How many of us have read multiple reports and articles that encourage foundations to provide more unrestricted and multiyear grants? And how often are we reminded that the shift away from restricted project grants has made minimal progress?
I’d like to make a friendly proposal to address this. What if foundation presidents, trustees, and program officers each selected one grantee whose work they care about…and asked to shadow the CEO of that organization for one full day?
In my roles as trainer, coach, consultant, volunteer, board member, lender, and grantmaker, I have had the privilege of learning from and working with hundreds of CEOs of nonprofit organizations for 26 years. And I have enjoyed engaging with scores of thoughtful foundation program officers and presidents over those years, too.
One observation that I have repeatedly found myself reflecting on is this: it seems that many — if not most — foundation presidents, trustees, and program officers have never served as CEO of a nonprofit organization. When CEP surveyed foundation CEOs for a 2016 report, 22 percent reported that they worked at a nonprofit organization immediately prior to working at their foundation, but the survey language did not specify whether or not they were the CEOs of the nonprofits. More foundation program officers have experience working at nonprofits (when CEP surveyed program officers for a benchmarking report last year, 79 percent reported having previously been employed at a nonprofit organization), but again the data does not specify how many have experience in the unique position of leading a nonprofit.
While I don’t have firm data to back up this potentially heretical claim, I have confidence in it based on a quarter century of curious scrutiny. (My observation also appears to be the case among folks who lead and work for government contracting and grant agencies, as well as the generous high-net-worth individuals upon whom the nonprofit sector gratefully relies.) For now, I prefer not to do a deep dive on why this is the case. Rather, my current purpose is to ask readers to accept the likelihood of the truth of this claim, at least for a moment.
With that in place, I’d like to suggest that one of the reasons why foundation dollars remain largely restricted to programs and projects is that precious few of the people who identify, evaluate, and approve grants are intimately familiar with just how challenging it is to run a nonprofit organization. From a financial perspective alone, nonprofit leaders must cobble together revenue from a vast and dizzying array of sources: multiple large and small individual donations, grants from multiple foundations, government contracts, and fee-for-service revenue.
Each of these revenue sources requires building and maintaining relationships with folks who rarely have interest in an entire organization, but instead focus on a specific program or activity. And those sources want to see their dollars spent only on that activity, not on the supporting efforts and expenses required to make that activity occur effectively. Application and reporting requirements are bespoke and sometimes hefty given the size of a grant versus the size of a grantee’s annual operating budget. And most sources require annual renewals — with a good number insisting that grantees “cycle off” for a year periodically to minimize “dependency.”
I recall a dozen years ago meeting a smart, thoughtful gentleman who wanted to use his career experience with starting, growing, and investing in successful for-profit businesses to help nonprofits scale up and achieve greater impact. He spent the next year working closely with a dozen or so organizations and found himself describing with a bit of shock and awe the work of nonprofit CEOs as “black diamond management.”
What is a “black diamond?” At the time I learned it was a ski reference. Here’s a helpful definition I found recently from a blog post on Outdoor Tech:
Black Diamonds: What They Mean
These runs will have steep gradients exceeding 40 percent and are considered difficult.
Black Diamonds: What They Really Mean
These runs are where you can get a little peace and quiet, except for the screaming. They are either very steep, full of bumps, or both. You don’t have to be an expert to ski these but that would help, along with a lot of confidence. Alcohol helps, too.
The smart, thoughtful investor went on to say that managing a nonprofit is in many ways much harder than managing a Fortune 500 company. I may be exaggerating — it was 12 years ago — but the basic idea holds value.
I posit that if every foundation president, trustee, and program officer spent one day shadowing a grantee CEO they would witness “black diamond” management firsthand. And maybe it would help them reconsider their foundations’ grantmaking processes and the types of grants they are willing to offer. This might not lead to a wholesale revolution of multiyear general operating support for all, but I have to believe it’s worth trying — and I have confidence that some real good for the field could come from it. I hope it won’t necessitate alcohol consumption, though…
For maximum benefit, I’d suggest that grantee CEOs be asked to conduct a shadow day as they would any other, with no special red-carpet activities. And to give this some oomph and maintain lightheartedness, I propose we establish Monday, April 1, 2019 as the first annual “Shadow a Grantee CEO Day.” If it takes hold, perhaps CEP’s May 2019 conference could include a session inviting those who participated to share what they learned, and participants can use this blog forum to share their experience?
Rodney Christopher is senior consultant at FMA, where he provides training, consulting, and coaching to build the capacity of funders to engage with grantees about their financial needs.