October 23, 2015

Foundations Can Get More Done by Giving Nonprofits More Power

For as long as foundations and individuals have given money to charitable causes, the power dynamic has been part of the equation. To many people, the idea that grant makers and nonprofits could work together on equal footing has seemed like a fairy tale, because one of them holds all the resources and decision-making power.

In recent years, tension between grant makers and nonprofits has grown as some foundations have attempted to exert even more control over the work they support. But in reality, grant makers can’t achieve what they hope to without strong nonprofits, and many funders are working to find ways to give beneficiaries of foundation money a stronger role. At Grantmakers for Effective Organizations, the group I head, we’re redoubling our commitment to finding ways to close the power gap.

Why this is so essential can be seen from years of work focusing on changes that grant makers can make to help nonprofits and communities succeed.

The most damaging consequence of the existing power dynamic is a lack of trust. Grant makers often convey suspicion rather than trust, which reinforces the power dynamic, damages relationships, and makes it harder to succeed in meeting important goals of social change. As one nonprofit executive said at a recent meeting of our group: "Grant-making norms are draconian. Nothing says ‘I don’t trust you’ more than 30 pages in triplicate."

So what does it take to build trust?

We gathered a group of grant makers and nonprofit leaders to answer that question. Sadly, some nonprofit leaders have no hope that the dynamic can be changed — they see it as an inevitable, though distasteful, part of doing business and are resigned to the negative consequences.

But others offered hints about how change can happen:

  • Nonprofits that recognize their own power fare better and have the ability to mitigate the power imbalance. Having the financial health and flexibility to say no when a grant maker is being unreasonable is key. Some nonprofit leaders we spoke with found themselves turning the tables and using the same language that grant makers often used on them: "It seems like we’re not a great fit, but please do stay in touch." Sadly, the vast majority of nonprofits are not strong enough economically to be able to operate that way.
  • Giving feedback about foundation practices to a program officer often feels like shoveling that information into a black hole, say nonprofit leaders, because program officers often don’t have the authority to act. Some savvy program officers do manage to find ways of working around certain situations when they don’t agree with the "norms" of their institutions.
  • Foundations often set policies and requirements based on bad experiences with a small minority of grantees. What might be different if grant makers set policy based on their work with exemplary grantees rather than problematic ones?

Because grant makers do have more power, the burden is on those who are part of the foundation world to act differently. We shouldn’t accept the idea that nonprofits think nothing will ever change.

While some nonprofits and foundations want a dramatic overhaul of how grant makers work, don’t discount the value of small changes.

At Grantmakers for Effective Organizations and other groups that work to improve philanthropy, we have learned that adjustments to basic practices can make a big difference, for example, by providing more flexible grants, being accessible, making the grant-making process clearer so grantees aren’t left wondering what has happened to their requests, and not punishing grantees when they provide tough feedback or are vulnerable about their challenges.

Many foundations have already made great strides in their efforts to mitigate the power imbalance and build trust.

In fact, four foundations — Blue Cross and Blue Shield of North Carolina Foundation, the Heinz Endowments, the Episcopal Health Foundation, and the Winthrop Rockefeller Foundation — have committed to participating in our organization’s inaugural Change Incubator, during which they will spend an intense amount of time and energy improving the ways they include grantees in their work. We hope to spread the results of this work and the lessons from it to everyone in philanthropy.

We constructed this opportunity because our research has shown that grant makers who are more connected to their grantees are more likely to provide the kind of support that nonprofits need to be successful.

Of course, nonprofits have a responsibility to speak up, too, and to act in ways to challenge the power dynamic, including being realistic about what outcomes are possible from a modest grant, knowing the true costs and requesting that the grant maker cover them, and speaking up when they feel they are being mistreated by a foundation

The rationale for grant makers behaving in a radically different way is overwhelming. While we see some bright spots, no one is satisfied with the progress philanthropy has achieved so far in solving the problems in our communities and around the world. If we want to see faster progress, then we need to create a new power dynamic — one in which it’s understood that donors’ money is only one of the ingredients necessary for changing the world. We need strong nonprofits that can do the work, and that know how to tell grant makers what’s working and what’s not.

Kathleen Enright is chief executive of Grantmakers for Effective Organizations.