Getting Rid of the Gap in Nonprofit Funding

It’s no secret that closing the gap between grant funding and the actual costs of nonprofit operations is an industry-wide challenge.

But even though most in the sector are aware of the risks of the so-called “starvation cycle,” historically, there have been few advancements to ensure organizations can cover their indirect costs.

However, there’s reason to believe that’s beginning to change.

Over the last two years, I’ve been thrilled to work with some of the leading foundations to try to address this issue head on. In a first of its kind project, BDO collaborated with Bridgespan, the Ford, Hewlett, MacArthur, Open Society and Packard Foundations, and other stakeholders, to dissect this problem and work towards solutions to address chronic nonprofit underfunding.

One discovery embodied the importance of the project: among a sample of their own U.S. grantees, the funders learned that the verified indirect costs exceeded what the foundations actually paid by an average of 17 percentage points. That’s just one piece of evidence for how underfunding is undermining the great work of nonprofit organizations.

Now, in a new series on the Chronicle of Philanthropy website, you can read about the reasoning behind this important work and learn more about its results.

Read my article.

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