Shifting Power to Communities in Grant Funding

(Photo by Unsplash/gauravdeep singh bansal)

For all the attention paid to diversity in board and executive leadership, and in who receives grants, another fundamental area of racial justice in the funding world is ripe for exploration: Who has decision making power over where capital flows? In a poll of over 200 funders who attended a webinar that Common Future and Dalberg co-convened on shifting power, 23 percent said who has decision-making power over funding is one of the main priority areas that funders need to change to advance racial justice (which was the top area of concern for attendees).

As the Black Lives Matter movement has grown to the largest social movement in US history, funders are being forced to reckon with the origins of their wealth—with deep roots in extraction and inequality that continue to the present day. But they are also being called to examine how institutional practices deepen inequality instead of dismantling it: From arduous application processes to repetitive reporting requirements, business as usual in the funding world feels more about maintaining control than sharing it. To address this painful history, and implement policies based on trust and equity, philanthropists must give up power in decisions around funding deployment. Inclusive decision making can have more inclusive and powerful results.

What does this look like in practice? Both Common Future and Dalberg have aimed to share perspectives and experiences in how funders can include more voices.  Common Future deployed several million dollars in 2020 to the organizations within our network of community leaders, and for years we have recognized the need to shift capital to leaders building equitable models in entrepreneurship, business, and asset ownership. Within Dalberg’s Justice, Equity, and Economic Mobility practice,  we prioritized working with funders who were interested in applying a racial equity lens to their strategies and portfolios centering community voices as a critical piece of their decision-making processes.

A critical test to this belief in inclusive decision-making quickly arose alongside the advent of COVID-19, the Movement for Black Lives, and the ongoing debates about what a racially inclusive economy looks like. These historic events prompted Common Future to move money quicker than anticipated and Dalberg to more deeply explore how funders were addressing the moment. In doing so, we both had a first-hand look at what it takes to share power: spaces for more voices, an open approach to reporting, and other practices grounded in equity.

As funders seek to shift power, below are several strategies we have employed, including how to address barriers that may arise. We view sharing power as critical not just for this moment, but also for building a future rooted in the understanding that our fates are tied and that inclusion makes all of our work better off in the long run.

Deploy Peer-Review Strategies (and Pay the Reviewers)

Peer-review strategies for grant selection and deployment have seen modest growth in popularity over the past few years. One benefit of this model is that everyone coming into this grant is familiar with one another’s work from the start, creating a strong and connected cohort of grantees. Moreover, who better to understand your work and its impact than your peers? To that end, Common Future required peer review as part of our application process and paid reviewers $1,000 each for their time and effort.

Throughout this, we kept reviewers’ reading experience at the center of the application design, asking: Who will be reading this? What information do they need? Where does this information need to live so they have access to it?

In addition to creating a step-by-step guide on how to review applications, we used a flexible and responsive platform (which didn’t require reviewers to create an account). We sent reviewers a maximum of five applications and kept the applications to eight short questions, focusing on what’s most relevant to project success, making it easier for reviewers to share their insights.

Common barriers to implementing a peer-review process are finding people to participate and designing a process that isn’t too burdensome. To address these we recommend the following:

• Make review mandatory. Making the review process mandatory for grant applicants evens the playing field for participation and ensures that community voices are part of the selection process.
• Pay your reviewers by calculating how long it takes to read an application. Paying reviewers not only acknowledges their expertise but also expands their capacity by compensating for time they are giving up.
• Design the application with them (not just you) in mind. Who is your prime reader? How is this expressed in who is reviewing what? This is known as user experience design and forces you to keep the needs of the applicants (who are your readers) at the center.

Solicit and Implement Community Feedback on Your Strategy

We know first-hand how crucial it is for funders to evaluate their impact. The best way to do this is to open lines of communication with community leaders to ensure your top-line strategy, not just your individual grants, are in line with community priorities.

At Common Future, we work with a number of funders like the Chorus Foundation and the Heron Foundation who have made great strides to implement these practices. We also model this work through our grantmaking. After our most recent round of applications were submitted, we held a post-application call with reviewers in addition to a survey to gather input and make adaptations, a customer-service oriented approach which upends the normal power dynamic between grantee and grantor. We plan to build on this by implementing quarterly stakeholder calls that continually engage our grantees and network leaders we serve on a continuous basis to ensure we’re centering both of their needs.

Here’s how to weave in more intentional feedback gathering:

• Be clear about the intention and use of the feedback. The process of gathering information from grantees can feel extractive and invasive if it’s not clear why feedback is being gathered. Sharing the purpose builds trust.
• Create various pathways for sharing feedback. Some prefer phone conversations while others are more comfortable with a survey. Take note of these preferences, as you can.
• Follow up with how feedback is and is not used. And be honest and transparent about your mistakes.

Co-Create Reporting Processes to Ensure That Grantee Voices are Central to the Determination of Outcomes

Reporting is often treated as another step in due diligence, used in determining whether an organization can continue receiving funding. This makes reporting an agent for power shifting. Specifically: How can we, as grantor and grantee, co-create what success looks like?

Measurement reflects values. All too often, what funders request in terms of impact does not reflect the values of the grantee. For example: A funder requiring the creation of jobs without looking at the quality of jobs may miss what the community actually needs and values. Not bridging that gap fosters a disconnect.

If you’re not able to offer general operating dollars (our best recommendation) to grantees, there are still a number of ways you can build organizational capacity to co-create measurement and evaluation metrics with your grantees. We recommend the following:

• Ask grantees what data they have on hand. By starting with what grantees are already tracking we can expand our definition of impact, ensuring it is grounded in the experiences of people doing the work.
• Consider co-creating new metrics. Our grantees are working with us on co-creating shared indicators so we can develop an ecosystem understanding of the problem we are trying to solve. This benefits us, the grantees, and our sector as a whole by creating new knowledge.

This trust-based approach takes about the same amount of time as many funder’s underwriting processes and is inherently inclusive, flexible, and responsive to the aims of grantees.

Understandably, implementing this approach requires board buy-in. To that end, consider paying grantees and potential grantees to come talk to your board about what measurements are important to them and why, what they currently report and what they'd like to be reporting. In the long term, board trainings on racial equity and power analyses can start to pave the way for prioritizing grantee perspectives in tandem with a fundamental understanding that the solutions to challenges often lie with those who are closest to them.

Consider Your Investment Strategy Alongside Your Grantmaking Strategy

No matter how effective a foundation’s grantmaking strategy is, a coordinated investment strategy can be a huge missed opportunity. With an average of 92 percent of a foundation’s wealth sitting in financial markets, we must ask ourselves how impactful our grantmaking can be when the vast majority of our financial activities are supporting an extractive financial system, from payday loans to private prisons?

In the absence of such investment strategies, at best, endowments are underutilized. At worst, these investments can directly counter the work of a foundation’s grantmaking activities.

There are a number of ways funders can shift investment capital to support activities that are building power within Black and Brown communities. One of the first questions any funder should be asking themselves is: “Who is on my investment committee?” Is your committee representative of the communities that you’re prioritizing with your grants? If not, you may need to have a hard conversation with your board. One way to do this is to build an investment advisory board. The Heron Foundation and the Chorus Foundation both leverage investment advisory boards representative of their target communities to weigh in on investment decisions.

One of the most common barriers that we hear from funders is that the marketplace for these sorts of investments are severely limited in the impact space. There are a few things that funders can do to combat the “pipeline problem”:

• Leverage grantees as investment pipeline. Are any of your existing grantees in need of investment capital? Do they know organizations in their networks that are?  Bridge funds are also largely absent in the impact marketplace. How can your institution help fill that gap for your grantees and related actors?
• Connect with local financial institutions. Build relationships with local banks, community development financial institutions, and mission aligned investors in the communities in which you’re serving.  Most likely, values-aligned institutions will tell you that they’re strapped for cash. Have you considered grants or affordable investments into these field builders?

Still, even when funders are able to address the perceived marketplace barriers described above, many struggle to put their ideals into action. In the report that we at Dalberg co-authored, we found that just 29 percent of large foundations (those with more than $100M in total assets) planned to revise their grant KPIs or objectives in response to the events of 2020 and an even smaller percentage of medium and small foundations (12 percent and 11 percent, respectively) planned to do so. What this tells us is that even alongside ambitions to uplift community voice and wisdom, many foundations may not yet be at the point where they will shift their vision of success to align with that of the community.

But taking a look at our own efforts, we can see the replicable elements that enable funders to have a flexible yet inclusive approach to grantmaking. The biggest is trust in grantees. But funders must also understand giving up power is in their best interest as well. We're able to accelerate and deepen our impact by putting control in the hands of people who know best, and in that way, we mitigate our risks.

So, funders must ask themselves: Where in our processes might we share decision making? How might we create space for grantees to tell us about their impact, in their own words, to shape our thinking? How might we be equitable in all aspects of our work, including our investment? The urgency of this moment is calling on us to look across our systems and center those who are building the world we so desperately need.

Read more stories by Rodney Foxworth & Marcus Haymon.