Funders have not embraced general operating support, study finds

Funders have not embraced general operating support, study finds

Despite the widespread belief that multiyear general operating support is important to nonprofits' ability to fulfill their missions, many foundations do not provide such support to their grantees, a report from the Center for Effective Philanthropy finds. 

According to the report, Making the Case: Foundation Leaders on the Importance of Multiyear General Operating Support (34 pages, PDF), only 12.4 percent of the grants in CEP's Grantee Perception Report dataset over the last ten years were for multiyear general operating support. Based on surveys of foundation CEOs, program officers, and nonprofit CEOs conducted prior to the emergence of COVID-19, the analysis found that only 41 percent of nonprofits reported receiving multiyear general operating support during the previous twelve months and that such grants accounted for less than a quarter of their funding from foundations. And while 58 percent of foundation CEOs reported providing some multiyear general operating support, a majority of those funders (60 percent) awarded such support to less than a quarter of their grantees, while only 11 percent provided such support to more than half their grantees. The analysis also found that while 63 percent of foundation CEOs said they were in favor of increasing the percentage of their grantees that receive multiyear general operating support, only 17 percent believed that their foundation would increase the allocation of grant dollars to general operating support over the next year. 

The reason most often cited by nonprofit leaders (29 percent) for why foundations are reluctant to provide multiyear general operating support was a lack of trust in nonprofits and a desire to maintain control over how their grant dollars are used. In addition, a foundation's relationship with a grantee was a key factor for program officers in considering multiyear general operating support (31 percent), followed by what a grantee needs and asks for (21 percent) and a grantee's alignment with the foundation's mission and strategy (20 percent). Compared with a 2006 survey, foundation CEOs generally have come to view general operating support and multiyear grants as more effective than or as effective as program/project support and single-year grants, but many feel their board members are less supportive of increasing multiyear general operating support for grantees.

The study, which was funded by the Ford Foundation, could not identify significant barriers to foundations providing or increasing such funding. "The explanation for why it's not being done more widely seems to be that it doesn't fit with the foundation's approach, simply hasn't been prioritized, or, for a subset of community foundations, isn't seen as possible given constraints," the report's authors write. Based on in-depth interviews with leaders of twenty-four foundations that provide more multiyear general operating support than most foundations and have significantly increased the proportion of grantees receiving multiyear general operating support over time, or both, the study found that many of those leaders have made the intentional choice to provide more grantees with multiyear general operating support because such support yields crucial benefits — greater trust and stronger relations between funders and grantees, as well as greater foundation and grantee impact — with little downside. A companion report, Making the Case: Foundation Leaders on the Importance of Multiyear General Operating Support (26 pages, PDF), details the perspectives of five foundations — the Foundation for a Just Society and the California WellnessClaneilMary Reynolds Babcock, and Paul Hamlyn foundations — on why they provide multiyear general operating support and how considerations of equity fit into their decision making. 

"It is clear that multiyear GOS grants have proven benefits for nonprofit organizations, and we've been hearing this from nonprofit leaders and advocates in philanthropy for years," said Ellie Buteau, CEP's vice president of research and a co-author of the report. "Given this, along with the fact that the data shows no clear barriers to foundation leaders providing this type of support, the lack of change in practice in the field over time is concerning for nonprofits that could greatly benefit from such funding."