Imagine you're running a business and you're told you can't invest in your production lines, pay your office heating and cooling bills, and even staff training and salary increases are subject to outside approval. Now you know what it's like for many charities who find it virtually impossible to generate financial support for "core operations".
Understandably most funders and donors want impact for their donations. So they tend to want to fund programs, projects, new activities and "externally" focused costs. But we all know you need to keep the lights on and pay "overhead" costs just to run those programs... I give full credit to organizations like the United Way of Toronto that does continue to fund "core operations" because without them many worthy organizations would be in real financial trouble.
And I don't think we'll resolve this issue until common standards are set, books are made fully transparent, and charities volunteer to show the "real" costs to donors and funders. Once the philanthropic world has met this end of the bargain we need to talk about the elephant in the room: that there are legitimate costs to running a charity that need funding. The alternative is to continue the current cycle of self-inflicted starvation (or funny games with how the numbers get reported) where every charity seeks to look like cheapest operator in town.