At the Evelyn and Walter Haas, Jr. Fund, we believe strongly in the critical importance of unrestricted general operating support because it provides nonprofit leaders with the flexibility to direct spending toward strategic priorities facing their organizations. In 2011, two-thirds of the Fund’s grants were allocated for this purpose.
However, the Haas, Jr. Fund also believes there are times when general operating support may not be the most effective capacity-building strategy. Over the past seven years of the Haas Leadership Initiative, our experience has been that executive directors are often reluctant to allocate unrestricted funds to strengthening organizational leadership for a variety of reasons:
- Executive directors almost always find it difficult to prioritize longer-term staff and leadership development work when confronted with short-term programmatic needs and tight budgets.
- The “selfless” culture of nonprofit leadership discourages leaders from dedicating resources to their own development.
- Some executive directors fear that choosing to invest general support funds in leadership development could be perceived as a sign of weakness—a sign that a leader, or the board, isn’t up to the task of managing an organization and “needs help.”
One of our grantees framed the issue this way in a response to an evaluator’s question:
“You can’t get money to strengthen our organization the way we have been able to. We’d feel too guilty to do it.”
At the Haas, Jr. Fund, we have seen this dynamic play out often in our work. We still make most of our grants for general operating support, but we are increasingly augmenting those grants with separate, dedicated funding for leadership development. Fifty of our grantees currently receive both kinds of support.
After posting about this topic on a Grantmakers for Effective Organizations listserv, we were interested to find that we are not alone in this belief.
The response from Pi’ikea Miller at the Hawai’i Community Foundation was typical. For 10 years, her foundation has offered funding for executive directors to work on a specific capacity-building project facing their organizations. Pi’ikea wrote that the combination of dedicated funding and a deliberate approach to connecting leadership development to organizational outcomes has made all the difference in getting organizations and their executive directors to sign up. “In some cases, they felt selfish investing in themselves rather than the organization,” she wrote.
Numerous other funders — from the Annie E. Casey Foundation to the Gap Foundation to the Cedarmere Foundation — responded to the post by offering similar insights from their work. John Harvey, Managing Director of Global Philanthropy with the Council on Foundations, recalled his own time as a nonprofit ED and the struggles he went through as he sought to convince himself and his board of the value of investing discretionary funds in leadership development. “A restricted grant would mean that no one—not a frugal board nor a prudent (or un-self-aware) nonprofit leader—could say no to professional development,” Harvey wrote.
The bottom line: many in philanthropy, including the Center for Effective Philanthropy, agree that large, multi-year operating support grants are critically important for nonprofits. But it seems that an increasing number also see that there are times when dedicated funding is an important complementary strategy for strengthening organizational leadership.
As Kaki Rushmore of the Community Foundation for Monterey County commented, “Having designated funds for leadership development allows a leader/organization to say, ‘This is what the funding is for, so we need to do it.’”
As always, we are curious to learn about others’ experiences on this topic. Please add a comment below or contact Leadership@haasjr.org.