Stanford Social Innovation Review

I couldn’t agree with Paul’s comments more. In the very real and valid pursuit of giving money where it will do the most good, funders are afraid of general support. Whether they mean to or not, this implies a distrust in the management of the organization. I think it’s more expensive--from an impact perspective—to run an organization on a shoestring and to not be able to invest in productivity-enhancing technology and talent. Ironically, this often translates into the organization’s inability to really track their impact as well--which are the outcome measures donors should be looking at.  It’s natural to gravitate toward the most track-able data, like overhead expense, but what does it matter if an organization can run things very lean but not make a dent in the problem they’re addressing?

»» Posted by: Kate Cochran on June 21, 2007 12:30 PM

Thank you for being another voice willing to speak the truth— that the overhead-to-program ratio is an emperor with no clothes on.  Those ratios mean virtually nothing when it comes to making any type of evaluative statement about an organization or its work.  The fact is that there is NO simple “test” for determining whether a charity is worthy of a philanthropic investment, no number that measures a nonprofit’s effectiveness at making change in the world.  Our society, for the most part, would prefer to believe that charity is easy (write a check, show up at a board meeting, etc.).  Offering them a letter grade or a ratio or a “best practices” seal of approval feeds the ease, but does nothing to either educate, inspire, or engage a donor in helping shape—and support—a specific vision of a community (or at least some small aspect of it) as a better community because of our philanthropy.

As I share with donors, the character of the men and women leading a charity is a far better measure than “the ratio” in anticipating whether a group is capable of effecting the change you wish to see in this world.

The charity rating gods will be cursing you tonight.

»» Posted by: Renata Rafferty on June 21, 2007 12:33 PM

A fellow ED once described the equivalent of restricted giving in the for-profit world:  You’ve just had a great meal in a local restaurant.  On your way out, you happily pay your tab and mention to the owner that the food was so good that you want the entire amount of your bill to go towards the chef’s salary.  It seems ridiculous, doesn’t it?  Yet it happens all the time in the non-profit sector.  Donors even say they won’t pay for salaries!  How do you provide service without employees?  A bad practice has evolved in the non-profit world and that is expecting and rewarding low administrative costs.  Without sufficient administrative oversight and support - including HR, IT, program evaluation, financial management, etc., non-profits do not have the infrastructure and capacity to increase the scale of their activities or guarantee consistent quality of service.  As non-profit leaders, we’re often admonished to operate more like a business—it would be a lot easier if donors would treat us more like a business—and that includes inrestricted investment in the outcomes we promise to produce.

»» Posted by: Marsha Bailey on June 21, 2007 12:39 PM

Paul,

I really appreciate your bringing this up. As a 24-year board member of the Puget Soundkeeper Alliance in Seattle I have seen the restriction on overhead funding effectively force us to make a choice between running programs and building organizational capacity. We have at times found ourselves over-committed to program activities (we often have unpredictable costs, such as expert witness testimony in legal cases or permit appeals) that we then have to scramble to fulfill with limited staff because we couldn’t afford to hire with a budget restricted to non-overhead or non-administrative activities.

It has forced us to be lean and creative, but at times it would be wonderful to have the ability to backfill capacity on those occasions when we are successful on getting a grant that stretches our capabilities.

We are accustomed to (and welcome) scrutiny in all our program activities and would welcome the opportunity to justify our overhead and salary needs to funders, but often we don’t get the chance because their guidelines preclude the conversation.

Thanks again for bringing attention to an important irrationality in the system.

Tom Putnam

»» Posted by: Tom Putnam on June 21, 2007 12:42 PM

As a former forprofit-corporate bookkeeper, I had fits trying to understand the world of nonprofit accounting.  After nearly a year of “screwing around” the books, doing enough copying to destroy a forest, and generally losing sleep, to make the grantor “happy”, I realized that our nonprofit ran a 100% administrative cost agenda!  We have no members, no direct services to clients, and only educate the masses about epilepsy.  By getting rid of “projects” in the itemization of a proposal’s budget, our books now run clean, and with only one bank account.  Grantors, as much as anyone, must know accounting the same as a contractor knows that it takes a long list of expenses to construct a building.  Get rid of project names and apply the mission statement to all spending!

Maybe this applies only to small nonprofits, but I’m a volunteer and when I hear that others are paying CPAs big bucks with smaller budgets than ours, I have to wonder.  Thanks.

Lyn Davis
Cheyenne, WY

»» Posted by: Lyn on June 21, 2007 01:10 PM

Point very well taken.  I think that, in general, the restrictions on OH flow from a basic dstrust in the motives or competence of the managers of nonprofits.  In the case of foundations’ funding of universities, and particularly of academic health centers, the OH limits (zero in the case of one large foundation) relate, I think, to the opacity of the accounting.  One certainly does not want a FASB for nonprofits, but that may be what it takes.  Perhaps a good start would be a few case studies of nonprofit costs so we could develop the metrics for cost structures.

»» Posted by: Michael Barth on June 21, 2007 01:19 PM

Thank you, Paul, for continuing to raise this issue. As evident by the responses on the GEO list-serve a while back this is still--and should be--a hot topic. You ask where this practice began...I don’t know for sure, but my guess is that it is modeled (intentionally or not) on the contract for services template that frames government/nonprofit financial relationships.  And, as the accountability issue became elevated, particularly in the mid-1990s, directed, programmatic funding, in both the public and private sectors, intensified. 

When I began working with social service nonprofits nearly 20 years ago it stunned me that their budgets were frequently derived from what they could fundraise...not from the financial analysis of what it would take to provide the most effective programs and build the most stable, sustainable and accountable organizations.  In fact, many of the organizations with which I worked couldn’t easily answer the question of what the real cost of their programs were...they’d been browbeat into continually accepting less and less funds to do the same job, completely distorting the true costs of their services.

That being said there’s a place for project-based funding, although it should always reflect the real costs of doing business.  For example, in early stages of testing a strategic plan or new program area, funding to a new grantee might well be project-based at first, to make sure there’s a good fit and to build the relationships.  In some cases, with large multi-issue organizations, the fit with a funder’s program area may only be with a small part of the organization.  In these cases, project funding is fine---but again, even in these cases, care should be taken to make sure that the programmatic funding covers the full freight (which includes paying decent salaries, investing in staff development, fundraising, and all those other things that nonprofits need to do to operate at the highest levels). 

Whether the funding is unrestricted or programmatic, the bottom line is that different kinds of programs have different kinds of costs; a good due diligence process should indicate whether or not the organizational budget makes sense or not. Putting artificial limits on indirect or admin costs is just silly---if you don’t have confidence in the management of the organization and their financials don’t fund it! 

The height of irony, of course, is that short-sighted public and philanthropic funding behaviors have led to a weakened nonprofit infrastructure...which then we turn around and try to fix with “capacity-building” grants.  I’m not saying capacity-building isn’t necessary, but wouldn’t it be nice to have some reflection on how grant making practices may have contributed to the problem in the first place?

Finally, I’ll wrap up this rant by simply noting that the type of grant (short or long-term, programmatic or general operating, etc.) should flow from what a funder is trying to accomplish--there’s never a one size fits all answer.  Life should be so easy.

»» Posted by: Pam David on June 21, 2007 01:23 PM

I agree with 99% of the comments. My question is: How do we convince especially corporate and private grant makers to engage in a Paradigm shift that makes the sense most of the comments suggest?

»» Posted by: Maceo May on June 21, 2007 02:43 PM

I think funder restrictions are a pretty tricky issue - especially overhead restrictions.  Success is often difficult to measure in the nonprofit world.  And, comparing one organization’s success to another organization’s success is even more difficult (especially if the two organizations serve very different functions such as education and envirionment).  So these overhead restrictions are somewhat necessary for the less sophisticated foundations to have a guarantee that their money will produce value. 

I agree in theory with Pam David -"if you don’t have confidence....don’t fund it!” But smaller foundations, family foundations, and employee giving programs don’t necessarily have the resources to get to know all of their grant recipients. 

Overhead restrictions are annoying - even burdensome - but what is the alternative?  Trusting in nonprofits to do what is best? Unlikely - have you seen the latest polls???  Customized grants and individual attention?  Too expensive… then the foundations’ overhead would be 50% or greater.  I can get $50K and never talk to a grant officer.  Do I want 50K or do I want $45K and a lot of discussion about how I am using it? 

My point, if I actually have one, is that the philanthropic world (on all sides) is still a little too unsophisticated to do anything but have people with money saying “this is how it should be” We don’t measure or compare success well, we have hundreds of thousands of community based organizations that run in uniques ways - many of them running poorly, and we don’t replicate successful models often enough.  I am not saying the folks with the money are doing the right thing, but I am saying that they MIGHT actually be doing their best.

»» Posted by: Ryan Brooks on June 21, 2007 03:39 PM

I agree with Paul on the matter of limits-on-overhead.  I also agree that unrestricted support is the ideal funding arrangement...but with a caveat. 

We funders have mission statements and goals, as do the groups that we fund. In our case, we work to protect wildlands and wildlife in selected geographic regions.  We prioritize our efforts based on conservation science and an assessment of opportunities within, and threats to, these landscapes.

If a grantee is undertaking work that is entirely consistent with protecting one of these places, we’ll happily offer unrestricted support. 

If however, we’re funding a group that has a diverse range of programs, we’ll restrict our funding to support the project that advances our agenda. 

In short, we’re happy to pay for our great meal in a local restaurant. But we won’t pay for the meal of the diners sitting at the next table.

»» Posted by: Paul Beaudet on June 21, 2007 03:40 PM

Paul,

You are not missing anything ! It is aone of the greater mysteries of this business..... it is a business (certainly nowadays). And since everybody is stating that non-profits have to be managed as a company I have stated more then once; “then finance it like a company” (and that is not on a project basis without overhead etcetc).

“Everybody wants to go to heaven but nobody wants to die”

http://vanstokkom.blogspot.com/2007/05/everybody-wants-to-go-to-heaven-but.html

http://vanstokkom.blogspot.com/2007/04/understanding-nonprofit-capital.html

»» Posted by: Henk J.Th. van Stokkom on June 22, 2007 12:45 AM

As a consultant in this field who came out of the for-profit sector, I share the opinion of many of us who have had for-profit experiences and shake our heads at the paucity of operational support in the nonprofit sector. Sure, funders need to track things and sure lean and mean is great, but can you imagine a shareholder, lender or other investor telling GE not to use the capital they provide for anything but the glass used in the light bulb??

»» Posted by: Robert Kuhn on June 22, 2007 07:43 AM

What a bunch of great comments. THANKS everybody.  I particularly like the private sector analogies, which is a valuable way to look at this issue. Maceo, hopefully a good answer to your very good question will be coming shortly from http://www.geofunders.org—in about a month, they will publish a General Operating Support Action Guide, so keep on the lookout for that.

A couple comments in response to Ryan Brooks. First of all, I sincerely appreciate your jumping into the mix. Re: your comment “overhead restrictions are somewhat necessary for the less sophisticated foundations to have a guarantee that their money will produce value” --- I would ask, in what way does an “overhead restriction” give you one iota of an indicator of value? As I said, there is nothing close to a real and accurate definition of overhead in the first place and even if there was, the only thing such a restriction would tell us is that the nonprofit didn’t spend much money on it; that’s it. They could easily be very efficient and completely ineffective. And it’s not clear to me what difference it makes if the funder is more or less “sophisticated” (whatever that term might mean, Ryan).

I am sure funders are “doing their best.” I am not calling anyone’s motivations into question. The bottom line is that doing our best is not relevant or acceptable. Our job is to invest in organizations and people that will change the world for the better. We AND the nonprofits have the responsibility to do everything in our power to help make that happen.

So when you also ask “Overhead restrictions are annoying - even burdensome - but what is the alternative?” there are lots of alternatives, starting with 1) make your grants unrestricted; even if you don’t know the outcomes, you can know that you enabled the nonprofit to have more flexibility and become stronger, and 2) most importantly, make the grant unrestricted AND ask the nonprofit to tell you how they know / measure whether they are successful at achieving the social outcomes they are targeting. If they can’t answer that question, I would suggest they aren’t worthy of your investment in the first place.

On that last point, perhaps I may even be contradicting Renata’s supportive answer a bit. I don’t know that she meant “there is ... no number that measures a nonprofit’s effectiveness at making change in the world” verbatim, but I would argue against that notion. Is it much much harder for a nonprofit to measure effectiveness than for a for-profit company? Yes! Does that mean it’s OK for a non-profit not to do so at all? No! If we are all in the business of changing the world, how can we as funders a) not invest in organizations that can manifest their effectiveness and then give them the unrestricted money to pursue their mission and b) be sure that we only invest in those organizations that can prove to themselves and their clients that they are doing so?

Thanks again, Ryan, and everybody!

»» Posted by: Paul Shoemaker on June 24, 2007 08:50 AM

Paul, thank you for the opportunity to clarify.  I’m referring to those watchdog and other entities who reduce their charity assessments to a letter or number grade, or who identify an acceptable fixed overhead ratio as a means of making it “simple” to decide whether a charity is worth a donation.  Of course, there are measurements that can be taken that come closer to assessing a charity’s effectiveness vis a vis mission. 

But I would propose moving towards a model in which the funder(s) and organizations collaborate as partners to develop a shared plan for measurable change in the community.  Funders too often see themselves as simply as “grantmakers”—and consider themselves successful if the agencies they fund have each hit the program goals they set individually. 

To use an analogy, if the funder’s vision is to build a car, and each agency delivers what it promised for the funds received ... tires, engine, chassis, seat, doors, windows, steering mechanism, brakes ...  you will probably end up with a lot of quality parts.  Put them together and it is very possible they will still not make a car at all.  You may have a racing body, a touring engine, great glass that does not fit the body, and tires that are the wrong size.  Each great in its own right, but the “car” is going nowhere.  Under today’s most common mode of grantmaking, however, it’s another successful year for the funder and for each agency!

Funders can be so much more than “grantmakers” ... they have the power to convene organizations to develop a shared vision for the community so all are working toward a common goal.  Alternatively, funders have the power, if they choose, to develop that concrete community vision on their own, then invite agencies capable of having a role in achieving that measurable, palpable change.  In other words, funders have the “authority”—moral and/or financial—in our sector to bring agencies together to determine whether to make a Bugatti or a Pinto.  But at least all will be working to deliver parts that will fit together and drive.

A funder is a financial investor.  How silent of an investor that funder wants to be may mean the difference between being a “grantmaker” or a “changemaker.” I vote the latter.

»» Posted by: Renata Rafferty on June 24, 2007 10:53 AM

You ask: “What am I missing?” I’d suggest you’re missing (or overlooking or ignoring) several things, though I’ll focus on the broader restricted funding issue rather than the separate “rating” issue.

1. You’re missing the fact that this isn’t, and should never become, an either/or issue. There is and will always be a place for “program” funding, or funding that is restricted in whatever way a donor feels is appropriate. As a sidebar, you’re overlooking the fact that there are many other methods for giving that private funders are increasingly using, including program related investments (loans), mission related investing (the local and/or ‘socially responsible’ portfolio), pooled funding, venture funding, capital funding, and public/private partnerships. These all require a negotiation between the funder(s) and the recipients and partners in terms of how the funds can be allocated – it isn’t such a black/white issue, and hasn’t been for some time.

2. You’re missing the fact that the majority of private foundations know their contributions constitute a comparatively small part of most non-profits’ overall budgets, and thus many see their role as being something other than the lights and heat that other (usually public) sources specialize in. You’ve missed, in other words, the enormous role that public (and individual) funding plays in supporting general operations as compared with private foundations. You’ve also neglected to note that well over half of recently polled large private funders have already been giving GOS for some time now, a fact that I assume you’re familiar with since you mention the GEO study being released.

3. You’re missing the fact that the vast majority of foundations, like the vast majority of non-profits, are small and have very limited capacity for undertaking the kind of due diligence that is required to feel comfortable making an unrestricted grant to a non-profit (or any investment in any sector). Again, because their contributions are comparatively small, it’s preferable for many funders to identify specific activity and support that. The other side of this is that for years, many funders have given unrestricted annual grants/gifts to non-profits despite their inability to evaluate the impact of the funds or the organizations, and have given to many badly managed non-profits simply because they have great name brand recognition. To me, a “major non-profit with a long history of good work” (a typical pitch) is as likely to be bureaucratic, wasteful, and just old as it is to be anything like effective. It amazes me how quickly and completely some posters here want to lay blame for that at the feet of private funders.

4. You’re missing the fact that many non-profits, despite being led by passionate, dedicated people with huge hearts, are poorly managed, and many would not meet basic thresholds for competent operation. In my experience, a huge percentage of the leadership of the non-profit sector got into it to work with the people they serve, not to ‘run a business.’ However, despite the rush to overlay the private business model on the non-profit sector (which cannot be done so unequivocally, in my view), no one talks about the many, many, (many) non-profits that should have gone bankrupt long ago. Because they’re non-profits (again assuming great hearts lead to competent management), they’re exempt. Yes, I can choose not to give to them, but they find operating funds elsewhere (see #2 and add political influence), and their colleagues, and with them, foundations, have to tolerate this.

Motive for doing the work is not and never has been in question (this “trust” thing that keeps coming up)—management ability is. Thus the more recent focus by funders to make restricted grants to “capacity building,” which was disparaged by one poster to this thread as the ironic funder foolishness du jour. Given a choice between serving more clients in established ways or undertaking professional or organizational development (which also should never be an either/or), most would choose the former, which is honorable, but perpetuates the poor management practices they’ve struggled with. This is one of many situations where a funder’s interest in restricting funding to specific activity (a project) can “force” an issue that would otherwise be continually postponed.

5. Finally, you’re missing the fact that the way you set this whole thread up – “Restricted funding misses the point”; “Am I missing something?” (the second half of which question would be: ‘…or are these other funders really this clueless?’), “An issue that has been sticking in my craw…” – was confrontational, judgmental, and dismissive. Yes, I understand you were after snappy headlines to ‘stir the pot,’ but it invited the piling on of many of the other contributors, and it certainly made it difficult for a funder to feel like responding – assuming you actually wanted the participation of other funders in the thread.

For the record (and it feels like I need to state it), I spent over 18 years in the non-profit sector in the arts, arts in education, adult education, community health and healthcare, and research administration, and I’ve been on the funder side (the dark side?) for over seven years now. I also spent my teens and twenties in a small, continually struggling family business (they all are) that was finally big-boxed out of existence. The us/them, right/wrong, black/white stuff limits the universe far too much and strikes me, over and over, as unproductive.

If every funder tomorrow decided to make long-term general operating support grants the non-profit world would not magically change, and for whatever ways it would get better, I can easily imagine ways in which it would quickly get worse. Without doubt, there is much that private funders can be criticized for, but there are also many tools, there is much new information, and there has been much progress, and that should be the basis of further discussion.

Paul T. Hogan

»» Posted by: Paul Hogan on June 26, 2007 11:42 AM

attn. Paul Hogan

Dear Paul,

Us/them, black/white.....
Given you start each point with “You’re missing the point that...” it seems that it’s a habit that one does not easily walk away from.

Having been on the funder’s side for a bit more then thirteen years now and having worked in the investment industry before that (and still involved in that area) I can not see it otherwise:

If - like recently written again by Matloff ( Molecular Investment Consulting for Philanthropies ) - we feel that non-profits ( or citizen sector organisations - CSO’s - as Ashoka wants us to call it ) should be run like companies. Then they should be financed like companies.
This means that funders, like shareholders, should be treated more equal and CSO’s should steer away from project funding and not be willing to accept money from organisattions that are not willing to pay for overheads etc.
CSO’s should be bolder and not bend for the demands of funders when they become ‘unreasonable’ ( as in:  ‘we will not pay for overhead’ ).

Given the enormous amount of money becoming available for philanthropy in the coming years and given the fact that good implementing partners will be more and more difficult to find, it will not be long before this game will start to change and it will be the funders who will be happy if they can join the financing of a good organisation’s activities.
The days that these CSO’s are happy to ‘find’ money and have to bend over backwards and spend more time in fullfilling reporting demands from funders then on there ‘core busines’ might therefore be counted.

»» Posted by: Henk J.Th. van Stokkom on June 27, 2007 01:01 AM

I think leadership is tied up in this discussion.  As we all know, non-profit leaders burn out frequently and yet, many are also the same folks who will turn around and work on another social cause.  How do we give these leaders the resources and support they need so that they can remain focused on the work long enough to achieve social impact?

If we fund program after program, at the end of 10 years, ultimately we are left with a long list of programs.  And yet, if over 10 years you provide core support funding, then at the end of 10 years, you could have stronger leaders and institutions.  I believe Andrew Rich’s SSRI article “War of Ideas” begins to touch on this idea.

»» Posted by: Stacy Caldwell on June 27, 2007 12:48 PM

Some fantastic postings. Just a few comments in response to Mr. Hogan—Again, THANK YOU for your response, Paul. I largely agree with your point #1 especially the positive trend of funders using many approaches. I could go through a long litany here of where and how I disagree with much of the rest of your posting, but I’ll leave that for another day and time. I want to apologize if my verbiage came across as us / them, right / wrong. This is one of the vagaries of email . For anyone that knows me, they know that isn’t my style or intent. Hopefully we will get the chance to have this discussion face to face someday down the line; I would enjoy that greatly.

»» Posted by: Paul Shoemaker on June 27, 2007 11:31 PM

I’ve also have had e-comments I’ve made misinterpreted more than once (hard to believe, I know), and I apologize for overreacting. The thread title obviously triggered the release of a great deal of frustration over pronouncements on the ‘best way’ to provide support. We are a large funder in an area of overwhelming need with few colleagues and even less resources, public or private.

I see my post as a list of problems and challenges, not answers, and my guess is that we’d end up agreeing on that through most of them, though I suspect we’d still disagree on the degree to which (not the methods by which) one way or another provides the best solution.

I agree that leadership support and development, particularly at the level of neighborhoods and small communities, is a critical need and should be agressively addressed.

The heart of much of this may have to do with the posting above: “If we feel that non-profits should run like companies, we should finance them like companies.” I have serious reservations, as I noted in my post, about the wholesale overlaying of the business model on the non-profit sector. Absolutely, business practices can be and have been usefully brought to the non-profit sector. And there are ways in which funders can provide flexible capital. But they are fundamentally different undertakings—and, as you note, another thread entirely.

On picking this up face-to-face, I’m partial to cold draft beers in neighborhood pubs—the first round’s on me.

»» Posted by: Paul Hogan on June 28, 2007 07:14 AM

Jim Collins the author of From Good to Great says one of the most important things organizations need is the right people in the right seats on the bus. Everything else follows from that. Without the right personnel, the right senior staff it is virtually impossible to move the organization forward in significant ways. Without general support or capacity building fundis it is extremely difficult to get the best people. Collins wrote a monograph for the nonprofit community based on his book - I think it should be mandatory reading for all funders. Then maybe it will click that growing an organization’s infrastructure is a great investment in helping organizations produce great results on mission-focused projects.

»» Posted by: Suzanne Mintz on July 4, 2007 06:10 PM

At the outset I want to state that I’m not a fan of the “funding world.” In my relatively recent transition from the business world to the nonprofit world I’ve experienced foundations as an insular, restricted clubs that demonstrate little in the way of innovative thinking or leadership.  The world has changed and non-profits must adapt: staff must be entrepreneurial, think strategically, cost effectively, have a sense of efficiency and a systems perspective, stik to abudget and have a grasp of marketing and PR and-- all within our mission. Call the model what you will.

My observations:

1.Foundations are generally risk-averse and non-entrepreneurial in nature; this helps explain the controls they put in place and “restrictions”,
2.The client-service levels at most foundations are deplorable; unreturned emails, phone calls, unpleasant attitudes from foundation staff, etc.  This pretty much signals to me that Foundations don’t really care about who they serve. Indeed, the non-profit is rarely treated as an equal. Attempting to contact the CEO at a Foundation requires an act of Congress.
3.Foundation leaders rarely visit the institutions they fund;
4.Program officers - the ones who review applications - are generally ill informed and know little to nothing about an institution’s “business” Let’s be frank, they are application reviewers - like the local bank loan officer.  Unlike banks, foundations do not use any consistent evaluation systems or shared ratings;
5.Most foundations I have dealt with require an inordinate amount of face-time;
6.The real-estate many of these foundations occupy is insane; I don’t consider the 35th floor of a AAA rated, downtown property a necessary business expense for a foundation; something is wrong.
7.We need to deal with the class issues at these Foundations.

I would like to see Foundations regulated more closely at every level. I’ve much more to add and can be more specific – but I’d like to hear what funders have to say.

»» Posted by: Anthony Brown on July 7, 2007 11:19 PM

I completely agree that non-profits must adapt and be enterpreneurial, cost effective etc...but you know what? They still need operating funds and this what funders need to realize.  If a funder wants statistics, or a database or concrete outcomes, it costs money.  It also costs money to hire people.  Really, what I would like to see is many non-profit exit the arena, because right now there are just way to many of them competing for dollars, and see Foundations recognize what it costs to do business. A Non-profit is a business. And many foundations and general donors understand this, I just home that more and more begin recognizing its importance.

»» Posted by: Victoria on September 10, 2007 02:16 PM

As a consultant who works mainly with small, grassroots nonprofits, I would like to add that I always stress the need to develope multiple streams of funding.  Grants do indeed have their purpose to fund specific programs, but they go away after a few years and you have to identify new foundations or change your programs to suit funders...something I caution against unless it is in the best interest of the community you serve.  Writing a foundation proposal is often seen as the easiest route to funds and it usually is that. 

It is up to EDs and development officers to build relationships constantly in their communities with individuals who will be with them year after year. Special events are scoffed at because they are labor/volunteer intensive, but special events can also be a service to the community if they are mission focused.  Here is where you bring in unrestricted support from local businesses and newcomers who will then become long-term donors.  Revenue generation through forprofit activities is another often under-utilized source for funding that also can be tied to your mission.  Work with media to get your face infront of the crowd.  Join local community groups taht will introduce you to local leaders who can then become your champions.

Finally, I disagree with Anthony Brown’s assessement of foundations made on July 7. They are entreprenurial.  That is why they focus on short-term funding and not longtime support.  They challenge nonprofits to build a base of support within their own communities.  If your community doesn’t have need of or appreciate your services, why should they keep funding you?  I have found most foundations willing and open to approach by the nonprofits they are seeking to fund.  Face time is what fundraising is about. Foundations are people, not machines. I have always felt welcome talking with foundation officers about my program.  As for their real estate...It is usually part of loaned space by the firm or individual that created the foundation in the first place.

Bitter rants against the gift horse are wasted breath.

»» Posted by: Sharon Rabb on September 25, 2007 08:49 AM

Good day Prof Shoemaker and bloggers!!!

I am Kenneth Ahiarakwem, a postgraduate student of Engineering Management at the University of Ottawa, Ottawa, Canada. I am preparing a report on the product development process for social entrepreneurship. The purpose of the report is to discuss the Venture capitalist experience in funding Social Entrepreneurs. The result will be used to explore the Venture capitalism in the Social Entrepreneurship and how it correlates to Business Entrepreneurship. I wish to throw three short questions to this forum and I blieve It could go a long way to put funding considerations for Social Entrepreneurship in the right perspective.

1. What is the greatest problem in funding social Ventures?
2. How can this problem be overcome?
3. what is the major difference between funding a social venture and funding a business venture?

»» Posted by: Ahiarakwem Kenneth on November 18, 2007 08:43 AM