Nonprofit Resilience Relies on Smarter Grantmaking

A new study examines field-wide grantmaking attitudes and practices and how philanthropy can effectively support nonprofits to thrive amid a changing environment.

What do grantees really need?

In the midst of GEO’s recent annual planning process, I met with the executive director of a community health clinic at a coffee shop in her clinic’s neighborhood. Because GEO principally serves (and thus, mainly interacts with) the funding community, I wanted to see if our work resonated at all with her as a nonprofit leader and chief fundraiser of her organization. She shared with me her experience working with funders, both the good and the bad. I learned that when her organization was on the brink of financial disaster several years ago, two foundations came together and rallied the funder community to her organization’s aid. It was a perfect example of the role many funders have played in supporting nonprofits to thrive amid the turmoil over the past few years. On the flip side, her experience echoed that of many other nonprofit leaders: Funders still rarely ask her what kind of support she needs to best serve her community. When I asked her what her organization needed most, she replied without skipping a beat, “We need overhead and we need infrastructure investments.”

It made me wonder, why aren’t more funders asking this question? And more importantly, what would happen if they did? As we were making meaning of the findings of our recent field research—some of which was good news and some of which showed disappointingly slow progress—we noticed something interesting. There appears to be a link between funders who have really good strategies in place for understanding grantee needs and what those funders ultimately decide to do with their grantmaking funds. In the past several years, it might have seemed downright counterintuitive to increase dollars for general operation, multiyear, or capacity-building support. For some, that would have represented a pretty big gamble on an organization at a time when it might have seemed more logical to provide restricted dollars to serve immediate client needs. But some did it anyway. Why? And what made them different?

In our study, we found that funders who always used grants to foster learning between the foundation and its grantees were three times more likely to increase multiyear grantmaking than those who never did. Those who always sought external input on foundation strategy from recipient communities were nearly three times more likely to increase general operating support than those who never did. Funders that always sought advice from grantee advisory committees or sought external input from recipient communities were about twice as likely to increase capacity-building support. We couldn’t help but notice the link between having an ear to the ground and learning together with grantees, and the kinds of investments funders chose to increase.

When we asked some of these foundations why they increased these types of support, they told us that multiyear, general operating, and capacity-building grants were the types of support that best addressed the systemic problems in their communities. The Durfee Foundation, for example, after gathering feedback from grantees, took what it heard from grantees and figured out how to best deploy resources to help them. Out of this process came the Springboard Fund, which provides multiyear grants to help their grantees do long-range planning and assigns seasoned leaders to mentor newer nonprofits.

Toward the end of my conversation with the health clinic executive director, I asked her who her favorite funder was. Of the variety of funders she works with—city and state government, and private foundations that give her substantial grants—she named the board member of a small family foundation. Why? This trustee lives in the community, spends time at the clinic, and gets to know the patients. As a result, she knows what kind of support the health clinic needs.

The challenge to the field of philanthropy at large is to figure out how we can all gain this same kind of street-level view. This is how we will ensure that vital institutions like the health clinic will adapt and thrive and how we will continue to meet the needs of their communities for years to come.

Read the results of GEO’s national field survey of grantmaker practice, “Is Grantmaking Getting Smarter?”.