December 18, 2015

The Real Cost Project: A New Perspective on Making a Difference

What if changing our perspective and our expectations could improve outcomes for our target populations?

The Real Cost Project aims to make this outcome a reality.

Launched in April 2015, the Real Cost Project is a collaborative initiative developed by Northern California Grantmakers, San Diego Grantmakers, and Southern California Grantmakers. It “seeks to provide the knowledge and skills to support an outcomes-based funding approach and identify the best new practices and approaches to increasing impact” in the community.

Focusing on real-cost-based funding—that is, evaluating every factor that will play a part in a funding effort from concept to completion—this project could fundamentally shift the way grants are made, here, locally, across the country, and internationally.

I see the challenges with funding on a day-to-day basis. Frequently, when talking to the CEO or the Executive Director of a nonprofit organization, I find they lament the fact that grants have restrictions, especially on the amount of overhead they can charge to the grant.

There are challenges inherent to estimating the percentage of time staff will have to devote to a particular project, especially knowing that as the project progresses, the estimates could change. In the end, most nonprofits complain that they aren’t able to cover all of the costs of a project, solely based on grant funding . The Grantmakers for Effective Organizations (GEO) suggests that making core operating support grants (versus project-focused grants) provides the best avenue to supporting nonprofit organizations. This is why our Mission Support Grants are set-up as they are—as flexible, core operating support grants.

The next step, then, is taking what we’ve learned about funding and applying it to how we operate. It’s one thing to identify a goal, but how often do we actually pinpoint every detail and every cost, then create a plan to execute a realistic, cost-effective approach to achieve it?

The goal for nonprofits is to create change and to better the lives of those they serve. The mission is not simply to be frugal and good-hearted (as many perceive). These are valuable qualities for any nonprofit, but without resulting in real, sustainable change, it’s a disservice to the organization and a disservice to the target population to not explore different methods and approaches.

This is the goal of the Real Cost Project. As we move forward, it is imperative that grantmakers change not only how funds are distributed but how they think about funding. For AHF, we emphasize that a real cost budget be presented in our Innovation Initiative. We want to know the real cost of social change and innovation. We ask what it will really cost to advance health and wellness.

As mentioned in the video embedded above from the Donors Forum, “If you want success, you must pay for what it costs to succeed.”

Think about what it takes—from start to finish—to affect those you serve. How can you help us change the conversation about the real cost of making a difference?

How do you evaluate the real cost of social change? What are your impressions on this movement? Leave a comment, and we’ll discuss!

Alliance-Healthcare-Foundation-Executive-Director-Nancy-Sasaki-Headshot-Nancy Sasaki, Executive Director
Alliance Healthcare Foundation

About Alliance Healthcare Foundation

Alliance Healthcare Foundation is a San Diego-based nonprofit which works with nonprofit, government and community agencies to advance health and wellness throughout the San Diego and Imperial Counties. AHF works to serve the most vulnerable – the poor, working poor, children and homeless by providing grants, advocacy and education to support its region.

To learn more about AHF, visit:   AHF on Facebook, AHF on LinkedInAHF on Google+, AHF on YouTube, AHF on Twitter

To learn more about our grantees, visit our Grantee Page. 

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