What if we took grantmaking out of the hands of grant makers?

I like to spend my Sunday afternoons ideating what the future of our sector might look like especially when it comes to modernizing current norms in other industries and seeing their potential application for philanthropy. At the end of the day Innovation doesn’t have to be new, just new to you.

It was during this weekly research ritual that I stumbled across an article from the past week titled Foundation Wars: Struggling Nonprofits Beg Foundations to Cut the Red Tape which featured in the Denver based Westword publication this week. I was looking for breadcrumbs that would lend itself to my hypothesis around power dynamics.

I was wondering why Foundations continuously tinkered around the edges of their funding cycles, micromanaged the application process and burdened organizations with mountains of paperwork. The lens of which I viewed it was through the legislative branch of government.

Elected officials draft bills, it becomes legislation and then its passed to the executive branch to be enacted through its departments. Ultimately you don’t see Senators or members of the house checking eligibility for stimulus benefits, signing the check and popping them in the mail, nor do you see them review every application for financial aid and have them report on their progress.

So why this level of scrutiny and why aren’t we automating what in essence should be a far more efficient process?

What motivated me to go down this rabbit hole was the fact I was floored by the following comment that triggered my ongoing angst around the issue of funder fundee power dynamics.

“In this time period, I’ve seen an increase of expectations,” Duffy says. “I know it’s coming from a good place, but every foundation has a COVID section [on its grants and reports] — three questions from each foundation. When you put that against twenty foundations, you have sixty additional questions to answer.”

‘Duffy’ who is Jami Duffy, the executive director of Youth on Record based in Denver, Colorado also made the now decade old analogy that “We’re in The Hunger Games, performing for the Capitol,” of which I whole heartedly agree with and note that the quote is culturally quite relevant if we refer back to the unnecessary commentary associated with Lady Gaga’s choice of outfit at the recent Presidential Inauguration.

However, this is not a gossip rag, neither is it a fashion critique of America’s pop royalty, but I digress.

I must admit that this article was a bit of an emotional rollercoaster. What piqued my initial interest was the title which appealed to my penchant for strategic government deregulation in the nonprofit space, then the aforementioned quote which had me thinking about transparency, consistency and issues of equity (why should we be adding questions to an already cumbersome process especially in a global pandemic?) and then finally just letting the gravity of it all sink in. That nonprofits are doing it remarkably tough right now.

So, are these additional questions just data for data’s sake or are funders really going to utilize the data beyond including it in a tweet or infographic?

I think we can all agree that there is way too much paperwork that comes with grants vis a vis how much they are applying for. With ‘micro’ grants of up to $200 still requiring 3 pages of information, funders often require line-item budget expenditures for new projects that will be funded through restricted gifts of $10,000 and they will ask you to write a lengthy post-funding report twelve months later. It’s time to reassess the process and give nonprofits the 20 plus hours they spend on average jumping through hoops for your attention.

Entertain me here, if you could hypothetically rebuild the grantmaking process from scratch again, is there a reality you can see where the actual grant proposal and award process became totally automated, with only certain phases of that process the only times where foundation staff had touch points?

What if we saw the following enhancements to the grant application/making process?

• Automation: ensuring grant applications are the smartest they can possibly be, pulling information effortlessly from 501c3 documentation, 990’s and other relevant applicant reports together with the auto-population of forms from previous applications.

● Progress bars: on average, applications for $10,000 and above take approximately 20 hours to complete. Let folks know how long the process will take, provide a real-time update on their progress and avoid any process that has either a timing out function or does not autosave all input to date.

● Real time support: include customer service chatbots to answer any simple FAQ’s.

● Smarter forms: RFQ’s should automatically revert to RFP’s if the minimum requirements to apply are met. There should be no shortlists. Smart contracts are also on the horizon too – using blockchain to execute all facets of a funding agreement from disbursing funds, to reporting.

And the touch points I mentioned that will still lend themselves to foundation staff? Well, you not only get to make the final decisions (there always needs to be a human context layered in to automated process especially when applications will outnumber available awards) but you can also imagine stronger outcomes on the funder side too:

● Dashboards: Simplicity in the proposal reviewing stage should include the capacity for peer review to avoid biases (including a timing mechanism to ensure fairness), the ability to see their own progress in reviewing the document, and other methods to ensure they stay aligned to the mission of the organization and that a consistency is applied when assessing proposals

● Algorithms: Building automated rules and processes that will recommend and rank the strongest grant proposals, bonus points if you can find a way to construct them without any implicit bias.

 ● Smart Contracts: Imagine the contents of a regular grant agreement re-drawn in computer code and executed automatically when the terms of that agreement have been completed, thus triggering the full execution of that contract and releasing funds to the grantee. This would be a smart contract in the context of a nonprofit grant agreement.

To keep things simple: the ‘contract’ effectively receives and distributes assets. There is no intermediary and there is no two month delay from the day your organization learns it has been successful in a funding round to receiving those important funds. (You’re not bitter, though, right?) An automated & trackable process for clearing and settlement ensures that this form of contract is truly transparent and conflict free. It will clearly define the rules upfront and automatically enforces these obligations (including the triggers needed for distribution) of multi-year funding agreements and returning the money to the donor in cases of non-compliance.

It can also bundle the data you need, not the data you think you will need.

Ultimately I really want grant makers to recognize the ways that data can empower their grantees to thrive while also acknowledging the flaws and limits of data especially if it’s just a reactionary add-on to the current issues of the day.

What factors influence the data that helps determine the effectiveness of a program or grant? Who benefits from the data? Do the data collection efforts burden grantees and ultimately not benefit the organization itself? Or do they empower organizations to evaluate and improve programs, as well as equipping them with information to tell their story to their stakeholders?

Transparency in evaluation also plays a critical role in the development and continued improvement of organized philanthropy, providing a systematic process of collecting credible data and using it to inform decisions on whether or not funding priorities and those funded projects are advancing the organization’s objectives. In this context, a strong evaluation framework can be used to assist funders in understanding the process and to assess the appropriateness and value for money of programs to influence future decision making through a fiscal, impact and equity lens. A great ROI for the sector would be to include the following:

● Examples: share successful applications each funding cycle to help applicants understand the quality and detail of what is expected. This will help create a much stronger pool of applicants.

● Data visualization: share the data sourced from applications and reports in a way that is beneficial to the sector and not just how your grants were impactful from a quantitative/ROI perspective.

● Unfiltered feedback: share why applicants were both successful and unsuccessful in their applications. This levels everyone up for future applications and provides priceless feedback on current and future approaches to service delivery.

● Partnerships: is there the potential for expanded or supplementary funding rounds that seek to have applicants partner together if their proposals are similar or have some apparent synergy? Avoiding the competition for resources in favor of bringing our communities together in advancing the common good through novel ideas in solutions and approaches should be something that is cultivated, not overlooked due to rigid (and in many cases), outdated systems.

I understand the ‘ask’ as it were for more information from nonprofits to provide information on their work during COVID. However, these should be optional questions not a requisite section for eligibility. Did any of the organizations funded in the past five years get asked to report on the effects of the coronavirus on their grant? Did they have to fill out additional questions to get funded?

Probably not.

This is an issue of equity, consistency and transparency.

If you are to change the process, this needs to be clearly articulated especially if it is a once off. When will foundations stop making everything about them? Their response to COVID-19, their response to projected yield on their investments and their take on what organizations truly need.

I’m pretty sure organizations would let you know the problems they face with COVID-19 in their applications, just as much as a bitcoin devotee would be if they were considering donating this highly volatile pseudo-currency.

At the end of the day current funding practices compound historic and current inequities, privilege, and power dynamics in the sector. It’s important for our foundations to start displaying some sort of critical thinking when making grantmaking decisions, funders who want to support organizations likely to achieve programmatic objectives would be wise to consider organizations that might have fewer resources and little to no formal evaluations, but whose leaders come from the community they serve. These leaders know what might work from lived experience and have the knowledge and trust of the community to bring about change. Funding within established networks can perpetuate inequities by overlooking community leaders and solutions that derive from that lived experience.

Beyond the process of making grantmaking decisions, data will also play a key role in evaluating the effectiveness of a grant or an organization. Yet funders should think less about data as a tool for compliance and punitive action against organizations that have not achieved certain projections, and more as a tool for evaluation and to support an organization’s learning, growth, and storytelling capacity.

Especially during a once in a generation (fingers crossed) global pandemic.

Duffy also recently wrote an open letter to Foundations, speaking truth to power and highlighting the compounding problems nonprofits such as the one she leads face every day, exacerbated by the ongoing instability, uncertainty, and devastating impact of the coronavirus on frontline service providers services, budgets and planning.

This is what Jami highlighted as her current struggles as a leader, colleague, and friend:

“In truth, my real work during the pandemic and national uncertainty is (and should be):

  • Getting my staff and teaching artists vaccinated
  • Adapting critical services to meet the growing and changing needs of youth during this time
  • Managing staff and student trauma from a deadly pandemic
  • Disseminating information for my team about civil unrest threats and COVID cases and regulations
  • Figuring out how to pay for part-time staff to get health insurance so they don’t die from the virus (something philanthropy is not keen on paying for)
  • Providing preparedness and civil unrest supplies and skills to our team so they can ride out multiple planned terrorist attacks on our city’s Capitol building
  • Diversifying funding
  • Surviving, because I am also a person, and I’m not immune from all that’s going on”

Dude.

That’s heavy. It’s also the nuance of nonprofit management we don’t see. The nuance we don’t understand, and the nuance we have to acknowledge quickly if we are to see the sector rebound quickly.

Foundation leadership the country over need to start thinking how they move unrestricted funds into the community over the coming months to ensure our sector is prepared and supported as we begin to see vaccinations slowly reopen our communities. No strings attached, no fishing for data sets to pump prime a planned infographic justifying their response, just mission driven funding that moves beyond a simple triage to one where organizations can be free of the concerns raised by Jami Duffy, to one where they are supported and free to be nimble in a society where the immediate future is unknown, except for the fact that there are people in real need.

I guarantee these are not isolated concerns from an ED on the proverbial brink.

This is a sector wide issue where their collective voice has continued to be self-censored as they don’t want to rock the boat in the face of major budget shortfalls and to damage years long curated partnerships. It seems counter-intuitive in a way, because the more you build rapport with a funder – showing strong results and returns on investment – the more you should be able to honestly highlight the issues and share ways to solve them.

At the end of the day money fuels the compounding effects of power dynamics in philanthropy and COVID has infected that in unforeseen ways too.

Jami Duffy is trying to write the story of her organization and her community and she is hell bent on it not turning out to be another Greek tragedy. So, let’s think about whether our scripted grant proposals need another scene or whether our productions are best served by actors who know their audience and can be nimble enough to serve their needs.

Ultimately, ensuring that all key stakeholders are involved in this process and are effectively co-designing future improvements will make the grant application process beneficial in some way regardless of the funding outcomes. After all a grant application should be the beginning of a dynamic new partnership and an opportunity to start conversations about civic solutions, not to try and have a monopoly on them.

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