The Case for Core Funding Over Project Grants

Twenty years inside the nonprofit world, and I can still count on one hand the times a funder sat down and asked, “What do you actually need to thrive?” Most chats kick off with a project idea, a shiny outcome metric, and a line-item budget that carefully sidesteps the unglamorous glue holding everything together. That’s why I’m laying out the argument for core funding—sometimes called unrestricted or general operating support—over project grants. This isn’t just a preference I picked up along the way; it’s a principle hardened by long, messy experience.

Understanding the Funding Landscape

Project grants rule the roost. A foundation or government body drops a request for proposals tied to something specific—youth employment, say, or water sanitation. Organizations scramble and compete, and the winners get funds locked to that initiative, complete with painstaking output reports. From the outside, it looks clean: donors see straight-line results, and nonprofits pump out concrete programs. But scratch that surface, and you hit a quiet fragility that never quite goes away.

Core funding flips the script. It backs an organization’s whole mission—salaries for the executive director, the rent on a cramped but functional office, overdue tech upgrades, accounting help, even those rare, vital pauses where a team stops to think instead of cranking out another report. It’s the money that lets an outfit exist with some backbone and integrity.

Why Project Grants Fall Short

I’ve juggled dozens of project grants. Each arrived with its own logic model, its own clutch of indicators, its own reporting template. The admin burden alone swallowed hours that should have gone straight to the people we serve. Worse, though, was the slow strategic drift. We’d chase a grant because it was there, not because it fit our long-term vision. Over time, our identity smeared. We became a collection of disconnected projects, not a coherent force pushing for change.

Project grants also feed a starvation cycle. Cap overhead at 10%, and an organization can’t put money into staff development, half-decent software, or a rainy-day reserve. People burn out. Systems creak and snap. The very programs funders want to see succeed turn brittle. I’ve watched solid teams dissolve under that weight, and it’s never pretty.

The Practical Strengths of Core Funding

When an organization gets unrestricted support, it can finally plan. That’s a bigger deal than it sounds. With multi-year core funding, a director can hire the right person—not just the one who fits a grant’s frantic timeline. They can invest in a donor database that actually functions, or in mental health support for frontline staff who’ve been running on fumes. These aren’t luxuries you tack on after the “real work” is done. They’re the floorboards.

Core funding also builds resilience. Think back to those raw early months of the pandemic: organizations sitting on a mix of unrestricted funds pivoted overnight, while peers lashed to project grants waited for amendments—or folded altogether. Flexibility isn’t a nice-to-have. It’s oxygen.

How It Strengthens Mission

I remember a community health group in Nairobi that stepped away from project grants and into a core-funded model. Freed from the chase for short-term opportunities, they spent six months just listening to residents. Then they tore up their old approach and rebuilt it. They dropped two popular but low-impact programs and poured their energy into policy advocacy. The board squirmed at first. But within two years, maternal health indicators shifted measurably—not because a grant demanded it, but because the team finally had space to follow what actually worked.

That’s the principled core of core funding: it trusts the people who live and breathe the problem. It says, “You know your context. You know your community. We’ve got your back while you do the work.”

Accountability Without Micromanagement

A pushback I hear often is that unrestricted funding skates by without accountability. In reality, the opposite can happen. When a funder puts money into core support, the whole relationship shifts—from a transaction to a partnership. Reporting leans into overall health and learning, not just counting widgets. Hard conversations about failure become possible. And those conversations are where actual improvement hides out.

I’ve sat in too many meetings where a project-grant report was a polished fiction, because admitting a setback threatened next year’s funding. With core support, we could say, “That fell apart, and here’s what we’re taking from it.” That kind of candor built trust and fed stronger strategies down the line.

Addressing the Funder’s Concerns

I get why funders hesitate. “General operating support” doesn’t tell a tidy story the way drilling wells or training teachers does. Boards love tangible metrics they can grab onto. But there’s a growing stack of evidence that core funding produces better outcomes. The Center for Effective Philanthropy has documented that nonprofits with stable unrestricted revenue tend to be more effective and more inventive. Some forward-leaning foundations now commit 20% or more of their giving to core support—and they’re not looking back.

Funder collaborations offer another path. When a group of foundations pools unrestricted funds for a shared cohort, each donor spreads their risk and taps into collective insight. I’ve watched this play out in human rights and environmental justice networks, and the energy shifts when nobody’s guarding a silo.

The Role of Governments and Intermediaries

Government contracts are notoriously tight, but even here, cracks of light appear. Some local authorities now offer “outcome-based contracts” that fund an organization’s capacity to hit broad results, instead of micromanaging every activity. Intermediary groups—the ones that regrant funds to grassroots partners—can also push core support forward by swallowing the admin burden and choosing to trust the people on the ground.

Shifting the Culture

Changing funding norms takes more than a good argument. It needs a cultural tilt. Nonprofit leaders have to get comfortable turning down project grants that don’t fit, even when the bank balance is tight. That’s a courage thing, and it helps enormously when boards grasp the long-term price of misalignment. Funders, on their side, need to widen their idea of effectiveness beyond glossy outputs. A healthy organization is a legitimate outcome, full stop.

Lately, I’ve started asking every potential donor a simple question: “What would it take for you to offer unrestricted support?” Some look surprised. A few have circled back with multi-year commitments. The conversation itself plants something that grows.

Practical Steps for Organizations

• Audit your current funding mix. What share is truly unrestricted? Get honest about how much wiggle room you really have.
• Communicate your overhead story. Show donors what their unrestricted dollars make possible: a steady team, a functional office, protected time for reflection.
• Build a reserve policy. Even a small unrestricted reserve signals financial maturity and cuts down on panic-driven decisions.
• Seek core-first funders. Some foundations openly prioritize general operating support. Start there and build a track record others can’t ignore.

FAQ

What exactly is core funding?

Core funding is money given to an organization to use at its own discretion, in support of its overall mission. It covers operational costs like staff salaries, rent, and administration—not a specific project. This allows the organization to allocate resources where they’re most needed.

How can funders ensure accountability with unrestricted grants?

Accountability comes through relationship, not just paperwork. Funders can request narrative reports on organizational learning, financial health, and strategic progress. Site visits, open dialogue, and long-term engagement often reveal more than a compliance checklist ever could.

Isn’t it risky to give money without tying it to specific outcomes?

It can feel riskier, but the bigger risk is an underinvested sector that cracks under pressure. Unrestricted funding builds the infrastructure that makes every program stronger. Many funders find that the organizations they back with core grants perform better over time precisely because they’re not stretched thin by fragmented project demands.

Can small organizations realistically attract core funding?

Yes. Start by cultivating individual donors who believe in your mission, not just a single project. Some foundations also prioritize grassroots groups with core grants. Being clear about your impact and financial needs in every conversation makes a difference—even a modest unrestricted grant can be a game-changer.

Conclusion

The case for core funding is both practical and principled. It’s practical because it builds organizations that last, adapt, and deliver. It’s principled because it respects the expertise of the people doing the work. I’ve seen the difference in boardrooms, in field offices, and in communities. Shifting the balance from project grants to core support won’t happen overnight, but every conversation nudges us closer to a sector that’s funded for real impact—not just for projects that look good on paper.