What About Making General Operating Grants More Accountable?

The Center for Effective Philanthropy continues to produce compelling research that gets foundation trustees and staff really talking. This is no less true of their recent work that explores the divide between nonprofits, which prefer general operating grants that they can spend in any way they wish to advance mission, and foundations which generally prefer to make grants that are tied to specific programs. These program-specific grants are widely, if theoretically, believed to provide more accountability because they link grant dollars to program metrics.

I’ve always appreciated nonprofit performance measurement guru Jason Saul’s approach to this conundrum, which provides for both accountability desired by foundations and flexibility desired by grantees. According to Jason, whose Mission Measurement is counseling corporations on social performance metrics, foundations might feel more free to provide general operating grants if they required grantees to provide metrics that demonstrate how they intend to spend such grants. In this approach, nonprofits can pay back debt or purchase equipment or increase salaries, but are pressed to be transparent and to provide a defensible strategy (if they want future dollars) for why precious general operating dollars are best spent in this way.

Flexible capital is no less imperative for nonprofits than for-profits, yet this has proven to be a difficult argument for foundation staff to carry with foundation boards. They can keep trying, or try new approaches like this one.

Susan Herr