More Lean Funders Should Consider General Operating Support - Exponent Philanthropy
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More Lean Funders Should Consider General Operating Support

Photo by Christina Morillo from Pexels

When funders give general operating support, also known as gen op grants, they help sustain a nonprofit’s mission rather than specific programs or projects. Grantees can use these funds to strengthen the organization or further its charitable purpose as they see fit. This might mean looking at salaries and overhead, investing in technology, furthering fundraising efforts, or something else.

Philanthropists working with few or no staff are uniquely positioned to offer this type of support. They tend to be very familiar with the communities where they fund and often have deep relationships with nonprofit leaders.

Gen op grants are valuable for many reasons. They:

  • Allow grantee organizations to focus on fulfilling their missions and building infrastructure, rather than on tackling peripheral projects and additional fundraising
  • Serve as a vote of confidence for nonprofit leaders, helping to decrease burnout
  • Lessen the inherent power imbalance between grantor and grantee and shift the conversation toward the outcomes of the grant and overall impact of the organization

Gen Op Grants by Lean Funders

According to the 2023 Foundation Operations and Management Report, more than two-thirds (70%) of foundations surveyed provided general operating support to grantees.

Among foundations that gave gen op grants, respondents reported awarding 29 of those grants, on average, in the preceding fiscal year, and the grants accounted for 49% of each foundation’s total grantmaking budget. The average general operating grant amount was $57,990 (median of $21,435).

That said, the percentage of foundations providing gen op grants, though, has decreased over the past 5 years. While there was a slight increase in the percentage of foundations providing general operating support from 2020 to 2021, this increase was not significant.

Measuring Outcomes

Some funders shy away from general operating support because they are concerned with precisely how to know if the grant is making a difference. Although general operating support requires a high level of trust, a foundation can use a variety of questions and techniques to measure success.

Sister David Ann Niski, executive director of the Bernardine Franciscan Sisters Foundation in Virginia, asks basic questions about impact of the foundation’s gen op grants, such as this one: “Is the organization still running, financially sound, and operating high-quality programs that benefit our community?”

Kathleen Odne, a board member of the Dean & Margaret Lesher Foundation in California, offers these considerations of additional, broader questions about the impact of the foundation’s gen op grants:

  • Are we multiplying resources? Does the grant and its reputational capital encourage investments by others? General operating support can help organizations chase other (easier-to-come-by) funding for programs.
  • Are we building capacity (e.g., infrastructure, staffing)? Can we use our intellectual capital to inform the capacity-building?

As you track the progress of your gen op grants, be mindful of not overburdening grantees. As Judy Peckham, executive director of the Conrad and Virginia Klee Foundation in New York, says,

Too often as funders, we force our grantees to embark on new projects because that’s what we’re willing to fund. Yet, organizations with good core programs often desperately need funds for administrative costs to keep those programs strong. If you’re nervous about outright operating grants, consider granting more than a requested project budget to offset administrative costs for that project.

Keep reporting requirements proportionate to the grant’s size and consider midgrant conversations in lieu of written reports. You could also welcome a report prepared for another funder.

Asking Grantees About Their Greatest Needs

Take your relationships to the next level and ask current, past, and potential grantees to share their greatest needs. Ask whether gen op support would help. Such a conversation indicates your openness to dialogue and willingness to be responsive.

The Bernardine Franciscan Sisters Foundation shared this feedback from one of its grantees:

Core operating support has allowed [The Boys and Girls Club] to avoid mission drift in seeking funding.

Another grantee wrote,

This grant has been immensely helpful by assisting with our greatest of needs: fundamental operating expenses.

Is General Operating Support Right for You?

Should your foundation fund general support? It depends on your grantmaking goals and your strategy to meet those goals; your community’s needs and how best to support them; and the tendencies of your board and the types of grants that keep them engaged.

Whether or not you ultimately decide that general operating support is right for your foundation, take the time to consider it. It can be a powerful tool for your foundation and your grantees.

Here are some steps to follow:

  • Use this article and other resources to educate your board about general operating support.
  • Talk with fellow grantmakers about their experiences.
  • Consider allotting a portion of your grantmaking budget to gen op grants. Discuss a potential strategy and process for these grants.
  • Identify prospective grantees. Does the grantee have a track record of success, or is it a start-up that you’re keen to invest in? Does the grantee have the leadership and systems in place to be successful at managing unrestricted funds? Or can you help to build those areas?
  • Ask grantees if general operating support would help. Critical operating costs often are the most difficult to fund, but grantees may not reveal the need unless asked. Many are accustomed to foundations that prefer project grants, not operating support.

As increasing numbers of funders embrace general operating support, we encourage you to learn more by calling on our staff and fellow Exponent Philanthropy members.


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Comments

  1. jamila

    This is a great idea! Further, I hope funders consider funding living wages, paid time off, and health benefits for grassroots organizations. #staffingthemission

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