Should you offer general operating support? When and why it matters

Now more than ever, nonprofit leaders say that general operating support (GOS) grants have the most impact on strengthening their organisations. 

Because of that, many grantmaking foundations have responded in kind: In a 2022 survey, 90% of grantmaking entities reported that they awarded at least some GOS dollars, with a median of 32% of their total grant funding going toward GOS—a percentage that increased from the year prior.

In this article, we’ll cover what GOS is, why it matters and how grantmaking foundations can offer this kind of support as effectively as possible.

What is general operating support?

General operating support (GOS) is unrestricted funding that nonprofits can use for organisational expenses. A general operating support grant example might include the purchasing and expensing of items like staff salaries, rent and technology.

Unlike project-specific grants with detailed spending requirements, grants for general operating support give organisations the flexibility and support they need to fund the daily operations that make programming possible.

Why is GOS gaining traction?

While general operating support has always been beneficial to nonprofits, in recent years, it’s become even more popular and critical—for a few reasons:

Nonprofits need consistent support: With economic downturns and funding uncertainties, nonprofits need unrestricted and consistent assistance in covering their daily operating expenses so they can carry out their missions.

The trust-based philanthropy movement is growing: Progressive funders increasingly recognise that nonprofit leaders closest to community problems are best positioned to identify solutions and allocate resources, rather than having distant funders micromanage spending decisions. GOS gives them the stability and support they need to make the best decisions for their organisations and their communities.

GOS is linked to better program outcomes: One of the biggest benefits of general operating support is its ability to amplify impact. According to research, 93% of nonprofit leaders report that this type of grant has moderately or significantly strengthened their organisations’ ability to achieve their missions. 

Nonprofit staff are burned out: Nonprofit workers are stretched thin, trying to operate efficiently while creating impact. Unrestricted grants, such as general operating grants, can significantly alleviate the workload of some of these staff. In fact, in one particular case, more than a third of leaders indicated that receiving an unrestricted grant reduced their level of burnout.

Multi-year commitments offer sustainability: Unlike restricted grants, unrestricted multi-year grants allow organisations to make strategic investments, retain quality staff and plan initiatives that take time to develop, creating far more impact than equivalent short-term project funding.

When and how to use GOS effectively

Offering general operating support for nonprofits requires a bit of strategy in order to ensure optimal outcomes for everyone—including both grantees and grantmakers:

Fund organisations you believe in, not just programs: Use operating support when you trust the nonprofit’s mission, leadership and track record, viewing your investment as supporting their overall capacity to create change rather than purchasing specific deliverables.

Prioritise multi-year commitments over annual grants: Three-year operating support provides exponentially more value than three separate one-year grants of the same amount.

Conduct thorough organisational due diligence upfront: Since you’re giving discretion to nonprofit managers, assess their financial management practices, strategic thinking, leadership stability and governance structure rather than focusing solely on recent program outcomes.

Start small: If you’re hesitant, start by funding 50% operating support and 50% project-specific work. Then gradually increase the operating portion as trust builds.

Coordinate with other funders when possible: Multiple foundations providing operating support to the same organisation creates even greater stability and planning capacity.

Adjust reporting expectations accordingly: Focus on organisational health indicators like staff retention, financial stability and strategic progress rather than detailed project metrics.

Top GOS challenges and how to address them

As with any type of grant funding, GOS comes with a few obstacles that grantmaking foundations will have to maneuver:

Board resistance: Making the case for general operating support internally can feel like an uphill battle. To help build your case, share research on operating support effectiveness and start with small pilot grants to demonstrate results before scaling up.

Difficulty assessing organisational effectiveness: Offering GOS requires a different kind of evaluation. To address this, develop measures of leadership quality, financial management practices, strategic thinking and organisational track record rather than relying on easily quantifiable but potentially misleading project outputs.

Concerns about reduced accountability and oversight: GOS is often accompanied by worries about rogue spending. To offset these worries, implement regular check-ins, reporting and site visits for relationship-building.

Make offering GOS easy with Good Grants

General operating support grants can be a godsend for nonprofits—and a strategic move for grantmaking foundations that want to enhance their grantee-funder relationship and create more impact. But, like with any new type of initiative or funding, there’s strategy involved and a few obstacles to be aware of.

With Good Grants, grantmaking foundations can streamline all of their grant programs in one place—from pre-award to post-award—helping foundations track all the outcomes they need, communicate consistently with grantees and house all of their documentation in one place.