Have you seen that pizza video — you know, the one produced by the Human Services Council of NY that shows how hard funders can make it for nonprofits to get funded in ways that align with their work? In the comedic short video, the “funder” wants to buy a bunch of pizzas but tells the local pizza shop owner that “none of this money can be used for utilities, rent, marketing, pizza boxes, or your salary — especially not your salary…”
That video came out seven years ago and reflects the experience of nonprofits for decades — and, unfortunately, it still rings true today for much of our field.
There have been two notable exceptions to the trend: First, some changes in funder practices during the COVID-19 pandemic that were catalyzed by the crisis. And second — as amply demonstrated in CEP’s new study, “Breaking the Mold” — in MacKenzie Scott’s example of providing large, multiyear, unrestricted funds with few or no application and reporting burdens.
Now, as nonprofits across the country brace for increased needs in communities, as well as funding cuts that result from federal policy changes, it is once again a chance for funders to choose to structure our funding in ways that nonprofits say work better for them. Above all, that means we should be providing more multiyear, flexible funding.
And we can do it. During the COVID-19 pandemic, we saw funders adjust their practices, providing more flexible funding and also streamlining processes to reduce administrative burden on nonprofits. Philanthropy was responsive and got more flexible so nonprofits had the flexibility they needed to meet the moment.
So, it was disappointing to see that, in the most recent CEP report on Scott’s impact and influence, about half of foundation leaders report that they believe nonprofits are only “somewhat,” “slightly,” or “not at all” able to handle large gifts with no restrictions. This was striking to me, given the three years of evidence in CEP’s study that the majority of nonprofits are handling these gifts effectively.
It was also striking because of the power of multiyear flexible funding described in the report which contributed to:
- Increased leader confidence
- Increased financial stability
- Greater ability to pursue mission, including through increasing reach or strengthening programs, innovation, or programmatic risk-taking
- Increased investments in organizational capacity and staff
- Ability to deploy funds over two or more years
Although few funders are able to fund at the same level as MacKenzie Scott, it’s hard to ignore the benefits of multiyear flexible funding noted in the study. These are the things nonprofits need most — especially in times of crisis.
The power of multiyear flexible funding is not surprising or new to me. I have spent my time in philanthropy — at the Edna McConnell Clark Foundation, Blue Meridian Partners, and now the William and Flora Hewlett Foundation — in organizations that consistently provide multiyear flexible funding with varying grant sizes. I have seen how this kind of funding can support programmatic innovation, stronger organizational capacity, and growth that the same organizations would not have been able to accomplish without both flexibility and time.
Not everyone has the capacity to give at MacKenzie Scott’s level, but more funders at all levels can move toward flexible funding. And, as noted in the study, some funders are currently exploring or want to do more of this type of funding. Here are some ways to make the change, even if incrementally:
Give flexibly. Instead of project grants that can limit flexibility even though they have clear deliverables, give flexible funding. As nonprofits meet increased need and navigate a shifting (and hostile) environment, some of the best support funders can give is to ensure that nonprofits can use funding for the most pressing needs right now.
Give flexibly — and try 18 months. At Hewlett, we do two-, three- and even five-year flexible funding grants. But that isn’t feasible for all organizations. See what it might take to go from 12 to 18 months. Even that incremental boost can make a difference.
Give flexibly — and engage more. As you lift restrictions, see what opportunities for open conversations about what your nonprofit partners are experiencing — and what they need — arise. Build deeper relationships with your grantee partner so you can listen and learn about their goals and impact.
Give flexibly — and be responsive to feedback. As you engage more deeply and build trusting relationships with grantees in the ways mentioned above, do more than keep your ears open — act on what you hear, from extending grant terms to being a connector and convener to offering much-needed resources beyond the check.
For those of you who want to experiment more with unrestricted grants, now is the time to start. The size of your grants should not hold you back, especially because the average nonprofit is smaller than the average organization receiving funds from MacKenzie Scott. When crisis hits, nonprofits need to be flexible. And the best way we can support them in that mission is to drop the strings and make the funding flexible.
Jehan Velji is director of the Effective Philanthropy Group at The William and Flora Hewlett Foundation. Find her on LinkedIn.
