Now is the Time to Push for Changes to Non-Full Cost Funding Practices [SUBSCRIBERS-ONLY]

Our recent article on the Challenges of Accepting Non-Full Cost Funding prompted compelling and thoughtful comments on the universal problem of non-full cost funding in the nonprofit sector. Many commented that non-full cost funding is a systemic problem that fuels marginalization of the communities, causes, and peoples we serve. To right this wrong, we must draw attention to these problems and advocate for change. Indeed, real sustained effectiveness cannot be achieved if this harmful funding culture continues.

One very compelling and thought-provoking comment came from Alan Thornton, the President & CEO of St. John’s Community Services. Alan highlighted how, in contrast with nonprofits, the for-profit world is not required to accept funding of this nature:

“Nobody questions the need for for-profits to produce healthy margins, because in addition to shareholder value, it also creates capital for the sake of re-investing significant dollars back in the business in order to further build capacity and opportunity, but that perspective is still far from accepted in the nonprofit funding world. Hence the stringent expectations on limitations on Fundraising and Overhead costs, and the continued pervasiveness of the “do more with less” mentality. If the same mentality were applied, and the goal was to both increase shareholder value (aka clients being served) as well as invest for capacity, in the end, good nonprofits might be able to actually afford decreases in contracts, or provide more mission return overall.”