Full Cost Project:
Increasing the Impact of Philanthropy in California

In addition to the increased awareness around the negative impact of funding that doesn’t cover the full cost of programs, the world in which social sector organizations operate and the way in which they work is shifting rapidly and drastically. Over the past ten years we have seen:

By focusing on the outcomes they want to achieve, by understanding what it really costs to achieve those outcomes; and by focusing on the strategic questions to build a sustainable organization, funders can not only bring their grantmaking into the new reality but can prepare their grantees for the changes that lay ahead.
  • Governments changing how they fund and approach social problems at the federal, state and local levels – often resulting in less money for many nonprofits.
  • Government funders trying to be “smarter” about allocating limited dollars; and trends such as “pay for success” shifting the risk from government onto philanthropy.
  • Increased focus on collaboration and collective action presents incredible possibilities and significant challenges for the sector.
  • A blending of the social and capital markets driven by a new wave of donors looking for innovative means to invest in social outcomes.
  • Technology and ‘big data’ changing how organizations work, presenting a new set of opportunities and potential barriers.
  • The increase of big money in political campaigns threatening to drown out the voices of those who lack the resources to compete.

In 2005, there were no such things as B Corps, there was no ‘impact investing’ as a recognized approach to funding, there were no ‘Social Capital Markets’, and social impact bonds were still five years away. And there was no “Citizens United” that opened the flood gates of “big money” into political campaigns. Ten years ago, the social sector was a vastly different place.
Forget fundraising ratios and overhead rates. The debate over ‘overhead’ is a bit like arguing the virtues of Beta vs VHS in the age of online streaming videos. It is not about good or bad, it just isn’t applicable anymore. Focusing on overhead means you are focusing on inputs in an outcomes-based world. The Real Cost Project aims to change that.