In 2016, five foundations—Ford, Hewlett, MacArthur, Open Society, and Packard—came together with The Bridgespan Group to explore the underlying challenge of insufficient cost recovery: project-restricted grants that do not cover the actual costs of those organizations we are trying to support. Building on previous research, the funder collaborative engaged nonprofit organizations, program officers, sector intermediaries, and financial experts (including BDO, FMA, & Humentum) in a pilot project to better understand the dynamics of the cost recovery problem and potential solutions. Based on our findings, and with a view toward driving change among funders and finance professionals more broadly, the session will outline specific tactics that can be used to support grantees in building stronger, more effective organizations.
- Understand the drivers of the insufficient cost recovery problem and the relationship to financial instability among grantees
- Navigate a “menu of grantmaking approaches,” spanning flexible enterprise-level support as well as project-restricted funding options
- Learn about the process of indirect cost rate verification with individual grantees (as piloted by the funder collaborative and pilot “verification partners”: BDO, FMA, & Humentum), including where opportunities exist to develop shared guidelines for indirect cost rate calculation
- Identify what steps funders can take to recognize and address the cost recovery problem in their own portfolios