This post originally appeared on the Money and Mission Blog at the Chronicle of Philanthropy.
Over the past few months, the Nonprofit Finance Fund has had
the opportunity to work with several foundations and regional associations of
grant makers across the nation on efforts to rethink how they can better use
their grant dollars to achieve more and better results in their communities.
Time after time, I have been struck with the deep desire by
foundation program officers and staff members to change what many understand is
a flawed system. Too often, foundations bear the brunt of the blame for
creating many of the problems facing nonprofits.
As Ann Goggins Gregory and Don Howard suggest in the
Stanford Social Innovation Review, the problem boils down to “funders’
unrealistic expectations about how much running a nonprofit costs.”
Laying the blame and responsibility on the doorstep of grant
makers and their “unrealistic expectations” might play well with many people
who work at nonprofits, but it won’t achieve the results we want to see.
In reality, grant makers and nonprofits are actually in the
same boat, ensnared by a set of dysfunctional rules and conflicted beliefs
about money.
While there are certainly bad grant-making practices that
undermine nonprofit financial health, I have found many program officers,
trustees, and foundation managers who have a deep understanding of nonprofit
economics and the realities under which nonprofits are struggling.
To really understand why nonprofits struggle to cover their
full cost of doing business, why a foundation grant can actually drain an
organization’s liquidity when it does not cover the full cost of a service, or
why the nonprofit world lacks an equity ethic, we need to understand the
broader historical and social context of money in American society.
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