Our Core Support Project
What is core support? In essence, it is a funder's support for a nonprofit organisation as a whole, as opposed to support for specific projects. It is investing in the mission of the organisation, giving the organisation the support it needs to carry out that mission.
Why does core support matter? Core support matters because effective projects and programmes are only possible if the organisation running them is healthy. If, for example, a nonprofit lacks the right staffing or enough computers, they will not be able to deliver the projects which all their stakeholders, including their funders, want them to carry out. In the end, all parties lose out: the charity, the funders, and their intended beneficiaries. Core support is a tool for strategic philanthropy, which can strengthen nonprofit organisations, giving them the means and flexibility to increase efficiency and allowing them to make more of an impact in their issue area.
What is the Core Support Project? The Core Support Project aims to propagate the ideas of core funding, increasing debate and action on the subject. Since providing unrestricted funding is an important tool in nurturing a strong nonprofit sector, the Core Support Project aims to increase core funding by donors.
Who practices core support? Any foundation, trust, grant-making organisation or philanthropist can provide core support and some already do so. Below are examples of a few such funders and their reasons as to why they provide unrestricted funding. Although there are great examples such as these featured, many funders are hesitant about providing core funding and focus on project based funding.
Our research paper, Supportive to the Core: Why Unrestricted Funding Matters, uses original case studies to explore mutual benefits for funders and grantees of core support, and the reasons behind some donors' hesitancy to include it in their grant-making. If you would like a downloadable pdf version of the text of our Core Support Project, please email email@example.com.
"Many of Arcadia's grants are unrestricted, providing core support to the organisations we fund. We believe that an adequate funding for effective management is needed to allow organisations to concentrate on delivering their core mission. It may also give them confidence to operate flexibly and to innovate. To work successfully this approach to funding requires a real measure of trust and confidence on both sides." - Anthea Case, Principal Adviser, Arcadia Fund
Blue Shield of California Foundation
"Especially during this economic and fiscal crisis, core support provides critical resources that enable our grantees to provide essential services to Californians. Core support offers the flexibility to use funds where they are most urgently needed, and can help cash-strapped non-profits leverage additional funds. Our evaluations have shown that for many of our grantees, our core support dollars are making an important difference." - Brenda Solórzano, Director of Public Affairs and Policy, Blue Shield of California Foundation
Eugene and Agnes E. Meyer Foundation
"From our work with nonprofit executives over many years, we know that unrestricted general operating support can be the hardest money to raise, and that lack of management support is one of the leading causes of executive burnout. We've found that when there is close alignment between an organization's work and a foundation's mission and goals, general operating support grants are one of the best ways to support a strong leader and build an effective organization." - Julie L. Rogers, President and CEO, Eugene and Agnes E. Meyer Foundation
The Frances Lear Foundation
"Unrestricted grants are a vote of confidence for an organization. The funder is basically saying; "I believe in the mission, the strength and soundness of the organization, as well as the quality of the work, and I want to fully support your worthwhile efforts." " - Maggie Lear, President, The Frances Lear Foundation
"Too often charities are stuck in the quagmire of short-term, project-based grants, constantly chasing different funding pots. This can skew a charity's activities and doesn't allow it to think strategically. Impetus Trust is committed to providing core funding (together with management support and specialist expertise) as this empowers a charity to invest in itself and so become more efficient, effective and sustainable. If other grant-makers are serious about creating real impact, they must also consider the long-term future of the organisations they fund." Daniela Barone Soares, Chief Executive, Impetus Trust.
Sainsbury Family Charitable Trusts
"The Sainsbury trusts very much appreciate the importance of supporting core costs and have done so for many years, so we endorse the findings of your report.” – Alan Bookbinder, Director, Sainsbury Family Charitable Trusts
"STARS Foundation is dedicated to transforming the lives of the world's most vulnerable children and young people. Using data gathered from local NGOs applying to our main grant programme the STARS Impact Awards, we have found that a rigid approach to funding is limiting the effectiveness of frontline work. We have adopted a true partnership approach, providing organisations with the flexibility to respond to changing circumstances. An essential component of an Impact Award is $100,000 of unrestricted funding supplemented by tailored consultancy support. As stated in our recent report, “Recognising Excellence”, it is our view that when a funder identifies a well-run local organisation it wishes to support, it can provide the flexibility for that organisation to determine how best to use its funds.” - Muna Wehbe, Chief Executive, STARS Foundation
SUPPORTIVE TO THE CORE
Why am I interested in this subject? Because I’ve been on both sides: as grant giver (at the Heritage Lottery Fund and at Arcadia) and with organisations looking for funds. My experience is that in the latter role, core or unrestricted funding is the most difficult of all to obtain.
Which leads to me ask: Is a preference for project funding rational for funder and grantee?
To examine this we must ask: Why do funders prefer project funding? My three are simply
- vanity – paying for work on the drains isn’t as glamorous as a snazzy project:
- fear - of being locked in or blamed for failure and
- laziness - since effective core funding makes greater demands on the funder.
Is the difficulty in obtaining core funding damaging for grantees?
The answer is yes. Management resources are diverted when time and energy is spent on dressing up core funding to make it look like a project need. In addition, project funding does not give organisations the flexibility required for growth and development. Where is the funding for innovative thinking, or the seed corn funding for new developments or the bridging funding for projects where funders drop out, as they do?
Is there a definition of core support?
Arcadia’s is this: the things an organisation needs to do to deliver their mission effectively and to develop – governance, communication, fundraising and finance. As with profit making organisations, the smartness and effectiveness of these functions is the infrastructure underpinning their overall performance. Often our core funding supports quite mundane parts of operation – the aforementioned upkeep of the drains – for instance, computer systems which enable better communication between staff or awaydays as an opportunity to think forward.
Are low overheads a good thing?
A one size fits all approach is to be avoided. The case study in the Institute’s report is a starting point. Core funding in that case - for TARA, an organisation recording and digitising rock art in the African bush is very unlikely to be the same as that in another of our grants - a programme of research grants encouraging cooperation between university departments and NGOs in Cambridge. Nor is it necessarily either/or. Core funding can be part of a funders overall support for a grantee’s mission. What it means for a particular organisation will depend on the organisation in question and the funders understanding of its needs.
Understanding of needs is crucially important for successful core funding. It is a prevention and answer to the concern that core funding is a bottomless pit, potentially encouraging dependency and profligacy, with no means of measuring success.
Arcadia’s approach is to 1. Identify an organisation as one whose mission we want to support, 2. Get to know them and discuss what they believe would be the most appropriate use of our grant. 3. Jointly agree from the start what the outcomes or impact should be. 4. Keep in touch with this through regular reports and face to face contact.
Outcomes and impacts. What does this mean? The “targets” can be either general or particular.
Here are some examples from a Board meeting where we have recently renewed core funding
- an advocacy/campaigning organisation, we supported the general aims, learned how they would approach the identification of particular campaign objectives and the tools they would use but left the deployment of our funding and the specification of particular campaign objectives to them. They report to us on their decision about what these are and how successful they have been in changing policy.
- the grantee wanted our funding for a fundraiser, we asked them what they would see as an appropriate cost/reward.
When approached in this way, reporting and evaluation are not a costly add-on but something which grantees want to do for their own purposes.
Getting there is hard work. It is not for the lazy.
If this close relationship is sustained and aspirations and progress understood, there is no reason to assume that a dependency culture will follow – even where, as with us, we are prepared to support grantees in the longer term. If done well, it can give organisations the confidence to grow and develop. But it does require a culture of trust between funder and grantee. There should be no unexpected surprises.
As the Institute’s report sets out:
- core funding is an essential component in strengthening organisations to deliver their mission sustainably
- it should be looked at as essential infrastructure rather than a cost to be squeezed as low as possible
- to offer core funding successfully means an investment by the funder in getting to know the organisation, its needs and aspirations, not just when the grant is agreed but throughout its life so that the process of monitoring and evaluation becomes part of a dialogue between funder and grantee and builds the trust from which both parties can benefit.
Communicate - Initiate conversation with your grantees to clarify your combined goals and discuss what the grantee needs to carry out their work. Make clear that you are open to supporting them in whatever way is necessary to achieve these goals.
Be honest - Clarify your standpoint with your grantees, including the quantity and duration of your support for them. If you are open to building long-term relationships, tell them so; alternatively, make it clear that you may only support them in the short term. If you are apprehensive about offering core funding, explain that it is a new approach to funding for you, so may be discontinued if it doesn't seem to work for you. Being clear from the outset is important to avoid grantee dependency or pursuing strategies that are unsustainable, which can put strain on both funder and grantee. In short-term grantee relationships, honesty is as important as in long-term ones; if you decide to stop funding a grantee, explaining the reasons why may help them improve their performance and management in the future.
Engage - If you are new to offering core support to grantees and unsure if it's the right strategy for you, engage in our core support project: read up on the topic, attend events to find out more, and connect with peers. Ask fellow philanthropists and foundations that are offering core support or have consciously decided not to provide core support about their experiences. Share your concerns; whether you decide to provide unrestricted funding or not, discussing the topic can be very helpful in deciding how best to move forward with your grant-making.
Research - Researching your grantees' work and understanding their finances is key to building a productive relationship and deciding whether you want to provide core funding. There are plenty of tools for funders that can be used, such as those explaining due diligence. The Full Cost Recovery software from ACEVO, which allows charities to calculate their overheads accurately, is also a valuable tool. If you think it would be helpful for a grantee to use this software or provide you with detailed breakdown of their overheads, consider offering to pay for the training or the capacity they need to provide you with such information.
Advise - Charitable organisations have great expertise in their fields and many have solid infrastructure; however, they could potentially still benefit from your pro bono advice. Discuss with your grantees if there are any other ways you may support them. They may benefit from outside financial or marketing advice, for example, something you could provide by finding someone in your network to help them in this capacity.
Develop - Providing core support means you can give your grantees the means to plan strategically. You can help them develop strategy for future development and sustainability. Look for ways to become a public advocate for their cause and organisation, helping to bring in new income and support and helping them become less dependent on your funding. Use means such as matched funding, challenging a grantee to find another funder to match a grant of yours, which stimulates innovative fundraising and the building of new relationships.
Prepare - In offering core support, prepare for some of your funds to be spent where you didn't expect. Ask your grantee to explain why these costs were necessary and how it advances your combined mission. You may not like the answer, but transparency is crucial to a strong partnership and their answer will no doubt help you develop your future funding strategy.
Evaluate - Providing core support does not mean doing away with evaluation. Discuss with your grantees appropriate evaluation techniques and be open to different forms of evaluation. If you want a specific grant reporting system developed, be prepared to offer financial support to implement it. There is no absolute framework on how evaluation needs to be conducted and presented so find a system appropriate to both donor and grantee.
ACEVO, Full Cost Recovery
Blue Shield of California Foundation,
"Core Support Initiative Evaluation"
Blue Shield of California Foundation,
"Clinic Core Support Initiative: Follow-up Evaluation Findings"
"The Rationales for Modes of Foundation Support for Nonprofit Organizations"
Brest, Paul, in: Stanford Social Innovation Review,
"Smart Money: General Operating Grants can be Strategic - for Nonprofits and Foundations"
The Bridgespan Group,
"Don't Compromise ‘Good Overhead' (Even in Tough Times)"
The Bridgespan Group,
"Nonprofit Overhead Costs: Breaking the Vicious Cycle of Misleading Reporting, Unrealistic Expectations, and Pressure to Conform"
The Center for Effective Philanthropy,
"In Search of Impact: Practices and Perceptions in Foundations' Provision of Program and Operating Grants to Nonprofits"
The Center for Effective Philanthropy,
"Listening to Grantees: What Nonprofits Value in Their Foundation Funders"
Center on Philanthropy at Indiana University and the Center on Nonprofits and Philanthropy at the Urban Institute,
"Lessons for Boards from the Nonprofit Overhead Cost Project"
The Center on Philanthropy at Indiana University,
"Functional Expense Reporting for Nonprofits: The Profession's Next Scandal?"
Center on Philanthropy at Indiana University,
"Paying for Overhead Study"
This presentation can also be watched:
Compasspoint Nonprofit Services and Meyer Foundation,
"Daring to Lead 2006"
Grantmakers for Effective Organisations,
"Is Grantmaking Getting Smarter?"
Hager, Mark et. al., in: Foundation News and Commentary,
"Paying for Not Paying for Overheads"
Howard, Don and Ann Goggins Gregory, in: Stanford Social Innovation Review,
"The Nonprofit Starvation Cycle"
Independent Sector, Guidelines for the Funding of Nonprofit Organisations
Institute for nonprofit Organization Management, California Foundation Studies,
"General Operating Support: Research on Grantmaker Policies and Practices"
New Philanthropy Capital,
"Lessons from Funders and Charities"
Pallotta, Dan in: Harvard Business Review,
"You Say You Want Impact"
"The Worst and Best Way to Pick a Charity This Year"
Silverman, Les and Lynne Taliento, in: Stanford Social Innovation Review,
"What Business Execs Don't Know-but Should-About Nonprofits"
"Why We Need Philanthropic Equity"
Unwin, Julia: The Grantmaking Tango: Issues for Funders
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