A common question fundraising consultants are asked by charities is, “Are there foundations or other funding sources that provide grants for operating funds?”. Grassroots, start-up and volunteer-managed organizations understandably pose this query most often. Securing a steady revenue stream would enable their leaders to direct their energy and attention squarely on delivering impactful programs free of any financial worries.
As reasonable as it sounds, buying into this mindset can endanger a non-profit’s future viability. Although it would be convenient having a third-party funder – whether it’s a government agency, foundation or company – cover the bulk of a charity’s overhead, it also limits their autonomy.
The moment a fledgling non-profit agrees to receive long-term financial support from any institutional funder, it immediately must adhere to a complex set of rules and restrictions that board and senior staff might not have anticipated. Some may permit funding for direct, but not indirect operating expenses. Others may allow charities to allocate funds toward programming, but not support or administrative staff. In some instances, charities may use core proceeds to maintain, but not to purchase important capital items such as computers or vehicles.
Organizations can quickly become captive to the limitations on how core funds are allocated and the responsibilities they are obliged to fulfill. Functioning under narrower than expected parameters can lead to negative behaviours like becoming overly obsessed with public accountability. Devoting excessive amounts of time to tracking and monitoring every dollar spent frequently results in having less energy and resources available for program delivery.
Appeasing core funders emerges as priority one for charities where the gathering of statistics and achieving minimum programming outcomes supersedes their quest of making their communities a better place to live, work and play for everyone. Ensuring that funding reports are compete, accurate and submitted in time takes precedence over finding solutions to society’s challenges. EDs and boards who initially had visions of changing the world quickly become prisoners of bureaucracy and no longer are the champions of their organization’s mission.
Arguably a more calamitous outcome is when complacency overtakes an organization’s culture and it becomes entirely dependent on its core benefactors. Rather than take ownership of its funding journey by cultivating and nurturing a long-term base of passionate and committed donors, a charity places its fate in the hands of a solitary government or institutional supporter. Board and senior staff don’t feel the need to for any additional fundraising or donations since all current expenses are met. In fact, some may even feel a sense of relief that they don’t have to engage in the intimidating task of asking others for money.
Getting too comfortable too soon with core funding unfortunately is how the disastrous habit of fundraising evasion starts. Eventually core funding dependency shapes an organization’s culture. Successive boards and senior staff develop explicitly negative and hostile attitudes towards the notion of requesting donations from anyone. In their view, fundraising is a nuisance and the act of soliciting donations from the community is intrusive and annoying.
I’ve encountered countless charities where 80% or more of their budgets are covered by government sources yet struggled to create any true change in their community. Stagnant annual funding levels combined with no fund development strategy (and limited reserves) prevent many of these organizations from generating any meaningful impact. In short, jumping aboard the core funding hamster wheel prevents these groups from implementing real solutions to the issues they pledged to address.
Nobody is suggesting that establishing an annual fund development plan that builds long-term base of sustainable support is easy. Neither is anyone implying that partial funding for core operations is destructive. Striking a balance between the two is a highly prudent and sage approach.
A reasonable amount of core funding provides an organization with income certainty while a solid base of loyal donors allows it to direct dollars where they’re most urgently required. However, the less a charity relies on core benefactors, the less its programs are subject to the whims of detached third parties.
Building a sustainable donor base consisting of individuals, foundations, corporations, service clubs and other groups that share common values, interests and aspirations is always in the best interests of the people served by a charity. It gives an organization the flexibility to secure the resources it needs when they’re needed. Ultimately fundraising empowers them to deliver high quality programs that remove barriers to wellness and prosperity and enables their communities to thrive.
In the end, when asked if I know of any core funding opportunities, I instinctively try to steer organizations toward the arduous but fulfilling journey towards sustainability and self-determination. To those charities that succumb to the allure of long-term core support, I urge them to prepare to dance to whatever tune their funder whistles.
