Do grants support charities to thrive?
According to Social Ventures Australia’s May 2021 report, grant funding can create ‘unique vulnerabilities for charities’.
Yes, you read that right.
Grant funding can sometimes be a bad thing for charities.
There are differences in the way we invest in an organisation depending on whether they are for-profit or non-profit. Let’s take a closer look at some of these.
Before an investment is made to a for-profit organisation, investors look at the way the whole organisation runs. If they decide to invest, they trust the organisation to make good long-term decisions.
However, before funding is given to a non-profit organisation, funders look at what programs the non-profit runs rather than the whole organisation. Non-profits are usually asked questions about their operational or running costs like how much they spend on essential staff or the infrastructure they have in place. If grant funding is successful, they must report back regularly when and how it suits the funder.
When funding is restricted to individual programs, it limits an organisation’s opportunity to focus on strengthening core foundations, investing in staff and innovating to come up with better solutions for our community. When we don’t trust non-profits as the experts in their field, this comes as a huge cost not just to non-profits but to all of us.
The future of grant funding is changing.
I remember a time that I was shocked if I found out that some of my donations went to core operations of a charity versus the ‘cause’ I was supporting. Now though, I am grateful if my donation goes towards marketing, to bring on board more donors like me, or towards amazing staff, who will create more impact with my donor dollars. This type of unrestricted funding is the type of funding that creates change.
In 2020, the Ford Foundation along with over 800 US-based and international foundations pledged their commitment to providing more flexible funding during the COVID-19 crisis to make it as unrestricted as possible. Funders can continue to make this pledge.
Non-profits can also be part of this change, by developing relationships with funders that have an aligned mission, by being purposeful in funding applications, and by being vocal about what your organisation needs to thrive including the funding of your core operations.
These ripples will lead to waves of lasting change. For all of us. If you would like to have a chat, please email me on firstname.lastname@example.org