This post is the second in “Social Justice and a Relevant Philanthropic Sector,” a five-part series by Miles Wilson about where philanthropy is stuck in old paradigms — and where there lie opportunities to advance social justice both within the sector and across American society.
In philanthropy, there’s an ongoing debate about the use and value of project support grants versus general operating support grants. I’ve heard and participated in this debate for as long as I have worked in philanthropy.
Project support grants are for a specific effort or project of a nonprofit organization. Often times, project support grants do not include the costs of the overhead and infrastructure necessary to conduct the project (grantmakers will sometimes include an allocation for “reasonable overhead costs,” defined by the foundation rather than the actual costs calculated by the grantee). Conversely, general operating support grants are unrestricted and support the entire organization, allowing leadership to allocate the funds in whatever manner it sees fit to further the organization’s overall mission and performance.
In practice, project support grants far exceed the number of general operating support grants provided by grantmakers — and the percentage of funding given as general operating support has not been increasing. As a result, many nonprofit organizations find themselves fundamentally weakened in their ability to sustain themselves and the infrastructure necessary to fulfill their mission and serve their constituencies.
There is no doubt in my mind that the provision of general operating support grants produces the greatest benefit to foundations, grantees, and the common issues and constituencies they seek to impact together.
Project support is largely outdated, generally ineffective, and above all a dangerous approach that threatens a nonprofit organization’s sustainability and its ability to achieve its mission. It’s time for organized philanthropy to make the shift to general operating support, which will intentionally strengthen nonprofits and create the conditions for relationships that demonstrate trust, partnership, and the necessary humility that every good grantmaker should have.
Read the full article about general operating support for nonprofits by Miles Wilson at the Center for Effective Philanthropy.
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