A Student Again-Week 2

First of all, let me say that I forgot how much reading is involved in a graduate level class. I saw the syllabus and almost fainted with the amount of reading that must be done on top of what I read for work. But the weekly topics will be very interesting and so I'll try to consider it as "reading for pleasure"...

This week we discussed the regulation of foundations since the Tax Reform Act of 1969. The reading the struck me the most was "The Long Recoil from Regulation" by Peter Frumkin (1998). In it he discusses the results of the regulations imposed on foundations in 1969; of particular interest to me was his discussion of the change in foundations funding innovative, long-term programs and operating support to small, short-term targeted grants that are administratively heavy. When I was writing a paper for a fellowship last year, I read several articles with the same criticism of foundations being more interested in project-specific grants instead of funding general operating support or long-term investments in innovation. The unfortunate result is that nonprofits wind up creating new projects and programs to meet the requirements of the foundation when in fact all they need is money to continue to support their staff salaries or buy a new computer. So they create a new program (or reconfigure an old one) and fold in the operational expenses. It becomes a vicious cycle of grant after grant just to ensure that a key staff member still has a job.

In 2006 the Center for Effective Philanthropy released a report highlighting the need for operational support from nonprofits. In the findings, only 16% of the foundation CEOs surveyed were in favor of grants providing operational support. On the flip side, nonprofits preferred larger, long-term grants that supported their general operating expenses. The foundation I worked at in St. Louis, MO funded operational support and it was our most popular program. It was the one allocation that was completely spent every year. I've felt for a long time that more foundations should support operating expenses. There are many small nonprofits doing phenomenal things but they struggle to keep their doors open. So why not just help them maintain their programs? Why do many foundations essentially force nonprofits to reinvent themselves repeatedly so they can sustain their operations? Certainly there are new programs to be created but if something is going well and the organization is fulfilling its mission then it needs to be sustained, nto made to repackage its efforts for a 1 or 3 year grant.

I'd love to hear from those of you who do support operational expenses in your foundations and what you've heard from your grantees. I'd equally love for those who don't fund operational support to make comments with their thoughts.