Resetting the Grantor-Grantee Relationship

There’s an ugly truth in the social sector. The grantor-grantee relationship—so pivotal for converting resources into impact—can be marked by strain, mistrust, and lack of empathy. This leads to real consequences for our happiness and longevity as leaders, the health of our organizations, and most importantly, our ability to achieve our missions.

But it doesn’t have to be that way. Our organizations—the Peery Foundation, a funder that strengthens youth and families to build lives of dignity and self-reliance, and One Acre Fund, a nonprofit that provides financing and training to Africa’s smallholder farm families—have worked hard for more than five years to develop and nurture a trust-based relationship. We know we’re far from alone. So we started reflecting on examples of organizations we work with that are going against the grain to create what the book Unicorns Unite calls “epic partnerships.” We hope the examples below, based on our experiences, will provide an illustration of how we can all build better relationships to unlock real value for the communities we serve.

1. Money

Money, money, money. It’s at the heart of every grantor-grantee relationship—and it can also be at the heart of their dysfunction. But it’s very possible to take trust-building steps that balance the power dynamic, and incent good outcomes for both grantors and grantees.

Matt Forti (One Acre Fund): During a three-year, unrestricted grant, one of our donors pushed us hard to strengthen our finance policies and controls. Then, without any prior signal, they doubled the size of their final grant payment to honor our hard work. It was so empowering to be rewarded for achieving an outcome they felt strongly about, rather than feeling the distrust that attends the traditional funder approach of making grant payments conditional on improvement.

Dave Peery (Peery Foundation): Our foundation’s local portfolio supports schools and nonprofits in a specific community. For a long time, we made grants on a rolling basis throughout the year, with renewals 12 months after the last grant went out. However, several grantees shared with us that this timing was far from ideal, given that they needed to secure funding before the start of the academic year to adequately plan and hire staff. Thanks to this courageous feedback (and the flexibility of our board), we were able to shift renewal dates to better align with the academic calendar, which ultimately resulted in higher impact and less stress for grantees.

2. Connections

Like it or not, networks make the world go ’round. But all of us have, at one time or another, muffled a groan with a smile when a well-meaning partner connects us with an organization or individual without first checking whether it would be fruitful for both sides. By better understanding the priorities of our partners, we can make much richer connections.

DP: We think about our networks from the very beginning of a new relationship. Before deciding to support an organization, we imagine connecting them with other funders we know. If we feel any hesitation or get a pit in our stomachs about making a connection, we know we won’t be able to serve the grantee well.

MF: A few years ago, a private individual donor asked us, “Where else could you use my help apart from my money?” After thinking it over, we shared that, alongside resources, talent is ultimately our biggest enabler of success. Although the donor was not all that well-connected in the social sector, he suggested we send him job descriptions for our priority roles. Incredibly, four weeks later, he had identified two solid candidates—one of whom we later hired!

3. Exits

As with all relationships, parting ways can be messy. But we’ve also seen many well-managed exits, where both parties sought a gradual and gentle formal separation, while maintaining a less-intensive, ongoing connection.

MF: After three years of consistent funding, one donor told us candidly that their priorities had shifted and that we no longer fit with their desired grantee profile. To help with the transition, they approved a final, one-year grant to help us bridge the funding gap. They also expressed strong interest in—and followed through on—a commitment to support us in new ways, including brainstorming alternate funding sources, serving as a reference to other donors, and leveraging unexpected connections to help us manage our supply chain.

DP: Grantees can’t expect funders to support them forever, but they should be able to expect clarity, follow-through, and respect when it comes to exiting. Our approach is to “do no harm,” and we try not to leave good organizations hanging. For example, we had a longstanding funding relationship with an organization that had grown beyond the size of grantees we generally support. During the transition, we gave them an “exit grant” and later found other ways to collaborate. Fostering a strong partnership that outlived our funding allowed us to find new overlapping interests and opportunities.

4. Feedback

Every organization says it wants feedback. How often have you heard phrases like: “The tougher the feedback the better,” and “If there’s anything we can do better, let us know.” But in a relationship with an obvious power dynamic, this is far from sufficient—parties must put in place formal mechanisms to gather feedback and demonstrate through actions that constructive feedback is welcome.

DP: When we evaluate a potential grantee, we look for organizations that listen to those they serve and build what they hear into the design of their interventions. If we are in the service of our grantees, then we must self-impose the same expectation and find ways to get honest feedback from them. We have invested in tools such as FunderFeedback.org and GrantAdvisor.org to improve our work and encourage greater accountability. We have also asked a few grantees to join our foundation’s advisory board. One of them told us it was the only time a funder had asked her to provide input on strategic direction in this way.

MF: One grantor we work with created a field in their reporting template where they required grantees to describe what the grantor could do better. Upon reinforcement from the grantor that they would only accept the report with a true effort put forth to provide constructive feedback, this mechanism forced us to reflect on how to improve the relationship, and to our delight, the grantor followed through with immediate changes.

While there’s no magic formula to create better grantor-grantee relationships, we see the examples above as evidence that simple tweaks in mindset and behavior can go a very long way. Since there’s proven power in public commitments, in the comments section below, each of us has made a commitment to enact a behavioral change in the next three months. We strongly invite you to do the same, even if just to try something new with a single partner. Together we can innovate stronger, more rewarding relationships in service of achieving more social good.

Read more stories by Dave Peery & Matthew Forti.