A busy restaurant can hide a nonprofit's Funding Gap.

Olivia Cole, chief strategy officer of Café Momentum, argues in a Candid post published September 30 that a nonprofit's visible success can lead donors to assume it no longer needs their help. Café Momentum runs restaurants that train and employ young people involved with the justice system. Cole calls the gap between how an organization looks and what it needs "the visibility paradox."

The post is written by the organization's own staff, and every Café Momentum figure below is self-reported by Cole; we have not checked them against the organization's tax filings. Her argument is a useful template for charities planning year-end appeals.

Why success gets misread

Cole writes that Café Momentum has grown from one restaurant in Dallas to a national organization with locations in Atlanta and Pittsburgh, with Denver to come. Awards, national media attention and partnerships followed. Those signs of success, she writes, created an assumption that the organization has "made it."

Her first example is the restaurant itself. A full dining room suggests a business that pays for itself, but the restaurant is also a training setting inside a program that includes paid work, case management, education and mental health services. The diners' checks pay for only a fraction of the costs, she writes.

The numbers Cole reports

Cole says Café Momentum relies on philanthropy for 80-85% of its budget. She writes that the restaurant contributed 30% of annual operating revenue before the COVID-19 pandemic and contributes 15-20% today.

Growth, she writes, has raised costs rather than lowered them. A national team now provides shared technology, HR, marketing, training, data collection and evaluation, and Cole says that team must raise 75-80% of its annual budget as unrestricted general operating support. She also describes a $10 million capital campaign for a Dallas flagship: $8 million for a building that combines the restaurant with a community services center, $1 million for a maintenance fund and $1 million for operations during construction.

What the wider data says

Cole cites a Candid finding that the median foundation awards 32% of its grant dollars as general operating support. That figure comes from a Candid post published September 13, 2023, and describes 2022 giving by large U.S. private and community foundations; 513 respondents answered the question for that year. Candid noted that many funders do not track such grants and that some gave rough estimates.

The same analysis found that 90% of respondents awarded at least some general operating support in 2022, and about 10% awarded none. Candid cautioned against comparing its figures with other statistics on operating support, because methods differ.

Three suggestions for your appeal

Cole describes three practices Café Momentum is using, and says its communications strategy is still a work in progress.

• Explain the business model, not just the mission. Show donors which costs earned revenue covers and which philanthropy covers.
• Help funders understand the need for unrestricted money. Program needs matter, she writes, but funders also need to see the operating costs that keep core programs running.
• Raise sustainability before there is a crisis. Discuss multiyear needs and the true cost of growth alongside program results, rather than waiting for a gap.

What other nonprofits can take from it

In our view, the most portable idea is to put a plain statement of the funding model into the appeal itself. A sentence or two on what earned revenue, grants and individual gifts each pay for answers the question a donor may not ask: does this organization still need me? Groups with a social enterprise, a fee-based program or a visible building project may face the same assumption.

Unrestricted money also asks donors for trust, and the organization's side of that bargain is covered in our piece on why a restricted gift is a promise. One caution: an essay by an organization's own staff is advocacy as well as information. Donors and board members who want to test claims like these can compare them with the organization's most recent Form 990.