Foundations and governments love to fund new and innovative projects, and in the past were reluctant to fund ongoing operations of a nonprofit organization. Today, however, some foundations are changing their approach and providing operating support to the nonprofit organizations deemed most critical to the continued vitality of their communities.

The biggest struggle among leaders in the nonprofit sector is finding operational funding to keep the doors open and the lights on, just so they can continue to do the good work they've already started. Often, they have created additional programs just to provide a portion of grant monies for overhead (or “indirect”) costs. But that puts them in an awkward situation because the more programs they invent — assuming the programs work — the more they have to maintain.

You can understand that it can get a little tricky when you sit down to talk about how you're going to sustain a project over the long term, after it becomes institutionalized and, as such, the responsibility of an already stretched “operating” budget.

This section, nonetheless, is the make-or-break point of consideration among foundation trustees and grant readers. You must plan how you will put together the funding to sustain the program after the grant money is spent. You'll have to decide whether it will be through fees for service, partner funding, future grants or donations, operations, or, most likely, some combination of these income sources.

And often, you'll need a plan for sustaining the project for at least three years after the grant period ends.

The hard truth is that most projects really struggle when launch funding runs out. Often, they become a shadow of what they once were. The plus side of the equation is that the leadership of the organization can review its evaluation and eliminate what doesn't work. The negative side is that if a program works just the way it is, any adjustment will weaken it and the agency that operates it.

All that said, you are left with the responsibility of writing something as realistic as possible under rather unrealistic expectations.

As you'll see in the following sample budget for sustainability, the agency tries to balance declining grant funds with increased fees for services. It also plans to seek local foundation funding to replace declining government funding and contribute some support from its own annual budget.

Year One: $432,500 Budget (grant year includes one-time capital investment)

Year Two: $175,000 O perating Budget

Year Three: $175,000 O perating Budget

Year Four: $175,000 Operating Budget

This nonprofit was smart. The minute they were awarded a federal grant, they began meeting with local funders to talk about what they'd need in years two and three. Over the next year, they sent program officers media articles about the project and evaluation results, so they were well positioned to seek funding when the time came.