About five years ago, the Ford Foundation made public a commitment to award 40% of its grant dollars as unrestricted, general operating awards. They made this move in the face of mounting advocacy for loosening philanthropy’s widespread proclivity for tying grant dollars to specific programs or capital projects. Groups like GEO (Grantmakers for Effective Organizations) have made the case that general operating grants, preferably multi-year grants, afford grant recipients the flexibility to apply grant dollars where they are most needed, reduce the cost and burden of grantseeking, and make it possible to respond promptly to unanticipated challenges and opportunities,
Foundations are beginning to recognize the appeal of general operating support, albeit slowly. A GEO study in 2011 determined that about 80% of funders include some sort of general operating support in their annual payout. But only 17% of overall dollars awarded was for general operating. Funders frequently cite the perceived difficulty of assessing the impact of general operating grants as the main reason for their tepid embrace.
At the Tower Foundation, we’ve been substantially lower than the 17% threshold for general operating. Our grantmaking bread and butter has been program support, investment in pretty specific capacity building needs, and, more recently, community coalition work. But we’ve also worked hard to build relationships with grant partners, taking grantmaking beyond the purely transactional. As our confidence in these partners has grown, so has our appetite to add general operating awards to our grantmaking toolbox.
In fact, it happened somewhat sooner than we expected when COVID-19 upset the status quo so terribly in early 2020. Based on what we heard from grant partners, we offered the option of converting current programmatic dollars to general operating funds. We also waived grant reporting requirements. Programs were stalled by the pandemic, but needs relating to telehealth, staff and client safety (to name just a few) were exploding. In June we conducted a special COVID-19 emergency response grant initiative to help address these and other issues head on. All funds awarded were unrestricted dollars.
This fall we launched a general operating pilot grant program. The Foundation selected seven grant partners to receive a general operating grant of $70,000 ($35,000/year for two years). We chose organizations to reflect a mix of small and mid-sized nonprofits, several of the communities where we fund, and our four funding areas (intellectual disabilities, learning disabilities, mental health, and substance use disorders). With this initiative, we hope to test one particular assumption: it is possible to effectively measure the impact of general operating grants. We also want to explore how we can learn — in concert with our grant partners — about the realities they face, trends in their field, and potential levers for advocacy. We also hope to prioritize opportunities to get closer to the ultimate grant beneficiaries — the people that our grant partners serve every day.
Grant partners will not be asked to submit formal reports. We want to keep administrative burden to a minimum. We will have a series of structured conversations — three in all over two years — between Foundation’s staff and the grant partners’ leadership teams, leaning on the methodology of Results Based Accountability (RBA). RBA works to establish an alignment between an organization’s work on the ground and the change that it wants to see in the community. With each conversation (and we hope some of them can be in person!) we will revisit a set of questions that examine conditions that help or hinder community change, look at organizational level performance measures, consider new partners, and assess effectiveness of existing strategies.
RBA recognizes that change at the community level happens when multiple actors work towards a common goal, even if their approaches differ. We hope to be able to capture a story from each of these grants. A narrative that looks first at an organization’s guiding principles (its North Star) and that captures the growth and learning that accompanies the quest to improve lives and enrich communities.