Foundation Friday: Who’s Giving What to Whom and What I Think About It

Nearly lost in the crush of holiday stories about the miracles wrought by generosity was last month’s release of a study by the Center for Effective Philanthropy documenting the refusal of most foundations to provide their grantees with general operating support.  As reported in the Chronicle of Philanthropy,

Of the total 163 foundations the report examines, the majority provide less than 20 percent of their grant recipients with operating support.

The Chronicle continues,

But in a sense foundation executives are caught in a Catch-22, says Judy Huang, the center’s associate director and co-author of the report. 

While they face demands to pay for grantees’ overhead expenses, they feel a greater pressure by their trustees and others to measure the effectiveness of their grant making, which they argue is difficult to do with unrestricted giving.

Please note: this is not a Catch-22.  The original catch of that number, created by Joseph Heller, was the one preventing crazy people from escaping military service on the grounds that if you were sane enough to wish to escape military service, you couldn’t possibly be crazy.  It would be a Catch-22 if foundations were prevented from granting operating-support requests on the grounds that any agency organized enough to ask for general operating support is obviously too organized to need it.

Maybe that’s what Ms. Huang meant.  More likely, though, she simply meant that foundation program officers are caught between what their grantees need and what their trustees want, and that they resolve the issue in favor of the trustees because, well, they sign the checks and he who has the gold makes the rules. 

But the most interesting item in the article is buried near its end: the argument that it doesn’t matter whether foundations give general operating support or not because they’re not giving away enough to make a difference anyway.  To quote the Chronicle once more:

Ms. Huang adds that more operating support is not a "silver bullet" for grant recipients. . . . [W]hile operating support is valuable, it needs to be given in bigger dollar amounts and over longer periods of time to be truly helpful.

The report says that the median operating support grant was $50,000 . . . . In addition almost half of the grants provided by the foundations surveyed were a year in duration.

"What the report suggests is that the current debate has been too narrow," says Ms. Huang. "It’s focused simply on types of support when our research shows that foundations ought to also think about the size of grants and duration of grants when they’re seeking to make these grants that are most impactful to nonprofits."

So the reason foundations can’t measure the impact of general operating support–which is their excuse for failing to provide it–is not that such support is inherently un-measurable; it’s that they’re not giving enough to make an impact. 

That’s not a problem that can be solved by grantees.

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3 Responses to “Foundation Friday: Who’s Giving What to Whom and What I Think About It”

  1. Gayle Says:

    Hi,

    You’re readers also be interested in another, alternative study of foundation general operating support released just this month by the Grantmakers for Effective Organizations.

    According to the report “the findings challenge the conventional wisdom that few foundations make general operating support grants, and also shows the strategic perspective of the staff and boards who do provide general operating support.”

    To download a free copy, visit:

    http://www.geofunders.org/index.cfm?fuseaction=document.showDocumentByID&DocumentID=2759

    Peace,
    Gayle
    Fundraising for Nonprofits
    gayleroberts.com/blog/

  2. Gene Finley Says:

    My experience has been that foundations rarely make unrestricted operating grants. In general, operating gifts are made to start a new program or enhance an existing program.

    The problem with this is that the charity has to fund these enhancements themselves once the foundation moves on to the new flavor of the month.

    It is critical to charities to have consistent funding. In my expreience, foundations do not do a very good job of that. It’s not that it cannot be measured. The measure of an operating grant is the overall effectiveness of the charity. That is not the kind of thing that gets the foundation’s name in the paper though. Maybe there’s a certain conceit among foundations that makes operating gifts unpalatable.

  3. Nonprofiteer Says:

    Mr. Finley’s point is the central one: that we need to be more concerned with what benefits charities, and less concerned with stroking the vanity of donors. I’ll be interested to look at the study Ms. Roberts refers to: if in fact many foundations are giving general operating support, they’re keeping it a pretty tight secret!

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