by Todd Cohen

Paying attention to the needs of clients is a critical skill and “best practice” that many funders seem to sorely lack.

Funders are quick to preach to the nonprofits they fund about the need to “engage” their own constituents so they can be more responsive and effective in their programs and fundraising.

But when it comes to their own shops, funders seem less like welcome wagons for the community and more akin to fortresses protected by moats and drawbridges.

A new study, based on a survey sponsored by Grantmakers for Effective Organizations, or GEO, and conducted by TCC Groups, says grantmakers that are using strategies to listen to and learn from grant recipients are more likely to provide the kind of support nonprofits need to thrive.

That includes general operating support, multi-year funding, and grants to help nonprofits build their operating “capacity,” says the study, which surveyed 755 grantmaking organizations.

Increasing those types of funding is needed to help nonprofits “address the ever-changing needs in their communities” and represents “one of the most critical decisions a funder could have made in the past several years,” says J McCray, author of the study and chief operating officer at GEO.

The study finds that, on the whole, “progress across the foundation field has been generally slow” in terms of providing those kinds of support, a trend it says is “not surprising given the kinds of pressures facing the nonprofit sector and philanthropy.”

And it says most grantmakers “did not significantly change their stakeholder engagement practices” during the troubled economy of the past three years, a trend it calls “disappointing,” although it says “stability during turmoil and the fact that there was little backsliding may represent no small accomplishment.”

Still, it found what “appears to be a connection between stakeholder engagement practices with grantmakers making smarter decisions about what to do with their funds to better support grantees.”

And the study identified a possible “shift in the way that funders see themselves and their role in supporting nonprofits.”

Funders, it says, are looking for additional ways “to stay plugged in, including feedback from grantees to help strengthen their performance.”

If they truly want to help nonprofits build their capacity to help people and places in need, funders should do more than simply talk about “engagement” and actually begin to practice it.

That means finding ways to truly listen to nonprofits and the communities they serve, and then providing the kind of funding that will boost nonprofits’ ability to learn, lead and grow.

Todd Cohen is editor and publisher of Philanthropy Journal; reprinted with permission.

Also see, Nonprofits Need Time to Think.