It Shouldn’t Take Crisis for Funders to Learn This

Who says large institutions can’t move quickly? Immediately after the first U.S. COVID cases were reported here in Seattle, the Ford Foundation began collaborating with the Council on Foundations, the Trust-Based Philanthropy Project, and more than 40 other partners to craft a funder pledge that attracted commitments from 796 organizations. This pledge focused on eight practices—from cutting red tape to providing support for advocacy—that could help nonprofits survive the economic fallout from the pandemic and meet the exploding demand for services in their communities. The only time I’ve seen a funder mobilization like this was in 2004, when Chuck Grassley’s Senate Finance Committee threatened foundations with a series of reforms.

Now it’s time to build on this momentum—not just among the early-adopter foundations that signed the Ford-inspired pledge but also among a much broader swath of organizations that could be receptive to adaptations that benefit them and their grantees. To this end, the Leap Ambassadors Community, a learning community of top-social sector leaders, has just released a Jim Collins-style monograph called Funding Performance: How Great Donors Invest in Grantee Success, in collaboration with the Ford Foundation, Hewlett Foundation, Tipping Point Community, Bridgespan, and FMA.

Without the typical nonprofit politeness, my fellow essayists and I issue the following call to action:

Funders, heal thyself! Your intentions are noble, but your practices aren’t. The vast majority of you are starving your grantees rather than nourishing them. When your grantees get a chance to speak freely—that is, anonymously—about the way you treat them, they express resentment that you’re not listening to them or giving them what they need for success. Enough is enough!

Some of the monograph’s essayists, including Ford’s Hilary Pennington and Tipping Point Community’s Sam Cobbs, are funders. Some of us have nonprofit backgrounds. And some of us are advisors to funders and nonprofits. All of us have vantage points that have given us a close-up look at the best and worst practices in our sector. In the monograph, we share both.

All of our organizations have discovered a prescription for change which is remarkably consistent. In each of the monograph’s six essays, which we wrote independently, all roads lead to the same basic recipe for funders seeking real impact:

Funders should help grantees break out of the “nonprofit starvation cycle.”

Many foundations inadvertently shortchange their grantees with short-term, restricted funding that doesn’t even cover nonprofits’ actual costs. This leaves nonprofits financially weak, and it directly undermines their effectiveness by making it hard for them to invest in talent, plan for the future, and learn rigorously. This is why the most effective funders give the majority of their grants in the form of flexible, multiyear funds; cover grantees’ true costs; and roll up their sleeves to help grantees line up additional resources from other private and public funders.

Funders should address inequities not only in society but in their own institutions.

Given that all of us are fallible human beings and most of us were raised in societies built on layers of injustice, our institutions are steeped in inequities. The most effective funders examine their own biases with the help of outside truthtellers, cultivate diverse talent in their ranks, expand their grant pipelines beyond “likely suspects,” support BIPOC led-organizations, and challenge unfair systems—even those from which they have benefited.

Funders should treat grantees with respect.

Many foundations treat grantees as mere contractors rather than valued colleagues whose professional and lived experiences are critically important for fulfilling foundations’ own missions. The most effective funders communicate well; make grant decisions within a reasonable amount of time; solicit and respond to feedback from grantees and their clients/constituents; and cultivate the kind of trust that results in truth-telling.

Funders should play well with others.

Many foundations operate in a vacuum, failing to recognize that their efforts alone are unlikely to achieve the long-term impact they seek. The most effective funders coordinate, learn, exchange knowledge, and at least informally collaborate with others who have shared goals and priorities.

Funders should focus processes on learning and improvement.

Many foundations ask grantees and prospective grantees to jump through hoops that take up too much of their precious time, are out of proportion to the size of the grants, and don’t produce valuable insights for anyone. The most effective funders encourage and support their grantees to collect and share information that’s useful not only for themselves but also for their grantees.

All of these practices make intuitive sense. They don’t require a big infusion of new resources or staff. They make funders’ work more interesting and impactful. And as my Leap Ambassadors Community colleagues and I have documented in a companion series of funder profiles, they all exist in nature—at foundations large and small, local and international, brand new and generations old.

Now it’s time to make them our sector’s standard operating procedure. That can only happen if dozens of influential organizations passionate about effective philanthropic practices—including Candid, donor advisors, regional associations, community foundations, think tanks, academics, and other affinity groups—band together with even more urgency than when we thought Congress might erode our prerogatives.