At this time of year, I like to ask: “What do I know today that I did not know a year ago?” and “What am I going to do differently in the coming year because of that knowledge?”
By Antony Bugg-Levine, The Chronicle of Philanthropy
In that spirit, I’m thinking about what I’ve learned since I left my job seven years ago as a program officer at Rockefeller Foundation to lead a national nonprofit lender and consultant.
What an eye-opener the last seven years have been. Learning directly from the nonprofits we help as well as research and other work we have done to develop nonprofit business models and financial strategy, I’ve come to realize that so much of the conventional wisdom about what makes for good grant making is misguided. I’ve learned that standard practices on the money-giving side of philanthropy often impede effectiveness, stemming from the foundation world’s aversion to risk and persisting because of power dynamics that make it difficult for grant makers and grant seekers to learn from each other.
Here are seven questions I wish I had asked of myself and my foundation colleagues:
Why don’t we just give general operating support?
Like most foundations, ours had a strategy and looked for grantees undertaking specific projects that fit into it. But great nonprofits have their own strategies. By pushing many of them to fit into a specific type of restricted funding, I risked not getting their best. Letting effective nonprofits use our grants in ways they thought best would more likely have generated the best results.
Why don’t we make more multiyear grants?
Running a five-year grantmaking project with a set budget at the foundation, I didn’t want to constrain my funding flexibility for future years, but I now realize that short-term funding causes distraction for nonprofits and hinders long-term improvement. Nonprofit Finance Fund’s 2018 State of the Nonprofit Sector Survey found that half of U.S. nonprofits operate with only enough cash on hand to last three months or less. Yet we know that almost none of the issues we all work on will be solved in the next months or even years. Longer-term funding commitments allow nonprofits to breathe and to invest in ways that improve their ability to achieve their missions over time, such as partnerships, new program areas, etc.