Many funders are challenged by how to respond to the multitude of needs in their communities, even within a narrower lens of specific interest areas: 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 important opportunities will we miss? These questions come up in TPI’s work in many different ways. For new funders seeking to find the balance that makes sense for them, or for more established funders assessing their current strategies, it can be helpful to reflect on the pros and cons of responsive and proactive giving strategies. Those who are considering a shift towards more proactive approaches may find it useful to ask five key questions to guide their planning.
Responsive Giving: Pros and Cons
A grantmaker 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. Some of these groups may have innovative ideas with great promise, and a responsive grantmaking process offers a way for funders to learn about such efforts.
On the other hand, if funders only respond 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 more responsive approach may not uncover efforts that could achieve the greatest impact. Finally, without clear goals and targeted strategies, it can be difficult to measure progress towards social impact goals. These challenges can prompt funders to shift towards more proactive approaches.
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 a specific set of goals, engaging in strategic long-term partnerships with grantee organizations, convening public and private funders with shared goals in order to align funding efforts in ways that are highly strategic, or finding other ways to catalyze change.
Challenges in being more proactive include the greater attention and focus that is needed. More time and resources are needed to conduct research, analyze programs and barriers to change, enlist input and ideas from the community and other stakeholders, and create theories of change and well-designed strategies. Proactive strategies may also involve greater risk. Innovative approaches may not achieve desired results. Collaborative efforts may fail to achieve systemic change. Lastly, proactive initiatives often call for multi-year support and can involve long-term partnerships that need to be managed more actively.
Five Questions to Consider
How do we determine the right balance between responsive and proactive efforts?
In TPI’s experience, many funders – 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. Some may allocate 10% or less of their grantmaking budget for responsive grants, while others may reserve a much larger percentage. Regardless of the balance, continuing some responsive giving allows place-based funders to maintain flexibility and continue to address important needs within their community or region. Doing so also provides a pressure valve by allowing for continued support to vital organizations that, going forward, may fall outside of a funder’s proactive focus. Allowing for some responsive grantmaking enables funders to continue to learn about and support new organizations, innovative ideas, and emerging needs.
How quickly can we (or should we) make the transition toward a more proactive strategy?
Timeframe often depends on two factors: clarity of purpose and relationships. A more rapid transition is possible when a funder goes through a well-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 toward more proactive strategies. For funders who embrace a more 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.
For ongoing responsive grantmaking efforts – whether 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.
As we shift toward more proactive approaches, how can we be helpful to nonprofits that we may no longer support?
Advice from funders who have grappled with this question falls into two main themes. 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.
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, Web site information, 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 the transition in ways that are open, transparent, and forward-looking.