As someone who has spent a large portion of his career in back offices of nonprofits, I have been called many names ranging from “accountant” to “finance director.” I have even been called an “Excel geek.” I’ve worn all of these labels with pride, but there was always one name that carried a stigma. I am referring to the innocuous label – “overhead.” Yes, I was overhead, that seemingly ever-present necessity that was always at risk of diverting funds from what has been deemed more meaningful and impactful purposes than keeping the organizations’ doors open.
Let me make one thing clear – I understand the desires of donors to ensure every cent of a donation, every penny of a grant, and every hour of volunteer work has a meaningful impact on the mission of an organization. There is nothing wrong with wanting to make sure your contribution or grant funds go directly to help those who an organization serves. But few donors or grants are looking to fund the costs associated to tracking where all of the funds go. At least that’s the way it was – but something has changed.
Recently, the Ford Foundation, the nation’s second largest philanthropy, announced that it hopes to double the total that it gives in the form of unrestricted grants for operational support. This revolutionary change is a signal from one of the largest foundations in the country that overhead isn’t a “bad word.” Here’s an excerpt from its announcement, “What’s next for the Ford Foundation”:
According to Nonprofit Finance Fund’s most recent State of the Nonprofit Sector Survey, the single greatest challenge facing organizations today is “achieving long-term financial sustainability.” So much of the feedback we’ve received echoes that sentiment.
In light of this, we have decided to invest in organizations as partners—and to give them the kind of trust, flexibility, and additional supports they need to do their best work. As incubators for both individuals and ideas, organizations are essential to developing a robust ecosystem of actors addressing inequality around the world.
…In some cases this may mean larger, longer-term grants that can be used more flexibly. In other cases it may mean support for wraparound services that help an organization develop, adapt to change, or even merge with others. Whatever form it takes—depending on context and the needs of each organization—our aim is to ask not, “How do we make this grant successful?” but rather, “How do we help make this organization successful?”
Finally, the philanthropic world is growing more accepting of me and my colleagues. That is to say, there is now hope that organizations can look forward to receiving money to support the costly capacity and technology required to track, manage, and report expenses related to grant funding. This isn’t to say we should expect that suddenly funding overhead will become the next big “thing.” However, the inclusion of funding to support organizational capacity can help alleviate the quandary: How do I grow if I can’t manage the obligations – but how can I afford personnel and technology to manage the obligations without new funding?
It’s not often that there is a huge change in thought around the funding structures of foundations and government programs. However, at least today I have hope that I – and all the other “overhead” out there might one day find our place among the regularly funded categories.