Why give unrestricted core funding?
Groundswell alternates our grant rounds between project funding and core funding rounds.
Project funding is exactly what it sounds like - funds to pay for specific projects carried out by climate advocacy organisations, such as an event, training, report, piece of polling, research or a communications tactic like advertising. Groundswell does project funding as part of our donors’ learning journey, because it’s an easy entry point into understanding climate advocacy.
Core, unrestricted funding (sometimes called general operating funds) are donations where the grant recipient has discretion to use the funds wherever they’re most needed. This often means paying for staff and costs related to them doing their jobs well, like budgets for communications, meetings, training and professional development, technology costs like constituent relationship management systems, media monitoring, and bringing in contractors to accelerate big pieces of work or react to opportunities that come up.
Unrestricted funding for organisations’ core costs is best practice in philanthropy generally. This is especially the case for philanthropy that funds advocacy, where circumstances can rapidly change and a project that made sense in January might be out-dated by June. And even more so for climate advocacy, where sudden changes in the physical climate (e.g. drought, bushfires) demand immediate shifts in communications and political strategy. It’s important to note that the other critical best practice is multi-year funding, but Groundswell isn’t in a position to provide this at this stage (1).
The Myer Foundation, one of Australia’s oldest and most well respected philanthropic foundations, changed its focus from project funding to unrestricted multi-year funding when it adopted a new five-year strategy in 2018. Says CEO Leonard Vary: “Really, if we exist for the benefit of the sector, shouldn’t we be identifying non-profits that are mission aligned with us and whose work we value and is valuable and backing their decisions as to the deployment of the resources?”(2)
The Trust Based Philanthropy project explains: “Funds that lack flexibility create a risk that grantees will not do the most important or most relevant work, but rather will do the work that they were funded to do, despite shifts or changes. When grantees have flexible, unrestricted support, they have the space to bring their full expertise—and their communities’ needs—into the work they do.”(3)
In the past, some funders have been reluctant to give unrestricted funding because they worry it might be wasted or used inefficiently. Kevin Starr, Director of the Mulago Foundation and the Rainer Arnhold Fellows Program, only make unrestricted grants - no project funding. He puts it well: “If we don't think an organization knows how to use the money better than we do, we don't give them any”(4). He also draws a smart analogy between philanthropists donating to NGOs and investors funding companies:
“In the real world, if you were to invest in a company you thought would make you a tidy profit, you wouldn’t tell the senior management they had to make a product of your choosing, restrict the number of vehicles they purchased, or expand operations into a new country. Why should we do any differently in the social sector? Why not simply invest—fund—on the basis of return in the form of impact? Isn’t that the point?”(5)
The excellent website Nonprofit AF makes an even starker comparison:
Imagine if you go to a doctor and say, “I know you are helping a lot of people. I want to support you, but you have to use Number 7 scalpels on your patients. I will only pay for Number 7 scalpels. And morphine for people who need it, but only on Tuesdays. Also, I won’t pay for your salaries, because while I believe doctors are important to saving lives, I prefer to fund only odd-numbered scalpels and morphine.”
Would you consider that to be ethical? Do you know more than the doctor? Do you have a license to practice medicine? Do you think it is right for this doctor to spend half their time trying to figure out who is paying for what instead of doing their work? Is it ethical to restrict this doctor’s funding and make recommendations on treatments when you know that doing so may cause people to die?
For some reason, though people would never tell a doctor, or a carpenter, or a mechanic, or other professionals what to do, it seems perfectly OK to do this to nonprofit professionals. When you restrict funding, you send a clear message to us: “We don’t trust you to know how to best do your job. In fact, we know more than you do.”
We are not doctors, but our work significantly affects people’s lives, and many of us are trained, credentialed, and experienced in doing this work. We must have the flexibility to use our skills and experience and whatever resources and tools are most effective to address the various challenges facing our communities.”(6)
In the United States, many philanthropic thought leaders now point to unrestricted funding as best practice, including the National Committee for Responsive Philanthropy, Grantmakers for Effective Organizations, the Nonprofit Finance Fund, and the Center for Effective Philanthropy (7). In March, the Ford Foundation launched a COVID-19 Philanthropy Pledge, now signed by over 750 Foundations, to convert existing restricted (project) grants to unrestricted funding, and to make new grants as unrestricted as possible during the COVID-19 crisis.
Here are our top 3 reasons why we as donors get more “bang for our buck” with unrestricted funding in climate advocacy:
We allow organisations to be responsive to opportunity. Climate advocacy work is by definition deeply political. As we’ve seen in Australia where you can go to sleep one night with one Prime Minister and wake up the next morning with another, our political context can change overnight. This means that avenues for influence that looked promising can close off unexpectedly, and new opportunities can arise quickly. The Centre for Trust based Philanthropy, which recommends unrestricted funding as “essential for creating healthy, adaptive, effective organisations” says that unrestricted funding “encourages risk taking, creativity, innovation, and emergent action instead of sticking to proposal outcomes that may become outdated.” For example, Australian climate advocacy groups that were reliant on project-based funding had much less leeway to pivot their work during the recent ‘black summer’ of bushfires. Those with more unrestricted funding were able to re-allocate staff time from other projects, bring on new staff, and scale moment-relevant new initiatives such as the Emergency Leaders for Climate Action, Groundswell’s first grant recipient.
We maximise time spent on impact work, not paperwork. The idea of “project funding” is one that comes from other sectors - social services and the arts, where work can genuinely be described as projects, like a theatre production project or a project to build more accomodation for people experiencing homelessness. Effective climate advocacy - at least that undertaken by strategy led (not tactic-led) organisations, is not a series of projects. Organisations doing climate advocacy usually have strategic plans around how they’re going to create change, encompassing advocacy and political engagement, community organising and movement building, communications, and strategic partnerships. These plans rely on skilled staff - strategists, campaigners, communicators and community organisers - working towards specific goals, in an ever-changing political and media environment. Writing applications to make a piece of your political or community organising strategy look like a “project” resembles mental gymnastics - bending over backwards to make a particular part of a strategy look like a “project” - picking out one element like an advertising campaign, or a training, or a report. This takes time. Time that could be instead spent doing other, critical work. Making organisations spend a long time writing applications, which is more likely with project applications, reduces the odds that they’re going to have impact solving climate change.
We reduce the stress levels of the executive director. Climate advocacy organisations operate on shoestring budgets when compared to the size of the funding required to tackle the problem. If most funders give tied grants, it gives the leadership of these organisations very little leeway in meeting the most critical needs an organisation may face at any given time. This makes them stay awake at night stressing about funding and budgets. The high rates of overwork and burnout in the climate movement are well documented. Anything we can do as funders to reduce the stress of the leaders of the organisations, and send a signal that we trust and value their work, is a positive thing for the climate movement, which relies on skilled leaders to drive progress.
TLDR summary: unrestricted funding gives groups the autonomy and flexibility to make their own decisions about how our funder dollars will make the most change. The people immersed in this work full time are better placed to make these decisions than funders who are removed from the day-to-day. This is why Groundswell’s grants are alternated between core funding, which is best practice, and project/ campaign funding, which is an easier entry point for new donors into understanding the climate movement and climate advocacy, which is the bulk of Groundswell’s members.
Footnotes
Groundswell does not provide multi-year funding because we aim to give our donors a good overview of the whole climate movement through learning about, and having the chance to support, a wide range of different climate advocacy groups. This is a core part of our mission to go on a learning journey together about climate advocacy. However, we encourage members who support organisations outside of Groundswell to provide unrestricted multi-year funding.
The next evolution: The Myer Foundation’s journey to refresh its strategic plan, Philanthropy Australia.
Five Myths of Traditional Philanthropy, Trust Based Philanthropy.
Mulago Foundation: How we Fund.
Just Give ’Em the Money: The Power and Pleasure of Unrestricted Funding, Kevin Starr, Stanford Social Innovation Review.
Rethinking the Funding Equation: Can General Operating Support become the New Normal? National Committee for Responsive Philanthropy.
FURTHER READING
Philanthropy, Systems and Change report December 2019, The Australian Centre for Social Innovation.
Best practice Principles in Philanthropy, Perpetual, December 2019.
https://trustbasedphilanthropy.org
The Ethical Argument for General Operating Funds, Nonprofit AF, 2018.
Rethinking The Funding Equation: Can General Operating Support become the New Normal? National Committee for Responsive Philanthropy, 2016.
Ford Foundation COVID-19 Pledge of Action, March 2020.