Sustainability strategies of socially oriented NPOs: grant support mechanism

The amount of grant support allocated by the state to the non-profit sector of social services is increasing annually; the number of social projects and the volume of their funding are growing as well. The state’s interest in the qualitative development of socially oriented non-profit organizations and expansion of the segment of their participation in social services is determined by the opportunities that non-profit organizations possess as new performers of social services, capable of introducing innovation in addressing social problems of citizens in need of support. In Russia, the Presidential Grants Foundation is the major grant operator that accumulates public funds and distributes them on a competitive basis among non-profit organizations. Its unique competitive system complies with modern standards for supporting project applications and supports socially oriented non-profit organizations in the process of implementing winner projects. The Foundation is also distinguished by a more significant amount of funds allocated to support grants in comparison with other grantmakers, including private foundations. The problem that determined the focus of the issues considered in the article is the contradiction between the significant amount of support provided to regional socially oriented non-profit organizations in the process of their formation as providers of social services, and the continuing low efficiency of these organizations. We investigate major strategies for raising funds by socially oriented non-profit organizations and show that their income portfolio consists mainly of the funding that comes from grant support, which is accompanied by risks of financial instability of organizations and an increasing dependence on grant funds as the main source of income. The empirical base of the study includes open source data and interviews with representatives of regional socially oriented non-profit organizations, resource centers and grantgivers (n = 27). Based on the analysis of interviews with the participants of the study, the article examines the possibilities of income diversification for non-profit organizations and the risks each strategic perspective may entail. We reveal the readiness of non-profit organizations to develop strategies aimed at attracting donor funding and income-generating activities. We also define conditions under which organizations are able to implement the discussed strategies in practice.