As a nonprofit organization, LifeWay Network Inc. understands the importance of philanthropic funding. And while any form of funding is important and well appreciated, there is a growing frustration among many nonprofits as philanthropists tend to overlook the importance of capacity-building and operation expenses in favor of restricted funding for specific programs, even when those programs do not include funding for the professionals needed to carry them out.

Capacity-building and operating expenses are often seen as “unsexy” compared with funding for programs that directly serve the community. However, if nonprofits are to truly drive positive change, they need to have the capacity to carry out their missions. Without the necessary infrastructure in place, such as staffing—not only direct service staff, but also administrative staff who manage the organization’s finances, operations, and funding efforts—we cannot do the essential work that we do. Nonprofits need physical space to carry out their work. This includes office space for staff, as well as programmatic space for direct service programs; without these, programs simply cannot be sustained. Capacity building might include investments in systems or technology, whereas operating expenses are necessary expenditures like rent, utilities, and salaries.

During conversations with other nonprofit leaders, it has become clear that lack of funding for operating costs is a widespread issue that affects many organizations across different sectors. Many have expressed frustration with the focus on programmatic funding at the expense of infrastructure and capacity building. At LifeWay, for example, we provide safe housing and other critical services to survivors of human trafficking. We are dedicated to helping survivors heal and recover, but we cannot do it alone. However, we struggle to secure funding for staff salaries, utilities, and rent, even though these expenses are necessary to keep the organization running. This creates a challenging environment where nonprofits must constantly balance the need to sustain our operations with the desire to provide direct services to our communities. We need the support of philanthropists who understand that, to truly make a difference, we need the funding to build organizational capacity and cover operating expenses. Without these resources, we simply cannot do the work that is desperately needed.

It’s time for philanthropists to recognize the importance of capacity-building and operating expenses and shift their funding strategies accordingly. By investing in these areas, funders can help mission-driven organizations adapt, thrive, and drive positive change.

Additionally, funders can also partner with trust-based community-centered organizations to support community-led solutions. Trust-based, community-centered nonprofits prioritize building trusting relationships with donors, recognizing that trust is critical in the success of the organization; for its part, the donor provides flexible funding that allows the nonprofits to support the community with more autonomy. At LifeWay we prioritize transparency, honesty, and accountability to build and maintain trust with donors.

Furthermore, investing in capacity-building and operating expenses can make nonprofits more effective, efficient, and sustainable over time. For example, improved IT infrastructure can enable a nonprofit to collect and analyze data that can inform programs and initiatives, leading to better outcomes for the community. Similarly, investing in staff development can help build a more skilled and resilient team that can adapt to changing circumstances, which, in turn, leads to increased efficiency and effectiveness. In addition, organizations providing mental health counseling need to cover salaries for social workers, therapists, and administrative staff to ensure that they can provide consistent and high-quality services. Without this funding, they may need to reduce their staff size or pay rates, which could impact the well-being of both their clients and their staff. By investing in capacity-building and operating expenses, nonprofits can become stronger, more impactful, and better equipped to serve their communities.

There is an inequity in general operating support in that smaller community-based organizations, particularly those led by people of color, are often at a disadvantage. Historically, white-led organizations have been more likely to receive higher funding support than BIPOC-led organizations. This can be attributed in part to the fact that white-led organizations tend to have more established relationships with funders and are more likely to have access to resources like grantwriters and development staff. Additionally, funders may have biases or assumptions about the capacity of BIPOC-led organization, leading them to focus on funding specific programs rather than investing in infrastructure and capacity building.

Overall, there is a need for greater equity in the distribution of capacity-building support to ensure that organizations have the resources they need to carry out their mission and serve their communities. This requires a commitment from funders to address systemic biases and invest in capacity building for all organizations, regardless of their size or leadership structure.

Marion Kendall, M.Ed., MSW, is CEO of LifeWay Network.