The Infrastructure Gap: Why People Ops Can't Wait
When funders cut budgets, Executive Directors face impossible choices: which team members to let go, how to sustain programs with fewer people, and whether the organization can survive at all.
We're seeing this play out globally right now. Development aid projections show drops of 9-17% in a single year. Organizations are bracing for layoffs, wondering when their turn will come. And the hardest part? Much of the organizational chaos we're witnessing could have been prevented.
DevelopWell CEO Holly Witherington recently authored a piece for Alliance Magazine highlighting how chronic underinvestment in People Ops leads to a brutal cycle that undermines the very missions funders aim to support.
People Ops underinvestment creates a vicious global cycle
Existing data reveals a troubling pattern. Most funders restrict spending on indirect costs – the infrastructure that keeps organizations running – to 15% or less in the US, and often just 10% in other countries.
Meanwhile, evidence shows that financially healthy organizations need a minimum of 30% to build sustainable infrastructure.
This results in what researchers call the "starvation cycle." Organizations scramble to cover core costs, can't invest in systems or staff development, burn through talented people, and ultimately struggle to deliver on their missions. Then funders see those struggles as poor performance rather than the predictable outcome of chronic underfunding.
What changes when funders invest early?
The cycle is particularly frustrating because we know what works. Bridgespan research shows that organizations investing in leadership development, strategic planning, and talent systems grow twice as fast as those that don't.
When we examined organizations that received adequate infrastructure funding, the benefits were striking:
Reduced turnover costs (replacing an executive costs 200% of their salary; organizations lose 1.5-2x salary in productivity alone)
Stronger capacity to weather crises and adapt to changing contexts
Sustainable, equitable growth rather than boom-bust cycles
The ability to maintain mission focus even during downturns
3 concrete shifts funders can make
In her article, Holly provided three detailed, tangible recommendations funders can enact to bring about these positive changes.
We hope you'll explore the full analysis in Alliance Magazine and let us know what you think.