by Gretta Forrester-Gaffney
Like all business sectors the non-profit business sector is fluid and evolves relative to the surrounding market forces and community conditions. It is important to consider this when establishing and evaluating best practices for grant allocation.
There are various theories, studies, and opinions considering the most effective and efficient ways to grant monies to organizations seeking funding. Each type of grant has its advantages and challenges, and there is no, “one size fits all” approach. However, due to various factors at present–such as the COVID 19 pandemic and a renewed spotlight on racial inequities–momentum has built behind the idea that General Operating Support (GOS) grants are the most efficient type of grants for non-profits to do more effective work in the community.
There are several types of grants that funders offer potential grantees to consider when applying for funding. SOS encourages applicants to consider any of the following types of grants on its grant application:
Project Grants
These grants support a specific project or program for a predetermined amount of time.
General Operating Support (GOS) Grants
These are unrestricted funds that give the receiving organization complete autonomy in how to use those funds. These grants are highly sought after by organizations but currently less than 20% of grant budgets of the largest, well known foundations are allocated to GOS grants. Small family foundations are more likely to fund local organizations with a GOS grant.
Negotiated GOS Grants
These are also unrestricted funds, allowing the grantee to determine where the funds will go within the organization. The caveat is that the relationship between the grantee and the grantor is more intentional and, when done effectively strengthens the grantee organization and ensures accountability. This type of grant allows the grantor to assess impact through agreed upon metrics. (note: those metrics would be different from those used for a project grant.)
Capacity Building Grants
These grants are intended to help organizations increase their ability to do more in a particular area. For instance, an organization might receive a capacity building grant to help it build its fundraising capacity. These grants are for a process rather than a project, and also require different metrics to assess impact.
In the 14 years of SOS’ Grant making history very few grants have gone to GOS funding and capacity building. The majority of SOS’ grant money has been allocated to Project grants.
The SOS grant application has always invited organizations to apply for General Operating Support (GOS) funding and Capacity Building Grants but, overall, there have been fewer grantees applying for these types of funding. It remains unclear why our grantees are historically less likely to apply for GOS, but we might speculate on the reasons for such disparities:
- SOS has not successfully promoted GOS funding availability to its potential grantees.
- SOS members do not understand the difference between capacity, Project, and GOS granting.
- GOS funding requests are not as dynamic as other grant opportunities when expressed on an application.
- Grant applicants think that a GOS request will be harder to get SOS to fund.
General operating requests, are used to fund any aspect of an organization: keeping the lights on, paying rent or employee benefits. In contrast, Project based requests tell stories about how the organization’s work directly affects real people. On a grant application these stories create a compelling emotional connection, relatable moments that attach faces and names in a meaningful way.
GOS grant requests do not always tell the inspiring stories of single mother’s achieving autonomy, or 5,000 kids getting much needed glasses, or destitute families getting help to find and furnish a home. GOS grants can be used for projects. However, these grants are more likely used for paying overhead and infrastructure costs, but these funds are equally important in helping an organization to sustain itself, retain valuable employees, and meet its mission. GOS grants can offer many advantages for both grantor and grantees while also introducing some challenges.
Challenges of General Operating Support Grants
The challenges that accompany GOS funding are mostly on the grantor side. Assessing outcomes and impact for GOS grants requires different metrics from those used when assessing project-based outcomes. Metrics regarding the number of people served or the level of success clients achieved do not apply to GOS grants because these funds can be allocated at the discretion of the grantee. Ascertaining the impact of GOS grant dollars requires a change in the way “success” is defined and requires more trust in the organization being funded. The funders assessment on impact becomes more focused on how the dollars contributed to overall sustainability and success of the organization’s mission.
Some guiding questions to evaluate success might look like this:
- How is the organization delivering on its overall mission?
- How does the organization set goals to track its progress?
- To what extent are SOS’ GOS dollars contributing to the success of the organization and the community?
Grantmakers approach the assessment of GOS grants in a different way, because GOS gives the grantees flexibility to pursue their goals as they see fit. Funders are inherently giving up a certain amount of control with the intent of supporting the broader mission of the organization.
Benefits of General Operating Support Grants
As the NP world looks more closely at the concept of General Operating Support funding, it becomes clear that there are many substantial benefits.
For a grantee, the advantages of unrestricted funds of a GOS grant seems irrefutable. Unrestricted funds allow non-profits to address immediate issues as they see fit and can even allow them to anticipate developing needs in the community. GOS funding gives organizations the autonomy to make their own decisions and also allows them to sustain infrastructure while developing and investing in best practices and advancing technologies. For example, an organization that wants to retain good staff would have the opportunity to use GOS funds to increase salaries or benefits to provide incentives.
Under this type of grant the relationship between the grantor and the grantee changes, one involving more mutual trust. Giving a GOS grant inherently implies that the grantor trusts the way that the organization is run and the grantee’s financial and strategic choices. Furthermore, GOS grants suggest that the funder acknowledges the expert knowledge of the grantee and honors that they best understand how to meet the needs of the people and the communities whom they serve.
In effect GOS grants also allow the grantor to better understand the organization because, instead of assessing the legitimacy of a single project, the grantor now gets to look under the hood, see the whole engine, and understand how all of the parts work together.
A Case to Support SOS GOS Granting
Because SOS’ interests as a funder are directed at start-up and small non-profits in the St. Louis community, and because SOS is launching a strategic commitment to addressing the systemic inequities in our community, it follows that SOS needs to promote and increase the number of GOS grants that it allocates.
As SOS begins to develop stronger relationships with, and provide support to Black, Indigenous, People of Color (BIPOC) led organizations, it is imperative that these relationships are established with trust. Allocating GOS funds would be a strong first step towards this goal.
We, as funders, inherently know less about how to best meet the needs of these communities than the BIPOC leaders who head the organizations we fund. In all cases, but even more so in those where historical inequities persist, we need to listen and learn from those who we are supporting. We must also work to ensure that the metrics we use to define “success” are important to the grantee and not just to SOS.
Additionally, as SOS begins to adopt protocols for diversity, equity and inclusion (DEI) and concentrates on funding BIPOC-led organizations, GOS funds will allow these organizations to serve their communities with a level of autonomy that allows them to respond better to the needs of the community. Promoting GOS grants will also allow SOS to engage in a trust-based partnership with organizations should we choose to support in this way.
It is important to note that GOS funding is yet another powerful tool in the SOS toolbox, but not all potential grantees will request or need GOS funding. As SOS responds to the conditions of our community, remaining flexible while also maintaining a diverse portfolio of funding options can only increase our ability to support a more diverse landscape in the Nonprofit community in the St Louis region.
The real issue is not the type of funding that SOS is granting (GOS, Negotiated GOS, Capacity Building or Project grants) but how to most effectively accommodate the philanthropic objectives and the mission of SOS while also supporting the work and sustainability of the grantees so that St Louis and the surrounding area continue to have an effective, healthy, diverse and vibrant nonprofit sector.