Funders Should Exit their Comfort Zones

by Todd Cohen

Despite their seemingly endless evangelizing about the need for change, foundations sure seem slow to embrace it.

But if they expect to have even a prayer of making change happen on the causes and issues they care about, grantmakers first need to change the way they themselves do business.

Many foundations are disconnected from the nonprofits they fund and the communities those organizations serve.

Tone deaf to what nonprofits say about the operating and financial problems they face, and the kind of support they need, many foundations prefer to push their own pet ideas or those of consultants and other hangers-on who seduce them with management jargon and philanthropic-correctness.

Foundations drone on about the need for collaboration, evaluation and diversity, but they shun true partnerships, reject criticism, and dismiss ideas that differ from or challenge their own.

To help nonprofits and the people and places they serve cope with unprecedented challenges in the face of social and global crises and change, foundations need to use a lot more common sense about how they work.

The need for foundations to embrace change is the focus of the year-end statement for 2011 by Kathleen Enright, founding president and CEO of Grantmakers for Effective Organizations.

After 10 years of working to help funders work smarter, GEO still sees big gaps between the needs of nonprofits and the way funders operate.

While a new study from GEO will show “pockets of progress,” particularly among its members, Enright says, “broad-scale change remains elusive.”

On the whole, she says, the study finds that “general operating support remained static, evaluation remains predominantly an exercise in accountability rather than learning, and most grantmakers do not seek input on strategy or specific proposals from grantees or recipient communities.”

And instead of getting the operating and program support they need, she says, many nonprofits have been “hollowed out by accepting funds that are too rigidly restricted or do not cover the full costs of programs, operations or overhead.”

So GEO has been working to help make philanthropy “smarter so that nonprofits can grow stronger and deliver better results in communities,” she says.

Change, however, is “coming slower than we’d like,” she says.

A 2008 survey by GEO found a “persistent gap between nonprofit needs and grantmaker practices, with foundations making slow progress on adopting the practices that they and their grantees say are essential to supporting nonprofit health and vitality,” Enright says.

While the lack of progress across the field is disappointing, she says, funders have a critical opportunity “to focus on areas where they do have the power to make changes to better serve grantees and recipient communities and to invest grant dollars more effectively.”

Enright’s recommendations for funders include changing the way they give grants and changing how they relate to others.

On their grantmaking, she says, funders should provide flexible funding, increase multi-year support and streamline their requirements

And in their relationships, she says, funders should “foster deeper connections” and “tap the wisdom of grantees” and representatives from communities they support; learn together with grantees and community members; and collaborate to have greater impact.

“The only way for philanthropy’s response to match the complexity of the issues we hope to address is if we consciously shift the focus away from our individual interests and resources and instead look at how best to solve problems in combination with others,” Enright says.

“By supporting networks, focusing on collective action, being willing to follow as well as lead, and bridging diverse perspectives on the ground,” she says, “grantmakers will start to play a more vital role in creating positive change.”

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