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Giving Compass' Take:
• The Bridgespan Group provides a range of perspectives from philanthropy leaders on the value of pay-what-it-takes philanthropy.
• Are you providing funding to best support the organizations you work with? What additional support could they benefit from?
• Learn how lean overhead can impede nonprofit effectiveness.
A new grantmaking approach is needed—one that provides enough money for nonprofits to pay for all their operations, not just programs and services. The first step toward achieving that is for grantmakers to realize that different types of nonprofits have different cost structures.
If a foundation refuses to fund indirect costs, the burden should be on it to justify that decision.
If we had a set of standards for the indirect cost rates for various types of charitable organizations along the lines suggested in the “Pay-What-It-Takes Philanthropy” article, foundations would have two clear options. Either pay total costs, or acknowledge that they are only willing to pay a lesser percentage and demand that the organizations compromise their missions or raise matching funds to cover the shortfall.
“Pay-What-It-Takes Philanthropy” has stoked a growing conversation about funding true costs. The sooner we understand those costs and ensure they are covered, the quicker we can move on to tackling the ultimate goal of measuring outcomes.
Read the full article about pay-what-it-takes philanthropy at The Bridgespan Group.