Philanthropy has experienced an explosion in intermediaries in the past decade and I was privileged to have a front-row seat to that growth during my tenure at Arabella Advisors, a leading provider of fiscal sponsorship services to some of philanthropy’s largest intermediaries.
It was my experience that some viewed intermediaries as crucial bridgebuilders, enabling large institutional philanthropies and high-net-worth individual donors to channel resources, knowledge, and capacity-building support to nonprofits they could otherwise not fund directly due to any given foundation’s onerous grantmaking requirements. At the same time, skeptics critiqued funding intermediaries as gatekeeping entities that stood in the way of direct funder-to-grantee relationships and that captured and diverted precious philanthropic capital away from the very field and communities they claimed to support.
Any of these critiques or benefits can be true based on the individual lived experience of the participants in the intermediary ecosystem, but the field has had a limited evidence base upon which to decide whether we should invest more or less in the intermediary ecosystem.
There has been limited research on the impact of these intermediaries and the research that has been conducted to date has centered on the value intermediaries provide donors (in keeping with long-standing funder-centered research traditions). For the first time — and drawing on its deep bench of a decade’s worth of Grantee Perception Report data — the Center for Effective Philanthropy’s recent report, Bridging the Gap: Grantee Perspectives on Intermediary Funders, brings to the fore grantee experiences working with intermediaries in contrast to working directly with originating funders.
Given the narrative shift and practices that increasingly center the field around grantee experiences, this is an important direction for the field. After reading the report, I walked away with three key implications for funders and leaders of intermediary organizations:
1. We now have a trusted, well-developed, data-driven approach to evaluate how well intermediaries work with grantees.
Given CEP’s trust and credibility in the sector, it would behoove funders to ensure they are encouraging and supporting the use of the Grantee Perception Report (GPR) for their direct grantees in addition to grantees they support through intermediaries. Funders can use these findings to enable a data-driven approach to evaluating changing practices among intermediaries with whom they work just as they are changing practices within the walls of their own foundations. This would have the added benefit of informing changing practices across the sector, not just within a foundation.
With all that said, technically an intermediary itself is a ‘grantee,’ too, so work remains in the field to standardize terms to ensure ‘apples-to-apples’ comparisons.
2. Funders need to change practices should they want to support intermediaries in implementing larger, multi-year funding.
There is a perception that intermediaries can be the source of large, unrestricted funding but CEP’s study suggests otherwise — grantees of intermediary funders report receiving grants that are somewhat smaller ($75,000) than grants received from originating funders ($150,000). Only 33 percent of grantees of intermediary funds report receiving multi-year grants vs. close to 60 percent of grantees from originating funders who report receiving multi-year grants. Those who work in the intermediary ecosystem don’t find these data surprising — historically, projects housed at intermediaries are typically ‘time-bound,’ ‘pilots,’ or ‘experimental’ and less ‘core’ to the priorities of a foundation.
For funders, however, this presents an open question: if they believe intermediaries are nimbler and more flexible entities, then why do they place more restrictions on funds that move through intermediaries? It could be as simple as suggested above, intermediaries provide different value in the field. It could also suggest that funders trust intermediaries less than their own institutions. Certainly, the recent study I completed suggests that funders might need greater confidence in the infrastructure that undergirds these institutions.
Regardless of cause, these divergent practices risk creating a two-tiered system within philanthropy with intermediaries potentially representing legacy practices (lower funding, greater restrictions). Funders could evaluate their upcoming grant-dockets and ensure that the trust-based and flexible practices they bestow upon their direct grantees are similarly practiced by intermediaries in support of grantees. Or, together with other ecosystem actors, help educate the field as to how and why they work with intermediaries as complements (rather than substitutes) to core foundation grant-making.
3. There remains work to be done in the intermediary ecosystem to deeply understand grantee impact.
CEP’s research shows that grantees perceive intermediary funders as providing slightly more open and frequent communication but slightly lower levels of trust and understanding of grantees’ work compared with grantees of originating funders. On the surface, this seems like a contradiction — how does more frequent and open communication result in a lower trust, and a perception of less understanding of the work?
Part of the answer relates to the nature of the relationship between the grantee and intermediary partner. Until recently, these relationships were often driven by ‘areas of specialization’ with intermediaries playing a predominantly compliance and operational role and grantees focused on programmatic work. Against this backdrop, new intermediaries are emerging with an explicit mission of shifting power to frontline organizations representing Black, Indigenous, immigrant, low-income, and other communities historically lacking access to philanthropic capital and relationships within the hallowed halls of institutional philanthropy.
These new funds are also upending power within the operational structures — using community-driven participatory grantmaking strategies and inclusive governance models and centering around impact. However, not all intermediaries have this level of expertise or experience and, as such, work remains to move the intermediary ecosystem to center on shared impact rather than siloed specialization.
Forces external to philanthropy related to the speed, volatility, and intersectionality of social and environmental change will push the field further to accelerate investments in the intermediary ecosystem — we would be wise to heed the good counsel and insights from CEP’s study in an effort to prioritize improvements which center on grantees; that should always be the field’s North Star.
Sampriti Ganguli is a senior advisor at Arabella Advisors, where she was previously CEO for seven years. She is also a member of CEP’s Board of Directors. Find her on LinkedIn and read her insights on intermediaries here.
