Funding the Full Cost Can Enhance Social Good

I was intrigued by the recent article, “The Full Cost Project: Funding for Impact.” It made me start to wonder if and how foundations could fully support projects of organizations, rather than ask them to diversify their resources.

As a consultant who has reviewed countless proposals submitted by nonprofits, I am guilty of skeptically looking at their funding intentions to ensure that there are diverse resources. I’ve participated in site visits with prospective grantees where I have asked, “What happens if you don’t get this grant? What’s the impact if we don’t give you the full amount you requested?” More often than not, the prospective grantee will say that they will scale back the project and be creative to ensure that they can move forward.

That’s doesn’t seem like the right answer. Would we ask Elon Musk to build the Hyperloop with fewer resources? Would we instruct Richard Branson to build half a plane for his airlines, and finish up the rest in a year or two, or figure out how to build a safe plane with less money? Probably not.

In the funding world, we often ask about sustainability, but know that no one truly has the answer. Who knows what the whim of funders will be in 2 to 3 years? Who knows if philanthropists will decrease their support due to economic conditions or because they are responding to natural disasters? The result is that nonprofit organizations limp along from one year to the next, trying to figure out how to cobble together enough money to keep their doors open.

But what if funders said, “Let’s have a realistic conversation about what it will take to make this project successful.” Working together, the funder and nonprofit could have candid conversations and be realistic about what it will take. And here is what it would take: multi-year funding, a willingness to accept some calculated risks, and flexibility to change the plan as the environment changes. And – more than anything – the foundation would have to be willing to also invest in a “real” sustainability plan – one that would allow the nonprofit organization to fully operate its program after the foundation stops its multi-year investment. It would mean that nonprofits could focus on what they do best: addressing social service problems. Fixing problems. Changing the world.

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