Grantees Are Not Customers!

Kevin Bolduc

Twice last week I had conversations with leaders from different foundations who described to me their efforts to build “great customer service” for their grantees. It’s actually not an uncommon analogy, and I tend to let it slide. After all, I think it’s important that funders think carefully about grantees and how to work with them effectively, putting them “at the center of the map,” as Paul Beaudet of Wilburforce Foundation describes it.

But the customer service analogy is actually dead wrong.

First of all, there’s a definitional problem. What is even meant by customer service? There’s certainly no one definition of good customer service in the business literature — though the concepts of respect, helpfulness, timeliness, and efficiency come up a lot. All of those, though, are commonly subsumed under the overarching idea of “delighting” or “wowing” the customer. It would be interesting to see a foundation that oriented itself to ensuring that its grant recipients were delighted by its service to them — adjusting processes, grant characteristics, and requirements to what grantees would find amazing. I know of a few examples of funders that approach that kind of philosophy, but it’s not that common. And that’s because grantees are not a funder’s customers.

The second challenge to the customer service analogy is really one of directionality. Customers are paying something for a product or service. Grantees — the customers in this inapt metaphor — are not buying anything from a funder. In fact, I think it could be argued that, if anyone, it’s the funder buying something (outcomes!) from the grantees. But frankly, I find the notion of either party in the funder-grantee dynamic “buying” something to be inappropriate.

Finally, the purpose of providing good service isn’t transferable to the foundation context. In all the pieces I’ve read about customer service (though I don’t claim to be an expert), the point is at least in part to create customer loyalty and engagement — a customer who will come back more frequently, buy more or more expensive products or services, and recommend the product or service to a friend. That doesn’t work for the foundation-grantee relationship, either.

This is easiest to see if you push the analogy to its illogical conclusion. It would be the rare customer that approaches a seller again and again, only to be told, “I’m not going to choose to sell to you. You’re not quite the type of customer I’m looking for.” But that’s what we have in the funder-grantee dynamic, and the data bears this out: at the typical funder that has worked with CEP to survey declined applicants, 87 percent of those nonprofits that were declined indicate that they are considering applying again.

In a way, the customer service analogy is one borne out of a fear of loss: what if the customer goes away and never comes back?

For the foundation-grantee dynamic, I think we need a more positive analogy — one focused on opportunity for gain, rather than fear of loss. While I know that not all foundations consider grantees their “partners,” it’s a better, if still imperfect, analogy. In it, funders and grantees provide great service to each other because they’re motivated by common goals; bound together in shared strategies, approaches, or values; and in a joint quest for creating greater impact. If either party is letting the other down through a lack of timeliness, helpfulness, respect, or efficiency, there’s a mutual hurt because something that both parties desire is lost: a chance to make a positive impact for the people and communities about which they care deeply.

CEP’s research on strong funder-grantee relationships can offer some data-informed advice about the qualities that would make up good “partner service:” clear and consistent communication about what a funder is trying to achieve and interactions that focus on responsiveness, approachability when a grantee is experiencing challenges, and fairness. Excellent foundations would focus, too, on the internal expectations, systems, and structures that allow staff to create these relationships: transparency, a strong understanding of grantees’ goals and strategies, a selection process that is helpful and mitigates unnecessary pressure, and a deep understanding of the social, cultural, and socioeconomic factors that affect grantees’ work.

Those factors are not about customer service (or satisfaction). They’re about creating a dynamic that allows funders and grantees to elicit the best ideas and determined efforts to create the most possible impact with our precious, but ultimately limited, resources.

Kevin Bolduc is vice president, assessment and advisory services, at CEP. Follow him on Twitter at @kmbolduc.

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