By Lauren Kotkin, ASF
Two recent ASF programs surfaced some great takeaways. Check out our Educational Programs calendar for upcoming in-person programs, conference calls, and webinars that interest you.
Gen Op: The Disconnect Between Frequency and Amount
Just over 70% of ASF members gave general operating support grants in 2011. The same year, Grantmakers for Effective Organizations (GEO) reported that 80% of its members gave general operating grants—but the grants amounted to just 20% of grant dollars.
Why only 20% of grant dollars when nonprofit leaders say these are the most flexible? For at least two reasons, according to our September 17 webinar with co-hosts at GEO:
- You can’t count widgets, so to speak, making it different to measure the impact of general operating support—a process that requires more effort and engagement. Yet the speakers emphasized that the benefits to grantees far outweigh the added (or, rather, different) effort. Another pro: Funders learn more about their communities (geographic or funding areas) and the people and issues at hand.
- There still persists a myth that efficient and effective nonprofits all have low overhead—a myth that, in turn, makes supporting overhead (via general operating support) undesirable. GuideStar, Charity Navigator, and the BBB Wise Giving Alliance have a new campaign to dispel The Overhead Myth.
What factors affect your decisions about whether to provide general operating support, and in what amount? Download General Operating Support: A Geo Action Guide
Making Tactical Investment Moves
Should you change your asset allocation based on fact (what happened in the market) or opinion (what is being forecast)?
Make tactical moves, advised U.S. Trust Bank of America’s Stephen Campisi in his October 24 Quarterly Market Update conference call. And exactly how large is a tactical move? 2%? 10%? Investment changes should be modest, he replied. That is, make enough of a change to make a meaningful difference in performance while not increasing risk substantially if you are mistaken. Start tactical moves in sectors that tend to have more volatility, because these sectors also have more opportunity, and do so in a consistent way.
For example, commodities delivered weak returns over the past year—they lost 15%—but they had a strong third quarter at 3.5-4.5%. So what to do? If you’ve had no exposure to that sector, this is a good time to start. That is, you can use this as a buying opportunity while increasing your portfolio’s diversification. For your plan to make sense, you must have a forecast for targeting your tactical decisions. For example, you probably want to remain on the light side if you expect to experience greater risk of loss in a sector, while moving additional funds to those sectors that you expect to do well. But again, tactical moves are small, incremental changes.
Tactical opportunities come and go quickly, so consider being as nimble in your investment decisions as you are in your grantmaking. Register now for the Q4 Quarterly Market Update conference call
ASF Senior Program Director Lauren Kotkin plans a range of educational programs for the ASF community, including conferences, webinars, and conference calls. She also dedicates a portion of her time to managing ASF’s resources on investments. Previously, she worked at the Council on Foundations in the Family Foundation Services department. Lauren holds an undergraduate degree from Duke University and an M.Ed. from Lesley University, with a focus on using arts in education.
