As the old saying goes “Victory has a thousand fathers.” And few victories come as close to that claim as the successes wrought by funders and their grantees.
It takes the concerted effort, partnership, and co-creation of both funders and grantees to effect meaningful social impact. That said, one of the most prioritized and frequently asked questions continues to be “how can funders get the greatest return out of their investments?”
It’s important, for myriad reasons, that funders measure their impact. Dollars invested should generate a (social) return. But it’s critical that the funder-grantee relationship does not slide into an extractive dynamic in the pursuit of outsized (social) returns. So whether a donor is a lead investor or early funder, or offers a minor donation late in the game, the questions they ask themselves should land closer to “am I supporting the grantee organization to create the impact we both envision?”
You’ve probably heard of the three T’s: Time, Talent, and Treasure.
There’s actually a fourth T which I’ll share later, but I’d like to outline how funders can, at once, stretch their own impact with grantees while addressing some of the core challenges that those organizations face.
Time: An Irreplaceable Resource
The administrative and logistical challenges associated with fundraising are undeniable. Between sourcing leads, contacting prospects, building interest through outreach, engagement and follow-up, grantwriting, submission and awaiting a “Yes,” there’s a lot that takes place behind the scenes to drive nonprofit funding.
According to GrantStation’s “2024 State of Grantseeking Key Findings,” the largest grant award was up to six months for nearly 60 percent of respondents.
And while there is a delicate balance between the transformational and the transactional within the funding space, relationships are material for driving ongoing funding opportunities for nonprofits.
From that same GrantStation report, it was found that for nearly one third of respondents, recurring grants accounted for 11-50 percent of total grants. And while time spent for recurring grants may begin to shift to more transformational activities (direct engagement with funders, for example), in many cases the same administrative activities (whether completing the same application or developing updated materials) exist.
Solution: Lower funding requirements for returning grantees.
Time continues to be one of the most valuable assets for nonprofit leaders and therefore reducing the administrative burden by lowering application and grant requirements would give leaders valuable time back.
In a recent Center for Effective Philanthropy report, it was reported that “more than half of nonprofit leaders reported an increase in trust from their funders, and most reported that at least some of their funders had made application processes easier or reduced reporting requirements in the last year. A year later, most nonprofit leaders observe that their funders have either continued these changes or made new commitments to enact them.”
This is an encouraging pattern, and funders looking for ways to better support their grantees and enact measures to mitigate burnout should consider how time as a resource plays a role in their funding relationships.
Talent: Feedback is a Gift, as is Expertise
Nonprofit leaders have faced a particularly challenging labor market over the past five years. And while it’s a constant struggle to plan and hire strategically within the social impact space — given small budgets, limited runway and highly elastic funding dynamics — this “post-COVID” era has been especially tough.
Nonprofit organizations aren’t immune to strife around return to office, cost of living surges, racial equity and much more. In fact, these tensions tend to be more pronounced as the nonprofit space is often seen as the champion of social issues yet unable to compete with private sector employers when it comes to employee compensation and benefits.
In the same Center for Effective Philanthropy report, “About half of surveyed nonprofit leaders report having had some to a lot of difficulty filling staff vacancies in the last year (28 percent + 21 percent).”
The report also noted that, “Leaders of organizations whose work includes a direct service component report greater difficulty filling vacancies, on average, than those whose organizations do not engage in direct service.”
Solution: Provide feedback and offer expertise to address grantee skills gaps.
Feedback from the other side of the funding table is often sparse, especially when the funding decision is favorable. But gaining a greater understanding around the why for a “Yes” decision, as well as what would lead to a “Yes” for other grantmaking organizations with whom the funder is familiar is extremely helpful.
Further, the offer of in-kind expertise, whether it be in PR/media content review, marketing insights, funder intel or other knowledge sharing from a funder, is oftentimes a beneficial stopgap for organizations. On many occasions, I’ve witnessed or directly benefited from a funder stepping in to provide valuable professional support that addressed a functional gap in the organization.
Treasure: Show me the Money
Solution: By now, every funder is familiar with the call for greater unrestricted support to grantee organizations. No additional comment necessary.
Testimony: Believe Us that Burnout is Real
Nonprofit leaders are tired.
Between hiring challenges, obstacles to fundraising and all other aforementioned hurdles (a non-exhaustive list), nonprofit leaders often have limited bandwidth to forge valuable partnerships. This condition is exacerbated by the often-protracted timeframes under which funding decisions are made.
The writing is on the wall and nonprofit CEOs are near — or have already reached — burnout.
In the same Center for Effective Philanthropy report, “a third of nonprofit leaders surveyed say that they are “very much” concerned about their own burnout (33 percent) and half report that they are more concerned about their burnout now than last year (50 percent).”
Listening to nonprofit leaders — especially those that you are in a funding relationship with — is a start, but this ‘T’ goes beyond simply listening to spreading the word.
Solution: Make direct introductions to other funders and share grantee success stories to amplify their work. Remember, there’s a highly relational aspect to grantmaking and the degree to which pattern matching and referrals drive funding is quite high.
On countless occasions, referral-based engagement with prospective funders has led to investment and significantly reduced funding decision timelines.
The referral acts as a risk-mitigator and boosts the credibility of an otherwise unfamiliar organization in the eyes of a prospective funder.
In reducing funding timelines, accelerating the trust-building process, and facilitating the overall fundraising activities of a nonprofit leader, funders can significantly reduce the stress and pressure faced by these leaders.
In offering support through time, talent, and testimony, funders can significantly amplify the benefits that their ‘treasure’ bestows on their grantees. Further, the deeper the engagement with a grantee the more the balance shifts towards transformational, rather than transactional, partnerships.
Matt Stephenson is CEO and Co-Founder of Code2College. Find him on LinkedIn.
