What Funders Should Consider When Designing Nonprofit Funding Opportunities

May 26, 2021
What Funders Should Consider When Designing Nonprofit Funding Opportunities

Managers and practitioners regularly spend significant amounts of time examining nonprofit funding opportunities. They consider how to remain fiscally solvent, maintain their values, implement best practices, provide high-quality services, and maintain a healthy work environment.

In order to understand how organizations make decisions over nonprofit funding, we, here at Capacity Building & Policy Experts, LLC, surveyed 328 nonprofits. We examined how various types of funding affected decisions on service delivery, operational and administrative functions, and the service choices managers must make in order to advance the mission of nonprofits. Our findings suggest that decisions about systems, operations, and program quality are influenced by a combination of the the needs of clients and the administrative and operational effects of funder requirements.

We found that robust organizational infrastructures result in better quality programs and stronger organizations that can meet more needs. We also found that decisions for opting out of nonprofit funding opportunities are not made based on chasing the money, rather they are more likely to be correlated with the administrative, fiscal, programmatic, and operational realities that come about as a result of limitations placed by funders on services to the target population served by the organizations. Thus, if clients can’t benefit from the funding or will be harmed in some way, organizations won’t apply. In addition, decisions about applying for funding are also likely to be influenced by a decrease in needs from the population and the restraints placed on those services by funders.

Considerations in Nonprofit Funding Opportunities by Funders: 

Nonprofits are values driven organizations. Despite the multiple challenges they face in remaining fiscally solvent, they still consider the impact of nonprofit funding opportunities on their clients. Nonetheless, nonprofits appear to be facing multiple administrative and programmatic challenges at the same time due to overtasking and insufficient administrative and programmatic funding. In order to help nonprofits, funders should consider: 

  • Funding organizational infrastructure, which results in better quality programs and stronger organizations that can meet more needs.
  • Allowing for capacity building dollars in funding opportunities for nonprofits as they build-up new programs.
  • Avoiding funding approaches that do not allow organizations to fully staff programs and result in the overtasking employees.
  • Assessing the fiscal and programmatic accountability measures for nonprofits because some appear to be hampering organizations, reducing access to services, and overextending employees.

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