Operating grants

Operation costs form the bulk of many nonprofit organizations.

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[WEEK OF May 17, 2004]

Operations grants are critical in providing stability for nonprofits.

To often nonprofits have to disguise legitimate management expenses within requests for program grants.

Alexandra Furnari, Children’s Board of Hillsborough Co., Tampa, Fla.

Operating grants are crucial, and it is disgraceful that most funders seem to either ignore or are insensitive to this fact.

I believe, however, they are sensitive to providing adequate operating revenue for their own foundation operating expenses.

I am the founder of a small church/community-based nonprofit. Since 1997, we have been awarded more than $1 million to support our human services program.

However, funders’ insensitivity to the priority of operating grants is an ongoing source of frustration and hinders us in providing needed services to our community.

Thank you, Philanthropy Journal, for providing a medium through which our voices may be heard.

Maybe we need a formal organization for such voices. I would be among the first to join.

John H. Grant, past president and CEO, Mt. Zion Community Development, Asheville, N.C.

[WEEK OF May 3, 2004]

Operating grants are extremely important.

I am a founder of a charitable organization that uses horses to provide therapeutic benefits to those with disabilities.

It is very frustrating to feel pushed into new areas when it seems to me to be equally, if not more important to provide depth instead of new projects and new services, especially since the medium of the benefits provided is the horse — never inexpensive.

Rhetta Yount, board president, Heroes On Horseback, Hilton Head, S.C.

Operating grants are very important, and I wish more foundations would make them a priority.

As a director of a nonprofit in a rural county, I am constantly looking for ways to keep our operations going.

It is easy to find grants for the startup of new programs, but what do you do after the grant runs out?

There is only so much money to be made with fund raisers and local dollars, especially in a county like ours, where there is no large industries or resources.

We have had to stop several wonderful programs because we could not operate them after the initial grant ran out.

We don’t pay our staff big dollars, and we cut corners every way possible.

We don’t want operating grants to make us richer, but we need them to be able to provide needed services to people in our community.

Anne Watlington, executive director, Caswell County Parish, Yanceyville, N.C.

As a small but very active arts council serving a large rural county in northern New York with no paid staff, we have found operating support to be as desirable and difficult to find as the “holy grail.”

It seems that many of the operations grants we have looked into are for organizations with much larger annual budgets than ours, or for those operating in large metropolitan areas.

This seems to be a bit misdirected.

Small, under-staffed organizations in places that lack a large funding base are the ones that most need this kind of fundamental support.

They also serve populations that do not have a wealth of other cultural services available.

Grants for specific projects and programs are wonderful if you have the staff and infrastructure to maintain the organization as a whole.

If the organization itself is undersupported, a myriad of projects and programs can quickly swamp the whole boat and take it down — mission statement and all.

Hilary Oak, president, St. Lawrence County Arts Council, Potsdam. N.Y.

Operating grants are the greatest gift a foundation can give my organization.

Many programs have to be downsized due to income.

These grants allow us to deal with immediate needs, maintain staffing and generally feel that the foundation truly cares and supports the overall mission of our organization.

Tish Bayer, director of development, Hiller Aviation Museum, San Carlos,  Calif.

[WEEK OF April 28, 2004]

Operations grants are of utmost importance for the survival of a nonprofit agency.

Program grants are useful; however, if an organization does not have sufficient funds to run the organization that runs the individual program, there is no longevity in the individual program, and certainly no growth potential.

Program grants tend to cover the program costs plus a small part of operating expenses.

Where are the funds for the remaining operating expenses going to come from without operating grants?

While it is true that many nonprofits generate income through their programming, often it is at reduced rates that are insufficient to cover the full cost of operating the organization, including rent and utilities, administrative staff salaries, office equipment and general supplies.

I run a children’s theater and, yes, we do generate income from our performances, but it is not sufficient to cover the full cost of running the agency as well as the program.

Yet the program cannot exist without at least one full-time staff person and administrative office space.

Funders tend to think only of the outcome of an agency and the greater good that they are accomplishing in the community.

However, that greater good cannot be effectively accomplished without sufficient administrative support.

The result is that the program staff who should be doing their work out in the community are stuck in the office trying to accomplish the day-to-day administrative work since there are precious little funds to fully fund a position.

Here the cat is chasing its tail since the very work that they need to accomplish in the community cannot happen unless there is staff supporting their work.

Without the support staff, all of that paper work still has to happen to satisfy grantors, auditors and board members.

So program staff have to do it along with their regular job.

This causes ineffective production and ultimately burnout, sending nonprofit professionals to look for work in the for-profit field where their work is compensated accordingly.

I don’t believe that funders realize that an organization’s capacity to handle programming is dependant upon their organizational funding.

A program cannot operate unless there is sufficient staff support.

Who will answer the phones, handle computer problems, fix the copy machines, write the program, staff paychecks, pay the rent and utilities?  Not the program staff, yet it has to be done in order for the mission to be accomplished.

Yes, it is incumbent upon the nonprofit to diversify its funding base among different sources.

It is equally important for funders to realize that nonprofits with an excellent plan for operating
support are genuinely in need of that support in order to keep their projects in the community going.

Julie Condy, executive director, Stage to Stage, New Orleans

In any service organization, even for-profit organizations, the staffing and administration costs range from at least 30 percent, an underestimation, to 60 percent of the total operations costs.

Check with any government ministries, statutory boards or public utilities and services outfits.

The difference is that nonprofits do not charge for services rendered, and thus have no major income streams, as it is a voluntary service.

Donors, funders and well-wishers should, and some do, appreciate that fact it takes people, especially staff, to run nonprofits.

Therefore, it is necessary, and perhaps imperative, to support operation grants.

For funds raised to be dedicated only to programs is unrealistic.

The issue is not whether operation grants are necessary

Rather, the issue for donors and supporters is proper governance. Accountability, or proper disclosure and accountability structures, policies and procedures, and transparency, or posting income and expenditure statements on organization web sites, are steps that would address concerns of fund usage.

Dennis Lee, executive director, The Singapore Scout Association, Singapore

With all the cuts in state and federal funding, operational funding from other sources is of critical importance.

Vital and essential programs, and salaries to fund program directors, are needed more than ever as people with disabilities and other barriers to employment have fewer and fewer options for vocational training and support services.

M. Quilliam, grants associate/database manager, Goodwill Southern California, Los Angeles

General operations grants are extremely important to the sustainability of nonprofit organizations.

While many funders offer money for specific programs somehow they think you should be able to deliver the programs with no overhead. Volunteers can only do so much.

It costs money to run programs and projects.

I can see putting a reasonable percentage limit on the amount devoted to overhead.

However, many grants do not even make this accommodation.

Carla Carey, Americorps VISTA Member/assistant grant writer, I-5 Social Services Corp., Fresno, Calif.

They are crucial to the smooth and efficient operation of any social service agency.

To continually be asked to create new programs or twists on programs to secure funds fundamentally undermines the effectiveness and long-term viability of a service-delivery organization.

With government revenues declining and the competition for those limited dollars increasing, operating grants from private foundations, corporations and corporate foundations are the only way to ensure that the social safety is maintained.

As an executive director of a regional social service agency, I am finding it increasingly difficult to secure enough operating funds to meet the ever-increasing demand for the therapeutic services we offer to our clients within the communities we serve.

Without increased access to operating funds individuals in need of the services we provide will be denied access.

John C. McGee, execuitve director, Family Relations Program, Gainesville Ga.

Operating grants are the most valuable resources a nonprofit is likely to receive.

Usually operating funds are thought of as ‘overhead’ or ‘administrative costs’.

Better they are recognized as human resource and intellectual resources.

It is only through people that we get anything accomplished.

R. Susan Motley, Loyola University/Chicago

Overland Park, Kan.

Operating grants are critical, essential and there are far too few of them.

The ever-ongoing focus of grantors to prefer new programs and to avoid supporting operations truly misses the point.

If a nonprofit is fulfilling a critical need, then making certain they are viable and successful in their work and mission is of utmost importance.

Providing operating support is a true partnership not seen often enough.

Linda K. Off, executive director, Johnson County Library Foundation,

They are critical, especially in startups or for periods of transition.

I’ve also known of operating grants as being a catalyst and the “breathing room” for groups to win “matching support” or build endowments.

It sure isn’t the way to run day to day, however, although as resources from other sources go away, I’m seeing more and more people point to “critical levels” being violated at the operational level.

Vonna Viglione, resource development officer, N.C. Community College System, Raleigh.

Operations grants are extremely important for the seamless administrative support that is required for a nonprofit organization.

Having to continually replace staff due to decreases in operational funding is a major interruption to providing quality services.

It also diminishes experiential knowledge regarding the organization’s process.

Laurenne Sayles, Charlotte, N.C. 

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