Foundations Show Signs of Moving Beyond ‘Overhead Myth’

Foundations Show Signs of Moving Beyond ‘Overhead Myth’

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Many of the efforts to craft new financing approaches are young and have not yet produced dramatic change. "It’s culture work, and culture change isn’t easy," says Delia Coleman, vice president for strategy and policy at Forefront, an association of Illinois nonprofits, grant makers, public agencies, and related groups.

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A number of events inspired these new efforts to move beyond the "overhead myth." Grant makers say they were moved to act after the Great Recession exposed financial weaknesses in many nonprofits. A 2009 survey of small nonprofits nationally showed that nearly a third did not have enough cash to cover more than a month’s operations.

Another catalyst was a White House Office of Management and Budget decision in late 2014 to require states and localities to pay part of the indirect costs of federal grants that they pass through to nonprofits. In that decision, the federal government — the country’s largest grant maker — effectively acknowledged the obligation to pay costs beyond direct programming. "That gave us a window in," says Nancy Berlin, policy director with CalNonprofits, the state association of nonprofits.

Source Name: 
The Chronicle of Philanthropy
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