When I was approached by the Center for Effective Philanthropy (CEP) to serve on the advisory group for a research project on intermediary funders, I was immediately keen to participate. From two decades of first-hand experience, I know how valuable it can be to understand the impact a grantmaker’s practices have on its grantee organizations. Having spent the past seven years at Co-Impact, a global funder collaborative that makes grants around the world to organizations leading large-scale systems change efforts, I was excited to really be able to look at the question of how grants from intermediary funders might be different from other types of funders.
The research just published — Bridging the Gap: Grantee Perspectives on Intermediary Funders — gives us a good start at looking at this subset of funders, but we need more.
The report opens with a definition: “Recognizing there is no universally accepted definition for ‘intermediary funder,’ CEP defines intermediaries as organizations that receive money from other institutional funding sources (‘originating funders’) to distribute on their behalf. These include nonprofits that act as regrantors, donor collaboratives, and other structures.” The report’s sample includes data from 3,444 grantees of 24 intermediaries who have participated in CEP’s Grantee Perception Report.
Twenty-four is a relatively small sample size, and it merges together some very different types of intermediaries. Donor collaboratives like Co-Impact don’t take direction from a funder and act on that funder’s behalf. Instead, the diverse group of funders who agree to pool funding in a collaborative, while certainly able to influence the direction and strategy of the collaborative, do not generally direct their grantmaking.
I hope to see more research in the future that differentiates between types of intermediaries — and grantees’ experiences with these varying types of funders — so that we’re really able to understand the subset of donor collaboratives. And ideally, we’ll be able to differentiate further among different types of collaboratives. Bridgespan’s Philanthropic Collaborations Database houses information on more than 300 donor collaboratives, and their report on the landscape of collaboratives makes clear that collaboratives are about as varied in approach as originating funders. Panorama Global estimates that there are more than 400 collaboratives in the US alone.
That said, this research is a start, and for me raises a big question. The study points to some statistically significant differences between intermediaries in the study as compared to the broad set of funders in CEP’s larger dataset, with intermediaries having better results in some areas and less positive results in others. Are those differences due to the fact that they are intermediaries? How much comes out of the choices that the intermediaries themselves are making?
Does the fact that these grantmakers are intermediaries, with their own funding coming from “originating funders,” play a role?
In one area, the report showed a specific link. The study considers the impact of the funding flows into the intermediaries from originating funders on the grants that the intermediaries ultimately award. In particular, a lack of clarity about future funding flows can, in turn, lead to uncertainty about the funding that an intermediary can provide.
That’s certainly a possibility. Donor collaboratives — along with other types of intermediaries — are not endowed funds with a steady source of revenue. We must raise the funds that we award. Whether and how that impacts specific grantee organizations, however, depends on how the collaborative makes grant decisions and awards its grants. The case study shared is of a grantee organization that is unable to predict whether and at what amounts future grants will come in from their intermediary funder, specifically because the program officers at the intermediary do not have predictable budgets.
But does that have to be the case? Just like the choices all grantmakers must make, intermediaries have choices. One option in the face of variable funding could be to build up a reserve to be able to smooth out the funding flows. Our approach at Co-Impact, where we fund organizations working on large-scale change, is to make long-term grants, often five to six years in duration, and then to support our program partners throughout those years to secure other funding for the work beyond our grants so that they can reach full funding and avoid a funding cliff. That’s a deliberate funding strategy we have always employed — built into our approach and driven by our values.
There are other areas of difference highlighted in the report. For example, intermediary organizations are shown in this sample to provide more open and frequent communication, but to have slightly lower levels of trust than originating funders. But it’s not clear why these changes might be tied to the fact that the grantmakers are intermediaries.
From where I sit within a donor collaborative that has raised close to $800 million from more than 50 funding partners, when we face limitations suggested by our originating funders, then we have to balance those limits with our own sense of what is needed to support the organizations receiving our grants. And we also have opportunities to do things differently from our funders, unencumbered by the internal policies that drive their decisions. We can choose to provide flexible funding, to provide grants of longer duration, and to provide significant support beyond grant funding to our partners. We can choose to communicate freely and be transparent about our processes.
At Co-Impact, this starts at the beginning, in how we work with our own funding partners. We are joined by a diverse group of funders who were inspired to contribute to our vision of how to support significant change in the world, who saw the opportunity to do something different from what they do every day. We made sure we were aligned on that vision from the beginning, and we come together regularly to share what we’re learning, and to hear from them about what they’re learning as well.
I encourage our fellow donor collaboratives — there are hundreds of us, after all! — to participate in the Grantee Perception Report, so we can learn with and from each other. I want CEP to be able to take this research further. To broaden the data set to include many more intermediaries. To differentiate among types of intermediaries — and even among types of donor collaboratives. To look to understand whether the differences from the broader data set derive from the fact that these funders are intermediaries, and if so, to understand why.
Pam Foster is a lawyer and strategic operations specialist with over 25 years of experience in the philanthropic sector. She currently serves as chief operating officer of Co-Impact and is a member of CEP’s advisory board.
