Like many significant developments, philanthropy's current obsession with metrics (to borrow Gara LaMarche's phrase) has had its share of unintended consequences.
One of the least commented on has been a marked increase in grant application and reporting requirements that has "grantseekers and grantmakers alike drowning in paperwork and distracted from purpose."
That's the conclusion of a new report commissioned by Project Streamline, an initiative of the Grants Managers Network, in partnership with seven other organizations representing both grantmakers and grantseekers. (Full disclosure: The Foundation Center, the parent of Philanthropy News Digest and PhilanTopic, is one of those organizations.)
The report, Drowning in Paperwork, Distracted From Purpose (44 pages, PDF), identifies ten ways that the current system of grant application and reporting creates "significant burdens on the time, energy, and ultimate effectiveness of nonprofit practitioners":
1. Enormous Variability -- "Nonprofits encounter a dizzying range of practice -- both within and among funders -- when it comes to the types of information they are required to provide."
2. Requirements Aren't "Right-Sized" -- According to the report, the majority (66 percent) of foundation respondents don't vary their requirements depending on the size of the grant given, while 59 percent don't vary requirements depending on the type of grant given.
3. Insufficient "Net" Grants -- Nonprofits don't really receive grants, the report concludes. They receive "net grants" -- "the total amount of funding minus the true cost of getting and managing the grant" -- leading most nonprofits to weigh the possibility of funding against the cost of seeking it.
4. Outsourced Burdens -- The report notes that although "many grantmakers do not want their grant money used for administrative and fundraising purposes, application and reporting often require labor- and time-intensive activities of the grantseeker, activities that frequently can and arguably should be done by grantmakers."
5. Trust Undermined -- "Simply put," says the report, "many nonprofits believe that foundations do not trust them, and they interpret the burdens of application and reporting as evidence of that distrust."
6. Reports on a Shelf -- Grantees believe their reports are used by grantmakers primarily as a way of checking compliance and "wonder why they are required to provide detailed and lengthy reports just to prove that they complied with the grant terms."
7. Fundraising Gymnastics -- According to the report, the most commonly cited effect of the current funding system "is that nonprofits continually reinvent their programs...in response to foundations' preference for the 'new and different' and reluctance to pay core operating support."
8. Due-Diligence Redundancy -- In a nervous post-9/11 world, the report found that grantmakers tend to play it safe when it comes to due diligence, requiring "redundant and often unnecessary documentation from grantseekers."
9. Double-Edged Swords -- In theory, online grantmaking should save everyone time and money; in practice, it has flaws and poses problems. These include balky online application systems, incompatible formats, and the difficulty, for grantseekers, of gaining access to real, live people at foundations.
10. Time Drain for Grantmakers -- The report suggests "that grantmakers, like grantseekers, are poorly served by the current [system]. Even though individual dealings between foundations and nonprofits may be harmonious and supportive, the overall tenor of the relationship seems to be one of distrust and irritation on both sides."
Not a pretty picture...
The report identifies five factors that have shaped current grantmaking practice (tradition, insufficient investment in staff time and capacity, difficulty getting the right information from grantees, the desire to be strategic and measure impact, a lack of good feedback) and then recommends four principles that grantmakers can/should adopt to relieve the burden on nonprofits:
1. Begin from zero. "In a zero-based approach to information gathering, grantmakers begin with a rigorous assessment of what kind of information they really need to make decisions."
2. Right-size grant expectations. "Grantmakers should consider whether the effort that grantseekers expend to get the grant is proportionate to the size of the grant, the type of the grant, and the existing relationship with the grantee."
3. Relieve the grantee burden. "By minimizing the amount of time, effort, and money that nonprofits spend getting and administering grants, funders increase the amount of time, effort, and money devoted to mission-based activities."
4. Ensure that communications and your grantmaking process are clear and straightforward.
"Almost every funder has a unique application and reporting process," notes Richard Toth, Project Streamline chair and director of the Office of Proposal Management at the Robert Wood Johnson Foundation, "and they're adopted for sensible and responsible reasons. But the problem our research underscores is the cumulative effect of these measures. Imagine each set of requirements multiplied by thousands of grantmakers and you get a sense of the gauntlet nonprofits face. We've created Project Streamline to do something about it."
Anyone who used to think (as I did) that the Digital Revolution would deliver super-efficient workbots and the paperless office is excused if they're feeling a bit skeptical. But this is an idea whose time has come, and my hat is off to the Grant Managers Network and its partners for taking it on.
-- Mitch Nauffts