The Ethical Argument for General Operating Funds

[Image description: An adorable little kitten, inside a pink play tube thing. It’s staring off into the upper left corner. It wants funders to provide general operating funds. Unrestricted funds will make this kitten very happy, and you want this kitten to be happy, don’t you? I thought so. Image obtained from]
Hi everyone. Before we begin, thank you to all the colleagues who donated to my organization on my birthday last week. It helps our mission of developing more leaders of color and strengthening organizations led by communities of color. If you haven’t donated, it’s not too late

This blog post is going to be a little more serious than usual. I’m going to say things that may be very difficult for many people to hear. Especially if you work for a foundation that provides restricted funding, please take a deep breath. I don’t expect everyone to agree, but we need to have this conversation. Next week’s post will be lighter. Unless something else comes up.

An exasperated colleague in an ED group I belong to quoted a rejection letter she got from a foundation:

“The Foundation Board appreciates that the XYZ program requires staff in order to function; however, the Foundation’s preference is to provide funding toward equipment or other non-salary related expenses, rather than toward wages. As the majority of the funding request would be going toward wages, the Foundation was unable to support approval of funding for the request.”

“How do we change this narrative, people?!?!” my colleague added. You know an Executive Director is frustrated when they start wasting punctuation marks, since we are all trained to always scrimp and save, such as on grant applications, where we get 250 characters to describe our mission, impact, and evaluation strategies.

Across the field, we have used various arguments in support of general operating funds. Here, again, is the report from GEO, with lots of statistics for the data wonks. Here is a new graphic by Propel Nonprofits, providing people with a new way to visualize core operating support. And there’s the Full-Cost Project.

And I have been using sophisticated analogies such as “When you look at a restaurant on Yelp, do you care how much they spent on rent and electricity, or just how good the food and service are?” And “When firefighters are putting out fires, do you ask them what their hose-to-water ratio is?” And “Here’s an adorable kitten! It wants you to give unrestricted funding!”

Despite the many, many arguments, statistics, metaphors, stories, and pictures of baby animals, we nonprofits are still plagued with messages like the above, an indication that many funders still painfully, frustratingly, aggravatingly refuse to provide general operating funds.

I would like to try a different argument: General operating funds allow us nonprofits to be most effective at helping people, including saving lives. By restricting funds you are impeding our work; therefore, your philosophies and policies are causing people to get hurt and die. And that is unethical.

I know this sounds like a huge exaggeration. I wish it were. But this week I had a conversation with a colleague that made me realize just how serious this is.

My colleague told me that her wife, a case manager doing teen suicide prevention and other trauma work, just burned out and left the sector. The normal case load of clients at her agency was supposed to be around 50. She had 110. She would take files home, working late into the nights, into the weekends. She was someone that everyone trusted to listen and to provide support. She would spend entire rare days off comforting someone one step away from ending their own lives.

The organization should have hired several more case managers. They said they would. But it never came to pass. The grueling, heartbreaking work took a toll on her (and other case managers) physically and emotionally, and she left the profession. Our field loses a brilliant and dedicated case manager, and who knows how many people’s lives were affected by her and others’ absence.

Yes, there are many variables at play here, including the agency’s decision to hire new case managers or not, to pay them fair wages or not, etc. But many of these decisions are determined, or at least greatly influenced, by the messages and the restrictions we receive from funders and donors. There are endless stories of nonprofits not being able to invest in the staff and resources we need—that our communities need—because of many funders’ arbitrary and archaic beliefs.

There are thousands of further stories about how we waste endless amounts of time applying for grants (grants that we likely will not get), or answering unreasonably burdensome grant reports, time that we are not spending on our work, which means people are not getting the services they need, which means they may get hurt or die.

For so long we nonprofits have treated restricted funding like an inconvenience to be complained about among ourselves and then begrudgingly accepted. But an argument needs to be made that if something directly or indirectly leads to harm or death of innocent people, and we know about it yet refuse to change, then we are in violation of ethical and moral boundaries of our entire profession, including the role of philanthropy.

Imagine if you go to a doctor and say, “I know you are helping a lot of people. I want to support you, but you have to use Number 7 scalpels on your patients. I will only pay for Number 7 scalpels. And morphine for people who need it, but only on Tuesdays. Also, I won’t pay for your salaries, because while I believe doctors are important to saving lives, I prefer to fund only odd-numbered scalpels and morphine.”

Would you consider that to be ethical? Do you know more than the doctor? Do you have a license to practice medicine? Do you think it is right for this doctor to spend half their time trying to figure out who is paying for what instead of doing their work? Is it ethical to restrict this doctor’s funding and make recommendations on treatments when you know that doing so may cause people to die?

For some reason, though people would never tell a doctor, or a carpenter, or a mechanic, or other professionals what to do, it seems perfectly OK to do this to nonprofit professionals. When you restrict funding, you send a clear message to us: “We don’t trust you to know how to best do your job. In fact, we know more than you do.”

We are not doctors, but our work significantly affects people’s lives, and many of us are trained, credentialed, and experienced in doing this work. We must have the flexibility to use our skills and experience and whatever resources and tools are most effective to address the various challenges facing our communities. 

The importance of flexibility and autonomy is especially pressing when it comes to funding for staff. There still seems to be so much hesitation, and even visceral disdain, among many funders and donors to pay for salaries and wages. 95% of the work in the sector is done by people. People like my colleague’s wife, people who work late into the nights and weekends because they know that if they don’t make a phone call to someone in pain or send an email to a lawyer, a kid who is bullied may end up dead or a Dreamer may be detained and deported.

These and thousands of other critical issues are being taken care of by professionals in this sector. Not robots. Not equipment. Not supplies. Not white papers. Our people are out there doing incredibly complex work, work heightened these past two years by the rise in hatred, racism, misogyny, and xenophobia.

When you say something like “the Foundation’s preference is to provide funding toward equipment or other non-salary related expenses, rather than toward wages,” when clearly it is people who are doing life-saving work, you might as well say, “The Foundation is OK with kids dying of suicide,” “The Foundation is OK with seniors being abused,” “The Foundation is OK with parents and children being deported,” “The Foundation is OK with domestic violence,” “The Foundation is OK with climate change.”

I know that’s harsh. I never question people’s motives. I don’t think Foundations, like the one above, mean to be thoughtless or harmful. I think everyone means well. But “meaning well” may actually lead to people’s deaths through the wasting of time, the prevention of professionals’ abilities to do our work, and the burning out of critical staff.

We don’t have time for these archaic, destructive mindsets any more. If we are to be effective at addressing injustice and inequity, funders/donors must be equal partners to nonprofits. That involves freeing up our time by simplifying your grantmaking and reporting processes so that we can focus on helping people. That involves releasing more of your funds by increasing payout rates. And funding faster. And taking more risks, especially with organizations led by and serving people most affected by injustice.

But above all, it involves not assuming you know more than we nonprofits about how to do our jobs, the jobs that consume us on a daily basis and that you get to glimpse a fraction of from afar. It involves trusting us to respond to ever-changing circumstances, because injustice is never straight-forward. If you agree that nonprofits should be spending our time helping people, if you agree that things have gotten more urgent lately, then—please—provide general operating funds and allow us the trust and flexibility to do our work.

Make Mondays suck a little less. Get a notice each Monday morning when a new post arrives. Subscribe to NAF by scrolling to the top right of this page (maybe scroll down a little) and enter in your email address (If you’re on the phone, it may be at the bottom). Also, join the NAF Facebook community for daily hilarity.

Support the maintenance of this website by buying NAF t-shirts and mugs and other stuff.

Also, join Nonprofit Happy Hour, a peer support group on Facebook, and if you are an ED/CEO, join ED Happy Hour. These are great forums for when you have a problem and want to get advice from colleagues, or tell nonprofit jokes. Check them out.

Donate, or give a grant, to Vu’s organizationRainier Valley Corps, which has the mission of bringing more leaders of color into the nonprofit sector and getting diverse communities to work together to address systemic issues.