Wednesday, January 7, 2009

The Importance of Core Funding In This Economic Environment

One of if not the most controversial and widely discussed topics in the world of philanthropy has been "Core Funding" or "Core Operating Support". There are seminars dedicated to it, heated discussions centered around it and for many charities in 2009, survival dependent upon it.

How exactly is "Core Funding" defined? It is grants in support of a nonprofit organization's mission rather than specific projects or programs, or another way, it is funding for an organization's operations rather than particular projects. Now more than ever, charities will need their programs supported.

Let me relate a story to you. As a grant maker, we had a capital (naming) project that we were completing. We were also negotiating with another organization to begin funding a new project the following year (2009) for a four year commitment. With our assets down and therefore our five percent giving down slightly, and with the continued uncertainty in the financial markets, we felt less comfortable making that four year pledge. In conjunction with that, the charity we were in discussions with was not as sure of receiving additional funds for their capital project. They could see the impact the economy would have on this expansion. While they certainly would take our capital cash, their immediate concerns and needs were for their existing programs. They were afraid they would have to shut down services that their local community had come to rely on. Idea: How would they feel if we delayed the capital project for a year and gave them a much smaller core funding grant for 2009? After all, we were comfortable enough with the organization to discuss helping them with an expansion project, we certainly saw the benefits of the services they provide. The smaller grant would be easier for us, at least in the short run. We wondered how they would feel. Ecstatic probably does not do the answer justice.

As a member of the Association of Fundraising Professionals (AFP), a board or committee member for specific charities and as a consultant to not for profit organizations, I see the nervous faces in the grant-seeking world. Funding will be more scarce in 2009 than it was in 2008, while the need for human services is expected to increase. Projections show an estimated 7-11% of all US charities shutting their doors due to a lack of funding and there is no estimate of how many organizations that do survive will be cutting services when they are needed most.

While the debate over "Core Funding" has its place in the philanthropic world, now is not the time for words and discussiion, now is the time for action. Without their most basic needs and expenses funded, many charitable organizations will cease to exist.

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