Giving Compass' Take:

· Alex Forrester emphasizes the importance of outcome measurement over spending by debunking the overhead myth and addressing restricted line-item budgets.

· How does flexible funding affect nonprofits? How can organizations address overhead costs?

· Read more about focusing on outcomes, not overhead.

Reading the recent CEP resource about the five things nonprofits want donors to know, there was one thing in particular that most struck a chord with me as a nonprofit executive: flexible funding.

Over the past 14 years, I’ve run Rising Tide Capital, a nonprofit organization in New Jersey focused on creating economic opportunity for low-income families and communities through entrepreneurship. We’ve been fortunate to grow the organization significantly over the years, based largely on the willingness of our funding partners to provide flexible financial support. I can think of few issues that have more directly contributed to the success of our organization than this. Effectively, it boils down to one issue: line-item grant budgets.

I completely understand why line-item grant budgets exist historically, and why they probably need to continue in certain circumstances. But I feel they do far more harm than most people outside the nonprofit world realize. If you’ve ever seen the episode of The Office where the branch realizes they have a few thousand dollars in unspent funds that they will lose from next year’s budget if they don’t figure out a way to spend it by the end of the day (and the branch then divides into warring camps over buying new office chairs versus a new photocopier), you may get the point.

Read the full article about tracking budgets and outcomes by Alex Forrester at The Center for Effective Philanthropy.