When Funders Listen: Making a Difference, Long-Term

In a national report on philanthropic practices entitled “Is Grantmaking Getting Smarter?,” GEO (Grantmakers for Effective Organizations) shared some interesting findings. These findings will hopefully spark the interest of funders and, at the same time, warm the hearts of nonprofit executives. However, they leave me with a question: should funders listen more?

When looking at long term sustainability, the GEO has learned that there are three types of funding support which are most associated with nonprofit success.

3 Critical Types of Support:

1)     General operating support (unrestricted support)
2)     Multiyear support
3)     Capacity-building support

Why are these types of support so valuable?
In a similar report also funded by GEO, Nancy Burd argues that when funders focus only on short-term programs, nonprofits have an incentive to focus on the short-term and therefore may miss opportunities to work on both the organization and the mission long-term. Basically, they focus on the day-to-day and miss the internal and external opportunities which help them survive and thrive.

What does this look like?
More than 60% of nonprofits have less than 90 days cash. This means that most nonprofits are especially vulnerable to lows in funding cycles, economic downturns, and other external factors.  We’ve seen this. After the 2008 economic crash, many smaller and/or unprepared nonprofits folded. The hand-to-mouth business model doesn’t work for for-profits and we shouldn’t try to make it work for nonprofits.

Funders must listen to nonprofits.
A core message from GEO’s report is this: when funders listen to nonprofits, their funding is more closely alighted with long-term success because their funding more closely mirrors the three core types above.

Specifically, the GEO has found that:

  • When funders used grant reports to foster learning, they increased multiyear support.
  • When funders sought input from grantees and the community, they increased operating support.
  • When funders solicited advice from a grantee advisory committee, they increased capacity-building support.
  • When funders listened to grantees and the community, they increased capacity-building support.

This is great. It means that when funders listen to grantees and the community, funding more closely aligns with long-term success.

My Question: Why is this news?
I struggle with this information. From my perspective, I believe most nonprofit executives see multiyear, operating, and capacity-building support as key to long-term success. . . We’ve been talking about and asking for it for years. Nonprofits’ budgets need to account for the electricity bill, the administrative costs which undergird the sexy programs, and building the capacity of our staff, bolstering quality of programs and preventing turnover. These cold facts are usually not the ‘stuff’ that sells donors on a nonprofit; however, they are the ‘stuff’ that makes achieving the mission a possibility.

Yet, if we as practitioners know this, why don’t funders? I know many, many funders who do listen and who do understand the inner workings of nonprofits; however, this data clearly shows there is more work to be done. . .

How can we foster deeper understandings between nonprofits and funders which, hopefully, will increase the kind of support that makes a long-term impact?

Share your ideas here or at www.facebook.com/JennysJunction.

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