Nonprofit organizations, big and small, rely on infrastructure to fulfill their missions. From technology to board development, infrastructure strengthens a nonprofit’s ability to serve its clients well. In recent Wall Street Journal interview (The ‘Third Rail’ of Nonprofits: Overhead), Tom Tierney, chairman and co-founder of Bridgespan Group, discusses the importance of nonprofit infrastructure. This is a shift in mindset that the Omaha Community Foundation has had over the last several years. In that time, we have started talking more about capacity building and general operating grants (grouped together in the WSJ article as “overhead”) as worthwhile investments in the nonprofit sector. Two major programs are now aligned to this objective:
• In 2010, the Fund for Omaha, OCF’s major discretionary grant program, started inviting proposals for nonprofit agencies’ “greatest need,” be that capacity building, general operating, or programming. The breakdown of grants made since then is roughly a third in each category. Successful capacity building proposals to the Fund for Omaha tend to outline clearly how the investment in technology, personnel, or other capacity building will lead to increased effectiveness and efficiencies.
• The Nonprofit Capacity Building Initiative, now in its second pilot year, brings together groups of agencies to address both organizational and individual leadership capacity. This work has highlighted the importance of strong strategic planning and vision at both the staff and board leadership levels.
It can take a great deal of trust to make an unrestricted grant. One thing we have observed from the Fund for Omaha grants is that the committee has been comfortable making general operating grants to organizations that received a Fund for Omaha grant in the fairly recent past. There was a level of familiarity with the organization and they had had a chance to review an evaluation report.
Making such an investment can send a donor into unfamiliar territory. Unlike program grants, investments in overhead are harder to evaluate in terms of outcomes. They may not produce immediate or even measurable results. Further, a certain level of organizational capacity is necessary for an agency to be able to take advantage of investments—a new donor database will do no good if there is not a skilled staff member with enough time to use it. It may not make sense for every grant to be unrestricted, but it is an exceptionally helpful way to support your most trusted charities.
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