Funder Blind Spots – Lessons from the Other Side

Every so often, I am asked to speak to fundraisers about the view of the funder. One such place, in response to “popular demand” [or so they tell me], once each year, I teach a full day seminar for fundraisers on this topic at NYU. This year’s seminar was held just a few days ago.

There is no doubt that many development and fundraising professionals are often surprised with some of the perspectives offered. There are “orthodoxies” which seem to be taught to many fundraisers that simply are either out of date or too simplistic to describe the current dynamics in the philanthropy world. In fairness to those who actually paid for this, I am not going to give a précis of my otherwise priceless presentation.

I do, though, need to honor some troubling issues regarding our side, funders, which arise again and again – and that do deserve attention.

When asked about what troubles them in their dealings with funders, fundraisers and nonprofit executives articulate two overriding concerns: inadequate transparency about process and priorities, and shortsighted grantmaking behavior.

1. Inadequate transparency about process

I would have hoped that we were well beyond this one. In this day of easily developed websites and other affordable media, there really is no excuse for any foundation’s grants policies to be inscrutable. Even if a foundation does not accept unsolicited proposals, or has other very strict closed-door policies, people should know that. After all, if the 990PF is a public document, anyone at all can check out all sorts of things about the governance, finances, and grantmaking about any foundation. It is only reasonable, ethical, and good practice that a potential grantseeker should know if, how, and when they might explore becoming a grantee.

There isn’t that much about which people disagree on this very basic grade 1 level of funder transparency. If it is lacking, it is usually because of carelessness. As I have written in a piece on glass pockets some time ago, other elements of the question of foundation transparency are more disputed and negotiable, but not this one. If there are errors of omission, they can and should be corrected.

2. Shortsighted Grantmaking

Here, however, the plot thickens and the topic deserves some further comments – and judgments. A few examples:

a. Too little information on expectations

When funders are either clients or take seminars with me, I underscore and emphasize how important it is to clarify expectations along with any grant or contract. If a funder expects an evaluation process or publishable findings or regular site visits or certain kinds of documentation or recognition, make that clear at the very beginning. It isn’t good practice, nor is it useful to assume that the grantee can intuit what you want. Sometimes our expectations are unreasonable, for all sorts of reasons, and it is better for a funder and grantee to have that straightened out immediately. In my experience, though, too often an issue manifests itself later on – when a funder has a vague sense of dissatisfaction with the experience only incidentally related to the performance of the grantee. Typically, it turns out that the funder was very unspecific about the kind of relationship they wanted to have with the grantee, the grantee never asked, and at the end there was unnecessary disappointment.

b. Unclear or delayed exit strategy

The best time to establish an exit strategy for any grant, investment, or contract is the moment one has decided to grant, invest, or contract. The very worst time is toward the end. Sadly, though, it seems that funders violate this all the time. In fact, it is probably the single complaint I hear more than any other. A few examples: “we were funded for three years and were never advised that they [the funder] expected us to replace their funding in whole immediately afterwards”, or “we created a new program at the request of a funder, invested heavily in it, demonstrated its success and yet the funding simply stopped,” or “we discovered only at the end that they wanted to compare the program they funded with us with similar programs they funded elsewhere, but never told us what kind of documentation they would want us to produce.” Sound familiar? In each of these cases, a funder expected or wanted something when the funding was over, and yet never adequately conveyed those expectations nor worked with the grantee to fulfill them.

In fairness to funders, we also are all too aware of grantees who act surprised when the writing was on the wall. Or who act as if once funded, they are entitled to it in perpetuity. However, I have seen too many funders who are guilty of the kinds of shortsightedness in their funding practice and communication that I suspect that there is real fire in this smoke.

c. Giving too little for a program to succeed

Funding for success is not the same as only funding successful programs. We all know that seemingly well-conceived and adequately funded programs fail or fall short for many reasons. That is to be expected, and any honest funder acknowledges that is the nature of our business.

However, there are too many times when funders are far too arbitrary about how much or how little they choose to grant. Instead of asking themselves whether the project they are funding can indeed succeed with the available resources, they use unrelated criteria to determine amounts. [“They asked for $x, we should therefore give less than $x” or “We gave a similar organization $y; we need to maintain parity”; or “last year we gave $z, we should simply adjust that proportionally to our grants budget.” Etc.]

In grantmaking, the challenge is not to see how little one can give but rather what is the right amount to invest for potential success. The overwhelming majority of place-based nonprofits/ngo’s are not flush with extra resources and funds; if a funder knowingly gives an amount which allows a fragile program to be even more fragile, the funder is not doing much of a favor to the grantee, and as important, isn’t helping fulfill its own funding mission.

Many of my funder colleagues will rebut this, arguing that most proposal requests are padded, with the nfp’s expectation that, even if funded, it will be for less than the amount requested. This may be true a lot of the time, but if our own funding practices don’t align our funding with real costs, we run the risk of funders and applicants playing a less than productive game of poker. When we funders model that our grantmaking is based on best estimate of real cost analysis for likely success, we can and should insist on the same from potential grantees.

d. Abuse or misuse of implied power

Of course, ethics and best practices suggest that funders need to exercise due caution with their implied power. Hopefully every funder is well aware of self-dealing, and conflict of interest restrictions. However, the most typical “abuses” are inadvertent and well intentioned. I will give just one example: site visits.

Many funders, staff and trustees, love site visits. After all it gives one a direct experience with a grantee, or potential grantee. It adds vitality to the words of a proposal and can certainly be more dynamic than sitting in a plushy foundation office. There is good reason that a well-considered site visit can add significant information to a funding decision.

That last line, though, “funding decision”, is the key. If a site visit is going to make a difference to a funder’s decision, or gives a deeper understanding of what is actually happening with grant money, then, of course it is a constructive tool. [And there is substantial literature on how to make it productive.] However, if that site visit isn’t connected to decision making or monitoring, one should think carefully. Most funders neglect how disruptive a site visit can be to a nonprofit. Desks are cleaned, attire is upgraded, work is interrupted in anticipation of these visits. Instead of delivering service, there will be talk about the delivery of service. You get the picture. But the implied power of the funder makes the majority of nfp’s immediately responsive to a simple request to visit even when it doesn’t make sense. Very experienced funders may, without meaning to, cause this disruption by the simple request to visit.

None of the issues discussed in this post are new or cutting edge. Nor is this an exhaustive list. Nor should any of this surprise. Yet, when one hears the same concern voiced by executive and development officers of large and small nonprofits, over and over again, it is clear that we in the funding world still have work to do. As in so much of life, it is our blind spots that do us in more than our sins of commission.

Richard Marker teaches and advises funders from around the world through both the NYU Academy for Grantmaking and Funder Education and the Wise Philanthropy Institute, both of which he founded. His blog can be found at Wise Philanthropy.