2020 will be remembered as the year that changed grantmaking.
Foundations are in the midst of a sudden and unexpected upheaval of long-held grantmaking practices. Faster access to capital and removal of administrative burden have become the clarion-call from nonprofits struggling to meet the intensified demand of constituents. If ever there was a mandate to reexamine the role and process of funding, now is that time.
The practice of funding has traditionally been lopsided in favor of those doing the granting. Nonprofits undergo an arduous application and vetting process designed to provide funders a measure of confidence that their investment will achieve an intended outcome. Foundations have a fiduciary responsibility to be good stewards of their endowment. Carefully vetting each project and partner is the due diligence required to make good decisions.
On the surface this feels reasonable, but in practice significant issues and challenges emerge. The process is a time-intensive, laborious grind for applicants. Grantees painstakingly provide long histories of past performance, financial projections, and thorough descriptions of expected results. Once submitted, the application is scrutinized and debated across the organization –often requiring time consuming revisions of the proposal. And if accepted, the nonprofit can expect to produce a flood of data in the form of recurring progress reports.
When funding is awarded it comes at the cost of time, energy, and resources that could otherwise be spent concentrating on impact; and if the grant proposal is rejected, all that time and energy was for naught.
The situation is equally challenging on the funder’s side. Program officers and staff spend long hours shepherding grantees through this complex process, collecting and reviewing endless pages of documentation, and debating the merits of projects with a host of reviewers and committees. The process emphasizes administration and paperwork over engagement and relationship. Program staff have less time to commit to partnership, capacity building, and mutual accountability.
Enter 2020, the year that redefined grantmaking and philanthropy.
Ushered-in by a confluence of societal challenges and crises, traditional grantmaking practices are under pressure. Foundations are scrambling to award grants faster, and nonprofits are pressing to eliminate all non-value-added activity. Fortunately, movements like the Trust-Based Philanthropy Project were already gaining traction in the sector, and their principals provide guidance to how we might reimagine the end-to-end grantmaking process.
Spearheaded by the Whitman Institute, the Robert Sterling Clark Foundation and the Headwaters Foundation, the Trust-Based Philanthropy Project aims to change the grantmaking paradigm from transactional to ongoing partnership. It emphasizes six core principles to establish stronger relationships and streamline administration:
Values such as power-sharing, equity, and collaboration are at the heart of these ideas, and they provide a framework for enhancing agility, reducing burden, and simplifying the funding process.
Other ideas designed to reduce grantee burden are also emerging. The Kenneth Rainin Foundation introduced a process for their New and Experimental Works program to accept applications that grant seekers have previously submitted to other funders. This eliminates the need to create a new application for Rainin, and leverages the investment already made in a prior proposal.
Other funders are exploring the idea of standardized grant applications. Whether this develops into a “common application” for the sector remains to be seen. The concept could further reduce overhead, by enabling data to be produced once and then shared or re-used with multiple funders. It would provide a level of predictability and transparency, further reducing administrative burden and simplifying data sharing.
The nonprofit sector is at a rare inflection point. Faced with the urgency of this moment, funders and grantees must reexamine long-held beliefs and processes to find better and more-expedient ways of working. Movements like trust-based philanthropy, participatory grantmaking, and the Council on Foundation’s Pledge of Action provide new frameworks for further democratizing our partnerships, expediting access to capital, and simplifying our grantmaking processes. Technology will play a critical role in achieving these goals, but only if we demonstrate the courage of our convictions and willingness to evolve as a sector.
Sam Caplan is the founder of New Spark Strategy, a consultancy focused on technology strategy for Foundations and software partners in the nonprofit sector. Sam has held several leadership roles including chief information officer at the Walton Family Foundation, director of technology at the Walmart Foundation, and senior director at Fluxx Labs.