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Posts Tagged ‘grants’

Are your grantees spending too little on overhead? Or are they under-reporting how much they actually spend on such expenses? Chances are, both, according to the Bridgespan Group. In an article in the Fall Stanford Social Innovation Review, the nonprofit consulting firm’s Ann Goggins Gregory and Don Howard write that nonprofits under-spend and under-report operating expenses because they feel anti-overhead pressure, especially from funders. Although nonprofits need to be more assertive in reporting how much it costs to run their organizations, Gregory and Howard say that funders should take the initiative to stem what they call a “vicious cycle” that is “slowly starving” nonprofits. Based on Bridgespan’s research, foundations generally only allow overhead or indirect expenses to total 10 percent to 15 percent of each grant, when the true cost percentage is likely to be twice that. And this compares to an average for-profit rate around 25 percent of total expenses. In fact, the authors cite a survey reporting that most funders realize their overhead allocations don’t adequately cover grantees’ needs, but they proceed as usual anyway. The authors call for a coordinated, sector-wide effort to put pressure on foundations to curb their unrealistic expectations about overhead.

Beyond confirming a wealth of prior research that finds an unhealthy obsession with low overhead costs in the sector, this article underscores the general need for foundations to be more actively engaged in candid and realistic discussions with their grantees. There is a crucial need for more general operating grants, especially given the difficulty many nonprofits are having staying afloat during the recession.  However, this need for general operating support will not fade as the economy recovers.

–Jane Wales

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Associated Press writer Josh Funk reports on Peter and Jennifer Buffett’s NoVo Foundation, detailing their commitment to empowering women, collaborating with other groups to achieve their goal and the incorporation of Warren Buffett’s business ideas to philanthropy.

Peter Buffett will be a speaker at the upcoming Global Philanthropy Forum 2009 Conference in Washington, DC, April 22-24.

Full article: Peter Buffett’s foundation gives millions to girls

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Yesterday, the U.S. House passed the Edward M. Kennedy Serve America Act.  Following Senate passage of the same language last week, this means the bill will now be sent to President Obama so that he can sign it into law.

Unfortunately, the bill does not contain language creating a Commission on Cross-Sector Solution, as we mistakenly reported last week.  It does, however, include a new Social Innovation Funds Pilot Project, through which the Corporation for National Service will award grants to local programs.  We are pleased to see that Congress appreciates the valuable contributions of social entrepreneurs and also understands the need to measure the effectiveness of programs so that philanthropists can identify and fund the kinds of programs that work.  Here are the congressional findings related to this program, along with its stated purpose:

(a) Findings.–Congress finds the following:

(1) Social entrepreneurs and other nonprofit community organizations are developing innovative and effective solutions to national and local challenges.

(2) Increased public and private investment in replicating and expanding proven effective solutions, and supporting new solutions, developed by social entrepreneurs and other nonprofit community organizations could allow those entrepreneurs and organizations to replicate and expand proven initiatives, and support new initiatives, in communities.

(3) A network of Social Innovation Funds could leverage Federal investments to increase State, local, business, and philanthropic resources to replicate and expand proven solutions and invest in supporting new innovations to tackle specific identified community challenges.

(b) Purposes.–The purposes of this section are–

(1) to recognize and increase the impact of social entrepreneurs and other nonprofit community organizations in tackling national and local challenges;

(2) to stimulate the development of a network of Social Innovation Funds that will increase private and public investment in nonprofit community organizations that are effectively addressing national and local challenges to allow such organizations to replicate and expand proven initiatives or support new initiatives;

(3) to assess the effectiveness of such Funds in–

(A) leveraging Federal investments to increase State, local, business, and philanthropic resources to address national and local challenges;

(B) providing resources to replicate and expand effective initiatives; and

(C) seeding experimental initiatives focused on improving outcomes in the areas described in subsection (f)(3); and

(4) to strengthen the infrastructure to identify, invest in, replicate, and expand initiatives with effective solutions to national and local challenges.

With respect to the evaluation component, the bill included language allowing the Corporation to dedicate up to 5 percent of the funds available to the program “to support, directly or through contract with an independent entity, research and evaluation activities to evaluate the eligible entities and community organizations receiving grants … and the initiatives supported by the grants.”

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