More Lean Funders Should Consider General Operating Support

General operating support helps support a nonprofit’s mission, rather than specific programs or projects. Grantees can use funds to strengthen the organization, or further its charitable purpose as they see fit. For example: salaries and overhead, investing in technology, furthering fundraising efforts, and more.

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

General operating support is valuable for many reasons, as it:

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

Measuring General Operating Support 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. While general operating support requires a high level of trust, a variety of questions and techniques can be used to measure success.

Sister David Ann Niski of the Bernardine Franciscan Sisters Foundation in Newport News, VA, asks basic questions about impact of the foundation’s general operating grants:

• Is the organization still running; financially sound; and operating high-quality programs that benefit our community?

Kathleen Odne of the Dean and Margaret Lesher Foundation in Walnut Creek, CA, considers additional, broader questions about the impact of the foundation’s general operating 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 general operating grants, be mindful about not overburdening grantees. Keep reporting requirements proportionate to the grant’s size and consider mid-grant conversations in lieu of written reports. You could also welcome a report prepared for another funder.

“Too often as funders, we force our grantees to embark on new projects because that’s what we’re willing to fund,” said Judy Peckham of the Conrad and Virginia Klee Foundation in Binghamton, NY. “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.”

Ask 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 of its grantees, a shelter for abused children, 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; as well as 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:

• Using this resource and others, educate your board about general operating support.
• Talk with fellow grantmakers about their experiences.
• Consider allotting a portion of your grantmaking budget to general operating 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 more and more 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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