When I first began my dive into the philanthropy industry, the thing that always fascinated me was the give and take dynamic between a funder and their grantees. I’ve been amazed at the different ways of going about it; some funders choose a hands-off approach, while others develop close and long-lasting relationships with those they fund. Both have their benefits and drawbacks–what works well with one organization may prove disastrous for another–but doing the research and knowing your grantees makes each philanthropic dollar go further than the last.
One of the most illuminating publications I’ve read on this topic was put out in 2014 by the Center for Effective Philanthropy (CEP). You can read it here: PDF (note: it’s a bit lengthy). I’ll do a summary below, but if you’ve got the time to read the whole thing, I promise it’s worth it. Even seasoned grantmakers can find some (research-based) nuggets of wisdom there.
1: Forming Strong Relationships with Grantees
Thanks to data collected and dispersed by the CEP, it was revealed (perhaps obviously) that without a strong relationship between funders and grantees, grantees are less likely to perceive that foundations are having as much impact on their communities and organizations.
As a funder, you should:
- Understand grantee organizations’ goals and strategies;
- Provide a selection process that is helpful and does not put undue pressure on grantees, have the right balance and frequency of interactions with grantees
Here’s a particularly powerful quote from a grantee on how grantee-grantmaker relationships can go bad:
“…Site visits feel more like interrogations. The grant-review process is like the foundation is attempting to find the flaws in what we are proposing rather than to have a peer-to-peer discussion about what works, what doesn’t, and how we might consider working together. We sense a lack of trust in grantees, an approach that causes us to be far less forthcoming.”
2: Providing Assistance Beyond the Grant to Grantees
Providing assistance beyond the grant is crucial both in the achievement of the Foundation’s goals and for the achievement of the grantees’ goals.
Here are some ideas to make that happen:
- Encouragement / facilitation for collaborations
- Insight and advice on the field
- Seminars / forums / convenings
- Strategic planning advice
- Introduction to leaders in the field
- General management advice
- Development of performance measures
3: Providing Operating Support
CEP’s analysis suggests that while many foundations prefer to provide program-restricted support, there is burgeoning movement in philanthropy that argues that providing operating support is crucial to a nonprofit’s ability to be successful. Yet– somewhat contrarily– when it comes to grantees perceptions of the impact that foundation dollars have on the organization, simply providing operating support doesn’t make much of an impact. That is, however, unless the operating support is provided for multiple years and for larger sums than is usual.
So, this leaves foundations at an impasse: do we grant smaller amounts to more grantees or more substantial amounts to fewer? In this case, it depends on how closely an organization aligns with your foundation’s own goals and strategies. If you find that an organization is crucial to achieving your desired results, it makes sense to provide more operating support to that particular organization. However, if the organization only aligns with your goals in specific ways but not others, that’s when program support comes into play. Choosing which to provide–armed with the knowledge that substantial operating support can often make more of an impact–will be dependent on you truly knowing your foundation’s goals, as well as those of your grantees.
4: Making Your Reporting and Evaluation Process Helpful to Grantees
While many foundations see the reporting and evaluation process as a method designed to ensure that the grantee did as promised, CEP research points to the idea that grantees do not feel that the reporting and evaluation process helps strengthen their work–it’s more of a burden than a boon. And it’s not because they spend an average of 15 hours working through them, but because they wish they had more of an opportunity to openly discuss their work with their funders or program officers.
One grantee said this: “[the funder] should have provided opportunities for discussions about what was achieved and learned in this grant-funded effort. It was disappointing to spend a significant amount of time to prepare a final report and to receive no feedback or have any opportunities for ‘learning conversations’.”
How to rectify this, as per CEP’s research:
- Be clear with grantees up front during the selection process, about what the project intends to accomplish and how progress will be assessed.
- Ask grantees for their input as well
- Always follow up with grantees after they submit their final report
- Focus on developing a strong and trusting relationship with your grantees
- This makes difficult conversations down the line easier to swallow for both parties.
5: Preserving Relationships While Declining Funding to Nonprofits
33% of grantees surveyed by CEP said they have previously been declined from the foundation that is now funding them. 90% of declined applicants said they would be interested in applying again to foundations that declined one of their proposals–but this will only happen if the foundation handles the declinations correctly. This is important for two reasons: the grantee may have a great program down the line that you will want to be a part of, and maintaining these types of relationships after declination is crucial to a foundation’s reputation with the organization and throughout your community.
Much of this doesn’t necessarily have to happen after the application process closes. Being proactive toward grantees at the beginning of the process is more effective than waiting until after everything is said and done. To this end, ensure that your published funding guidelines are up to date and are as clear as possible. A nonprofit that spends its precious time on a grant application that wasn’t ever going to be funded in the first place isn’t going to come away from the experience with a positive impression of your foundation. This also applies to personal, face to face interaction with foundation staff–don’t encourage an applicant to apply if there is a slim chance they’ll be funded.
Think of a declination as a chance for you to turn the process into a positive situation for your grantees. Give them effective feedback, be very clear as to where their application didn’t fit into your foundation’s goals, and turn it into a learning experience so that the next time they apply (to you or to any other funders) they can take the knowledge you imparted and crank out an improved application. It’s good for your foundation, the organization, other funders, and the community you serve. It’s a win-win, the best kind of outcome.
For another look at funder-grantee relationships and some real-world examples from Foundant clients, join our webinar: