Nonprofits Need Lasting Change, Not Spare Change

by Laura Chynoweth, CEO of Granted

This post was originally published on The Grantsplainer on 3/26/2020.

The duration of the COVID-19 pandemic has been estimated at up to 18 months, but we all know its effects will last much longer. Nonprofits will be hit especially hard, not merely because they have had to cancel revenue-producing events and suspend services to their communities. Nonprofits worldwide are going to suffer--and many may not survive--because they already operate in a broken system. 

Lucky for us, though, “Pandemics can also catalyze social change,” to borrow words from this article in The Atlantic.

Bottom line: The practice of funders providing grants restricted to specific programs has got to go. We must first acknowledge that funders, of course, are allowed to contribute their money how they wish. However, we must also acknowledge that, under the restricted funding model, any grant, no matter how generous, does not allow nonprofits to address a community need to the best of their abilities; Such grants are therefore wonderful gestures, but they are not full investments in a nonprofit’s crucial work.

All this is not to say that nonprofits don’t appreciate their funders! Most funders may not even realize the obstacles that restricted funding presents for nonprofits trying to fulfill their mission. It was not so long ago that nonprofit overhead costs, such as staff salaries, were seen as unworthy of funding -- and some funders may still be under this impression. (Please see this open letter from GuideStar, BBB Wise Giving Alliance, and Charity Navigator to the donors of America on “the overhead myth.”) However, this view does not take into account the percentage of time these staff members spend delivering community programs and services. Even if some staff work 100% of the time on administrative tasks, shouldn’t funders want to put their money toward a well-managed, fully staffed organization, rather than an operation that overworks its underpaid staff members, who are likely to leave from burnout before the two-year mark? 

One good thing to come from the novel coronavirus pandemic is A Call to Action: Philanthropy’s Commitment During COVID-19, a pledge launched by the Ford Foundation and the Trust-Based Philanthropy Project and facilitated by Council on Foundations. Those who take the pledge commit to fulfill eight principles of grantmaking designed to help nonprofit grant recipients during the current crisis. As of this writing, more than 350 foundations worldwide have signed. 

I am thrilled to see such a communal and public acknowledgment of the detrimental nature of restricted funding. Trouble is, nonprofits have been pointing this out for a long time. I fear that pledge signers anticipate going back to “business as usual” post-pandemic. This is because the pledge guidelines are not subject to any sort of accountability measures, and they feature vague phrasing like: “communicate proactively and regularly” and “new grants as unrestricted as possible.” The timeline for operating within these guidelines is “over the days, weeks, and months ahead.” (I can’t help but imagine the response a nonprofit would get if it submitted a program grant request to one of these foundations with this sort of unspecific language.)

I’ll say it again: the practice of funders providing grants restricted to specific programs has got to go--Not just now, in our current time of crisis, but forever. The inability of nonprofits to survive on restricted funding was not caused by COVID-19 but was merely exacerbated by it. 

Here are my own calls to action: 

FUNDERS / FOUNDATIONS: Please use your short-term pledge as a stepping stone to long-term social change. Adjust your funding practices year-round to allow nonprofits to be the experts they are, using the best materials and methods for fulfilling their missions. 

NONPROFITS: Don’t see your foundation grantors’ names on A Call to Action? Ask them to sign! Start the conversation with these funders about making unrestricted grantmaking the norm.