Money Without Strings: The Debate Over Operating Support

Tuesday, September 2, at 12 noon, U.S. Eastern time

Paul Shoemaker is executive director of Social Venture Partners Seattle, an organization that provides unrestricted grants and other aid to nonprofit groups.

A transcript of the chat follows.

Peter Panepento (Moderator):
    Welcome back from the Labor Day weekend. I'm glad you can join us today for our live discussion about operating support. This is a topic of intense debate in some corners of the nonprofit world.

Many grant makers say they earmark most of their grants out of concern that otherwise the nonprofit groups will become too dependent. And they say it is too hard to measure the specific results of an unrestricted grant.

Advocates of operating support say nonprofit groups can be more innovative and manage their operations better if they don't have to worry about following a grant maker's instructions for how every dollar should be used.

Peter Panepento (Moderator):
    Today, we're going to take your questions on this topic -- and we invite participants from charities and foundations to offer their viewpoints. Please feel free to click on the "ask a question" link at any time to submit your question or comment.

Question from Fred Matthews, Sound Advancement Strategies:
    An unrestricted gift allows the organization potentially very broad latitude in how the donation is used. A gift for operating support is a type of restricted gift--a gift designated for, an albeit broad but specific purpose in relation to other potential uses. In terms of accountability and transparency,do you see this distinction as significant?

Paul Shoemaker:
    wonderful questions, Fred - 1) I agree with the distinction between "general operating" (which is, in a way, restricted to operations) and "unrestricted." The terms get used interchangably sometimes. When I use the term "GOS" (general operating support), I am talking more about unrestricted grants. Words always matter, don't they? :)

re: very broad latitude - it all depends on how the grantor-grantee relationship is structured. The form of the grant is only one aspect of the whole relationship. We have very concrete annual goals and a close workig relationship with our grantees. We deeply cre about the social and capacity oucomes that we want to both see achieved and would never ignore those goals. i.e. I think we both feel VERY mutually accountable to each other, even though our grants are 100% unrestricted.

BUT that latitude does have its real positive too, regardless of how the overall relationship is structured. We want our grantees to have more flexibility in how they spend their money - they know better than we do day-to-day, they know when and where they need to adjust their spending as the year goes along, they can decide whether to invest or save as conditions warrant, etc. And by the way, it sends a great message of trust to the non-profit, i.e. you are the business managers and we trust you to best know where to invest your funds to meet the goals we've mutually agreed upon

Question from Audrey Enseki-Tom, Hawaii International Film Festival, mid-size nonprofit:
    Is there a compilation of foundations that make general operating grants, and if so, can that resource be sorted by state and/or areas of interest?

Paul Shoemaker:
    I wish I had a more definite answer, Audrey. I would ask either your regional association of grant makers, community fondation, and / or check with the Foundation Center. I wold think one of those 3 would be your best chance.

And again, don't be afraid to "make the case" to funders and to explain how you will still be very accountable (which is a valid funder goal, by the way) and how it will help you better achieve your mission, i.e. what the funder wants in the first place

At a minimum, as I'm sure many of you do, ask for 20% of each grant to get for your operational / unrestricted needs

Paul Shoemaker:
    Good morning, everybody, and welcome back from Labor Day weekend. I just sent two boys off to elementary and high school this morning and droppped off my 18-year old son at Univ of Texas-Austin last week and I am still not ready for him to be gone :)

I hope we can have a great dialogue this morning about why and how funders do and don't make unrestricted and / or general operating support (GOS) grants. It's not an easy issue, but it's a very importnat one. Social Venture Partners Seattle (www.svpseattle.org, and we're a part of www.svpi.org) decided 5 or 6 years ago to go to 100% unrestricted grant making and are very glad we did. Not becuase it is "nicer" to our non-profit investees, but becuase we think it incresaes their chances of being more effective at achieveing their social outcomes and impriving their long-term sustainability. I'm glad to elaborate more on that as the hour progresses.

I've also written on the topic in a few different places in the last year -

--http://www.geofunders.org/generaloperatingsupport.aspx guide

--http://www.effectivephilanthropy.org/research/support_reactions.html

--And an Oct 07 piece in Exempt magazine

Ready when you are!

Peter Panepento (Moderator):
    Regarding an earlier question on foundations that offer operating support: this list could be helpful in finding out which foundations are offering the most in general operating support to charities. http://philanthropy.com/premium/articles/v20/i14/14002301.htm

Question from Karen Cooper, international NGO:
    How do you ask for funding for the implementation of a new strategic plan with the intent that the funding will be used for unrestricted purposes. Assuming this is a well established charity with a long history and a strong base of individual support.

Paul Shoemaker:
    Do you want the funding for a "new strategic plan" (which is specific purpose) or for "unrestricted purposes," Karen?? :) Maybe I misunderstand your question.

I don't think there is anything wrong with a non-profit asking for funding for a specific purpose if that's what you need. That's kind of a "self-restricted" grant, I suppose.

And by the way, as you know a "well established charity with a long history and a strong base of individual support" has a RELATIVELY easier time dealing with restricted grants because you have more sources / avenues of funding to fill in a fuller, more complete capital structure. The other truth is that more experienced, larger non-profit ED's get better and more creative at playing a short of shell game to move money around to fill in the holes / gaps created by restricted grants.

Question from Kathy Bangasser, Lutheran Social Services of SD:
    Every year, there are news stories about non-profit organization executives who have been caught in fraud and embezzlement. These are always isolated cases, but they can lead to an atmosphere of distrust. Do you think that grant makers' dislike of general operating grants comes in part from not trusting that non-profit executives will use the funds appropriately? If so, how can we overcome this impression?

Paul Shoemaker:
    I think those stories hurt us all, yes, Kathy. That probabaly playes some part, though not the biggest hesitancy about unrestricted / GOS grants. The biggest fundr hesitancies are about accountability - what am I gettting for my money? - and perceived dependency.

What can you do?? I guess the best thing I can tell an individual non-profit is be very transparent (just as we should be as funders) and be upfront, unafraid about explaining how and any GOS / unrestricted grants will make you more EFFECTIVE in achieveing your SOCIAL OUTCOMES. Non-profits don't want more flexible fuding so they can go waste it or get lazy. They want flexibl fudning so they can more effectively acheieve their missions

And by the way, the biggest roadblock to overcoming and making a paradigm shift here is at the funder's board room door. Center for Effective Philanthropy wrote a great report on this over a year ago and it made that point clear - i.e. staff, to a much grater degree, "get it," but those barriers above are much harder to overcome with the Board

Question from Bill Huddleston, CFC Fundraising.com:
    Why don't more non-profits take advantage of the opportunity to raise unrestricted funds through the Combined Federal Campaign? Less red tape than any grant, more leverage (for a national non-profit 1 application gets you in 277 regional CFCs) and as far as I know, it is the only type of subsidized fundraising that exists. Regards, Bill Huddleston www.cfcfundraising.com

Paul Shoemaker:
    I'm not personally aware of CFC, Bill, so thanks for making the point and sending the URL

Question from Ron Wegsman, World Union for Progressive Judaism:
    Are there certain types of organizations or sectors that are more likely to attract operating support from foundations?

Paul Shoemaker:
    Y'all are asking good questions that I don't know the answers to in some cases here :). My guess is it's more particular to specific non-profits, not specific sectors, i.e. those org's that have a strong track record + good expereince at how to get more GOS / unrestricted grants.

IMPORTANT point this raises - I personally think the #1 thing a non-profit can do to help is to get very good at measuring / tracking / explaining / using outcomes and measurment of its work, based in a solid theory of change. I am NOT saying all of your work can be boiled down to numbers or to one number. It can't!

But all non-profits should have a well-thought out theory of change, a system of measuring its impact (whatever it may be), and using that information not just to report to funders but even more importantly, to analyze and make its own programs more effective over time. And yes, your funders should defintely be willing to invest in a non-profit's ability to build a TOC and measurement / outcome tracking system

Question from Karen L. Cadbury, via Philanthropy Today:
    Are there examples of clusters of foundations in different states or regions, or those that support specific topics/areas of interest joining together to provide operating support in a focused, planned manner to strengthen certain sectors of the non-profit community/work?

Paul Shoemaker:
    good question. The answer has to be yes. Maybe Peter P or someone at COP will know specifici examples and the answer to this better than I will. I do know that some funders, like Hewlett, Packard, Surdna, and others have been willing to do more of this kind of funding over time.

I can't think of specific examples right now, but I know there are some and hopefully someone will jump in this morning. Send me a side note at paulshoe@svpseattle.org, Karen, and let me ask some other people so we can make sure to get you a good answer

Peter Panepento (Moderator):
    I'd refer you to the list of foundations offering grants that we pointed out earlier: http://philanthropy.com/premium/articles/v20/i14/14002301.htm . We also ran a recent story offering some tips from experts on applying for operating support grants: http://philanthropy.com/premium/articles/v20/i14/14002401.htm

Question from Martha McDaniel, via Philanthropy Today:
    We are a new non-profit museum and interpretive center with no track record other than local support and interest, in-kind services valued at hundreds of thousand of dollars, a new foundation and some monies raised but we still need construction costs of approximately $5 million. Any suggestions for finding foundations intersted in new civic ventures?

Paul Shoemaker:
    That one is kind of outside the scope here and outside my bailwick :). Sorry, Martha!!

Question from Jeff Icenhower, Off Square Theatre Company, Jackson wyoming:
    I am somewhat new at this -- why not just allocate the operating costs to specific events? In our case, we produce plays on stage and so could split up costs equally to each play, or based on budgeted costs for production.

Paul Shoemaker:
    Jeff, there are MANY ways to skin the cat, so to say. If you are a performance company that gets part of its revnues from ticket sales, you already have a built-in source of unrestricted funding for some percent of your needs.

And re: "allocating the operating costs to specific eventsallocate the operating costs to specific events," as I noted in an earlier email, structuring your grant requests in that way is defintely a partial, good step in the right dirction, short of asking for 100% unrestricted

Question from Tom, Community Agencies Corporation:
    Are some of the Foundations who may be willing to fund general operating expenses receptive to a multi-year grant request, or is it wiser to approach them for a single year initially?

Thanks very much.

Paul Shoemaker:
    Tom, I think you'll have to just figure that out funder-by-funder. Maybe you ask a few funders for one-year unrestricted grants to start, so you can gain confidence in each other. And let them know you hope that can be a stepping stone to subsequent multiple-year funding as well. Again, just an idea

Question from Elaine Fastow, via Philanthropy Today:
    Are there grants that you can recommend to ask for operating support in the State of Nevada or educational non-profits?

Paul Shoemaker:
    I don't know much about Nevada, sorry! :) But you might check with www.edfunders.org and ask the question

Question from Hsien-Hong Lin (Joe), from Taiwan, Kent State University's doctoral candidate in fundraising of higher education :
    1.In Taiwan, as I know, unrestricted grants to educational institutions are tax-free, how about in the USA?

2.Under the current slow economy of the USA, as you know, how do a charity organization control or reduce the operating cost? 3. How do you evaluate your grant seekers are eligible to have your operating supports?

Paul Shoemaker:
    1) Grants to most educational instituions are tax-deductible in the U.S.

2) I'm not sure if reducing operating costs is the right thing to do, especially given that social needs go up as any country's economy weakens

3) We give 100% unrestricted grants as a policy. And then we evaluate their effectivesnee and our relationship with them via annual goals - social and capacity - that we mutually create and evaluate over time

Question from Randi Hogan, Metropolitan Group:
    Paul, thanks for making the time to have this discussion with us. Now that SVP has has 5 or so years under its belt of providing entirely unrestricted grants, what are you finding? Has it indeed proven that organizations are being "more effective at achieving their social outcomes and improving their long-term sustainability"? What are your grantmaking colleagues reflecting about your practice? And what are the key lessons your grantee partners are taking from this shift?

Paul Shoemaker:
    From our standpoint, yes, but I can mainly speak to our direct investee relationships. We did write some lessons learned (not all specific to GOS) in the first sections of our 07-12 Strategic Plan which is posted on our web site.

re: our colleagues, I think we have a long ways to go, but forums like are ones that SVP intends to more actively participate in in the months and years ahead. We want to not just practice this, but be a leader and have a voice.

re: our grantee partners, much of what I say is reflected in our expperiences wiht them and what they tell us. There are also a few investee case studies posted on our web site that elucidate the lessons in practice further

Peter Panepento (Moderator):
    We've reached the halfway point of today's live discussion and have received some fantastic questions so far. If you have posted a question and haven't yet seen an answer, please be patient. Paul is working to get through all of the questions we've received thus far. If you have a question or comment that you'd like to submit, please click on the "ask a question" link on this page and fire away.

Question from Becky Sittason, consultant on behalf of small nonprofit:
    If you only had a few sentences to make the case for unrestricted/operating dollars, what are the key points to make?

Paul Shoemaker:
    See earlier posts and -- --Gives non-profit more flexibility to know where and when to best direct funds to highest purpose

--Enables non-profit to build a more holistic and sustainable organization. Restricted grants are like pieces of a puzzle. A non-profit gets handed several of the same of one piece of the puzzle but none of some of the other pieces so how can they build the whole puzzle (i.e. organization)

--There is nothing about an unrestricted grant that means the funder relationship with a non-profit has to therefore become less accountable or more dependent. Both of those are myths and / or easily addressable (see earlier posts again)

--Shows real trust in the non-profit management and creates a more trusting relationship

Question from Inee Slaughter, Indigenous Language Institute, mid-size nonprofit:
    Some foundations are encouraging applications for capacity building. How is this different from "GOS"?

Paul Shoemaker:
    They are similar and in some cases, they may be exactly the same thing with different words. In my defintions, I'd say capacity building is a little more specific to strengthening specific parts of a non-profit's infrastructure and GOS is a little broader, meaning the funding can apply to a broder range of operational needs of a non-profit. Again, that distinction is just my defintion and the line between the two is proabably small in practice for most

Comment from Linda Mathies, Old Barracks Museum:
    We are searching for grants that will subsidize salaries for interpreters of our "living history" programs focusing on the American Revolution provided to school children at our site. Please suggest foundations that support history. We have been striking out.

Peter Panepento (Moderator):
    Anyone have any suggestions regarding Linda's question on foundations that might offer support to organizations that have a history-based mission?

Question from Rachel Newsome, Illinois Center for Autism, medium nonprofit:
    Since funding from governmental agencies and local statewide funding is decreasing, is foundations funding operating costs something we should expect to see more of?

Paul Shoemaker:
    I don't know the answer, Rachel. From what empirical evidence I've seen (and good, solid data on this is hard to come by), I'd say the answer is, unfortunately, no.

Question from Barbara, The Project To End Homelessness In Philadelphia, Inc.:
    What is the procedure for accessing funds? Barbara PEHP

Paul Shoemaker:
    Good morning, Barbara. Your question is a little open-ended :). I think much of what you are asking was at least partially addressed in some of the earlier posts and responses.

Question from Marc A. Pitman, FundraisingCoach.com:
    Presumably, grant making organizations trust the organizations they're giving to. If that's the case, then earmarking wouldn't be necessary.

So, could the question be rephrased: Should grantmakers be giving to organizations they aren't sure will carry out the work?

Paul Shoemaker:
    Well, there is probably some truth to that, but I think, in a lot of cases, it's not about a funder "distrusting" a grantee. Some of this is based n practices that have just built up over decades and habits can be hard to break

Plus, as I said earlier, I think mutual accountability is a very valid goal for a funder. SVP has been a grant seeker periodically too and I feel very accountable to funders and that doesn't bother me.

I think accountability, outcomes, etc. are valid, appropriate QUESTIONS. I just think restricted grants are usually the wrong ANSWER.

The most core, fundamental problem is that non-profit outcomes are not black and white like earnings per share so funders are struggling for other means to know if they are investing wisely to achieving positive social impact in their communities. Again, that is an appropriate goal, but restricted funding is often an ironically, counter-productive answer to the challenge.

Question from Sara Werder, small nonprofit:
    What suggestions do you have interns of how to find donors that will make general operating grants?

Paul Shoemaker:
    Look at some of the earlier posts. No silver bullet here, Sara :), but I do think you can do some research on the funders (one earlier person asked that exact question). I also think, as a grant seeker, non-profits are going to have to do a better job of (and having the chutzpah sometimes) making the case. And like I said earlier, having a strong theory of change and associated outcomes measurement system is one of the most important things a non-profit can do (see my Oct '07 Exempt article).

Question from Molly Matlock, via Philanthropy Today:
    We’re an arts council in a rural area chock full of nonprofits and artists but with very few corporations, banks, or foundations. Nonprofits here compete repeatedly for the same resources. What can we do to spread the wealth? Also, should we focus more energy on soliciting private donations or public funding?

Paul Shoemaker:
    Well, good question, but again, I think you're asking a question that isn't exactly the topic of this chat. Can your cluster of non-profits do some collective / joint / United-Way like fund raising and then have a formula to divvy up the resources? MIGHT be a more efficient way to raise SOME of your funding? Just an idea off the top of my head.

Question from Matt Lingo, Sacramento Sierra Chapter-Red Cross:
    Should local Chapters of larger organizations (i.e. Sacramento Red Cross) compete individually for operational funding or should they always ask via the larger "umbrella" organization(i.e. National Red Cross)?

Paul Shoemaker:
    I wish I knew the answer for sure, Matt, but I don't. I guess I'd try it both ways :). Or it may just be a funder-to-funder dynamic.

Peter Panepento (Moderator):
    If anyone in the audience can help Matt with his question, please feel free to click on the "ask a question" link and offer your advice.

Question from Marty Fox, Alliant Energy Foundation:
    What kinds of metrics do you use to evaluate unrestricted grants? Do you encourage nonprofits to use certain performance metrics or do you follow up in some other way?

Paul Shoemaker:
    See earlier, but in short, we evaluate the grants, WHATEVER kind they are, by the social and organizational capacity goals achieved by and with our investees. Can we be 100% sure of cause and effect? No, but neither can you from any other grant making approach

We are big on theory of change and measuring social outcomes (if you haven't already noticed :)). The non-profit should define their mission, their theory of change, their outcomes (NOT US) and we should be willing to invest in their ability to do so.

Question from Erica Fessia, South Bay Children's Museum:
    We are a new NPO - just over 1 year. This topic is particularly relevant as we try to grow while striking the "right"/acceptable balance between ops expenses and program delivery. A young, growing organization tends to look out of balance on paper in the first few years. Any advice for us?

Paul Shoemaker:
    Hard to answer in a brief way, but yes, this issue is a bigger challenage for smaller, less established organizations. From what you are saying, I might ask you to look at how you classify your expenses and how much of if you consider "overhead" or "administration," e.g. Are YOU 100% "overhead"?? :) I don't think so.

You are also going to have to show that your near-term imbalances are part of the natural evolution of a small business / non-profit and that you have a longer-term plan for how that early investment will evolve into greater program effectiveness in the future.

Question from Vern Wright, Christ's Home for Children:
    Is there a history behind why most foundations are geared toward wanting to fund projects, program expansion, etc. vs. just giving to an agency to be used as needed? Were they finding that funds were being 'wasted', or perhaps to pad investments?

Paul Shoemaker:
    I don't know why going decades, back, Vern. I wonder sometimes myself :). But I do think I've answered this as best as I imperfectly know in a few earlier posts.

Also funders - individuals, foundations, etc. - DO want to make sure the greatest possible social good results fro their investment and sometimes their incorrect (not always) instinct is to restrict the funding to "ensure" that that happens

Question from James, small nonprofit:
    A broad question: How do you recommend presenting to GOS funders (or potential GOS funders) the solid and clear "result" that they want from their donation?

Paul Shoemaker:
    see earlier, James. I think you have to focus primarily on your ORGANIZATION'S outcomes and results. It's not possible to draw a 100 percent, conclusive connection from GOS to positive social outcomes, but you can sure build systems I've talked about in earlier posts AND you can explain to funders why and how GOS / unrestricted funding helped you better, more efficiently achieve your mission, intended outcomes (which is what the funder is investing in in the first place).

Question from Marc A. Pitman, FundraisingCoach.com:
    Paul: My understanding is that venture philanthropist often have more oversight/involvement in the nonprofits they make grants too. Coaching, strategic planning, etc.

Is this set-up part of the reason you all felt comfortable to moving to 100% unrestricted?

Paul Shoemaker:
    Yes, that is inherent to our approach and yes, I think it is important, but NOT the only, reason we are more comfortable making unresicted grants. Or more accurately, why we more keenly, closely see the value of those grants. We are on-the-ground with the non-profit, we see their day-to-day and financial challenges and undertand how and why unrestricted funding can often help them be more effective

Question from Helen Kantor, Urban Education Partnership:
    For 25 years, so much of our funding has gone into educational reform programs and operating expenses, and so little in publiciting/PR/tooting our own horn. How much do you think this helps or hurts us when asking for general operating funds?

Paul Shoemaker:
    Well, we all have to tell our story in some way :). There is a balance there. I think investments in things like PR (not a direct program expense) is justified by believeing that if we invest X in PR, you will evetually be able to raise 2X in funding, and ultimately create 3X social impact.

Question from Adam Liljeblad, National Forest Foundation:
    Linking back to an earlier comment, you said that NGOs need to master tracking outcomes and measuring their work. Which, as a grant maker, I completely agree with.

However, my organization provides restricted operating support for startup collaborative conservation groups. One of the things we've struggled with in that program is tracking outcomes, as many of the outcomes that occur as a result of our support tend to be rather intangible. Do you have any suggestions to help organizations to track the intangibles that come along with ops funding?

Paul Shoemaker:
    Ops funding itself doesn't make a non-profit's outcomes more or less tangible. I am very empathetic to the fact that some nonprofit's outcomes are more tangible than others; that is a fact of life and a challenge we all deal with every day.

But the TYPE of funding provided isn't what makes their outcomes less tangible, yes??

Question from James, small nonprofit:
    For grant applications, do you know of a statistic or fact that we can use to demonstrate to potential funders how much more they're getting for their money by contributing GOS? I.e., how much energy/time/money would otherwise have to go to final reports, developing specific program budgets, etc.

Paul Shoemaker:
    I can't imagine anyone knows the answer to that better than you do :). Spend a little time tracking or estimating how much time it takes you and make that part of your story. And remember, by the way, that SOME amount of reporting and budgeting is very OK.

I had one of our invetsee ED's a few eyars ago tell me that she estimates she has 1 or 2 extra FTE for all these purposes (she is a $3 million non-profit so that's proportional)

Peter Panepento (Moderator):
    Paul has agreed to stick around for a few extra minutes to answer as many of the remaining questions as possible. If you've submitted a question and haven't yet received an answer, please stick around a bit longer to get your response. And if you can't stick around, please note that we'll post a full, free transcript of this discussion at http://philanthropy.com/live once it's complete.

Peter Panepento (Moderator):
    I'd also like to take this opportunity to remind you that we play host to these live discussions every Tuesday at noon Eastern time. You can check out http://philanthropy.com/live for updates on future discussions -- and to access our full archive of previous chats.

Comment from Suzy Meneguzzo, Community Based Foundation:
    In answer to the why foundations steer away from funding general operating expenses, it may be helpful to consider how foundations as a group view themselves. Historically, foundation's role has been to fund innovative approaches to social problems. The idea was that foundations would prove the value of an approach- pre-school, vacinations, etc- and then government would step in and use what was learned to apply the innovation throughout the country.

While the reality may have changed, that sense that we must be free to innovate and attach to the next new approach perhaps hasn't.

Question from Marc A. Pitman, FundraisingCoach.com:
    Paul: I wonder about the awful stories we here of fundraising companies taking 80% of the donations and giving the charity 20%. Or of groups with enormous overhead even though they're well beyond the startup phase.

Is there a way for funders to guard against their 100% restricted gift being taken advantage of? Or do they have to move to earmarking every dime?

Paul Shoemaker:
    Well, fund raising companies are a very different animal than a service-providing non-profit, yes??

You are asking some big, broad questions here. Some I've touched on earlier. maybe you should send me a side email and I can go a little further. Again, I don't think the TYPE of grant makes a funder more or less "susceptible." It has to do with how goals are mutually set

And there is a kind of reverse answer to their whole restricted funding dilemma - does a funder think that more restrictions on a grant in some way makes their grant or the grantee more effective?? I have yet to see anyone prove that either at all. Maybe the grant is more "trackable," but that's it.

Question from Mia Hubbard, MAZON: A Jewish Response to Hunger:
    How do you decide when to provide GOS vs project support? And how do your accountability processes differ depending on the type and size of the grant?

Paul Shoemaker:
    We do 100% unrestricted, as a policy. I've explained out processes earlier and it does not vary by size or type of grant.

Question from Kathy Bangasser, Lutheran Social Services of SD:
    I can see funders being comfortable with unrestricted grants to organizations that serve one geographic area and have one main program focus. What about large, statewide organizations that have many different services for many different kinds of people?

Paul Shoemaker:
    You are probably right, Kathy, although "one geographic area with one main program focus" sounds kind of like an ipso facto restricted grant :)

I don't think the ideas, principles I've described above apply regardless of scope, but your job is just probably harder for broader scope. You're gonna have to just be a little more effective, articulate in making the case. I hope that answer doesn't sound like a cop out somehow :). I think unrestricted funding is, in reality, probably even more valuable to those larger, broader orgs.

Question from Tim Shaw, mid-size nonprofit advocating for disability rights:
    You emphasized the importance of measuring outcomes and the impact of a non-profit’s work based on a “solid theory of change”. Are there any books or publications (that don’t require a degree in system theory to understand) that would be a good resource to begin understanding how to measure outcomes and think about a theory of change?

Paul Shoemaker:
    This site has some good info, Tim - www.theoryofchange.org. We were with a very good consultant up here - www.organizationalresearch.com - and they might have some local references for you. You might also ask a few local peer non-profits that you think are "high-performing" and see if they have a TOC or resources that can help you out. If you come up empty, write me back in a few days

Question from Claudia Sangster, Harris myCFO Foundation:
    Hi, Paul! In your time with SVP what types of capacity building grant requests have you seen most often? And because there is a distinction in GOS and capacity building support, has it been much more difficult to assess effectiveness between the two types of grants?

Paul Shoemaker:
    We probably get more for outcomes / measurement, technology, and strategic planning than any other areas, Claudia.

And like I said earlier, we don't draw much of a distinction between GOS and CB support in our approach. Some of that answer is particular to our model, but they largely go for the same purpose in our eyes, i.e.a stronger, higher-capacity non-profit better able to achieve its social outcomes

Question from Inee Slaughter, Indigenous Language Institute:
    Paul, after this session I will check out your SVP site but if you have time, can you tell us the areas of interest for SVP? And what is your geographic area for support?

Paul Shoemaker:
    Locally we fund K-12 education, early childhood, youth development, and the environment. We are at http://www.svpseattle.org. The other SVP's can be found via http://www.svpi.org

Question from Cheryl, small nonprofit arts organization:
    Would you mind elaborating on the "theory of change" that nonprofits should describe in detail in their LOIs and grant proposals?

Paul Shoemaker:
    Cheryl, see the answer I just gave a few minutes ago. If that isn't enough, send me a side note

Question from Dan Rigby, SVP Arizona:
    Following on Vern Wright's question as to the basis of program funding bias, I think that funders are interested in outcomes--or perhaps through-put. Since the programs directly impact the end user, it is easier for the funder to measure the impact of their investment if they focus on program growth and improvement. Or, at least it likely feels easier. What you are suggesting here may feel like an investment it the institutionalization of the particular agency rather than its mission. Your comment?

Paul Shoemaker:
    I'd call it "institution- or organization-building," Dan. :) and yes, inherent to a lot of this is the belief that investing in the ORGANIZATION to become stronger is, in fact, one of the best / better ways for a funder to ultimately help a non-profit do the best job of positively impacting its end clients.

Comment from Inee Slaughter, Indigenous Language Institute:
    Not a question. Just wanted to thank you, Paul, for the insightful conversation. Thanks to COP for hosting! Inee

Comment from Barbara, The Project To End Homelessness In Philadelphia, Inc.:
    Thank you very much!

Peter Panepento (Moderator):
    That's a wrap.

Thank you to everyone who took the time to join us today -- and a special thanks to Paul Shoemaker for joining us early on the West Coast after an emotional weekend of sending his son off to college.

Please join us next Tuesday, Sept. 9, when we talk about how to write a better annual report.

Hope to see you all then.