The Benefits of Multiyear Grantmaking: A Funder's Perspective

(Sandy Edwards is associate director of the Jim Joseph Foundation, which seeks to foster compelling, effective Jewish learning experiences for young Jews in the United States.)

Cultivating a collaborative funder-grantee relationship built on trust, transparency, and shared knowledge requires a concerted effort on the part of both parties. In twenty-five years of grantmaking, I've also seen how multiyear grantmaking serves as a catalyst in cultivating this type of relationship, which in turn can be a key element in helping a funder achieve its strategic priorities and in helping grantees achieve success.

When it was founded in 2006, the Jim Joseph Foundation made a deliberate decision to focus on multiyear grants. Now, there is no right or wrong way to do grantmaking, but for the foundation multiyear grantmaking seemed like the most effective way to achieve our strategic goals. It encourages a relational approach to philanthropy that defines our foundation and, we believe, is critical to our ability to leverage our financial and human capital. Today, as the foundation approaches its seventh anniversary, we can begin to assess the effectiveness of that strategy beyond anecdotal outcomes.

First, a few statistics: 92 percent of the $270 million in grants awarded by the Jim Joseph Foundation since its creation have been multiyear grants; 84 percent were awarded for a period of three years or more. Moreover, our own experience with the positive outcomes of this approach has been supported by the Center for Effective Philanthropy, which in 2006 conducted a survey that documented the impact of such a strategy. Among other things, the report based on the survey suggested

that foundations ought to provide operating support grants that are larger and longer term than the vast majority of foundation grants today. Moreover, these grants must be provided by foundations -- and individual program officers -- [so as to align with] the dimensions most valued by grantees: high-quality interactions; clear communications of goals and strategy; and demonstrated expertise and external orientation.

Despite CEP's compelling analysis, multiyear grantmaking appears to be declining as a foundation strategy. A 2012 analysis by the National Committee for Responsive Philanthropy of Foundation Center data found that multiyear grantmaking declined some 21 percent in 2009, to $5.5 billion from its $6.9 billion peak in 2008. When the nation's largest grantmaker, the Bill and Melinda Gates Foundation, is excluded from the analysis, reported multiyear grantmaking declined by more than a third. The June 2012 Foundation Center report Foundation Growth and Giving Estimates likewise found that approximately 20 percent of the more than one thousand foundations that responded to a center survey indicated they planned to give less in multiyear grants in 2012 than in 2011.

We believe it is important to reverse this trend. At the Jim Joseph Foundation, we believe multiyear grantmaking is a critical component of grantee sustainability and is vital to achieving the ultimate objective of a grant. Indeed, we have seen the tangible benefits of this strategy:

Regular communication between funder and grantee improves implementation and performance. Cultivating a relationship between foundation program professionals and grantees that includes regularly scheduled phone calls, site visits, and communication via e-mail helps to build trust, which leads to improved project implementation and performance by all involved. If nothing else, the foundation program officer gains a deeper understanding of the project and, when a problem arises, is better positioned to recommend strategies to address the problem and/or a reallocation of resources.

The grantee's organizational capacity is bolstered by a longer grant period. JJF awarded $15 million over a five-to-six-year period to Hebrew Union College – Jewish Institute of Religion, the Jewish Theological Seminary, and Yeshiva University to boost the number of highly qualified educators who work with Jewish youth and young adults. At the inception of the grant period, we invited the Parthenon Group to work with us to ensure efficient implementation of the grant and help strengthen the foundation-grantee relationship over the course of the grant period. Three years into the grant period, our grantees continue to acknowledge that the ongoing relationship with the foundation's board and staff has enabled them to work more effectively.

Ongoing grant review improves grant management by both the grantee and the foundation. Our grant awards are approved as "up to" amounts. What may seem like a detail actually is an important qualifier regarding how the grant budget and expenses are managed to achieve outcomes. As part of the review process, both the grantee and the foundation can make changes based on actual events and the learning that inevitably occurs over the course of a multiyear grant period.

Formative evaluation supports grantee success and summative evaluation of longer-term initiatives adds to learning in the field. Not only do multiyear grants allow for longer-term evaluations, they are important to our efforts to learn in that they enable ongoing conversations with evaluators and grantees. For example, the initial evaluation of a five-year grant to the Foundation for Jewish Camp to provide financial incentives for three thousand children to attend Jewish summer camp provided data on why the initiative was not achieving its enrollment benchmarks. Among other things, the evaluation found that the program only provided incentives to families willing to enroll their kids in a three-week session, whereas the targeted families were more likely to enroll their children in two-week sessions. As a result, the following summer the program extended incentives to families opting for a two-week session and exceeded its enrollment targets. This learning and its application to other FJC programs simply could not have occurred in the context of a single-year grant.

Longer grant durations provide opportunities to work with other funders to support the long-term sustainability of proven initiatives. One of our key strategies is to support our grantees' ability to secure sufficient financial resources to sustain an initiative/project, as well as to scale and/or replicate the initiative/project when appropriate. This requires identifying and cultivating other funders, which can be impractical, at a minimum, if the grant term is just a year or two. For example, the foundation awarded a five-year grant to another Foundation for Jewish Camp initiative to launch five new Jewish residential specialty camps -- camps that are well on their way to achieving financial sustainability. Because the term of the grant gave us and our grantee plenty of opportunity to inform the field of the program's emerging success, FJC was able to secure additional funding from the AVI CHAI Foundation to help fund a second cohort of specialty camps.

For the Jim Joseph Foundation, the decision to focus on multiyear grantmaking has been crucial to the evolution of our grantmaking strategy. And our grantees report that our approach enables them to respond to and overcome challenges with the assurance that they will have the time, resources, and support needed to do so. We have also learned significant lessons from our partners and have shared those lessons with the field. As we look forward to many more years of grantmaking, this knowledge will continue to inform our efforts to create effective and meaningful Jewish learning experiences that shape the lives of Jewish youth on their journey through life.

-- Sandy Edwards