We are currently updating the planning assumptions that we use to develop our annual grant plan, as we do each year at this time. Our grant planning process begins with identifying needs, opportunities and trends within the Southern California nonprofit community, primarily through frequent and ongoing communication with our grantees and a survey of the year’s letters of inquiry and grant applications. Over the past several months, we also conducted a number of focus groups with our grantees. What we’re learning is that high demand for services, especially among human service organizations, combined with reduced government funding and a very competitive fundraising environment, are continuing to pose significant challenges.
Our grantees also tell us that limited unrestricted dollars prevent them from investing in basic infrastructure — let alone new strategies to improve fundraising or strengthen programs. I was particularly struck by the comments made by one nonprofit executive, who lamented that many institutional and individual funders are asking for better program outcome data while refusing to support the cost of evaluation. It doesn’t make a lot of sense.
The failure of private and, in particular, government funders to adequately support administrative and fundraising costs undermines nonprofit effectiveness and sustainability. A recent Urban Institute report shows that half of human service nonprofits surveyed nationally receive government grants and contracts that do not cover the full cost of services. In September, I posted a message on a national listserv hosted by Grantmakers for Effective Organizations that addressed this issue. I wanted to take advantage of the fact that there has been an increase in attention to the issue, most notably, the publication this past June of a joint letter by three charity watchdog organizations challenging the “overhead myth.” Locally, we hope to convene funders and nonprofits next spring to highlight the importance of funding the full costs of nonprofit work, and discuss better ways to measure effectiveness beyond overhead ratios.
Our current year’s planning assumptions can be found by clicking here. If you have thoughts on what you see as the major challenges and opportunities facing nonprofit organizations, as well as regarding the issue of overhead costs, we would love to hear from you. You can send us your comments by clicking here.
Thank you for the important work you do.
President & CEO