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Vol. 4, No. 1 January 2008

MEMBER Q & A

This month we asked members whether or not their organization funds nonprofit general operating expenses. Twenty-six AGF members responded to our survey questions. Fifty-seven percent reported that they do fund general operating expenses, while 34% do not. Seven percent will fund general operating occasionally, on a case-by-case basis.

Below are the questions posed, along with summaries of the answers we received:

Does your organization provide general operating to nonprofit organizations?

57% - Yes
34% - No
7% - Other*

*Other answers included "On a case by case basis" and "support for special events or specific programs."

Please explain your answer to Question #1 - what is your rationale?
Below is a sampling of answers, explaining policies regarding general operating support.

• We have several clinics that provide dental services to uninsured and low-income people across the state. We know that general operating creates a more stable, secure funding base for these organizations and allows them to focus on programs and not meeting specific grant related program requirements.
• General operating support is provided on a case-by-case basis, such as when an organization is facing a period of transitional funding, for start up costs related to a new program pending receipt of service-related revenue, or for organizations that are viewed as simply deserving of support and where such support can be provided under the auspices of a specific program.
• While operating support is important, we feel earmarking our support to very specific programs that are measurable and provide outcomes gives us a better idea of the effectiveness of the organization. Keeping the doors open does not always provide you with the detail on the effectiveness and that they are meeting critical needs.
• Many non-profits find it difficult to secure grants for general operating expenses. It doesn't make sense that they should often be trying to develop a "special" program to secure grants when the special program is the agency just doing what they were set up to do.
• Operational funds are more difficult to acquire than progrm funds. However, you can't have programs if you can't turn on the lights.
• We believe that nonprofit organizations know what resources they need devoted to which line items in their budget much better than we do. We review their budget and assess how this fits with their proposed (and actual) program work, and as long as it seems reasonable then we don't want to limit how they can move funds around to make that work. Of course, we monitor their actual progress in meeting programmatic goals to ensure that they use our funds properly and productively.
• They can't live without this kind of support, and to absolutely rule it out as an option is, in my view, irresponsible.
• [We give operating support to] organizations that are in their first three years of operation, or can demonstrate the unexpected loss of a government grant.
• Sometimes we fund operating budgets. Nonprofits still need to raise funds to do their basics. Some funders want to fund new programs only and that is ok too but personally I want to reward what the nonprofit continues to do well.