(Illustration by Laura Marshall)
Many funders agree that now is the time to give boldly. Nonprofits are reporting increased demand for services while experiencing reduced revenue from all sources, including more than $60 billion in cuts to overseas development aid. For nonprofits deemed “high risk” before the polycrisis of recent years, it was already difficult to obtain funding; now it is next to impossible. At the same time, the number of organizations and regions in which cross-border philanthropy can flow without facing substantial hurdles decreases daily. Widespread sanctions regimes and new regulations restricting the receipt of foreign funds are effectively cutting off resources to critical causes, and bans in countries that target or criminalize interventions that protect homosexuality, reproductive rights, or refugee status are proliferating. In some countries, unfettered government access to citizen data in the name of national security puts vulnerable communities at risk of persecution.
Nonprofits working under these circumstances face multilayered obstacles, making them either invisible (unable to fundraise openly) or unfundable (unable to meet donor requirements), or both, and the stakes are high. Funders often think of risk in terms of the legal and financial consequences of making a grant—whether it will lead to a fine or penalty, affect their reputation, or fail to meet the requirements of a qualifying distribution. However, as legitimate as compliance risk considerations are for donors, they stand in crass disproportion to the threats confronting grantees in countries with conflict and closing civil spaces. As one funder we spoke with expressed, “All we’re doing is legal compliance—that’s a totally different risk than the risk undertaken by our partners, whose lives are often on the line. Our partners have been jailed and killed.”
We recently interviewed seven private foundations and three public charities that provide funding in obstructive regulatory contexts and that, for the purposes of this article, we anonymize to avoid bringing unwanted scrutiny to them or their grantees. Several give globally to diverse causes, while others focus on specific issues and/or regions. Each funder spoke to the urgency of understanding risk, rather than letting fear drive decision-making. “Foundations have a lot of money, but compared to government funds, it’s actually quite minuscule,” said one large foundation executive. “The money is not the most important value; what’s important is the ability to take risk. Governments don’t have that ability. We can fail in ways that governments can’t.” Another mid-size public charity funder told us, “In this moment, it feels [like] there is a greater risk in not funding. … It’s incumbent upon philanthropy to move resources. That is our job. If we’re not doing that, then what are we doing and why? How can we expect our partners to be efficient and impactful if we can’t ourselves?”
From these conversations came 10 practical recommendations for funders looking to make informed, risk-related decisions that support increasingly invisible causes and partners. While they are meaningful in any context, they are particularly important for funders working in complex environments, as they take into account the heightened need for a deep, contextualized understanding of risk and the ability to respond appropriately in uncompromising circumstances.
1. Understand the challenges and power of anonymity. According to Human Rights Watch, “At least 67 countries have national laws criminalizing same-sex relations between consenting adults.” Many LGBTQ+ communities can no longer safely publicize their work, and therefore do not appear on crowdfunding sites, public databases, or eligible intermediary lists. So is the case with many human rights groups, journalists, women’s health advocates, migrant networks, and anti-authoritarian activists with global scope. Several funders emphasized the importance of employing local people to identify groups like these and verify their legitimacy. One intermediary funder that works in more than 70 countries across the Global South shared that its “staff are deeply rooted in these places, and are familiar with the risks and know how to navigate them.”
At the same time, anonymity may protect against the appearance of foreign influence that some governments use to shut down nonprofits. As Human Rights Watch recently described, “By stigmatizing independent civil society, media and other dissenting voices as ‘trojan horses,’ ‘foreign agent’ laws have offered a convenient framing to delegitimize and isolate them.” After witnessing shifting government sentiments toward human rights defenders in the Global South, another funder that focuses on grassroots organizations recently made the decision to stop highlighting grantees on its website entirely. Meanwhile, to prevent the possibility of unintentional exposure, a mid-size foundation that does not have its own website only allows staff directly working on a grant to access sensitive program data. As one large foundation told us, “We see transparency as an important value in philanthropy, but not if it’s going to be weaponized against us or our grantees.”
In situations where total anonymity is not possible (such as via Form 990 reporting), funders should be clear with their partners of the potential risks of engagement, for example, explicitly informing all grantees that even data securely maintained within the foundation is subject to subpoena.
2. Standardize, but contextualize, due diligence. Most funders recognize the importance of due diligence, but many exercise it in ways that grantees find confusing, overwhelming, and inconsistent. Creating clear processes and articulating them in plain language to grantee partners makes risk management less burdensome on grantees and more efficient for funders. This is especially so in places where limiting information sharing helps protect grantees from unwanted exposure or where grantees need a clear avenue to escalate risks to the funder.
An intermediary funder we spoke with who has been working in high-risk places for 40 years described its practice of fully systematically sharing its diligence processes with grantees: “When [we] put in place the systems, then we can be transparent about our requirements with our partners, which means being transparent about what we’re asking for, why, and how we do it. We can then also have the conversation with them … to determine whether there is anything that could put them at risk.” Though the specifics may change as new requirements emerge, this approach still provides consistency for grantees.
That said, context matters. Funders may need to adopt expedited processes for high-risk and urgent grants, or otherwise plan for longer timelines in countries where registration or banking delays are inevitable. In some countries, such as Egypt and Bangladesh, government approval to receive foreign funds can take months, and countries like Vietnam and Pakistan require government approval of grant agreements. Many of these approvals also require that grant agreements specify project deliverables, which the government can approve or reject individually. For funders that prefer to provide general support, it may be counter-intuitive but necessary to restrict a grant in this way. Funders may also need to release grants in smaller tranches or on specific timelines. A large private foundation that gives frequently in Mexico, for example, explained that its grantees sometimes request that it push end-of-year grants to the new year to reduce reporting thresholds.
Grantees, which can explain the impact within their own contexts, typically drive these decisions. But in all situations, funders should use due diligence exercises to openly discuss the risk that each party brings and to mutually strengthen compliance in ways that benefit grantees beyond the grant in question. Funders can also use diligence exercises to identify gaps in grantee practices that may be preventing them from accessing larger grants.
3. Lean on formal and informal donor networks. Attesting to a nonprofit’s good work in one issue area or region can help other funders complement and build on existing work and diversify funding streams for less visible organizations. A smaller human rights foundation we spoke with explained that another funder’s support of schools and medical care directly reinforces local human rights protection and the overall health and safety in the region where it works: “Network, network, network. We are constantly talking with people who are navigating the same risks we are and sharing responses. We get advice on good lawyers to consult with, where things are in the court system, and where to identify other good networks.”
Leveraging networks of donors and advisors in this way is also a proactive method of defeating authoritarian tactics. As another, larger foundation expressed, “It’s so important that a number of funders and organizations work together, because keeping us apart is the goal of those who want to shut down civil society.”
4. Engage mission-aligned counsel with specific expertise. Several funders spoke to the importance of finding the right kind of counsel. The same funder who mentioned using donor networks for legal advice said, “Your in-house counsel won’t be an expert on all things. When you have a group of lawyers with diverse expertise talking to each other on all of these issues, keeping each other informed, then you’re getting all of the issues covered.” Funders should also select counsel based on mission-alignment and find someone who understands that the goal is not to avoid all risk, but to identify and balance competing risks.
Other strategies we heard included connecting grantee partners to trusted counsel so that they also benefit from their expertise and asking attorneys to reuse advice they prepare in other circumstances in cases where it can benefit the larger ecosystem. This kind of information sharing among expert counsel, donors, and grantees, can help standardize how all parties understand their obligations, strengthening the sector’s response to evolving regulatory standards.
5. Build and maintain trust between boards and staff. Despite differences in organizational size and culture, one common approach emerged from our conversations with funders: Build operational trust between board and staff. The funder that gives globally to grassroots movements described its practice this way: “We start from a fundamental commitment (with the board) to moving resources into places that need it. That orients us in the right direction in terms of what we mean by risk. … Trust is built by the consistent practice of doing the analysis, identifying the risk, building the systems, and bringing that to the board.”
A smaller foundation emphasized how “oversharing” enables its board to respond holistically to each event, saying it takes “board engagement to the next level so that nothing comes as a surprise to them and they are fully aware of the … risks.”
Nurturing trust includes openly discussing “what didn’t work,” whether or not it is a time of crisis. As a larger foundation shared, “During the times of non-crisis is when you build the muscle memory for crisis times, when you earn that trust and goodwill. … Then, if things are going badly, we’ve already invested in that exercise, it’s not just a reaction to crisis. The board knows that leadership and staff are being honest and thorough, and can have confidence in each other.”
6. Learn from your grantees. Regarding the do-no-harm principle, all interviewees fully defer to their grantees. As one of the mid-size foundations we interviewed put it: “Trust your grantees and partners, and rely on their guidance. It starts with frank and open conversations. We must be aware that [the foundation is] not the front line of defense; it’s the partner. We ask [partners] questions about how their receipt of funds might be perceived. Not every recipient is the same.”
While this advice holds for all grants, regardless of complexity, it is especially true in places where foreign funds carry risk to grantees. Only organizations on the ground in these regions can speak to the practical risks and implications of a foreign grant. A public charity intermediary we spoke to cautioned, “Don’t assume you know the level of risk that they are or are not willing to take. You may be surprised by their position on this. It starts with that conversation, and then you build a process around that. Don’t let fear be your guide. A lot of boards want to have impact, have legacy, and be strategic, and this is one of the ways that you can do that.”
Grantee partners can also help explore appropriate, secure, and accessible communication methods. These are inevitably questions of context, not preference. For partners facing persecution risks, avoiding digital communication altogether and relying on site visits can offer safer, trust‑building exchanges. Conversely, one intermediary funder working in China told us that using highly secure digital platforms enables safe communication with both donors and grantees while minimizing potential backlash for local partners.
7. Understand the intermediary landscape. The landscape of local and regional intermediaries is growing, and many funders rely on them to help diversify their giving at scale while supporting local ecosystems. The fact that most intermediaries are public charities that do not face the same stringent rules as foundations also gives them more options.
Using an intermediary does not relinquish funders from the responsibility of conducting due diligence on intermediaries or final grantees, and it’s important that funders and intermediaries have the same communication style and risk management approach. One funder who has for many years given in regions with active conflict noted that sometimes intermediaries’ compliance practices are less robust and can “water down” funders’ own compliance systems: “[Using intermediaries] is a nice way to reduce operational burdens, but it can become too risky because their actions will ultimately be tied back to us and thus could amplify the risk.”
8. Be flexible and responsive. The call for more flexible grantmaking was prevalent in our interviews, though funders defined and exercised it in different ways. Importantly, flexible grantmaking does not imply a trade-off of compliance practices; it allows grantees to pivot in volatile surroundings, enabling agility within their strategic setting. This is another practice that benefits grantmaking in all contexts, however, in regions with political instability or natural disasters, flexibility is the only way to meet changing demands.
One of the smaller foundations we spoke to explained that having a strong theory of change in place enables it to shift operations nimbly since doing so fits into a larger strategic framework. “Make sure you know what you’re doing and why. Maybe the ‘what’ evolves, but the ‘why’ doesn’t.”
The funder that supports grassroots movements in the Global South provides long-term, core, unrestricted support. However, it starts most of its grantee relationships with a one-year “catalyst grant.” This typically includes a site visit by local staff, enabling both parties to learn from each other and deepen the funder’s understanding of local realities. In this way, grant expenditures are flexible, but the relationship and risk management practices remain strong components of the partnership.
9. Fund infrastructure and ecosystems. An effective tool to tackle new sanctions, conflict, or simply the outcome of a measured risk analysis is to fund, as one intermediary funder described it, “ecosystems of change, not just individual entities or single issues … [including support for] the safety and protection of movements on the ground. Such groups often don’t have the capacity to access legal resources. How do we contribute to creating an enabling environment in their countries?”
Similar tactics that most of the funders we interviewed use include funding local intermediaries or pro bono networks, or supporting research entities that shed light on particular issues and help solve problems. Several funders mentioned the International Center for Not-for-Profit Law (ICNL) and the Charity & Security Network as examples.
Philanthropic infrastructure and ecosystems are equally valuable. Multiple funders talked about working with other funders on systems change, and using formal and informal donor networks to shift practices and advocate for a better understanding of risk allocation and compliance.
10. Pursue your mission with courage. Funders exist to fill gaps and meet urgent needs. Relinquishing this mission when they face risk can mean relinquishing their raison d’être. One of the foundations we interviewed, which primarily gives in a high-conflict region, spoke to what it means to be courageous: “We don’t actually have a choice—we have to be courageous because this is our only lane. What other funders are now learning is that they’re coming for all of us. Don’t think that you can just put your head down and it will pass. … The point is that we need to be able to look ourselves in the mirror and know that we did everything right. What helps you sleep at night is that you know that you did the right thing to the best of your ability, that you know you always made the legally compliant choice.”
In the words of one of the intermediary funders: “After 40 years, we have never made the decision to step back from this work. To achieve a more just society, we have to support efforts to oppose authoritarian and oppressive regimes [everywhere] because it supports the rest of the globe. It’s all about getting educated about what the law requires, and how to put processes in place that ensure you are meeting the requirements in the grantor and grantee jurisdictions. We always find a way.”
As these and other funders point out, there is more than one way to fund regions and organizations facing invisibility, and none requires meaningfully increasing risk or harm to either the funder or grantee. Staying informed, collaborating with other donors, and finding the path that fits within your entity’s size and risk tolerance is within every funder’s capability. As a mid-sized foundation stated it: “The worst thing we can do as funders is to give away our power by taking a position that it is too risky for us to engage.”
Read more stories by Martha Lackritz-Peltier.