What Are Real Barriers to 21st Century Grantmaking?

January 24, 2014

While listening to some research highlights about Native American philanthropy yesterday, I got to wondering: Why have grantmaking methods changed so little since the 20th century? What are the invisible roadblocks that are preventing us from adopting 21st-century grantmaking practices?

In the Native Voices Rising report are 17 recommendations to increase grantmaking effectiveness and impact. Although written from a Native perspective, these suggested changes could be adapted for nearly any cultural or issue-based group:

  1. Provide increased funding for Native organizing.
  2. Provide more general operating and capacity-building support.
  3. Make long-term multi-year funding commitments.
  4. Fund grassroots Native organizations directly.
  5. Invest in leadership development.
  6. Support Native intermediaries that are solidly grounded in Native movements.
  7. Support income-generating activities such as social enterprises.
  8. Support development of the telecommunications/media infrastructure.
  9. Provide on-going operating support to voter engagement organizations beyond national election cycles in order to sustain progress and momentum.
  10. Incorporate interdisciplinary grant approaches that draw funds from multiple foundation program categories to support organizations and projects conducting work at the intersection of those programs, e.g., culture and environment.
  11. Listen and learn about Native communities, including issues, needs, and aspirations.
  12. Be more responsive than directive; find common interests.
  13. Communicate information about grant programs more broadly in the Native world.
  14. Conduct research on needs in the field in partnership with Native organizations.
  15. Look beyond the small population numbers as compared to other racial/ethnic groups.
  16. Bring Natives into the foundation as staff, board members and resource people, involving them in shaping and implementing foundation programs.
  17. Pool funds from small grant funders to streamline the grants application process and reporting requirements.

If you are a grantmaker, or if you work anywhere in the independent sector, I expect you’ve seen versions of these recommendations many times before. So what is hindering our adoption of these 21st-century grantmaking practices? I confess I don’t have the answers, but I bet you do.

Join the Conversation
Grantmakers, which of these recommendations have you already incorporated in your work? Which new practices would make the greatest difference to your grantees’ success? And which would dramatically improve your grantmaking effectiveness?

Please share your experiences. Together we can identify and break down the barriers to change.

– Wendy Wehr, v.p. of communications and information services


A Look at National Grantmaking Trends

June 7, 2013

criteriaThe National Committee for Responsive Philanthropy recently released new reports on 2011 philanthropic giving to key areas in Criteria for Philanthropy at Its Best: Benchmarks to Assess and Enhance Grantmaker Impact. NCRP uses data from Foundation Center, which analyzed the grants of $10,000 or more from 1,121 of the largest grantmakers in the country.

Here are the four reports that make up NCRP’s Philanthropic Landscape 2011 analysis:

  • The State of General Operating Support 2011 saw a shift to increased general operating support, from the 2008-10 average of 16 percent to 24 percent in 2011. One Minnesota grantmaker made the list of largest funders by percentage: U.S. Bank Foundation, which committed all its grant dollars to general operating support.
  • The State of Giving to Underserved Communities 2011 saw a slight increase from 40 percent in the previous 3-year period to 42 percent of foundation grant dollars benefiting underserved communities, defined as economically disadvantaged persons, racial and ethnic minorities, women and girls, disabled persons, and other groups. One Minnesota grantmaker, Northwest Area Foundation, was on the list of largest funders by share of giving to underserved communities, at 96% of its total giving.
  • In The State of Multi-Year Funding 2011, while nearly 90 percent of funders reported making no multi-year grants, two Minnesota grantmakers were noted. Blandin Foundation and The McKnight Foundation both made the list for largest funders for multi-year grants as a percentage of their totally giving, at 86% and 81% respectively. The McKnight Foundation also made the list of largest foundations ranked by total multi-year giving.
  • In The State of Social Justice Philanthropy 2011, while the share of giving to social justice decreased 3 percentage points from an average of 15 percent in the previous 3-year period to 12 percent of grant dollars in 2011, there was an increase in the number of grantmakers, from 76 to 94, providing NCRP’s proposed level of 25 percent of grant dollars for social justice work. Northwest Area Foundation also made this list of largest funders by share, with 92% of grant dollars going to social justice efforts.

In nearly all of the reporting, the Bill & Melinda Gates Foundation was a significant funder, and analysis was prepared with and without their contributions. Without the Bill & Melinda Gates Foundation in the mix, the Midwest region was well represented across most of these reporting areas, usually reporting within a couple percentage points of the highest ranked region.

- Anne Graham, MCF research associate


Streamlining Grantmaking: Perception vs. Reality?

May 20, 2013

TakingStockReportcoverGrants should facilitate the mission-critical work of nonprofits, but sometimes that’s not exactly how it works.

A new report by Grants Managers Network and the Project Streamline collaborative reveals that after five years of promoting effective ways to improve grant requirements, many nonprofits continue to feel burdened.

More than 700 grantmakers and grantseekers participated in a survey that revealed a continuing gap between grantmakers — who say they have streamlined — and grantseekers — who continue to find processes too unwieldy. Here’s a quick summary of the findings from the new report, Practices That Matter.

Project Streamline Principles Widely Recognized
Project Streamline’s principles are widely recognized in the grantmaking community. Almost all grantmakers say they have made or are planning streamlining changes. Here’s what else they said:

  • 93% are familiar with the impact of grantmaking practice on nonprofits,
  • 90% are familiar with the principles of clear and straightforward grantmaking communications,
  • 87% are aware that taking a fresh look at application and reporting requirements is recommended,
  • 86% realize that reducing the burden on grantseekers is important,
  • 81% are familiar with “right-sizing” — where application and reporting requirements are in proportion to the grant size and type.

Unfortunately, it takes a long time for changes in individual practice to become true culture change. So, nonprofits still spend too much time meeting requirements that are poorly designed, redundant, inappropriately scaled or simply mystifying.

Continuing Issues for Grantmakers
The research showed some grantmaker progress and brought to light issues that remain.

1: Take a fresh look at information requirements.

  • More than 80% of grantmakers say they have revised application or reporting requirements to ask for only what they use in decision-making. But grantmakers still don’t like to accept information that’s not specifically developed for them.
  • In fact, 84% of grantseekers say grantmakers rarely or never accept common applications, and 62% rarely or never encounter a funder who accepts standard or no reports.

2: Right-size expectations.

  • Grantmakers say they are paying attention to the relationship between requirements and grant size and type; 55% say they have revised applications and 59% have revised reporting requirements to be appropriate to grant size.
  • But 72% of grantseekers say applications for small grants are rarely or never proportionate to the level of funding. The same number say they have rarely or never encountered a simplified application for repeat grants.

3: Reduce the burden.

  • 91% of grantmakers now use an online system or accept applications via email. With the shift toward electronic submission, 84% no longer require multiple copies of materials.
  • But going online doesn’t equal streamlining. Poorly designed and untested systems remain a big source of grantseeker aggravation. Grantseekers cite  system issues including:
    • forms in which data cannot be cut and pasted but must be input one item at a time,
    • forms with stringent character limits,
    • forms that don’t allow users to review all questions in advance, save work, or go back to previous responses,
    • and myriad other bugs.
  • Furthermore, 50% of grantseekers say paper systems are still prevalent among funders.

4: Provide clear and straightforward communications.

  • 91% of grantmakers say they have revised communication to make it clearer and more straightforward; 84% have made messages consistent across all platforms.
  • But getting clear guidance and reaching a person continue to be barriers for grantseekers, who report confusing, inconsistent and insufficient communication. Grantseekers say online systems too often stand in for direct communication, which builds an unintended barrier to relationship.

Read the entire Practices That Matter report. You can also take an interactive quiz to find out how “streamlining savvy” you are, download ​Making More Time for Mission, an overview of the report, and more.

How do you think grantmakers in Minnesota stack up against these national statistics? Let us know your experience.

- Susan Stehling, MCF communications associate


Are Grantmakers Supporting Nonprofit Evaluation?

April 23, 2013

Don’t miss MCF’s spring issue of Giving Forum, online now and in your mailbox soon, for answers from MCF’s research manager in the “Giving Trends” article.

giving_trends_figurea

Funders can build nonprofit capacity for evaluation — and other types of operating activities — by providing general support. However, Minnesota grantmakers continue to provide most dollars in the form of program support. 

Minnesota grantmakers allocated grant dollars like this in 2010:

  • 62%: program support
  • 20%: general support
  • 9%:   capital support

While U.S. averages looked like this:

  • 53%: program support
  • 22%: general support
  • 14%: capital support

With general support, grantmakers help nonprofits develop evaluation capacities and thereby support stronger outcomes for Minnesota communities.

For much more on the topic, please read “Giving Trends” in the current issue of Giving Forum.

- Susan Stehling, MCF communications associate


The State of General Operating Support in Minnesota and Beyond

November 13, 2012

Grantmakers can invest in the health, growth and effectiveness of their nonprofit partners by providing them with general operating support, in addition to or instead of more restricted program or capital support. Recently, the National Committee for Responsive Philanthropy (NCRP) took a close look at national trends in general support in their research brief The State of General Operating Support (PDF). NCRP compared the latest available data on a sample of 906 large grantmakers’ average giving from 2008-2010 to a previous 2004-2006 sample. It found that foundation giving to support the general operations of nonprofits increased through the recent recession, but the share of foundation dollars classified as providing this vital type of funding remains the same, at about 16 percent.

Here in Minnesota, grant dollars dedicated to general support tend to be higher than the national average. In 2010, general support received 20 percent of Minnesota grant dollars. Program support garnered 62 percent and capital support 9 percent. (Student Aid and Other Support received the remaining 7 percent of grant dollars.)

Click on this figure for a full-size view

But general support has not grown as quickly as program support in recent years. Program and general support both remained steady during the height of the recession in 2008 and 2009, but program support increased sharply while general support dipped slightly in 2010 (see Figure A). Capital support, which decreased in 2008 and 2009, increased in 2010, primarily because of the Minnesota Orchestral Association’s capital campaign.

Why General Operating Support?

NCRP articulates five benefits to providing general support to nonprofits:

  • It provides flexibility to meet pressing community needs and achieve impact.
  • It eases administrative burdens for grantmaker and grantee alike.
  • It contributes to nonprofit sustainability and capacity building.
  • It signals trust between the funder and grantee without sacrificing accountability.
  • It shifts attention from limited program outcomes to broader organizational and social impact.

Learn More: A detailed overview of support type giving in Minnesota – and information on many other trends in giving – is available in Giving in Minnesota, 2012 Edition.

-Anne Bauers, MCF research manager  


Individual Giving Up; Minnesota Grantmaking Stable

October 16, 2012

Giving in Minnesota 2012MCF today released its Giving in Minnesota, 2012 Edition research, the most comprehensive analysis of charitable giving in the state.

The report shows giving by individuals, foundations and corporate giving programs totaled $5.2 billion for the 2010 research year, a modest 2.6% increase over 2009.

The 2010 research year, the most recent time period for which complete data are available, includes financial information from foundations and corporate giving programs with fiscal years ending between June 1, 2010, and May 31, 2011.

Individual giving grew 3.4% to $3.8 billion and accounted for most of the overall increase. The majority of the state’s charitable giving — 73% in 2010 — comes from individuals.

Grantmaking accounted for 27% — $1.41 billion — of total 2010 giving, an increase of less than 1% over 2009. The total includes grantmaking by MCF member Greater Twin Cities United Way, which was included in the research for the first time to create a more comprehensive picture of charitable giving in Minnesota. Without that addition, total 2010 grantmaking would have declined 4.1% from 2009.

Foundation Assets Growing
While grantmaking has not fully recovered from the economic downturn, foundation assets are beginning to rise. Assets grew 3.8% to $16.9 billion in 2010, but are still slightly below the pre-recession 2007 level of $17 billion.

Corporate Grantmakers Lead Giving
The Giving in Minnesota research indicates that corporate foundations and giving programs, which comprise 9% of the 1,467 grantmakers in the state, gave 45% of all 2010 grant dollars. Private foundations — 85% of Minnesota’s grantmakers — gave 38% of grant dollars. Community/public foundations accounted for the remaining 17%.

Education Received Largest Share of Grant Dollars
The three subject areas receiving the largest shares of Minnesota’s grant dollars were education (27%), human services (23%) and public affairs/society benefit (16%).

Funding for arts, culture and humanities rose 20% to $129 million, while giving to education, human services, environment/animals and religion was up more modestly – between 3 and 6% each.

Subject area information is based on analysis of grants of $2,000 or more made by a sample of 100 of Minnesota’s top grantmakers. These grants represented about two-thirds of the state’s philanthropic giving for the year. Overall, grantmaking by the sample increased 3% from 2009 to 2010.

Trends for Geographies, Beneficiaries & Types of Support
In 2010 51% of dollars given by Minnesota grantmakers went to organizations and programs serving Minnesota. The Twin Cities metro area received 31% of the total grant dollars, with Greater Minnesota and Minnesota statewide each receiving 10%.

Organizations serving other parts of the country and world received 49% of grant dollars. A majority (67%) of corporate grant dollars went out-of-state, reflecting businesses’ goals of distributing support between Minnesota, where they are headquartered, and other parts of the nation and world where they have facilities and customers.

Based on available data, 55% of the sample’s grants could be coded to a specific beneficiary group. Of those, the largest share of dollars — nearly 25% — went to organizations serving children and youth.

Grantmakers continued to devote the largest share of their giving — 62% in 2010 — to program support. Twenty percent of grant dollars went to general operating support and 9% to capital projects.

MCF conducts Giving in Minnesota research annually to examine long-term trends in charitable giving. For the Giving in Minnesota, 2012 Edition summary and full report, see www.mcf.org/research/giving.

- Susan Stehling, MCF communications associate



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