees with us. They helped us see that the implementation of the plan had to
be as thoughtful and bold as the planning process itself. Their technical
assistance has been as valuable as the generous grant they made for business
planning implementation.
I am not sure if that grant was for general operations or a special project – it
seems to be the perfect marriage of both. And that may be as perfect as this
subjective argument can ever be.
As with most governance and grantmaking decisions, your choice is likely to be
the result of your own values and mission and will derive from the impact you
want to have. And, as most donors report to me, when they have engaged in a
thoughtful consideration of facts, experience, and mission, their decisions have
been the most satisfying and important to their success.
You will begin to see the signs of our business planning implementation. Changes
to improve our website, FP Online, and even this newsletter are planned for the
next several months. Changes will also improve the way we package our services
and manage our relationships.
One thing will not change: our commitment to enhance our position as the only
organization that draws its inspiration, mission, and programming from the
personal participation of donors and donor families. In addition to what I
learned about marketing and sustainability, I learned a lot about why we must
ensure the sustainability of the National Center for Family Philanthropy. It is
our commitment to encouraging and supporting philanthropic families. New donors,
donor families in transition, those considering a philanthropic commitment – all
are foremost in our minds and our programs. It is our commitment to being here
when you need us as well as to collaboratively working with and through staff,
advisors, and colleague organizations so that our resources are well and widely
shared.
Representing the needs and interests of donors and donor families is a special
privilege and responsibility. I hope you will always share your thoughts,
reactions to our programs, and concerns with us so we represent you well. These
ideas not only encourage and challenge us; they are the sustenance that makes
this such exciting work and such a special organization.
Ginny
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