General Support? Sounds Nice, But…

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When it comes to how foundations fund youth work, Gary L. Yates is a lonely guy.

When Yates’ The California Wellness Foundation began shifting a large portion of its grants from project initiatives to general operating support three years ago, it was like a salmon declaring that it wants to swim the other way. General support accounted for just 14 percent of all foundation grants nationwide in 2000, according to the Foundation Center. At The California Wellness Foundation (TCWF), they now account for 60 percent.

The lion’s share of foundation dollars (45.8 percent in 2000) goes to project support, the Foundation Center says, even though grantees beg for more general support, and more voices in philanthropy say they should get it.

“It is very difficult if not impossible for a nonprofit to truly pursue its mission and jump around after project support for its total budget,” says Char Mollison, vice president for constituency services at the Council on Foundations.

“The shortage of general operating support is critical,” says Rick Cohen, president of the National Committee for Responsive Philanthropy.

Such comments draw nods from foundations, but few followers. The Foundation Center’s estimate of general support grants has been 13-point-something for several years (after hitting 18 percent in 1994). Most foundations award some general support grants, but it’s rare to find any (such as the San Francisco Foundation) actively trying to do more.

“California Wellness has been a lonely voice in putting its grant-making behind what it believes,” Cohen says.

Why is TCWF virtually alone in favoring general support grants? Foundations and their critics cite several reasons, but the biggest single factor is that foundations don’t think they can adequately measure what general support grants accomplish.

“You probably cannot evaluate a general support grant in a way that you can evaluate a grant intended to help an agency treat 750 drug addicts over the next two years,” says Benjamin R. Shute, Jr., corporate secretary of the Rockefeller Brothers Fund, who estimates that more than 20 percent of the fund’s $25 million in annual grants goes to general support.

But foundations “do a lousy job of evaluation” even on project grants, says Pablo Eisenberg, senior fellow at Georgetown University’s Center for the Study of Voluntary Organizations & Service. “There’s no reason you can’t assess whether an organization has provided good assistance to 150 groups or had an impact on public policy” with a general support grant. “You just have to dig it out.”

TCWF and the Charles Hayden Foundation have in fact evaluated general support grants – with results that illustrate the possibilities and the dilemma.

The Pretzel

When nonprofit agency directors consistently tell a foundation CEO like Yates that they’d rather get less money, he figures something’s not right.

“We would ask them questions about the type of support that was most useful to them,” Yates says of agencies funded by TCWF. “Out of the couple of dozen people I talked to, not one felt that project funding was preferable to core operating support.” Even when he asked if they’d rather have a million dollars for a new initiative or half as much for core operating support, “every single one of them chose core operating support.

“I’m not a rocket scientist, but I can hear that.”

He was troubled as the grantees described the stress they felt to mold their programs to fit what they think funders want. It’s a common phenomenon.

“I have numerous cases of people trying to come up with a new program because they think that’s what we want,” says Charles Hamilton, executive director of The Clark Foundation, a small family foundation in New York City.

One result is that agencies “try to pretzel their applications to fit program guidelines,” says Cohen. Then they use some of the project grant for the project and some for general operations – which “creates a tension between the grantor and the program operator,” Yates says.

He also says the focus on project grants hurts nonprofits by luring them to take on more tasks and drift from their core missions, adding staff and other costs that might remain after the grant expires.

Jon Goldberg, grants administrator for the Surdna Foundation, says that when he was a program officer at the New York State Council on the Arts, he saw grantees go out of business for this very reason. When nonprofits that put on musical performances “saw that the money was better in arts-in-education [programs] than in the music program, they started arts in education programs and abandoned musical performances. They lost their focus.”

If project support grants cause so much trouble, why do foundations favor them? Part of the answer lies in the nature of giving: People like to give money to address specific causes. Witness the success of Save the Children’s strategy of telling donors not only that their money will feed a child, but actually identifying the child. Foundations are no different. Even TCWF gives general support grants for a specific (if broadly defined) issue: health in California.

Project grants also give foundations “a great deal more control” over how the money is spent, Cohen says. And Eisenberg cites the “boredom” factor among program officers: It’s hard to get them excited about giving money to pay for whatever an agency thinks it needs to keep doing what it’s been doing. While many project grants include some allowance for administrative overhead, agencies say it takes a lot more than that portion to run their operations.

“Many foundations don’t really understand the need for general support,” says program development and fund-raising consultant Brett Halverson. “The people come from agencies where they never had to make a budget in their lives.”

New and Improved!

Even when an agency already runs a program that fits a grant, the agency usually can’t win the grant simply to continue its work. Funders want to see progress, which is typically measured by growth – in youths served or staffing, or in something like literature distributed or workshops conducted.

This holds true even for capacity-building grants, which look somewhat like general operating support because they seek to build and strengthen an agency’s infrastructure.

For example, in 1997 the Hayden Foundation ($16.8 million in grants last year) launched a three-year, $3.3 million General Support Grant Initiative – except “it was really directed toward capacity building,” says Carol Van Atten, vice president for programs at Hayden. “There were a lot of strings attached to these particular grants.” The foundation wanted to see progress in certain areas for each of the 19 grantees, and provided assistance to achieve objectives and measure outcomes. Van Atten notes that some people didn’t think of them as general support grants.

The same is true of the Institution and Field Building grants being made by the Edna McConnell Clark Foundation, which since 1999 has been shifting its grant-making from projects to strengthening youth-serving organizations. While some people think of this as general operating support, Clark Communications Director Bruce Trachtenberg calls it “a kind of general support that is very targeted,” because it requires an agency to pursue an ambitious expansion with specific plans in certain areas.

“What it comes down to is their ability to serve a larger number of kids with better programs,” Trachtenberg says. “What we’re really talking about is transforming the entire organization.”

Mollison of the Council on Foundations believes foundations should give more general support grants, but understands why they favor funding things that are demonstrably newer or bigger. “Foundations believe they have a very serious stewardship responsibility over their funds,” he says. “They need to show measurable results in how their funds are used.”

“It’s a little harder to evaluate a general support grant than a project grant,” says Alan Abramson, director of the nonprofit sector research fund at the Aspen Institute. “How do they [funders] know what happened to their money?”

Eisenberg is more critical. “The buzzword in the past three years has been capacity building,” he says, but there’s been no significant increase in general support grants, which are typically used for capacity building. “The foundations are talking out of both sides of their mouths.”

Measuring Impact

Yates may not be a rocket scientist, but he had worked at a nonprofit (as associate director of adolescent medicine at Children’s Hospital of Los Angeles) and several of his board members still did. So when TCWF grantees said they needed more general support, it was natural for Yates and the board to steer the 4-year-old foundation toward those wishes.

In 1996 the foundation, which had directed 75 percent of its grant dollars to project initiatives, awarded $8.4 million in general operating support grants to eight organizations to support community health clinics. An evaluation the next year found that the grants “allowed clinics not only to achieve, but to greatly exceed, their proposed objectives for providing preventive health, health education, and outreach services.” It found that the associations and clinics greatly improved their infrastructure in areas such as customer service, staff training and marketing.

Four years later the Hayden Foundation found similar results when the Non-Profit Assistance Corp.

studied its grant initiative. The study said the grants helped agencies “expand and strengthen their direct services to youth.” The agencies used the funds to, among other things, train and hire staff (grant writer, development director), develop a strategic plan, upgrade computer systems to manage funding, create an endowment and serve more youth.

“Their uses of the grant money and the technical assistance offer illustrative examples of how a general support grant initiative can produce tangible and documented outcomes,” the report said.

Did that convince Hayden to do more of this successful grant-making? “I don’t think there was ever a thought of renewing” the initiative, Van Atten says. By the time of the study “the people who initiated [those grants] were no longer here,” and general support was not on the new leadership’s list of priorities.

At the Wellness Foundation, on the other hand, the results from its health clinic experiment helped to convince the foundation to gradually shift its funding to at least 50 percent core operating support. In the first six months of this fiscal year (July 1 through Dec. 31, 2001), the foundation says, it awarded 53 such grants for a total of $9,170,000, accounting for 60.5 percent of all its grants.

That ratio pales in comparison to The Clark Foundation in New York, where Hamilton estimates that 85 percent of its $14 million in grants go for general support. But that’s no switch. Hamilton says the foundation has focused on general support since its founding in 1931.

“We’re not smart enough to do project support,” he says. The foundation, which concentrates on New York City and Cooperstown, N.Y., looks for agencies that do good work, figuring “they’re going to know how best to use that money.” (Sorry, he says: The foundation does not want unsolicited applications, preferring to fund by invitation.)

How does the foundation know if its money is having an impact? “We are not yet good at being able to determine whether our support is making a difference,” Hamilton says. With 173 grantees and a full-time staff of three (himself included) at the New York City headquarters, Hamilton says he hasn’t had the resources to develop a good evaluation system.

“I’ve only gotten so far as saying that maintaining a strategic plan and an implementation plan is the best way for us to know if general operating support is making a difference.”

“There’s a need for more research in terms of trying to assess the impact of this sort of grant-making,” says Abramson of the Aspen Institute.

Familiarity Breeds Grants

Up the coast from TCWF’s Los Angeles-area headquarters, the San Francisco Foundation has also heard the call from its grantees. “That was the word that we kept getting: ‘We need the flexibility’” of general support, says Ron Rowell, the foundation’s program officer for social justice.

The foundation is designing a general support initiative that will probably account for about 25 percent of its $66 million in annual grants. (Previously, the foundation had not counted its few general support grants as a separate category.)

Rowell acknowledges that evaluating general support grant impact will be “a challenge,” but says the same is true of project grant evaluations. The bottom line: “We trust the nonprofits to know what’s best for themselves.”

One reason for that trust is that general support will probably go to agencies that the foundation has funded before. Building such a relationship is a key for agencies seeking general support.

For instance, the Center for the Development of Teen Empowerment Programs estimates that 75 percent of its $900,000 in funding last year came from general support grants, mostly through family foundations that have funded the agency for years. (The Boston agency received $125,000 from the Hayden initiative.)

Because the center’s youths decide what social issues to work on, it can’t rely on project grants aimed at issues such as teen pregnancy, says Development Director Martha Pellegrino. What if the kids choose to focus on something else? “General support allows us to continue to be innovative, and continue to be dynamic,” Pellegrino says.

For most youth-serving nonprofits, a mix of project and general support funding – even with targeted outcomes – is fine. They want the balance to shift more in Yates’ direction.

“Some people are talking about what we’re doing. I’ve heard of a few that are going to do more [general support] than they’ve done in the past,” Yates says.

“Some think we’re not very smart.”


Gary L. Yates, CEO
The California Wellness Foundation
6320 Canoga Ave., Ste. 1700
Woodland Hills, CA 91367
(818) 593-6600

Carol Van Atten, Vice President
Charles Hayden Foundation
140 Broadway, 51st Fl.
New York, NY 10005
(212) 785-3677

Susan Erdey, Director of Communications
The Foundation Center
79 Fifth Ave.
New York, NY 10003-3076
(800) 424-9836

Char Mollison, Vice President
Council on Foundations
1828 L St., NW
Washington, DC 20036
(202) 466-6512

Rick Cohen, President
National Committee for Responsive Philanthropy
2001 S St., NW, Ste. 620
Washington, DC 20009
(202) 387-9177