One of the perennial questions we receive from funders is how to respond to the multitude of needs in their communities and elsewhere. If we’re too responsive in our grantmaking, giving only to those who seek us out, how are we being strategic? If we’re only proactive in our grantmaking, funding only efforts we uncover to tackle issues we want to address, what opportunities will we miss? With the sudden onslaught of crises in 2020, it’s no surprise that funders are asking these questions more often as they seek to find a balance between maintaining support in some areas and pivoting to adequately address new challenges. What do you see as the highest and best uses of philanthropy in addressing today’s challenges? Whether you are a new funder seeking to strike that balance early in your journey, or a more established funder assessing current strategies, it is helpful to think through pros and cons of responsive and proactive giving strategies, and to consider what approaches will best support your philanthropic goals.
Responsive Giving: Pros and Cons
Grantmakers may wish to pursue a more responsive approach when there seems to be a need for broader-based support of a range of groups and issues. This approach can open the door to critical support for smaller, more nimble, and newer nonprofits, and allow funders to respond quickly to needs that arise after a crisis.
On the other hand, if funders respond only to unsolicited requests, three challenges can arise. First, funders often find their giving is “an inch deep and a mile wide.” Second, if a funder seeks to address a specific issue or need, a quick, responsive approach may not uncover efforts that could achieve greater impact for the long-term. And finally, without clear goals and targeted strategies, it can be difficult to measure progress toward goals.
Proactive Giving: Pros and Cons
Through proactive approaches, funders can develop a roadmap for tackling ambitious philanthropic goals, and can capitalize on opportunities for leverage, learning, and leadership. Proactive approaches can include designing a Request for Proposals focusing on specific goals, engaging in strategic long-term partnerships with grantee organizations, and critically in 2020, convening public and private funders with shared goals in order to align funding efforts. Regardless of the approach, philanthropic resources that are invested in highly strategic ways can build on existing knowledge and lessons, encourage unconventional ideas, and support innovative approaches with potential to catalyze lasting change.
Challenges in being more proactive include the need for greater attention and focus. More time and resources are needed to gather input from the community and other stakeholders, conduct research, and analyze programs as well as barriers to change and how to overcome them. And proactive initiatives often call for multi-year support and can involve long-term partnerships that need more active management to sustain – or shift – them over time.
5 Questions to Consider
Balancing responsive and proactive giving has long been a challenge for funders seeking to strategically work towards their goals. Now, with the world facing multiple crises on the local, national, and global levels, funders of all kinds need to carefully consider how to find the mix that best fits their particular vision and context. Here are five questions to guide you.
1. How do we determine the right balance between responsive and proactive efforts?
In TPI’s experience, many funders – and particularly those that are place-based and have a history of responding to community needs – believe it is important to continue to allocate some resources for responsive grantmaking to support the communities they serve. Some allocate 10% or less of their budget for responsive grants; others may reserve a much larger percentage. Regardless of the balance, continuing some responsive giving allows funders to maintain flexibility and continue to address important needs in crisis situations. Doing so also provides a pressure valve by allowing for continued support to vital organizations that may fall outside of a funder’s proactive focus. Allowing for some responsive grantmaking also enables funders to continue to learn about and support new organizations, innovative ideas, and emerging needs.
2. How quickly can – or should – we make the transition toward a more proactive strategy?
For funders shifting some resources towards proactive approaches, timeframe often depends on two factors: clarity of purpose and relationships. A more rapid transition is well advised only when a funder goes through a defined and well-communicated process with stakeholders – nonprofits, community leaders, other funders – to examine and define clear goals, priorities, and strategic initiatives. The easier it is to articulate change and the rationale behind it, the easier it will be to shift the balance. For funders who embrace an organic evolution towards more proactive approaches, a more gradual transition may work better – enabling the funder to be opportunistic while slowly decreasing the percentage of responsive grantmaking over time.
3. For ongoing responsive grantmaking efforts – long-term or transitional – how do we define goals, criteria, and process for this piece of the overall strategy?
Often a funder will create a separate process for responsive grants, defining the purpose of those grants more broadly. For example, a funder may designate responsive grants specifically for community needs, innovative approaches, or special opportunities that relate to its primary mission yet fall outside the focus of proactive initiatives. In our experience, defining some parameters for responsive grantmaking can be very helpful in making the process more manageable for the funder, and in providing constructive guidance to nonprofit organizations. One approach that works well in times of crisis is to allow current grantees more flexibility in how they use their funding, so that support can be redirected more readily by those in the community who are closest to the needs.
4. As we shift toward more proactive approaches, how can we be helpful to nonprofits that we may no longer support?
First, create a timeline for the transition that is considerate and respectful. Most suggest giving grantee organizations at least a year’s notice, so they can explore alternatives and prepare accordingly. Second, consider offering transitional support over a longer time period. This type of support could include an additional year of funding, a series of step-down grants with declining grant amounts over a longer timeframe, or capacity-building support to help grantees strengthen their fundraising efforts. Funders can also offer workshops on grantwriting, make introductions to other funders, or provide other networking support.
5. How should we communicate the changes in our strategies?
Funders who feel they have done a good job of transitioning to more proactive approaches agree on the importance of clear, inclusive, and transparent communications with those who might be affected. Community organizations and other stakeholders are more likely to understand and appreciate the rationale for a shift in direction if the funder begins to communicate early in the planning process, continues to share information as strategies take shape, and uses a variety of communication vehicles – including written communications, information on websites and social media, one-on-one meetings with individual grantees, and larger meetings with affected stakeholders.
Navigating a shift in strategy can create challenges and uncertainties, and can also open up new and exciting opportunities. By thinking through important questions about balance, timeframe, process, strategy, and communications, funders can manage transitions in ways that are open, transparent, responsible, and forward-looking.