Photo by: Bellingham Food Bank
As underscored by the Covid-19 health crisis, the value of flexible funding for strengthening nonprofits and powering their vital work is increasingly clear. Yet too many funders still hesitate to act on this information.
A new report, Funding from a Place of Trust: Exploring the value of general operating support and capacity building grants, offers a sound starting place for any foundation, philanthropist, or impact investor who wants to better understand the benefits of flexible funding and the vital considerations for doing it well. At its center is the essential concept of a trust-based relationship. The report was commissioned by the Citi Foundation and prepared by Synergos.
Drawn from secondary research and interviews with more than 50 funders, NGO professionals, and representatives of intermediary organizations, Funding from a Place of Trust offers fresh considerations and insights for funders getting started with general operating support (GOS) and Capacity Building (CB) funding. It also profiles four organizations from both sides of the funder-grantee relationship who serve as models of how to allocate, track, and assess the impact of such funding – and how to build the essential “trust capital” that forms the relationship foundation for success.
Key insights include:
- Long-term GOS grants coupled with CB grants may be a gold standard. They enable nonprofits to avoid a tradeoff between investing in capacity and in programmatic growth, helping ensure that new capacity acquired is sustained. Within our current climate, this is more critical than ever to support grantees through this tumultuous time.
- Invest in GOS and CB funding early and for the long haul. This point cannot be overemphasized: It takes time to strengthen an organization and to achieve results. Grant terms of 5-7 years should become the new standard.
- It’s difficult to trace the impact of CB and GOS funding on results. Grants and evaluations are often not structured with methodologies to link CB and GOS funding to outcomes. One promising new methodology known as “Outcomes Harvesting” – which begins with results and traces back causality in a collaborative process between donor and grantee – may be effective for monitoring, evaluating, and learning.
- GOS and CB funding have a key role to play in monitoring, evaluation, and learning. Social outcomes are difficult and expensive to measure, yet nonprofits shoulder the burden. Investments in GOS and CB funding can elevate monitoring, evaluation, and learning (MEL) to a strategic level and generate data and insights to further boost nonprofits’ achievements. Cohorts of nonprofits can also serve as effective vehicles for identifying links between CB and GOS support and outcomes.