Operating Support Grants

Accountability vs. Trust

• Most private sector grantmakers used the word trust in talking about their relationships with grantees and the paperwork required, while public sector funders spoke about the need for lots of data and documentation to support their investment. The question is, where is the balance? While there was a fairly energetic discussion of this topic, no one was willing to answer the question: Why don't we trust our grantees?

Entitlement/Over-dependence vs. Partnership

• One participant asked the question, what's wrong with over-dependence?
• Some expressed concern that grantees felt "entitled" to the funder's investments. The counterargument was that others had developed a partnership with their grantees and found "entitlement" an inappropriate word to describe a relationship that they had with their grantees.

Procedures and Process Differences

• The examples of types of operating support requirements and processes varied (annual and multi-year).
• It is obvious but critical to note that public and private grantmakers do things differently. The biggest learning opportunity during this session was the discussion of why and how procedures and processes differ.

How directive can or should a grantmaker be with operating support grants?

• This was the most enlightening conversation. If operating support grants are "unrestricted," can or should they be directive? When do grantmakers function like parents? Do directives imply a lack a trust?
• Our colleague from the Houston Arts Alliance, a nonprofit local arts council that distributes public sector funds, talked about explicit directives to operating support grantees. For example, a directive might be that 10 percent of the Alliance's two-year grant must be used for marketing.

Capacity-Building

• Two colleagues from foundations talked about using a rubric and logic model to help focus the investment on such concerns as program quality, facility needs, and management issues.

An "out" strategy, or when do you stop funding a grantee?

• Hewlett Foundation described its agreement with multi-year grantees: It makes its investment on a declining basis, and it provides capacity-building services to help grantees find other sources of revenue replacement. This makes room in the foundation's arts portfolio for new grantees and helps guard against feelings of entitlement.
• An active debate followed on the ramifications of the Hewlett model.

Governance

• Participants had a fruitful discussion about board leadership (or the lack thereof) and the board's commitment to developing leadership within arts organizations. Specifically, there was concern that arts organizations are not developing the next generation of leadership. Several described instances of board members having to appoint one of their own to the arts organization's CEO position.
• Why do we only give to 501(c)(3) organizations? If grantmakers can give operating support to non-501(c)(3)s, what's stopping us from taking that risk? Are we as grantmakers too risk-adverse?

Artists' Compensation

• Another hot topic during this session was artists' compensation. Many felt strongly that arts funders should require grantees receiving operating support to pay artists a living wage. Several grantmakers shared examples and language from their programs.

Interesting Viewpoint

• Generally, funders base grants on a sliding scale of trust and interest; the more prescriptive the grant, the more rigorous the application and review process. For grantmakers seeking to encourage innovation, application and review generally are less complex.