This dimension refers to the contractual relationship between the donor and the CSO funded.
Project funding refers to the funding made available to a CSO which is earmarked for specific projects or activities/outputs/results. In this case, funding is normally given to project proposals, usually based on the Logical framework approach where the CSO has to formulate objectives and expected results at least at Output level. One central issue for this modality is hence the Transactions costs entailed in the process of project funding application and reporting. This type of funding also normally has specifications regarding how much of it may be used to cover administrative costs or overhead.
Core or programme support is instead based on a strategic programme or objective of a CSO, where funding is not tied to produce particular Outputs but to more general Outcomes, including improvements to the organisation itself (core support is sometimes more narrowly defined to only involve internal CSO development needs, but in most cases even support for Capacity building/development is linked to the attainment of larger societal objectives – capacity development for a purpose). The CSOs then have more flexibility to determine what is the most efficient use of funds .