Catch-22 -- general operations v. project funding

This often-used metaphor is never as accurate as when you’re dealing with nonprofit funding. In this latest installment of how nonprofits are seeking funding for general operations, we find ourselves caught up in this circle of obstacles, the famous Catch-22.

To repeat, at issue is general operations support v. project funding. These two areas of an organization’s existence is again and again set up - and used - against each other. Juxtaposed, polarized and utilized to argue for, wait for it…. no funding. I will explain.

In an earlier post I wrote about general funding and how difficult it is to access this most necessary type of support for an organization to exist. Most things emanate from general funding dollars: administration, fundraising, program management and communications. What’s more, the board and financial duties that come with running a nonprofit, also demand general organizational funding.

Recently, an organization that I am involved with was denied a large capacity buduliding grant - the type of funding that would have scaled up administration to manage projects and other programs, and all of the areas listed above, due to lack of, here we go again…. general operating funding in the past.

Completely openly, the funder’s objections rested on the facts that since the organization had not received general operations funding in the past, therefore they would not support giving it now. Disregarding years, decades of research and other programmatic activities that this organization had done, it was this particular area that was singled out. And yes, that the funding was not diversified enough.

There is so much to unpack here, but I will start with the title of this blog, the Catch-22 moment - how will an organization get general funding if a funder demands that this is a prerequisite to obtain it in the first place? Why are funders so afraid of ‘being the first’ to fund, when there is sufficient evidence of an organization actually having managed before? It is almost as if the funder is punishing the organization for being able to live on air, and rather than helping with support that would make the organization sustainable, forces an unstable existence and therefore, sometimes being an unreliable partner.

The paradox of how funders see organizational survival is, just that, paradoxical. For example, in order to apply for funding, an organization has to have resources to spend on writing the proposal. Often, this requires several weeks spent by a staff or volunteer on writing and gathering documents for submission. Funders are using various strategies and obstacles to deter or even stop organizations to apply, and this in turn, means that nonprofits spend an inordinate amount of time just looking up funders to apply to. The anecdotal figure thrown around in these instances, is that almost 40% of foundations and other funding institutions do not issues RFPs, i.e. request for proposals, meaning that they are only giving to organizations that they have identified, at their own will, when they want. This behavior is inadvisable for many reasons, financial for sure (what are they here for but not to give out their funds?), but also that foundations are not close enough to the grassroots action, actually knowing what is needed and how to address it. That’s knowledge that the nonprofits have.

But I digress.

The funder in this case also objected to that there was not enough diversified sources of income. In a direct response to this claim, it was obvious that the lack of diverse sources of income was due to a lack of general operating funding to boost - and diversify - fundraising. So here we are up against a clear case of Catch-22: how do you raise funds when there is no funds to pay anyone to do it?

Nonprofits rarely get money to just think about how they should run things; they lack funding to communicate who they are, which would spread the brand and in turn, raise funds; they lack funding to support program management and share with and report back to donors where their money went. All of these areas fall under general operating funding because funders often do not include general management, and barely salaries, in assistance that is designated to projects or programs.

In my previous life, I was able to direct funding to organization for new projects that nobody else wanted to fund; or new ventures that they had seen and wanted to address with their clients. If there for some reason was an issue with survival of that organization, we usually stepped in with supports of different kinds, to make sure that the organizations survived, and then continue with the project when the organization had found its footing again.

It is curious to me that so many funders seems to want to cut the feet off a nonprofit and only fund what is rather tethered to the upper echelons of their existence. How is it possible to perform, carry out a project if the basics of paying staff, provide communication of activities and keep fundraising going, are not also funded?

My suspicion of these circumstance rest on larger systemic reasons than perhaps visible to the eye. I believe that many funders are engaging in what has been popularized as ‘strategic philanthropy’. With this aim, funders are taking on the task of knowing where funding is best deployed, and decide over the heads of the very organizations that are set up to do the work, what needs to be done - according to their preferences, and somewhat engaged, but more often than not, a quite detached approach to reality and the actual needs.

I will elaborate on strategic philanthropy in another post, but suffice to say, it’s a trend that started with CSR, corporate social responsibility, glacially moving towards sustainability, to land where corporations and other business entities set up their own philanthropic offices and staff. As a result, a business-like atmosphere has started to creep into the sector.

This slow but steady movement has defined the philanthropic landscape for over two decades, effectively removing agency from the nonprofit sector and placed it in corporate hands. Many, who argued that nonprofits didn’t know how to run things professionally should take a page from the manual on how to live on air. This survival instinct comes naturally to those working in nonprofits but does not serve any purpose other than eroding over time what’s been gained.

Nonprofits are actually the ones to be admired, and further shows the power of the Catch-22 metaphor. Here, nonprofits survive on nothing while being targeted for not being able to run things properly, without funding. i.e. nothing.

Perhaps, it is time to look at it the other way around. That forprofits could learn something from their nonprofit partners, that there are ways to survive that they don’t know about; to produce and serve and to be sustainble.

But don’t get me wrong. I am not advocating for an existence on air, for anybody. The dignity in paying people is a goal to strive toward; the honor in appropriately enumerating those who perform a job, is the same regardless of sector.

In its extension, the feature of general funding is also a point of decolonizing wealth, and decolonizing the actions that a funder assumes - in the name of money. To trust partners to do a job is one way to get out of these absolutely nonsensical Catch-22 moments that funders continue to layer onto the nonprofit sector.

I have not doubt that denying general operating funding based on lack of previous operating funding will continue, but the need to call this practice out will not seize either. The end of this circular practice is the goal.

(The photo is the result searching for ‘catch-22’ on pexel.com. free photos online; fish was the catch. :)

Photo by energepic.com