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Trusting nonprofits with unrestricted operating support

September 28, 2009

The Harvard Business Review reports on some MAJOR changes in grantmaking policy by the Boston Foundation.  The most striking – and in my opinion, most important – is that the Boston Foundation will focus on giving unrestricted operating support to nonprofits.  In other words, their grants can be used for “overhead” – the cost of keeping the lights on” as they say – rent, staffing, administrative costs, supplies, etc.

When I was a grants officer at Interplast, I was always struck by how resistant foundations are to giving any amount to overhead – even if it was allocating a percentage – say 10% – of a program grant towards it.  If all foundations protest in giving general operating support, and more and more individual donors follow their lead because of the message that sends – then more and more money goes toward specific programs with no money for the home of those programs.  All this created a great deal of anxiety about how we would fund the things that kept us going – an outstanding fundraising team, for example.  With a $700 million endowment, Boston Foundation’s commitment is surely going to affect the way that other major foundations do grantmaking.

Their decision should make all of us, even individual donors, stop and think about our own giving.  Do you usually give just to restricted purposes or specific programs?  Or do you just write a check to an organization and let them decide how to use it?  Do you do both, depending on the situation?  How do you feel about nonprofits receiving unrestricted support for administrative needs?

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