The Campaign for Capacity

5 elements of a healthy nonprofit graphicMore and more voices from within philanthropy are arguing that funders need to stop directing the specific uses of their funds and provide general operating grants. Despite studies that show this to be the most effective type of funding, the percentage of general operating grants has been stagnant for the last 10 years.

The narrow channels for money into our sector cause nonprofits to be underfunding administrative and fundraising staff and infrastructure (finance and HR systems, technology, databases, etc.).

General operating grants allow organizations to build organizational capacity and program effectiveness by improving administrative processes that are essential to program success. Nowhere is the capacity conundrum clearer than with evaluation. Funders increasingly expect organizations to have complex data analysis and impact metrics to demonstrate their effectiveness. However, they are often unwilling to provide funding for the administrative staff, evaluation consultants, databases, and infographics needed for robust reporting.

Read what Washington’s own Paul Shoemaker of Social Venture Partners and Inside Philanthropy have to say about this problem.

We are making progress. The federal government is now requiring pass-through entities receiving federal funding and all federal agencies to reimburse nonprofits for some or all of their indirect costs, like administrative personnel. Washington Nonprofits tells you how to take advantage of this change.

What can you do to obtain more general operating support or support for indirect costs?

For other strategies read “Six Ways to Fund Admin and Overhead Costs” and check out this list of resources from Grant Space.