Inclusivity Calls for More General Operating Support Grants

Reuben Ogbonna proudly worked in New York City charter schools that made it their mission to provide access and entry to college as a way for students to climb from one economic stratum into the next.

He found that many students who worked hard to enter college ended up with student loan debt and were not successful in college.

“Many students are getting into college but paying a ton of debt to pursue this dream … going to colleges that don't necessarily have the resources or the track record to ensure they can graduate on time and end up in a great job,” Ogbonna said.

Like any other entrepreneur, he wanted to find a solution that met the needs of society.

That’s why he co-founded The Marcy Lab School, a one-year alternative to college to deliver students an education that will guarantee them a high-dollar income upon graduation without student loan debt.

“We asked if we could create a non-college version of college that would be as aspirational and impactful in terms of the outcomes of a four-year college degree.”

As The Marcy Lab School began to scale, funding became difficult. Ogbonna had difficulty accessing the philanthropy world and meeting funder requirements. The Marcy Lab School was younger than five years which was an immediate “no” for most funding opportunities. The restricted funds he found pulled The Marcy Lab School to new projects and away from its core mission.

“It's a fragile stage because, with too many restrictions, we could end up positioning ourselves to build a company that works against [our] program model,” he said.

Advocates for general operating support grants say they allow nonprofits to focus on what they do best in a market-based system designed for money to flow to those who are the best at what they do.

The idea is to return to market principles. Let leaders focus on what they do best and be more inclusive in grant-making.

Some of the barriers to successful new nonprofit startups are:

• A ton of energy goes into seeking funding.
• The application process is costly without guarantee of any wins.
• Strings are attached to how funds are spent.
• There is a frequent mismatch between what nonprofit entrepreneurs need and what funders will fund.
• Funding may come with high financial reporting burdens.

It is also costly for funders to solicit responses, review, contract, implement and monitor grantees; however, the burden is disproportionately high on young entrepreneurial nonprofits.

The Center for Effective Philanthropy report, "New Attitudes, Old Practices: The Provision of Multiyear General Operating Support", which was funded by the Ford Foundation, made three notable findings about general operating support grants:

1. Nonprofit leaders determined that multiyear general operating support grants were good financial vehicles for the organizations they led.
2. A small percentage of those leaders offered them to grantees.
3. The reason for not using general operating support grants was vague; they did not fit with a funder’s approach or did not seem viable.

The distinctive factor of those organizations who implemented general operating support grants was that they intentionally chose to trust, develop deeper relationships and increase impact.

Corporate grantmakers have also taken up similar initiatives. Becky Ferguson, senior vice president of philanthropy at Salesforce, stressed the necessity of intentionality in offering Salesforce’s version of general operating support grants through the Catalyst Fund.

“We're focused on connecting the capital to younger organizations that are 10 years old or less, or have operating budgets of $2 million or lower. We think this stage is when resources can make a substantial, meaningful difference.”

Fast forward a year-and-a-half, The Marcy Lab School is a recipient of Salesforce’s Catalyst Fund, which utilizes a simple application process to allow nonprofits led by underrepresented groups to compete for unrestricted capital grants of $100,000. The Marcy Lab School is thriving with the new unrestricted capital investment.

The primary element in new general operating support grantmaking initiatives is the element of intentional trust. Ultimately, it’s an act of trust in the ability of grantees. Trust generally goes a long way in any relationship. Ogbonna knows that.

“Why not?” he asked. If that trust is not there, “What would that say you believe about who we are and our capacity to lead?”