The nonprofit starvation cycle, and one funder who tried to break it

Ford Foundation atrium. Photo by Cc2723, CC BY-SA 4.0, via Wikimedia Commons.

In 2015, Ford Foundation did something unusual. They looked honestly at their own grantmaking and didn’t like what they saw.

Ford’s grantmaking was mostly short-term and project-based, even with long-term partners, and overhead rates were set too low to cover the real costs of doing the work. There was a chronic mismatch between what organisations needed to be effective and what funders were willing to pay. Ford had a name for the pattern, coined by Gregory and Howard in 2009 from their work for Bridgespan: ‘the nonprofit starvation cycle’. And Ford recognised, to their credit, that its own funding was part of creating it.

So they set up creating something different. BUILD, Building Institutions and Networks, was a $2 billion, 12-year commitment that combined multiyear flexible funding with dedicated investment in institutional strengthening. And they commissioned an independent evaluation from the outset, not to prove the program worked but to find out.

General operating support grew from a third of Ford’s overall grantmaking budget in 2015 to 80% by 2022. A fundamental rethink of what a funder is for.

What the evaluation found

The results, evaluated independently by NIRAS across multiple phases, are consistent. Across more than 500 organisations in 44 countries, 83% of BUILD partners said the program contributed to their mission impact to a large extent. Financial resilience increased over time, with 85% of grantees reporting they were more financially resilient by 2024, up from 76% in 2021. The evaluation also found something easily missed: organisations that didn’t receive a second BUILD grant experienced a measurable loss of the resilience they’d built. The gains weren’t permanent, and they required sustained investment to hold.

This is a finding worth reflecting on. We talk a lot about building organisational capacity. But if the capacity dissolves when the funding ends, then really what have we built? Or are our assumptions about capacity incorrect?

The three aspects of a BUILD grant, the long-term commitment, flexible funding, and institutional strengthening support, work together to help BUILD grantees be stronger, more resilient, and more effective. It creates conditions and permission to work both on and in the business at the same time, especially if the funding and support is sustained over time.

What genuine accountability looks like

Traditional grantmaking often confuses the reporting relationship with the accountability relationship. BUILD separated them. Ford’s program officers weren’t receiving quarterly reports as a monitoring mechanism. They were in conversation with partners about what was working, what wasn’t, and what needed to change. The accountability ran both ways.

That shifts how impact measurement gets understood. One of the persistent anxieties in the funder community is that unrestricted funding makes impact harder to see. BUILD’s evaluation found the opposite. When organisations had the stability and freedom to focus, their ability to understand and communicate their own impact improved.

The BUILD model surfaced something else. For a quarter of grantees, the evaluation found that a lack of clarity about future funding undermined progress even within the program itself. The cost of uncertainty is real, and it is paid in cognitive and strategic freedom.

Strategy changes as sector events

As part of the recent leadership change at the Ford Foundation, BUILD came to an end, opening space for the new President, Heather Gerken, to shape the future of the Foundation. 

Our recent research Shaping and Fuelling Change explored how foundation strategy changes can feel very internal to the institution but can actually be experienced as sector events outside it, requiring careful consideration. 

BUILD was not a standalone exercise. It shifted the Foundation’s broader practice towards unrestricted funding and institutional strengthening support. Now that the program has concluded, we hope the evidence and lessons it produced endure, not just for Ford Foundation but across philanthropy more broadly. 

The question is not whether funders can trust organisations with flexible funding. BUILD has answered that. The harder question is whether funders are willing to look honestly at their own grantmaking, as Ford did, and to act on what they find.

This is the second post in our series What the Evidence, Expertise and Experience Says. Written by May Miller-Dawkins and Jo Taylor, edited by Courtney Collins.

Next week: PropelNext, Unity Care, and what happens when a funder stays in when everything goes wrong.