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| September 26, 2003 |
Vol. 8, No. 3 |
Funding Matters: A Warning And An Opportunity
Fact Sheet #3: Administration: The New Dirty Word In Funding
The Canadian Council of Social Development (CCSD) has produced a seminal
report, "Funding Matters: The Impact of Canada's New Funding Regime on
Nonprofit and Voluntary Organizations." This study analyses changing
funding patterns throughout Canada and their impact on voluntary sector
organizations. The findings of this study compliment the results of
community-based research conducted in Halton in recent years that identify major
funding issues and their consequent impact on the quality and accessibility of
community services. Community Development Halton has prepared five Community
Dispatches of the Fact Sheets prepared by CCSD for the June 2003 launch of their
study. I believe this information is essential for all those in leadership roles
in the nonprofit and voluntary sector. Furthermore, a workshop, Funding
Matters: A Warning and An Opportunity, for senior managers, Board members,
funders and concerned citizens is planned for Tuesday November 25, 2003.
Katherine Scott, author of the CCSD report, will give the keynote address.
Details will be available shortly.
Joey Edwardh
Vital Operating Expenses Few Want To Fund
Funders are now very reluctant to cover administrative costs that cannot be
directly tied to a project or program. Organizations can typically include a
portion of administrative costs, such as rent, in a project budget. But funders
take a narrow view of allowable expenses and many do not permit organizations to
charge any administrative fee at all.
Q. Isn't it reasonable to expect that nonprofit and voluntary groups should
devote as much of their funding as possible to programs?
A. Absolutely. But this expectation has evolved into an unreasonable demand that
virtually all monies be strictly directed to programming.
Many study participants expressed frustration over their inability to
charge - much less recoup - the real costs of their programs under the terms of
many funding agreements and contracts. Moreover, the trend towards fixed-price
contracting is compounding these difficulties year after year. The ramifications
for nonprofit and voluntary groups are enormous:
- Two-thirds (66%) of organizations surveyed reported cash flow problems
related to the project-funding regime. Many indicated that they could not meet
their payroll obligations on several occasions.
- The project-funding model eats away at the sustainability of organizations.
Programming is pared to the bone, important activities are dropped, and capital
and infrastructure costs are deferred - all in an effort to make up for
non-program costs that are not recognized in the rigid project budgets.
- The ban on funding administrative or core organizational costs directly
undermines the viability of programs.
- Organizations are experiencing increasing difficulties in providing the
infrastructure necessary for effective program delivery.
- Funders - in many cases, governments - are increasingly slow in signing
project contracts, and organizations cannot bill for any costs related to the
start-up or operation of their projects - sometimes for weeks after the start
date - until the contract is formally signed.
- As a consequence, only groups which have access to commercial credit or have
substantial financial reserves can afford to take on these contracts
For more information on Funding Matters: The Impact of Canada's New
Funding Regime on Nonprofit and Voluntary Organizations, visit the CCSD
website at: http://www.ccsd.ca/pubs/2003/fm/
 PDF:
164 k
Produced by Community Development Halton
860 Harrington Court
Burlington, Ontario L7N 3N4
(905) 632-1975, (905) 878-0955; Fax: (905) 632-0778; E-mail:
office@cdhalton.ca
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