Funding For Real Change
Funding real change is funding fully & flexibly!
Despite civil society organizations and social movements being at the forefront of fighting the complex problems of our world, most of them unfortunately suffer from inadequate funding and financial instability. This is in part due to restricted funding.
- Restricted funds do not cover organizations’ administration costs and the essential functions they require to do their work, (rent, utilities, technology support, financial audits, and staff development), nor do they allow organizations to invest in their own development and wellbeing and build up financial reserves and resilience against external shocks or adverse events (like COVID). At the same time, there is a stigma attached to asking for higher overhead costs.
- High overhead costs somehow get linked to assessments of effectiveness. Due to the power imbalance between grantee partners and funders, civil society organizations and social movements are often reluctant to initiate conversations or enter negotiations revealing their real administration cost rates. This creates a vicious cycle, with organizations reporting lower administration costs than they actually incur, and funders not knowing the true costs required to deliver on their grants. It is a cycle of starvation!
- Organizations that cannot get adequate administration cost coverage cut administration functions out of necessity which makes them ultimately inefficient. It is time to bust the overhead myth and invest in movements!
A website that offers resources to reimagine project-restricted giving
Ariadne and EDGE Funders Alliance came together to create Funding for Real Change in order to acknowledge that project-restricted funding will most likely continue to be the most common way of supporting grantees, while also advocating for a future where higher indirect cost coverage and multi-year flexible funding is more common. The site offers concrete ways to push against the Nonprofit Starvation Cycle.
****Data on this site is developed by Humentum and MilwayPLUS, facilitated by BDO FMA and resourced by Funders for Real Cost, Real Change (FRC) Collaborative and the Ford Foundation.
Delve into the resources
Understanding the Nonprofit Starvation Cycle:
There are real ‘missing costs’ arising from some project-restricted funding with low indirect cost coverage. These come in the form of systemic under-resourcing of core organizational functions.
This underinvestment will persist until funders recognize the importance of breaking the nonprofit starvation cycle to enable civil society organizations and social movements to fulfill their full potential. Visit the site to understand the problem better.
Restricted giving hinders impact. Decades of evidence show how grantees’ core operations have been starved. Without strong core operations, civil society organizations and movements are unable to focus on their impactful work.
Data on the nonprofit starvation cycle
The facts are:
- >Low administrative cost rates do not signify efficiency.
- > The nonprofit starvation cycle intersects with other inequities.
- >The nonprofit starvation cycle is perpetuated because of power.
- >The nonprofit starvation cycle makes movements unsustainable.
Different practices, same commitment: Moving towards full, flexible funding
Funding for Real Change offers a spectrum of practices and resources that vary in flexibility: starting with increasing indirect cost coverage all the way to multi-year flexible funding. We recognize that there is not one single call to action that fits all funders globally. Only you can choose what practices fit your work best.
Explore a spectrum of flexible practices that can fit your work
Ready to start practicing multi-year flexible funding?
This toolkit offers a list of tactics, resources, examples, and starting points to help funders make the shift towards multi-year, flexible funding, with a focus on the differentiated roles of trustees, CEOs, program officers, and grantees.
Through offering pathways to overcome barriers, the toolkit aims to accelerate the shift to multi-year, flexible funding and normalize practices that create greatest impact and stronger partnerships.
More ways this website can support your work:
No matter where you are in your philanthropic journey, we hope that this website provides resources about practices that can help move your grantmaking further towards equitable and impactful practices that disrupt the nonprofit starvation cycle.