Is Grantmaking Getting Smarter?

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Grantmakers Increased Funds for Multiyear Grants and General Operating Support

The philanthropic field is moving in the right direction. However, we’re still a far cry from reaching our full potential to provide nonprofits with the support they need to be strong, adaptable and resilient.

As philanthropic giving levels continue to rebound, grantmakers increased the types of support most commonly associated with boosting nonprofit success, according to a new study from Grantmakers for Effective Organizations. Is Grantmaking Getting Smarter? provides an analysis of GEO’s 2014 national survey of staffed grantmaking foundations to track progress in the philanthropic field on key grantmaking practices both nonprofits and grantmakers agree are critical to achieving better results.

The study found that:

  •     The median level of funds devoted to general operating support increased for the first time to 25 percent, after remaining stagnant at 20 percent in 2008 and 2011.
  •     The number of grantmakers that give multiyear grants returned to pre-recession levels, up from 28 percent in 2011 to 58 percent of grantmakers that report making grants of two or more years in 2014.
  •     More than a quarter of grantmakers say they increased funds for multiyear grants (31 percent), general operating support (27 percent) and capacity building (27percent).

Nearly three-quarters of grantmakers (74 percent) said it is very important to provide support that will strengthen grantee organizations so they can achieve greater impact. By providing support that is flexible and reliable grantmakers enable high-performing nonprofits to build critical skills and focus on long-term mission fulfillment. According to Dave Coplan, executive director, Human Services Center and the director of the Mon Valley Providers Council: “Time is our most precious commodity. There are only so many workable hours in a week. Multiyear support gives a small agency like ours the ability to focus on our programs and what happens for people. Longer-term grants also communicate that you’re stable and worth investing in.”

The survey also suggests that the traditional relationship between funder and grantee is changing, as more grantmakers seek to tap the knowledge and perspective of grantees and community members to help shape effective solutions. Funders are now regularly seeking feedback from grantees and creating more opportunities for grantees to inform grantmaker strategy and practice.

  •     For the first time, the majority of funders (53 percent) now regularly solicit feedback from grantees, both in the form of anonymous and non-anonymous (attributed) input.
  •     They do so to engage external voices in decision-making and strategy:

     o    63 percent sought external input on foundation strategy from representatives of recipient communities or grantees.
     o    52 percent sought advice from a grantee advisory committee about policies, practices or program areas.

According to J McCray, chief operating officer of Grantmakers for Effective Organizations and author of the study: “When GEO previously surveyed funders in 2011, the results were pretty bleak. The recession caused endowments to shrink and there was a lot of uncertainty about what was around the bend. As a result, funders regressed on many of the practices that would have supported nonprofits to be strong and nimble during challenging times. However, in the past few years, there’s been a meaningful shift in the way grantmakers support nonprofit results. More and more funders are seeking input and feedback from grantees to help guide what they do and how they do it. The philanthropic field is moving in the right direction. However, we’re still a far cry from reaching our full potential to provide nonprofits with the support they need to be strong, adaptable and resilient.”

While the study shows that grantmakers have made important progress in a few critical areas, it also revealed where the field of philanthropy is falling short. With only a median of one in every four dollars granted as general operating support, the majority of nonprofits still do not have the resources they need to respond to new opportunities or changes in their environment. Furthermore, GEO’s survey revealed funders have a high degree of confidence that they are open to dialogue with nonprofits on key financial needs, but recent research from Nonprofit Finance Fund indicates that nonprofits disagree.

Although funders believe it is important to coordinate resources and actions with other funders working on the same issue (80 percent) to achieve greater impact, they are unlikely to support grantees to do the same. The majority of grantmakers (53 percent) say they never or rarely support the cost of collaboration among grantees. This disconnect can hinder grantees from effectively working in partnership with other organizations to make more progress toward shared goals.

According to Angelica Salas, executive director, Coalition for Humane Immigrant Rights of Los Angeles: “Usually a strong collaboration is one in which you commit to each other to do a certain amount of work. If you start multiplying all the hours that you’re committing to do work, and the time it takes to participate in meetings, to travel up and down the state, it’s an expensive proposition. Bringing people together creates an incredible spirit of ‘let’s get something done.’ But getting something done requires resources. In addition to getting people to the table, we need to know that the product of the work will also be supported.”

A strong majority of funders (76 percent) evaluate their work, but most are not getting all that they could out of these efforts because the focus remains on internal uses such as reporting to the board on grants (87 percent) or planning and revising strategies (65 percent) or programs (51 percent). Fewer than half of funders share learning with grantees and stakeholders (45 percent) or other grantmakers (49 percent). This means grantmakers are missing an important opportunity to improve collective knowledge and generate more useful information that leads to improved performance.

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The report is available for download through the GEO website and features additional examples from nonprofit and foundation leaders. + download PDF

The author of the study, J McCray, is available to speak with reporters and bloggers about the results and share grantmaker examples that illustrate these practices or trends. Please contact Danielle Yates, at yates@geofunders.org or 202.355.9541, to schedule an interview.

ABOUT GEO
Grantmakers for Effective Organizations is a diverse community of more than 500 grantmakers working to reshape the way philanthropy operates. We are committed to advancing smarter grantmaking practices that enable nonprofits to grow stronger and achieve better results.

The GEO community provides grantmakers with the resources and connections to build knowledge and improve practice in areas that are most critical to nonprofit success. We help grantmakers strengthen relationships with grantees, support nonprofit resilience, use learning for improvement and collaborate for greater impact. For more information and resources for grantmakers, visit http://www.geofunders.org.

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Danielle Yates
@GEOfunders
since: 04/2010
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Grantmakers for Effective Organizations
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