It is no secret that nonprofits, even the most prominent ones, often scramble to close the gap between the grants they receive and their actual costs of operations. Despite widespread awareness of this “starvation cycle,” funders have been reluctant to address the issue head-on—until now. The lead article in this package describes the two-year collaboration involving five leading foundation presidents who have agreed to apply a menu of solutions to pay grantees’ true costs. Writing separately, several funders, program officers, grantees, and intermediaries affirm the funding challenges nonprofits face and support the presidents’ push for ending the starvation cycle.
Featured Article
By Jeri Eckhart-Queenan, Michael Etzel, and Julia Silverman
Presidents of five leading foundations have agreed to experiment with practices and policies to address chronic underfunding of their grantees’ indirect costs. Said one president: “We have engaged because we have a responsibility to put forward solutions. That’s a breakthrough.”
Contributed Insights
Leaders from the sector share their perspectives on how to end the nonprofit starvation cycle.
By Jeffrey Moore
Many nonprofit leaders don’t know how to talk about their true costs. Making the case for better funding formulas requires nesting the need in a bigger story about the impact of nonprofits in American communities.
By Ellen LaPointe, Sandi Clement McKinley, and Sara Davis
Foundations should provide flexible grants and sufficient overhead funding to cover grantees’ actual costs. The time to lead this movement forward is now.
By Andrea Wilson and Hilda Polanco
How can foundations and nonprofits bridge the gap between project funding and actual costs? Foundations need a standardized approach to calculating indirect costs.
By Josh Solomon and Isa Ballard
Funders can do one simple thing to promote more open conversation with grantees about adequate indirect costs reimbursement: state on their websites and in their grant guidelines their approach to indirect costs.
By Norma Altshuler and Marissa Tirona
How foundations fund is just as important as what they fund. Coverage of actual costs is critical for grantees’ organizational health, and we need strong organizations to have impact.
By Eric Walker
Nonprofits funded by U.S. government grants receive full reimbursement for administrative costs. Those not receiving government grants need to master five low-overhead survival skills.
By Richard Modest and Aidan Eyakuze
The research and advocacy work of an East African NGO calls for flexible, long-term financial resources, something many funders are reluctant to provide. To cope, the organization had to master financial survival skills.