A common complaint among grant recipients, both in the arts and more generally, is that too many funders only support “new capacity”: they aren’t willing to chip in towards general operating expenses or other core activities that require ongoing support. It’s not hard to see why this is. Overhead is not a particularly sexy thing to fund, it doesn’t produce flashy case studies to show off—and of course it’s much easier to fund one-off projects with finite bounds than ongoing programs that demand detailed auditing.
There’s nothing inherently wrong with project-based philanthropy when it’s one funding option among many, but it becomes problematic when it’s the only show in town. The imbalance fosters lopsided organizational growth. It encourages waste and misuse. It can even backfire financially, creating costs in excess of what recipients receive in funding. (more…)