When you donate to a nonprofit, you want to offer your support in a way that achieves your giving goals. At the Community Foundation of Utah, we explore the differences between programmatic and operational support with our fundholders to help them create an impactful giving strategy.
Our giving facilitation process presents donors with thought exercises to explore their giving values. We’ve developed this discussion piece around programmatic and operational support to help you decide which grant type resonates with you.
What is the difference?
As a donor, you can specify how you want your donation to be used by a nonprofit. You may choose to fund a specific program or service of a nonprofit, such as an outreach program at an arts academy or support services at a food pantry. You can also choose to fund an operational need not related to programming. Examples of operational support could include grants for building costs, staff salaries, new computers, or office supplies.
Programmatic Support
Strengths
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By designating a specific program for your grant, you have greater control over where your grants are used and the impact created with your donation. This may lead to more measurable outcomes as to how your money made a difference; you can track the performance of the program and see the direct results of your support.
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You can develop close relationships with the nonprofit’s staff, leading to a better understanding of the program’s needs between you and your grantee. Building relationships with nonprofits also often leads to enriching personal fulfillment for many donors.
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Programmatic giving allows you the opportunity to continue the legacy of a program close to your heart. Donors may have an emotional connection to a program that served them or a family member in a meaningful way and would like to share their experience with others.
Limitations
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Sometimes organizations face unexpected changes in circumstances and may need to adjust or shift the focus of their programs. Programmatic grants may not provide flexibility for an organization to address the changing needs of the community they serve.
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Programmatic grants may require more extensive reporting responsibilities for nonprofit organizations. Some donors would prefer their grantees spend as little time developing reports as possible, giving the grantee more time to spend furthering their mission and using grant money to invest in their community.
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If you provide the primary source of funding for a program, you may not see a continuation of this work if future funding is not committed. Some donors choose to stipulate that their grant money cannot be the sole source of funding for a program to be sustainable longer-term.
Operational Support
Strengths
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Like most businesses, nonprofits have administrative needs that are integral to the success of the organization. Granting to an organization’s operations allows them the flexibility to allocate funding where needed so they can effectively provide services within their issue area of focus.
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Especially for nonprofits working with vulnerable populations, sudden changes such as pandemics, natural disasters, or emerging crises can drastically affect the needs of a community. Granting operational support helps nonprofits adapt their programs to new situations without compromising the intent of your grant’s designated purpose.
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Granting operational support helps foster trust between you and your grantees, particularly for donors engaged in longer-term giving relationships. After granting to a nonprofit’s specific program for several years with satisfactory progress, you may consider granting to an organization’s endowment to increase the breadth of your grant’s longer term impact.
Limitations
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Operational support may have less defined granting agreements, which may be unappealing if you like to predetermine how your grant money is used. Donors should discuss with the grantee if they would like their money to be used for a specific operational need or if the grant can be used at the discretion of the organization.
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It can be more difficult to track and measure a grant’s immediate impact if operational grants are put toward unspecified administrative needs. Giving to an organization over several years can help donors see the long term effects of operational support.
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Without a diversified and sustainable financial model, organizations may become dependent on your operational support. Donors might request that the grantee create a plan as to how they will cover operational costs without the donor’s support before giving seed money to grant toward that purpose.
