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Operational funding

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By Michael Brader-Araje

A recent report published by the liberal-leaning think-tank, The National Committee for Responsive Philanthropy, concluded that politically conservative foundations have done a better job influencing public policy and promoting their agendas than have their less conservative counterparts.

The report said conservative foundations provided more operational funding, thereby giving their grantees more flexibility in both the short- and long-term.

Ironically, liberal foundations weren’t liberal enough in giving nonprofits some fiscal freedoms.

The reality is that most nonprofits struggle to meet their operational needs, and this report points out one compelling reason why many philanthropists need to reconsider their position on operational funding.

That reason is simple: It affords nonprofits the flexibility to be more effective in meeting their goals and achieving their mission.

In an effort to enforce accountability, many grantors put stringent restrictions on their grants by earmarking money for very specific programs or projects.

Paradoxically, this inhibits the ability of nonprofits to respond quickly to urgent matters.

It also makes it very difficult to conduct long-term planning since nonprofits are forced to pander to the philanthropic cause of the day.

It is time to seriously assess the efficacy of this approach.

I absolutely agree that philanthropists need to hold their grantees accountable and ensure that money is used in a fiscally sound way.

However, accountability should not mean, “Here is my money and I want you to use this money to focus on this one project because that’s all I’m interested in supporting.”

This approach is shortsighted and discounts the responsibilities and fundamental expertise of executive directors at nonprofits.

Nonprofit directors are typically passionate, caring and committed people determined to make a difference in their community.

They are usually more knowledgeable about their issues than anyone else since they are the ones living and breathing their causes every day.

Let’s give them the credit they deserve and empower them to make critical issue-related decisions without interference from well-intentioned grantors.

Towards that end, grantors should instead focus on providing nonprofits assistance with business advice on things like strategic planning, market dynamics, and how to best scale their services.

When philanthropists turn on the garden hose with time and money, they shouldn’t tell grantees which plants and flowers to water.

Rather, let’s help grantees understand how to best use the garden hose itself.

The executive directors know the landscape better than anyone else and know what to water to create a thriving garden.


Michael Brader-Araje is founder and managing partner of truePilot and founder of the Michael and Laura Brader-Araje Foundation, both in Durham, N.C.

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