posted on: Friday, May 11, 2012

By Sean Dobson

A survey of 672 nonprofit employees conducted by the Chronicle of Philanthropy reveals unprecedented levels of job dissatisfaction as budgets and staffing have failed to return to 2008 levels, in turn causing anxiety, mounting workload, and stagnant pay. Eighty percent of nonprofit employees are seeking new positions – or would if the economy were stronger – and nearly 40 percent say they are dissatisfied with their work.

Why should grantmakers care? Because foundations can only accomplish their own mission through the work of their nonprofit grantees. But that work is severely hobbled if workers are unhappy, for in the long run unhappy workers are unproductive workers. As one disgruntled nonprofit employee told the Chronicle, “Organizations are investing less in their staffs and the result is that churn and turnover are on the rise.”

Research by NCRP and others shows that three grantmaking strategies in particular help make nonprofits stronger: 

• Give more by paying out more than 5 percent per year on assets – even if a recession shrinks a foundation’s endowment.
  
• Give multi-year support – even though a recession makes it more difficult for grantmakers to forecast future revenue and keeping this commitment might require temporarily spending directly from endowment.
  
• Give general operating support.

As a former nonprofit executive director who led an organization through 2008 and the years immediately following, I know from firsthand experience that these three types of support would have been very helpful at a time when I needed maximum flexibility to respond to declining revenue. But I’m a realist – I know it will take time before the sectoral needle moves on the first two strategies above because too many grantmakers ignore their own mission statements in favor of an obsessive focus on preserving (and indeed growing) their own endowments. 

But the third strategy does not require spending down an endowment.  So we would expect to see more grantdollars take this form during the Great Recession, right?

Wrong. The Foundation Center publishes the most comprehensive sectorwide annual analysis of types of grantmaking support. Unfortunately, the latest available data show that during the first two years of the economic downturn – 2009 and 2010 – the percentage of foundation grantdollars for general operating support remained stuck at 22 percent.

Grantmakers for Effective Organization’s 2011 survey of 755 staffed grantmaking organizations echoes the Foundation Center’s finding, revealing that since 2008 the “median proportion of budget devoted to general operating support” remained stuck at 20 percent.  The GEO study also indicates that the percentage of support in the form of multi-year grants probably declined during those years.

In a bad economy more than ever, foundations need to embrace general operating support as an endowment-friendly way to build stronger nonprofit grantees – and in the process accomplish their own mission better.

Sean Dobson is field director at the National Committee for Responsive Philanthropy (NCRP).