The Weingart Foundation (WF), in partnership with the California Community Foundation (CCF) and Nonprofit Finance Fund (NFF), has begun undertaking an effort to promote funding for nonprofits that reflects the full cost of service delivery. This initiative aims to strengthen nonprofit capacity and organizational effectiveness by providing the tools to advocate for full cost recovery from funders. A key strategy in this initiative is to support skills building for nonprofit executives and funders to allow them to accurately account for full costs, clearly identify those costs, and discuss funding mechanisms that allow nonprofits to receive funding that takes those costs into account. Additionally, the initiative focused on improving communication and strengthening relationships between funders and nonprofits to support the advocacy of the Full Cost approach.

Participants in the Full Cost Funder/Grantee pilot experienced varied levels of success in applying full cost concepts in their organizations. Some felt that they were immediately able to more clearly and confidently discuss the financial needs of their organization with other staff or board members and even funders using the full cost lens. One nonprofit representative said “it is refreshing to hear that I’m not alone in my frustrations with calculating overhead – it has been really helpful in communicating this within our organization.”

Others mentioned that being able to calculate full costs allowed them to do long term planning and prioritization. For example, one nonprofit participant feels that they can begin to combine activities from the strategic plan with the financial elements discussed throughout the pilot, resulting in better predictions and goals.

Because organizations were still in the early stages of understanding and applying the full cost approach, they did not yet have enough time to begin seeing the results and benefit of this work. We expect that additional follow up at a future date might more fully demonstrate participants’ ability to successfully implement the Full Cost approach. However, many participants felt that the Full Cost Funder/Grantee Pilot was a critical step in strengthening their organizations. As one nonprofit participant said:

For us, it really has been transformative. This training has been a catalyst that will take this organization to a healthier and more sustainable place.”

Read the source article at Harder+Company Community Research