In order to elevate outcomes and grow impact, there are certain practices grantmakers should embrace to do their job well. Over the years I have come to recognize five best practices that ensure success and turn grantmakers from ordinary to extraordinary. SIGN UP to receive your FREE COPY of “5 Best Practices of Extraordinary Grantmakers” by filling out the form below.
In this guide, you will discover:
- 5 best practices of extraordinary grantmakers
- How to develop and implement innovative ideas
- 13 “learning questions” you should regularly ask yourself and your partners
- The types and benefits of funder collaboration
- Examples of how to streamline your operations
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Today the options for effective grantmaking are more varied than ever. There are numerous choices for foundations to consider to move their plans forward, and they all merit close consideration to determine their value and effectiveness within your own philanthropic processes. To move from essential to savvy, SIGN UP to receive your FREE COPY of “From Essential to Savvy: Key Practices for Effective Grantmaking” by completing the form below.
In this guide, you will discover:
- 11 core practices for effective grantmaking
- 9 smart practices for savvy grantmakers
- How to identify all your assets
- Tips to help build relationships with organizations and grantees
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In philanthropy, there is much written about responsive and strategic approaches to philanthropy. Which approach is the most appropriate? Meaningful? Effective? While there is always room for both approaches, it’s important for foundations to understand each one to determine when one approach may be preferable to another. SIGN UP to receive your FREE COPY of “Responsive vs. Strategic Grantmaking: Exploring the Options” by filling out the form below.
In this guide, you’ll discover:
- The definition of responsive vs. strategic grantmaking
- The pros and cons of responsive vs. strategic grantmaking
- 10 tips for getting started in strategic grantmaking
- 5 mistakes to avoid when focusing on your grantmaking
- A board’s role in determining direction and strategy
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One reason we are involved in grantmaking is to be a part of making local, state, national, and global change from the ground up. Grantmakers often see real need for change in programs and services, or they see places where new programs and services will make all the difference. The key to creating real change is understanding and preparing for the complexities of a grantmaking initiative before diving in. Careful planning, focused relationship building, and a little thirst for adventure can help you take your next grantmaking initiative to new heights while respecting the boundaries of budgets, staff, and other limited resources. Here are some tips on getting started with your next initiative.
- Anticipate ongoing complexity. Grantmaking initiatives often spring from an idea brought to the table with a lot of enthusiasm. “We can curb obesity in our community if we restructure our neighborhoods to be easily walkable.” Sounds simple enough. But grantmaking initiatives are rarely simple. They require many moving parts that can shift direction quickly. Suddenly you realize you need more funders, more partners, more energy, and more ideas. Be prepared for the inevitable roadblocks so you can generate the necessary support.
- Lock in leadership support. Make sure that you have the full and unwavering support of the sponsoring foundation’s leadership and board before embarking on any initiative. Do some research on past grantmaking efforts. Confirm that there will be follow-through from beginning to end, and that leadership will remain supportive and engaged throughout the initiative. The support will prove invaluable—if not imperative—throughout the initiative’s lifespan.
- Engage your management capacity. A strong, resourceful manager who is willing to lead the charge is vital to the success of any initiative. You need someone who is both enthusiastic and engaged in the effort you are embarking on, and who has the skill sets and knowledge to oversee the process. Once the initiative is underway, be sure to continue to provide the administrative and task-focused support needed, so he or she can stay focused on the big picture.
- Engage foundation staff. A new initiative may be the spark your foundation needs to ignite fresh energy among staff members. Although you want one person to be the point man (or woman), tap into your existing staff to see where their skills may best be used to support the new project. They may be excited to manage some relationships, sustain and generate communications, design evaluations, and raise funds. Foundation staff can also pitch in to review proposals and conduct site visits.
- Allow ample time. A strong and strategic grantmaking initiative is not developed overnight. Make sure you allow time for planning, relationship-building, and stakeholder engagement. Take time to design a strong initiative before launching it. Then develop a theory of change to ensure that you can continue to articulate your goals and strategies throughout the initiative to guide ongoing management and evaluation.
- Build strong relationships. Determine who needs to be involved and, equally important, who wants to be involved. A partner with a passion for your work is as valuable or even more valuable than a partner with a pocketbook but no passion. In any successful initiative, a lot of relationship building goes on behind the scenes. Use in-person meetings and phone conferences to engage partners, build momentum, address concerns, and put out fires. Let administrative staff manage the scheduling so that you and your key players can manage the relationships.
- Cultivate ongoing communications. Internal and external communications are vital to the success of any initiative. Use your communications staff or key partners if they’re available. Otherwise, retain outside experts to identify audiences, hone key messages, and craft a communications plan. Stakeholders and key audiences must be able to clearly and consistently communicate the goals of the initiative at every stage of its development. Make sure your communications complement your initiative. If you are funding arts in schools, be creative; if you are funding an environmental program, be green.
- Meet pressure with action. Foundation staff are often pressured to make initiative grants quickly, far before planning is complete. Understandably, the foundation board wants to ensure that every dollar has a positive impact, while still demonstrating that the initiative’s funds are being invested in the appropriate communities or agencies. Anticipate this pressure by planning in advance for initiative success. Small pilot grants can be made during the planning stage to test the waters before launching the fully developed initiative.
- Embrace risk! Any initiative or change effort involves risk. Be brave! Name the risks and embrace them. Have the initiative planning team brainstorm a “risk list.” What might this list include? Perhaps funding did not have the impact anticipated, or you incurred negative PR where you anticipated a positive reaction. Discuss strategies to mitigate each risk. Bring the risk list to each planning meeting for review and updating. Some risks will disappear, and new ones will become evident. Remember: In community grantmaking, taking risks is often a vital part of creating solutions.
- Remember that the foundation is on the line. Launching an initiative takes a major commitment from a foundation. Keep in mind that the initiative’s success or failure will reflect directly back onto the foundation itself. Embrace risk, yes, but also leverage all available resources to ensure success. The CEO or board chair might serve as an initiative champion. Top leadership could make key introductions to business, political, and community leaders. With strong support from the inside out, a well-planned initiative can generate years of positive impact.
Developing a new initiative from vision to implementation can be a challenge, but the rewards of a successful endeavor far outweigh the difficulties. Maybe you have an initiative in mind that you would like to bring to your board. Start your planning today, so you are fully armed with answers when questions start coming to you. Who are your potential partners? What are your goals, and what barriers might get in the way of achieving them? How does the initiative reflect the mission of your foundation? Answer these questions now and you will be on your way to making an investment that makes all the difference, in the near term and in the future.
© 2014 Kris Putnam-Walkerly. All rights reserved. Permission granted to excerpt or reprint with attribution. Kris Putnam-Walkerly, MSW, is president of Putnam Consulting Group, Inc., a national
philanthropy consulting firm. She is also the author of the Philanthropy411 blog. She can be reached at 800-598-2102800-598-2102 or email@example.com. Her website is http://putnam-consulting.com.
It’s easy to get mired in the way things have always been done, and sometimes it leaves us blind to our customers’ real needs. So take a moment and ask yourself one critical question: Who is my customer? In my experience this is a question that most foundations simply don’t ask themselves.
I was talking last week with a client (let’s call her Mary) who said that a big lesson her organization has learned is that they should give their applicants more time to respond to a request for proposal. Apparently they had only been giving their applicants about a month; during that month, the applicant had to decide whether to apply and whether to apply jointly with other organizations that were also invited, prepare the application, secure matching funding, and actually apply.
Nonprofits are essentially this organization’s clients, and it was obvious to me that they were asking their customers to scramble to do all of this in a very short period of time. Actually, the fact that Mary was surprised to learn that a month was not enough time to make all of that happen was what surprised me. This seems like the kind of learning that one would expect from someone new to philanthropy, or perhaps from a relatively new foundation with little grantmaking experience. But this foundation has been in existence for literally decades, awarding hundreds of millions of dollars in grants every year. As an organization, they have likely issued thousands of requests for proposals over their decades of existence.
When I asked Mary why they had such a tight time line, she explained all the various departments and people within the foundation who had to sign off and approve a request for proposals: communications staff, grant management staff, contracting, finance. There were group leaders and team leaders, and each of them had a week to review the RFP before passing it on to the next person within the bureaucracy.
When you added up all the time they gave themselves internally to approve RFPs, it was significantly more time than the applicants were given to apply. The trouble is they weren’t paying attention to their customers. Are they there to serve themselves, or are they there to help nonprofit organizations have an impact on the issues they care about?
By contrast, another client we work with has spent tremendous time and resources to reengineer their internal processes, increase automation, and become more internally lean in order to increase efficiency and better serve their grantees. I believe they do this because they recognize that the grantees are their customers, and they focus on themselves only to discover how they can better support the grantees.
Three questions can help get to the heart of the matter, and I’d like you to answer them:
- Who is your customer? Your staff, or the nonprofit partners you are funding to meet the goals of your foundation?
- Are you aware of what your grantees are experiencing in trying to work with you?
- What steps can you as a foundation take to examine your internal processes and determine whether your focus is on helping yourselves or on helping the communities of the nonprofits that you serve?
The answers to these three questions should provide insight into your grantmaking practices. I hope you will spend some time considering and discussing your answers, because doing so should provide a clear road map to improved customer service — with the ultimate goal of better grantmaking.
© 2014 Kris Putnam-Walkerly. All rights reserved. Permission granted to excerpt or reprint with attribution. Kris Putnam-Walkerly, MSW, is president of Putnam Consulting Group, Inc., a national philanthropy consulting firm. She is also the author of the Philanthropy411blog. She can be reached at 800-598-2102 or firstname.lastname@example.org. Her website is http:// putnam-consulting.com.
I love developing new grant initiatives for foundations and individual philanthropists. There is nothing more exciting that identifying a problem where you have the potential to make a difference and then putting a plan in place to do just that. However, once the fanfare has subsided, I’ve noticed that many funder initiatives lose steam. Frustration builds as the approach that seemed so promising barely seems to make a dent in the problem, and certainly isn’t delivering the results it should. Here are three reasons why funding initiatives can fail instead of flourish:
- You didn’t learn from others
Your new effort to ensure all children are reading by 3rd grade, transform public education in your state, or provide rural communities with access to health care might be new to you and your community, but I can guarantee you it or something similar has been tried before. The best investment you can make in the development of your initiative is to talk to people who have designed, launched and managed similar initiatives. At the very least, talk with them by phone. Ideally, you can organize members of your team to go on site visits. That’s what we did when we helped the Cleveland Foundation organize a youth development initiative. We travelled to Providence, Philadelphia, Indianapolis, and Baltimore — and asked one key question: “If you could do it all over again, what would you do differently?” If you ask this question and implement their suggestions, I guarantee you will save your foundation time, save money, and achieve significantly greater impact, faster.
- You aren’t investing in communications
One of the most important — yet overlooked and underestimated — actions foundations can take to ensure the success of their grantmaking initiatives is to develop and implement a comprehensive communications plan at the very beginning stages of an initiative. In fact, one of my early lessons learned when I asked the question “If you could do it all over again, what would you do differently?” was “Communications begins the moment you begin discussing your new initiative, so be sure to start planning a communications strategy immediately.” This can be hard to do. In the beginning you’re in the middle of planning and launching, which feels like building a plane and flying it at the same time. You’re scrambling to assess needs, identify partners, get all the funding in place, and collect data. This means communications planning feels like a luxury. But your internal stakeholders (your team, board, grantees, key partners) need to be continuously informed and engaged, as do your many types of external stakeholders (which could range from parents to policymakers). In my experience, you don’t prioritize communications planning now — and I do mean right now — you’re going to pay the price a year, or five or ten years, from now when your grantees and partners aren’t coordinated and are unable to stay on the same page, and stakeholders and other funders are confused by what you’re trying to do.
- You aren’t anticipating complexity
If your initiative is successful, it will likely grow in size and complexity. You might expand into additional communities, add in new components (e.g., leadership development, capacity building, parent engagement, job training), or decide to engage in policy advocacy. This means more people and more types of people will become involved in your efforts: new partners, new grantees, additional funders, policymakers, technical assistance providers, community leaders, volunteers, etc. Additionally, you will experience typical staff and board turnover, so new leaders will replace old leaders among your existing organizational partners. Growth is great. The challenge is that all of these people are new to your initiative, yet expected to successfully implement it, fund it, and be its ambassadors in the community. One solution is to anticipate this complexity and develop a plan to onboard new staff and volunteer leaders. This can be done in a variety of ways: Conduct a bi-monthly orientation; produce and share a short video explaining the history, development, and accomplishments to-date; distribute a packet of materials that provide FAQs and important resources (e.g., passwords to members only website content, logos, contact information, meeting dates); regular trainings on key messages and media strategies, and annual “all-hands” meetings. Having your communi-cations plan in place will certainly help, as those new to the initiative will immediately start receiving and engaging in your communications efforts (e.g., monthly newsletters).
None of these three pitfalls require rocket science. They aren’t rooted in metrics or measures, and they don’t have to demand a large investment of resources (although some investment is a smart idea). They are, however, common-sense rules that I make sure my clients embrace when preparing funding initiatives. I encourage you to embrace them, too!
So, you’ve been around your foundation for a while. You’ve mastered the basics — the essentials you need to create a solid grantmaking strategy and process. How do you take your work and your effectiveness to the next level?
It’s one thing to be competent; it’s another to go beyond the basics and really hone your craft. Here are nine smart grantmaking practices that will help you do just that:
Practice #1: Organize your work around your values.
It used to be that when I heard people talk about organizational values I would roll my eyes. “Organizational values” seemed like words on a plaque or a website that were so universal they meant nothing. Then I learned that if a foundation is very clear about its values, and works to operationalize them, it can have a huge impact.
For example, one foundation regularly surveyed its grantees to assess their perceptions of the foundation. One year it was surprised to find that grantees rated their relationship with the foundation much lower than in previous years. The foundation asked me to help them find out why. I spoke with other foundations whose grantees said their relationships were overwhelmingly positive and the answer became obvious: all of those funders had a core value of building
strong relationships with grantees. They made this part of everything they did: how staff allocated their time, staff performance reviews, application and reporting processes that were not burdensome, etc. When making decisions they asked themselves, ”Are we doing this because it would be easier on grantees or easier on us?” If the latter, they wouldn’t do it.
Another client was the new CEO of a health foundation. When she started she was delighted to see that words like “evaluation,” “learning,” “transparency” and “results” were written everywhere in the foundation: in its values and guiding principals, in strategic planning documents and logic models. So she was surprised to discover that a learning culture did not exist in the foundation. There was no internal system, process or capacity to assess progress. The foundation was not living its values of openly learning and evaluating to improve results.
What sets some foundations apart is that they live and breathe the values they claim, and put systems and processes in place so that everyone is very aware of them. When that happens, values become part of how you do business.
Practice #2: Recognize that grantmaking is about relationships.
You can have a very transactional relationship with your grantees – send out funding announcements, proposals come in, you email them that they’ve been awarded the grant and you send a check. It’s true that you’re making grants, and probably making a difference, but a purely transactional process is not very meaningful to you or your grantees, is hard to learn from, and makes it virtually impossible to identify new needs, opportunities or ways to leverage your funding for greater impact.
To change that dynamic and get a better understanding of the needs, assets and opportunities in the community you serve, you need to build stronger and deeper relationships with your grantees. Ideally you want grantees to trust you enough to be completely honest with you about what’s working and what’s not working, so that you can help them and they can accomplish more. In the best case scenario, grantees feel comfortable to come to you with a problem – they
need to increase their capacity, an executive transition is rocky, your grant is not going as expected but they have a plan to make course corrections. You have the ability to help them by identifying other sources of support or connecting them to people who can help, and in doing so you build bonds of trust.
Be conscious that, as a funder, you always have more power than nonprofits. Seek to mitigate that power differential by listening, learning, being self-aware of the impact of your requirements and demands, and being realistic with your expectations.
It’s also important to build relationships with other funders, in addition to learning more about who is funding what. Other funders can also help you perform due diligence with grantees, identify other partners who might want to co-fund an initiative with you, and can share the wisdom they’ve earned from their own experiences.
Likewise, other partners like researchers or evaluators, experts in your interest area, or city or county officials will also become valuable allies in your work if you invest in building relationships with them.
Of course, building relationships takes time and requires an intentional effort on your part. Participating in membership or professional organizations can provide opportunities to meet and create relationships with other funders, experts or partners. Check out national funding networks, your regional association of grantmakers, local association of nonprofits, or other funder convenings around your areas of interest. Once you’ve identified people with whom you want to cultivate a relationship, take them to coffee or lunch to get to know them on a more personal level.
Regardless of the relationship you’re building, always act with integrity. Listen to their needs, be humble, ask for advice and follow up on commitments. It’s these “little things” that will allow you to build trust more quickly and reap the mutual rewards of the relationships you build.
Practice #3: Identify and leverage ALL your assets.
As a funder, you have much more to offer than money. Take some time to catalogue your full array of assets and consider how to employ those assets to fulfill your mission. Consider the different roles you can play, such as catalyst, broker, convenor or ambassador. For example:
- Connections – Who are the people you know, and how could you could make introductions or referrals for your grantees? Do you know other funders or donors who might be interested in supporting them? Are the accountants and attorneys in your address book a good fit to provide professional services? What about consultants who can help enhance capacity or guide a grantee in the creation of a new strategic plan?
- Knowledge and intellectual capital – What do you know about your community, about local politics, about other funders, about the issues? How and when can you share that information in ways that can support your grantees?
- Experience – Chances are, you have specific experience in certain areas that can translate to advice and guidance for grantees. For example, maybe you’ve led a scale up of a nonprofit to reach new markets. Or perhaps you’re a closet policy wonk who can help inform a grantee’s advocacy strategy. Offer your experience with humility and never force it on a grantee. When they’re ready, you’ll be there to share.
- Reputation – As a funder, your reputation, both personal and professional, individual and organizational, can help open doors for grantees.
- Convening power – The role of convenor is often overlooked by funders, but you have an unmatched ability to bring together either disagreeing factions or would-be partners in a safe, neutral and controlled environment. You can also provide facilitators or mediators to help move their conversations forward and enhance their outcomes.
- Ability to take risks – Foundations are often hesitant to try new ideas and learn from them, because they seem to operate under the assumption that failure will somehow discredit them. But as one of my favorite foundation CEOs says, “If this doesn’t work, are people going to stop coming to us for money?” You have broad latitude in which to take risks. Use it.
Practice #4: Adopt an abundance mentality rather than a poverty mentality.
A poverty mentality stems from a misguided belief that maintaining a Spartan operation equates to delivering value for grantees and communities. An abundance mentality is a belief that internal investment is important, and the more you put into your operation, the more you get out of it. It’s based on the belief that the more you put into life, the more you get out of it. An abundance mentality doesn’t have much to do with money – but rather with outlook and attitude. If you think small, you will act small, and your results will be small.
Examples of the poverty mentality abound in philanthropy. For example, I once spoke with the head of a women donors organization. They wanted to triple the number of women donor members, and dramatically influence hundreds of millions of dollars in annual giving of these women so that their philanthropic gifts focused on the issues this organization cared about. They had no idea what percent of their current donors’ philanthropy was already supporting these issues, nor how much influence they had on these donors’ decisions, nor what were the most effective ways to influence them to give more. They needed this baseline information to meet organizational goals, but balked at the idea of spending $50,000 or $75,000 to find it out. Their response was, “We are just a small organization so we can’t afford it.” They lost out on raising hundreds of millions because they felt too poor to invest in themselves.
Foundations with an abundance mentality ask questions designed to move their work forward:
Who are the TOP experts in the country or world who can advise us? How much more impact could we have if we invested additional staffing capacity to our initiative? Who are the best people we can get and what is the most strategic use of their time? If our program was to become a national model, what would that look like? What can we put in place now?
Adopt an abundance mentality and invest in your staff and staff skills, your office, technology and communications so you can learn more about your field, empower your team, and make grants more effectively.
Practice #5: Streamline your philanthropy.
Identify ways to streamline your application and reporting processes, your board meetings and other practices to reduce the burden on nonprofits and yourself. Think about what is the easiest, most simple, most streamlined way of going about everything – especially if you’ve been doing it the same way for years.
I recently saw the proposal guidelines of a large foundation in California Bay Area. They were 14 pages long. The proposal only needed to be 8 pages but it took 14 pages to explain it. And all that for a $50,000 grant. Another client gave its board a 300-page binder of information for each board meeting. After realizing they were needlessly overbur-dening both their program staff and their board members, they figured out a way to reduce it to a mere 30 pages. Another foundation realized it wasn’t doing anything with final reports from grantees, so it decided to curb its reporting requirements rather than waste its grantees’ time.
To streamline your processes, ask: What do we really need, and what is the most efficient and useful way to get it? Then, check in with yourself every few years, and ask grantees for feedback as well.
Practice #6: Test, learn, improve, repeat
Learning from your grantmaking is important, but it isn’t that helpful if it’s only happening inside your head or the heads of your internal team. Learning should be intentional and shared. Based on what you learn, you should make specific improvements or modifications, or even drastic changes.
To be intentional, you need to make room for reflection. Create some systems, processes, plans or timelines that will allow you and your colleagues to reflect on what you are learning, discuss it, document it and make decisions. For example, once you’ve come up with your new funding guidelines and process for how your board will review proposals and make decisions, commit to a conference call after the first few rounds to find out how the process went and what can be improved. Or, suppose you heard about a new best practice in providing mental health service for returning veterans and you want to replicate it. Convene your grantees after one year to find out what’s working, what’s not, what can be improved.
Learning from grantmaking isn’t rocket science and you don’t have to hire an evaluator to tell you what you’ve learned. Just be intentional, plan to learn and be willing to share what you learn with your entire staff and board — or better yet, your philanthropic peers.
Practice #7: Become knowledgeable about your issue.
It’s a pretty safe bet that, whatever your focus or issue, someone has already been playing in that sandbox. Before you make grants, scan the landscape of your chosen issue or community to find out what’s worked so far, what hasn’t worked, what the gaps and opportunities for impact are, and who else is working on the issue.
Nothing alienates a community or potential partners like a funder who comes into the room with all the answers. You’ll make far greater strides and align more valuable allies if you lead with questions and a genuine desire to learn.
You’ll also be seen as a valuable ally if you bring further knowledge into the mix. Can you access or underwrite national or regional research that can help inform everyone? Can you bring in speakers or consultants who can add to everyone’s knowledge about the issue?
Practice #8: Provide general operating support.
Even if you are focusing on a particular issue, consider providing core operating support rather than project support. General operating support allows the organizations that are on the front lines to adapt to shifts in need, respond to crises, take advantage of unforeseen opportunities, invest in their own capacity building, and further their own staff and leadership development.
Operating support isn’t sexy, and the direct results of your giving can be hard to quantify, but it also can be the funding that allows an organization the breathing room it needs to develop the next highly effective solution to a community problem. It may be helpful to think of operating funds as investments in overall success.
Practice #9: Trust your instinct—and follow it!
If you feel doubt about the skills or integrity of the executive director of a nonprofit, or you admire the positive culture of a particular group even though it may seem less sophisticated than others, pay attention to those hunches. At its most basic level, grantmaking is about human relationships. Your gut reactions to people and situations can be a valuable tool for determining what feels “right” for achieving your foundation’s mission.
There are many ways to become a more savvy grantmaker. This list is just a start, but don’t let these nine points overwhelm you. Start with one, or three, and grow your abilities from there. Need help or more ideas? I’m always just a phone call or email away! Feel free to contact me any time at email@example.com or 800.598.2102.
Physical space – Your board room, country club, even your house can provide valuable meeting space with just the right feel to bring together a grantee’s staff retreat, or host an event or a quiet conversation between diverse community stakeholders to solve shared challenges.Investments – The choices you make about what you invest in can have a huge impact on grantees. Practices like mission investing and impact investing can boost the capacity and confidence of individual organizations or even entire fields.
The options for effective grantmaking are more varied today than ever. What used to involve simply making financial gifts to qualified nonprofits now has grown to include public-private partnerships, social impact investing, program-related investing, crowdfunding, and many more avenues for achieving a foundation’s mission. Whether your foundation is just getting off the ground or has a venerated history that’s about to enter a new phase, you’ll have many choices to consider as you plan your way forward.
However, there are some basic core practices of grantmaking that should never go out of style, regardless of a founda-tion’s grantmaking process, capacity, culture or history. While not every foundation will use every element in the list below, each can add value to the philanthropic process and increase overall effectiveness. Therefore, each should merit close consideration.
The 11 core practices for effective grantmaking are:
- Understand Your Mission and Vision
It’s hard to make effective grants if you’re unclear about what you’re trying to accomplish. Your foundation’s mission and vision should leave no doubt about that. Mission is your foundation’s core purpose – it’s why you exist and targets the need you are addressing. Vision is the future you desire – it paints a picture of how the community or the world will be different if you succeed in achieving your mission.
How do you develop a mission and vision? It can be driven by the passion, interest or value of those who established the foundation, but should also take into account the actual needs within the community the foundation serves and how those needs might be prioritized. For example, your founder may have a passion for women’s health, but in the community the biggest needs for women’s health may be around domestic violence or unplanned pregnancies rather than clinical issues.
To identify and prioritize needs, you might call on a number of resources — from your own past experiences with grantmaking, to the services of experts who can conduct an objective scan of needs, to community input and engagement.
- Assess Your Capacity to Accomplish Your Mission
Take a look at the people, knowledge and expertise you currently have within your foundation. What are your intellectual assets and where are the gaps you’ll need to close? Ask yourself these questions:
- People – Who are the people involved in your foundation and what roles do they want to play – as board members or as staff. Who are your trusted advisors?
- Knowledge – What do you collectively know about the issues you care about? Do you know where to get additional information or do you need help finding or creating it?
- Expertise – Does anyone involved in your foundation have experience in grantmaking and in the issues that you care about?
Given what you are trying to accomplish, you may need to increase your board and staff, increase your administrative capacity so that the board and staff you do have can become more effective, or scale back on your mission to stay within your capacity to create change.
- Determine Your Funding Focus
What will you fund, and what will you not fund? Depending on your mission and capacity, your focus could include broad program areas such as health or education. Or, it might be concentrated in specific areas like increasing access to high quality early childhood education.
In general, there are be three potential levels of change you can effect, based on your capacity: people, organizations or fields. So, for example, if your interest is substance abuse treatment, you could fund programs that provide treatment (people), OR you recognize that the organizations that provide substance abuse treatment are operating on a shoestring and need help with staff training, strategic planning or board development so you provide funding to improve their operations (organization), OR you realize that the stigma of substance abuse prevents people from getting help so you fund a national communications campaign to reduce the stigma (field).
What you want to fund may also inform where you’ll place your funding focus – locally, statewide, nationally or globally – and vice versa. If you want to create change for individuals in the substance abuse example above, you may decide to start in a single community. If you’re bound by geography but want to participate in a national effort, then you may need to support participation of local organizations in national networks. The key is to find the most appropriate (or creative) nexus of what and where to serve your mission.
- Determine How You’ll Find the Organizations to Fund
Once you know the kind of work you wish to support, how will you find the organizations in which you might invest? Typically, funders take the road of accepting solicited or unsolicited proposals. Solicited proposals are those invited by the funder from organizations they’ve proactively identified as effective in their work, aligned with the funder’s mission and potentially good partners. Unsolicited proposals are gathered through an open proposal submission process in which any organization is free to apply for funding, based on your advertised criteria.
There are pros and cons to unsolicited and solicited proposal strategies, and many foundations incorporate both in their grantmaking, depending on what they wish to fund and where. For example, foundations that wish to focus on a specific, evidence-based intervention to address a community need may use a solicited strategy to reach out to a few select organizations that have demonstrated their prowess in deploying that intervention. On the other hand, a foundation that genuinely wants to engage community at the grassroots level to strengthen that community’s capacity may invite any organization to apply for funding in hopes of catching a number of small but promising community-based organizations as new partners.
- Create Grant Strategies
What kind of funding will you provide (or not provide) to your grantees? Grant strategies can be as varied as the issues you address, but options typically include:
- Program support
- Core operating support
- Organizational capacity building
- Capital gifts
- Multi-year grants
The type of strategy or strategies you select will be defined in part by your area(s) of focus and the needs and capacity of your potential grantee pool. For example, if you wish to address a relatively rare medical condition or want to prove that a specific kind of classroom intervention works best for children with dyslexia, you may want to use research funding as a primary strategy. If you know that domestic violence shelters throughout your state are struggling with daily operations and are unable to collaborate or think strategically, your best bet may be to fund organizational capacity or core support. And if you are passionate about feeding the hungry, then support for the programs that deliver services in your community may be the best bet for you.
- Develop Grant Guidelines
Being able to clearly define how, to whom and for what purpose you will award grants does more than just provide applicants with a clear set of expectations; it also helps your staff stay focused and on point with the mission. In fact, a good set of grant guidelines clearly puts into writing all of the key decisions you’ve made to date: about your mission, focus of your funding, program areas, solicited vs. unsolicited outreach, and chosen grant strategies.
Remember, clarity is key for your guidelines. Being crystal clear means that nonprofit organizations can read your guidelines and know immediately if they are a good fit, which saves time and frustration for them. It also means that everyone involved in your funding decisions – whether inside staff or outside consultants or advisors – are in agreement about what you will or won’t fund.
Remember, length is the enemy of clarity. The more concise and direct you can be in writing your grant guidelines, the clearer they will be for everyone.
- Get the Word Out
Once you know your focus, your targets, your strategy and your guidelines, it’s time to get the word out to potential grantees. How will you find them – especially if you want to use unsolicited grant invitations to a select few? Your board and staff will have some connections, but you’ll most likely need to cast your net more broadly.
Basic forms of communication, such as a website, are helpful, but this is also a great time to leverage the connections of your grantmaking colleagues at other foundations. Take some time to explain your interests to them and describe the kind(s) of grantees you’re looking for. Ask them to help point you to likely candidates for your solicited proposals or to networks or communities in which to promote your unsolicited application opportunity.
- Design a Process for Proposal Review
Once the proposals start pouring in, who will review them and how? Proposal review processes can be as simple as a thorough read-through and vetting by program staff. Or, depending on the nature and size of the grantmaking strategy, might also include a pre-screening process with staff or community advisors, site visits to potential grantee locations and/or a group discussion process to discuss the merits of each.
Whether simple or complex, every proposal review process must include due diligence. This can mean simply verifying that the applying organization is indeed a 501(c)(3) nonprofit, or it can mean reviewing audit information, confirming that staff and/or board members of the applicant have significant background checks on file or asking for copies of operating agreements between co-applicant partners.
Keep in mind that every step of the proposal review process will add to the burden for both your staff and your applicants. Site visits in particular require a deeper level of planning and preparedness to ensure that both you and your grantseeker make the most of your time together. So before you add a step to your process, consider its value and purpose in helping you choose your grantee partners.
- Create a Process for Board Review & Decisionmaking
What information will your board need to make a responsible decision about your grant recommendations, and how will you supply that information?
There are many horror stories from program staff about the time and reams of paper that go into preparing a board docket. We all know those thick dockets don’t get read, and all the time spent assembling them could have been better spent on other tasks. Work with your board to determine how much information they want and need to do their duty, and resolve to give them not one scrap of paper or one extra email more. Allow board members to decide whether they want to receive their board meeting materials in paper form or electronically.
When your board convenes to make its decisions about grants, how will you make sure their discussion is efficient and effective? What kind of information will you share with them during the meeting – a complete set of information or a summary? Who should facilitate their discussions? Will the final decision be made by vote or will it require consensus? The answers to these questions can vary, but it’s important to make sure they are based on clear decision criteria that reflect your grant guidelines.
- Award Grants
Once your grant decisions are made, consider how you’ll notify grantees. Will it be an email or a phone call, or is a formal letter more your style? Once you’ve shared the good news, be sure to have a grant agreement letter or contract that both you and the grantee sign before money is disbursed. This agreement should specify the amount awarded, the purpose, the payment terms, reporting requirements and any other “non-negotiable” aspects of your work together
as funder and grantee. The grant agreement is a legally binding document, so be sure to have your attorney review it carefully before use.
- Create Grant Reporting Requirements
Once you’ve gone through the process of choosing grantees and have invested in their success, you’ll want to learn what they’ve accomplished. Grant reports help you assess their progress, understand the reality of the work in which grantees are engaged, and help you generate lessons learned that can help you, your grantees, and others in the field to hone expectations and improve impact.
Writing and reviewing grant reports add an extra burden for you and your grantees, so be sure that you keep them as simple as possible. Focus on what is actually useful to know and leave the sidebars and extraneous details behind.
Reports can be as simple as a single page or a series of short answers to specific questions. If you find your requirements too long, it may be that you’re not sure what to ask – revisit your mission and focus to clarify and streamline.
Also, remember that grant reports don’t have to be written. Consider conducting a formal post-grant interview, record a video debrief, or just take notes during an informal conversation over coffee. The important thing is to document what counts, in whatever way makes the most sense for you and your grantee.
Customize Core Practices for Effectiveness
Now that you know the core practices, it’s time to adjust them to your foundation reality. Use them as a guide to create a process that is meaningful to you and fits your needs. It’s okay to learn along the way — in fact, it’s a sign that you’re increasing effectiveness. For example, you might think site visits are a great idea at first, but then learn they are too time consuming and board members really can’t commit to them. If that’s the case, change your approach. Don’t like the information you’re getting from grant applicants? Change your guidelines. For any of the 11 core practices, the key is to consider how they benefit your foundation and make them yours!
Need help or more ideas? I’m always just a phone call or email away! Feel free to contact me any time at firstname.lastname@example.org or 800.598.2102.
Using Research and Development as a
Strategy to Achieve Dramatic Impact
Achieving dramatic, lasting impact in the world of philanthropy is a complex task, but it begins with a simple question: What if? To learn how asking what if— and utilizing research and development— can transform your foundation’s strategy, SIGN UP to receive YOUR FREE COPY of “Asking ‘What If?’” by filling out the form below.
In this guide you will discover:
- The meaning of Research & Development philanthropy
- 12 of the most common practices for engaging R&D philanthropy
- 5 mindsets necessary for meaningful and effective investments in R&D
- The role R&D philanthropy plays in smaller foundations
- The potential benefits of bravely asking, “What if?”