Friday, July 18, 2008

Core Funding: Why it Makes Sense!

Core funding has become a hot topic in the philanthropy world over the past few years. Those dollars that fund the organization doing the worthy charitable work as opposed to those dollars that find their way to the needy that the charity was set up to help. It is a difficult distinction to make, particularly when it's your dollars and your vision on how you want those dollars to be applied.

When I began managing the donations of our family foundation my first thoughts were "Let's find a project to work on that best fits the ideals or mission statement of our foundation". As I spoke to more and more grantees about the work they were doing and what their needs were, the recurring theme was, "We all want to help the needy, but if we can't pay the rent or keep the lights on, the vehicle to get the job done breaks down". It made a lot of sense. I started to look at it this way, if Ford comes out with a great line of autos (focus, this isn't a commentary on the U.S. auto industry), I can't invest in just that line of autos, I can only invest in Ford. Shouldn't my philanthropy work the same way? If you like the work a particular grantee is doing, though you may want all of your assets to go directly to those in need, your grantee can't stay open to do that work unless someone pays to keep the lights on and pays the rent and of course their salaries.

I think it comes down to this simple evaluation, do you trust your grantee? Not only to not mismanage the funds they receive, but to continue to balance the needs of the organization with the intended recipients of those funds, the needy. This takes a little due diligence. The more you get to know your grantee, the more comfortable you may become in their ability to manage that balance, and therefore the more comfortable you will become in funding the entire organization and not only those they are trying to aid.

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