In its recently released report, Foundations Respond to Crisis: Lasting Change?, the Center for Effective Philanthropy (CEP) shared new research in which foundations reported working differently now than in early 2020 — and indicated plans to sustain most of these changes. The report reveals numerous areas of change in foundation practice and in leaders’ plans for the future, as well as some disconnects, barriers, and additional opportunities for further change. This is the fifth in a series of blog posts in which members of CEP’s research team share further data and insights that the research revealed, beyond what was included in the report. Find other posts in this series here.
To embrace an understatement, the past two years have been a lot. To deal, many of us have reached for comfort in the form of sugary cereal, indoor plants, Disney movies, and the like. For my part, I have become unapologetically obsessed with Encanto, Disney’s recent animated hit. In Encanto, Mirabel, the only Madrigal family member who was not blessed with a magical gift, does everything in her power to protect her family and the miracle they rely on.
Part of why Encanto resonates with me is because the desire to cling to miracles at all costs feels very prevalent in philanthropy. As Center for Effective Philanthropy (CEP) President Phil Buchanan said in a recent blog post, “we’ve seen more change in how foundation leaders approach their work in the past two years than in the previous two decades combined.” It’s a miracle! In a CEP report released last year, Foundations Respond to Crisis: Lasting Change?, we found that many foundations have started making changes to alleviate the pain points that nonprofits have been experiencing for decades. For many, this included finally rethinking the reporting process. For so long, we acted as though the receipt of funding was a miracle and the reporting process, though arduous and at times overwhelming, was just how we earned it. But maybe there’s another way — and hopefully these changes will indeed last.
As my colleague, Kevin Bolduc, pointed out in the fall of 2021, reporting processes in their historical form could largely be done away with. They were time consuming, labor intensive, and not particularly beneficial to grantees or foundations. In his post, Kevin describes grantees spending an average of 30 hours on reporting processes throughout the course of a grant. That’s 30 hours that are not being spent on mission furthering work. This isn’t a new development. More than a decade ago, in our 2011 report, Grantees Report Back, we found that the typical grantee was spending 20 hours, on average, on tasks related to monitoring, reporting, and evaluation. If anything, until recently, calls to revisit the reporting process, or better yet skip it altogether, had gone unanswered.
The crumbling of the world as we knew it, as a result of the pandemic, prompted many foundations to ask less of their grantees. Three quarters of the foundation leaders that responded to our survey in 2021 indicated having made changes to their reporting requirements to reduce the burden on grantees. Most frequently, this entailed shortening or eliminating their reporting requirements and being more flexible in the form that submitted reports take. As one leader said, “We left the guts of our application and reporting diligence at the door…and so far, so good.” Another described being, “careful about only asking for things that we need and that we will use. We’re not going to ask you to write War and Peace when we only need you to write a one-pager on what happened.”
The experiences of nonprofit leaders also suggest that a change in reporting processes has occurred. In a series of interviews that we conducted with nonprofit leaders from our Grantee Voice panel, 72 percent reported having experienced these streamlined processes and benefiting from the newfound flexibility. One nonprofit leader described their experience last year as, “Much more streamlined. We’ve been able to go from 20-page quarterly reports to just five questions for an annual report. God bless. We used to ask people for $10,000. I wanted to put as a line item in the budget, ‘It’s going to cost $10,000 to create the budget in your format.’”
Another grantee described the relief they experienced as, “We had one foundation that allowed us more time on reporting, which was really critical because there were times when we were just scrambling to make it. We had to call and say, ‘This report is going to be late; we’re just putting out fires,’ and they were very understanding of that.”
In 2021, most foundation leaders (89 percent) indicated that the foundation would maintain at least some of the changes it had made to the reporting process, even after the pandemic is contained. But what is worrisome is that our optimism is so often, and rightfully, cautious. We say things like, “so far so good.” We titled the report with a question mark acknowledging the uncertainty about whether these changes will truly be lasting. It seems there is always that little bit of anxiety in the background that says we might just lose these better practices — someone might just take away our miracle.
As we and others have argued, the way to alleviate this anxiety is to foster strong relationships between funders and grantees so that the reporting process is a fruitful opportunity to reflect on the work. As we start to feel like we are getting to some kind of normal, I encourage funders not to wait for another crisis to prompt them to think about what they’re asking of their grantees. Funders should be regularly rethinking what they ask of grantees, and why, before we see signs that the walls are starting to crack.
Early in the pandemic, one foundation leader shared, “We came to understand very quickly that the burden on grantees was about to become enormous. They were going to have to cope and adjust in the face of crisis. And their sheer survivability was in doubt. So, we tried to be a model for being as low burden as possible.” But not every burden is obvious and sounds an alarm that you can’t ignore. Sometimes it’s the pressure every day like a drip that will not stop that wears you down. Foundations and their grantees should be having regular conversations about reports, if they’re required, and about what else the grantees might need. Be like this foundation leader who said, “When COVID struck, we sent a message to all our grantees letting them know that we were not going to be asking for reporting. We let them know that if they needed help, we were there to help them.”
The truth is the miracle isn’t the funding. The people who work at nonprofits, using that funding to make the world a better place, are the real miracle. Funders should prioritize fostering the strong relationships between themselves and grantees that facilitate the most productive reporting processes and amplify societal good. As one leader reflected last year, “We have gone way too far in what we expect nonprofits to report on, and how we expect them to define the minutiae of their impact. At some point, we just have to trust them.”
That’s all there really is to keeping a miracle alive — trust.
P.S. Please see Encanto, it is so, so good.
Satia Marotta is manager, research, at CEP.