Putting Our Money Where Our Missions Are: More on the Importance of General Operating Support
November 19th, 2020
Funders need to provide grantees with multiyear general operating support in order to help them achieve their missions. This statement is not new. In fact, last year, after the five wealthiest U.S. foundations committed to doing more to help grantees cover their overhead expenses, we called on the Jewish philanthropic world to do the same. Providing general operating support to organizations is one of the strongest levers we have to effect change. We noted then:
Now more than ever, the Jewish philanthropic community expects organizations to look at a complex, evolving world and respond with speed and creativity. We ask our partners and their leaders to perform at a high level in a challenging environment, and we must ensure they have the resources that enable them to be nimble and take risks. We have found that we can best support this agility by standing behind our grantees and not in front of them.
And that was before the pandemic. Today, the importance of general operating support is even more apparent. Beyond allowing organizations crucial time, space, and dollars to innovate during periods of calm, general operating or overhead support also provides organizations with the resources they need to pivot and adapt in times of crisis.
The benefits of general operating support are vast and yet the dollars just are not there. As many have noted about a recent report from the Center for Effective Philanthropy, funders are more likely to express their support for providing unrestricted funding than actually follow through on that approach.
Over the last eight months, many Jewish organizations were able to meet the moment and overcome challenges because of their dedicated, tireless leadership and staff. As we worked alongside them, we also experienced how unrestricted dollars made a crucial difference.
Organizations such as BBYO, Hillel, and Moishe House engaged existing and new audiences in meaningful Jewish learning and engagement, helped program staff adapt to digital platforms, and helped participants stay connected to each other and to community. The general operating funds they had already received meant that they had risk capital, secure funding, and sufficient staffing to be able to apply for PPP loans. They even had the capacity to serve as sources of support for other organizations in the field.
Beyond just surviving, general operating support helped Jewish organizations innovate when our sector needed it most. The trust cultivated from these grants between funder and grantee helped create a culture of experimentation. Grantees felt comfortable trying, “failing,” learning, and trying again with new engagement efforts. What a testament that some of the new virtual efforts created over the last several months will positively influence the field long-term.
In this regard, Repair the World, with the security of multiyear general operating support, brought together more than 40 organizations to launch a major ongoing initiative to engage young adults in meaningful acts of service. Repair had the expertise, credibility, and capacity to pursue this endeavor for Jewish young adults looking to make a difference. This is but one example of unprecedented collaborations and partnerships that unfolded in the initial wake of the pandemic.
Admittedly, general operating support, particularly multiyear funding, requires a big commitment; to do it right, funders need to dive in and trust the process. The Bridgespan Group reports that even when funders do offer general operating support, we often cap overhead expenses to 15%. However, overhead expenses for high-performing nonprofits make up 21-89% of total costs. We need to help fill this gap.
To be clear, there is an important place for restricted funding too. But we should treat program-specific grants as one prong in a strategic two-pronged approach. In supporting our core partners, our foundations prioritize general operating support because it signals our commitment to a more substantive relationship. With so much in flux due to the pandemic, both of our foundations provided more one-year general operating grants to enable our partners to focus on their work. We also remain fully committed in the long term to investing through multiyear grants. When support is multiyear, the relationship between funders and grantees becomes even more substantive over time. We are telling grantees that we believe in their work, in their leadership, and in their ability to effectively use the resources they have at their disposal. We believe that every foundation can work within their theory of change to expand the size and number of general operating grants they make.
The case for providing general operating grants is compelling. Indeed, unrestricted support is useful to organizations as much for what it gives them – dollars, flexibility, capacity, and trust – as for what it saves them from – uncertainty, constraints, and repetitive administrative work. And, most funders say they agree with the approach. But with a world broken open by layers of change and challenges, now is the time for action. Talk to your board, your grantees, your program officers. Look at your grant records. Anticipate the obstacles you may encounter. Then figure out where and how you can incorporate this practice.
An organization’s ability to discover new ways of operating is paramount to its survival. Our field needs to continue offering organizations the leeway and runway they need to best serve their constituents. We need them to take everything they have discovered and learned during this challenging time and apply it to the future. It should not take a pandemic to get our field thinking in this way, and to give grantees the flexibility and risk capital to think more imaginatively about Jewish engagement, learning, and leadership.
From now on, change will be the only constant in our line of work. The best way to prepare our grantees for whatever comes next is by working alongside them, limiting restrictions on our funding, and putting our money where our missions are.
Lisa Eisen is Co-President of the Charles and Lynn Schusterman Family Foundation. Barry Finestone is President and CEO of the Jim Joseph Foundation.