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A to Z Grantmakers' Guide for Uncertain Times

November 08, 2008

(Michael Seltzer is a regular contributor to PhilanTopic. In October, he shared his A to Z Guide to Uncertain Times with readers.)

Abcs_gms_2It's still hard to predict what the long-term consequences of the current financial crisis on the economy and nonprofit sector will be. But the best evidence available would suggest that, for grantmakers, it's no time for business as usual. The turbulence affecting "Nonprofit Street" has two dimensions: (1) many nonprofits serve as a sort of de facto safety net for the low-income, unemployed, and vulnerable among us; and (2) these same organizations are most likely to experience the brunt of cutbacks in local, state, and federal budgets.

Many donors have already begun to rethink how they can work to create greater value for their grantees and other organizations in their areas of interest. The A to Z Grantmakers' Guide for Uncertain Times is a collection of existing foundation practices and is not intended to be either inclusive or representative of best practices. Consider it a sampler. The ideas offered in it are intended to send the message: "We are here to help." And that may be the most important message grantmakers can send in these troubled times.

I hope the list generates discussion among staff and boards, and inspires more innovation from and risk-taking by foundations.


Assume nothing
The future is too uncertain to make assumptions about the sustainability of key grantees. There are too many variables in the workings of the national and global economy to be able to predict either the length of the recession or its likely impact on the organizations you have committed to support over the long haul.

Break down barriers that create distance between you and your grantees
See "D."

Convene grantees and other key players in your fields of interest
One of the greatest tools available to foundations and other donors is their convening power. Indeed, many foundations have perfected this strategy and are aggressively using a range of new technologies to bring grantees together as well as extend their reach and influence.

Discuss with your grantees what they consider to be the greatest challenges to their organizational viability
Candor is too often a rare commodity in grantor-grantee exchanges. Creating a safe environment for these kinds of exchanges is integral to good communications -- and grantmaker effectiveness. To that end, some funders have experimented with grantee-perception reports, ombudsmen, 360-degree evaluations, surveys, and off-site retreats.

Encourage collaboration, information-sharing, and cooperation
It can be hard for organizations to want to cooperate rather than compete, especially when they feel threatened financially. Grantmakers can set a tone that encourages trust and cooperation among different organizations.

Fund raise
Many foundations are accustomed to providing partial support to their grantees, leaving the responsibility for raising additional funds for a campaign or specific project to the grantee. In these tough times, grantmakers need to do more to help their grantee partners raise needed funds by hosting funders' briefings, making introductions, writing letters of support, and so on.

Give general support grants
The one issue that continually resurfaces in grantor-grantee exchanges is the need for unrestricted or general operating support. Many grantmakers, for reasons of their own, have avoided awarding such support. Today, more than ever, grantmakers should endeavor to create room in their tool kits for general support grants.

Hold the spendout line
With endowments declining in value, foundations across the country are feeling pressure to reduce the dollar amount of their grantmaking to reflect new financial realities. Now is not the time to cut back. Indeed, now is the time for grantmakers to reexamine whether the nature of the challenges and opportunities in their areas of interest require that they increase their pay-out rate.

Indicate a willingness to cover indirect costs and overhead
With the exception of government grants and contracts, there is no fixed formula for determining what percentage of administrative expenses a nonprofit can include in a proposal budget. Grantmakers can help prospective grantees by letting them know they will be willing to cover such costs up to a certain point.

Join your local grantmakers' association and/or national affinity group
It is especially important at times like these for funders to meet on neutral ground and exchange ideas and strategies. Such meetings have been taking place under the aegis of regional associations of grantmakers, United Ways, the Council on Foundations, Independent Sector, and others, and grantmakers should be looking for ways in which they can participate.

Keep grantees and applicants abreast of any changes in your fields of interest, priorities, and procedures.
Even in the best of times, grantsmanship is a time-consuming job that can lead to less-than-satisfying results. What is often most frustrating for applicants is when a funder declines a proposal based on reasons that are not evident in its stated guidelines. Organizations can ill afford to spend time pursuing grants from sources that are unlikely to fund them.

Liase with government officials
Local, state, and federal governments are facing painful fiscal decisions that will affect people in need and the nonprofit organizations that serve them. But in many fields, including climate change, new funding opportunities will be coming on line for groups active in these areas. Be sure to make your voice heard in these policy areas. As long as it is not tied to support for specific legislative bills, policy work is permissible -- and can make a difference!

Minimize paperwork
No explanation necessary.

Never reject an idea because it came in over the transom
In tough economic times, it's tempting for grantmakers to stick with the tried and true. Fight the temptation. It's always wise to maintain some openness to promising ideas that may come in from unfamiliar sources or organizations.

Offer peer learning opportunities
See "C."

Provide technical assistance
Foundation and corporate contributions staff can be great sources of helpful ideas, information, resources, and connections. Indeed, information often flows more readily up to donors than across organizations with similar missions. With that in mind, grantmakers should look for new ways to interact informally and share ideas and resources with grantees outside of the formal grantmaking process.

Quickly acknowledge requests for support and indicate when an applicant might receive a decision
No explanation necessary.

Reassure grantees of the status of their grant
Given the flurry of bankruptcies and mergers in corporate America, and the likelihood of more to come, make sure that organizations which have been approved for support but to whom checks have not been issued know that your commitment to them will be honored.

Share office space
A growing number of foundations are encouraging nonprofits that work in their areas of interest to co-locate. In some cases, the foundation will even provide free or below-market rent, or share office services and expenses. More information about the trend (dubbed "Multi-Nonprofit Tenants Centers") is available from Tides Shared Spaces, a program of the San Francisco-based Tides Foundation.

Think outside the box
Now is not the time to embrace the status quo; now is the time for fresh and creative thinking, strategies, and approaches.

Use a common application form
Many regional associations of grantmakers have successfully promulgated a common application form to aid grantseekers in making their case to prospective grantors, while some foundation executives shun them, believing they limit applicants' creativity. In either case, the onus is on funders to make the grant application process as simple as possible.

Value your staff
In these times of downsizing and declining program budgets, it's especially important for grantmakers to express appreciation for their staff.

Weigh using Web 2.0 technology
Web 2.0 technologies are rapidly becoming some of the most valuable tools in the organizational tool kit. Yet, too many foundations and nonprofits remain unaware of their potential.

eXperiment with a new generation of accountability and transparency practices.
This is not the time to put accountability on the back burner. In fact, the current financial crisis demonstrates that, more than ever, the public wants the organizations and institutions on which it relies to practice a higher degree of transparency and accountability.

Yield the "steering wheel" to nonprofit leaders and organizations that are doing frontline work.
Hubris lurks in the corridors of most grantmaking instititutions with professional staff. Nonprofits have experience and knowledge. Trust them.

Zero in on others active in your field
Your foundation is a wealth of non-grant resources, including its relational and intellectual capital. Think hard about how you can make these resources available to nonprofit organizations active in your areas of interest. See also "C."


Update: Tuesday, December 9, 2008

We've added entries for the letters K, X, and Y, completing the guide. Enjoy!

-- Michael Seltzer

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Posted by Marie Moser  |   November 11, 2008 at 11:16 AM

Here are my suggestions for the letters K, X and Y.

KNOWLEDGE should not be underestimated. Get to know your organization's mission. Get to know your donors and your donor community. Get to know your organization's clients, your board of directors, and your volunteers.

XENOPHOBIA has no value nor any place in this world. Constant outreach is necessary to keep your goals fresh and expansive and to create new sources of income and new friends of your organization.

YOUTHFUL attitudes are not limited to the young. Wisdom and experience are not limited to those who aged,

Posted by Jacqueline Audige  |   November 17, 2008 at 11:22 AM

KITS for general support grants?

You can elaborate on this to complete the K

YIELD a great return on your investment

You can also think this one through and determine what would best fit in there

Posted by Michael Seltzer  |   December 14, 2008 at 11:47 AM

Thanks to every one for adding their helpful suggestions.

Michael Seltzer

The comments to this entry are closed.

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  • "[L]et me assert my firm belief that the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance...."

    — Franklin D. Roosevelt, 32nd president of the United States

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