As Covid-19 disrupts every aspect of our lives, the demands on foundations and nonprofits are already unprecedented. None of us can fully imagine what it will take for us to respond. But it is clear that philanthropy can’t engage in business as usual.
That’s why a group of us quietly joined forces to figure out how to ensure nonprofits have the resources to help all who are at risk from this unfolding health and economic crisis. In just a few days, more than 300 grant makers pledged to loosen or eliminate restrictions on our funding and trust in our nonprofit partners to find the best solutions for the people they serve. (Editor’s update on May 1: This number is now at 727.) The pledge also commits us to learn from this crisis so that we can permanently and fundamentally change the way that philanthropy does business.
This approach has been overdue in coming, as our grantee partners have long been telling us. I think often about talks I have had with grantees over the years and the challenges they face because of restrictions on grant funds and worries about whether grants would be renewed for the following year.
For Cristina Jiménez, co-founder and executive director of United We Dream, the largest immigrant-youth-led organization in the country with 700,000 members, the need for flexible funding has been underscored by Covid-19. The organization aims to transform America’s immigration system, advocating for the rights of young immigrants across 28 states. But the pandemic has exacerbated the vulnerabilities of the communities United We Dream serves.
For example, Jiménez and her colleagues are currently preparing for a potential decision from the Supreme Court on the Deferred Action for Childhood Arrivals policy that could put many young immigrants at risk of losing their deportation protection in the midst of a global pandemic. Jiménez is seeing demand for her organization’s work grow exponentially, even as she and her team manage new challenges brought on by this global health crisis.
It’s general operating support from foundations that is allowing organizations like United We Dream to quickly and efficiently reallocate resources to support the evolving needs and priorities of communities during times of crisis. And that’s why grant makers need to listen to how we can best help.
Many grant makers are reluctant to move away from the strict earmarks on spending out of concern on three main points: accountability, their ability to advance their missions, and their institution’s restrictions on multiyear grants. But our experience at Ford has helped show the value of maximizing flexibility. We decided to go big on that approach in 2016 with a $1 billion effort to invest in the long-term management capacity and sustainability of more than 300 social-justice organizations.
Our effort, known as Building Institutions and Networks, or Build, provides long-term, flexible funding and a deep sense of partnership with grantees, which leads to impressive outcomes for social-change organizations around the world. More than 80 percent of Build grantees report that because of Build support, their work is more effective, their networks and fields are stronger, and they have been better able to take advantage of strategic opportunities and counter external threats. Research from groups such as Bridgespan, USAID, and Rockefeller Philanthropy Advisors similarly shows overwhelmingly positive outcomes from long-term, flexible funding.
The trouble is, foundation support of nonprofits too often takes the opposite approach, providing highly restricted, transactional, and one-year-at-a-time funding. According to the Center for Effective Philanthropy, less than 30 percent of foundation funding in the United States today goes to nonprofits in the form of general operating support. And although 95 percent of foundation leaders say they care about their grantees’ overall organizational health, only 43 percent of nonprofit leaders say their grant makers care.
When it comes down to it, the real problem at hand is that many grant makers struggle to truly trust our nonprofit partners. We don’t want to give up our control over their work — and there are all sorts of excuses to avoid leaning into this trust.
In almost 20 years as a grant maker, I’ve heard all the most common arguments, and even made some of them myself, against long-term, flexible funding, but few of these arguments hold up to close scrutiny. To create the lasting change we need, especially during this era of cultural and political stress, we need to shift the mentality of grant makers by dismantling the three main arguments. Only then can we build deeper, more candid relationships of trust between foundations and grantees and, ultimately, fuel meaningful, systemic change.
Unrestricted funding doesn’t mean a loss of accountability.
Grant makers often believe flexible funding means they lose power to hold grantee partners accountable for results. But at the Ford Foundation, we’ve learned that the flexible, long-term nature of the Build grant makes program officers more attentive to grant monitoring, not less. Our program officers are advised to conduct two in-depth site visits every year and to focus not just on questions of strategy and programming but also on questions of organizational health.
If we see a problem or organizational challenge, we try to support grantees as they problem-solve. In other words, we strive to engage with grantees not as rigid implementers but as true partners — and the results can be transformational. More than 90 percent of Build grantees report that their relationships with Ford staff are deeper and more meaningful because of the Build grant. And of nearly 300 Build grants to date, fewer than five have ended early because of accountability concerns.
Flexible grants can be aligned to strategy and evaluated effectively to be sure they are making a difference.
Grant makers are often reluctant to provide flexible funding because they are worried that grantees will use the money ineffectively — or in ways they simply don’t like. The reality is that flexible grants are among the most strategic types of support because they give nonprofits room to quickly adapt their work in response to challenges and opportunities.
For example, when the National Women’s Law Center received a Build grant in 2016, the venerable civil-rights organization was on the cusp of the first leadership transition in its 45-year history, appointing its first woman of color CEO, Fatima Goss Graves.
Rather than holding back funding, or attaching numerous conditions to it, the Ford Foundation chose to invest in the organization’s new leadership with a five-year, flexible commitment that included funds for the center to complete its leadership transition; bolster its communications, fundraising, and information-technology efforts; and increase staff diversity. With Build funds in hand and stronger infrastructure in place, the center was ready when an unanticipated opportunity came their way: running the Times Up Legal Defense Fund, which has raised more than $25 million to help women win workplace sexual-harassment claims.
Flexible funding requires foundations to be flexible in their own grant-making strategies — and to listen deeply to their nonprofit partners in developing strategy in the first place. Foundations spend millions of dollars each year developing and implementing strategies, yet it’s shocking how few of those strategies are developed in close partnership with the nonprofits that will be implementing them. As grant makers, we mainly define the outcomes and terms of engagement, resulting in organizations contorting their own target outcomes to fit the needs of an array of funders.
Funding flexibly also calls for a patient approach to assessing progress. Changing systems like health care or education or criminal justice requires us to play the long game, and it doesn’t lend itself to quick outcomes. When the Ford Foundation makes a Build grant, we take a broad view of achieving impact rather than simply counting deliverables such as influence campaigns waged, reports published, or people trained. This requires assessing impact in multiple layers and directions, including the impact on the grantee institution itself, the program impact enabled by our support, and the grantee’s influence within its field.
Multiyear grants can exist under budget constraints.
Another common argument against long-term, flexible funding is that budgets won’t allow for multiyear commitments. What this really means is that grant makers’ budgets don’t allow them to fund nearly as many organizations with multiyear grants as they can with single-year grants.
Funding over multiple years does require making difficult choices, as larger grants usually mean fewer grants. To make room for Build, the Ford Foundation had to cut funding for other long-running programs.
It takes real effort and courage to decide who gets the funding, but there are ways to help navigate these tough choices. At the Ford Foundation, we have a detailed set of criteria for Build grants. We ask ourselves: Is the organization focused on a change Ford is focused on? And is it ready to take this on?
And grant makers don’t need to commit $1 billion as Ford did to make longer grants. Multiyear grants can be valuable to nonprofits even if the grants are not particularly large. The average Build grant in developing countries, for example, is about $2 million over five years.
With a Build grant of just $1.2 million, Akili Dada, a girls leadership-development program in Kenya, was able to expand its work into two new regions of the country while upgrading its financial-management and communications efforts. Akili Dada’s executive director, Purity Kagwiria, observed, “Build gives us the security to focus on the areas we think are relevant to us, in ways that are relevant to us. It also gives us the trust to know we’re at the right place, at the right time, doing the right thing, and that we have the right resources to do what we need to do. It’s given us a spark of magic.”
So how can grant makers create that spark? How can we build trust with grantees and let go of our need for control?
It may sound oversimplified, but we have found the best way to overcome resistance to flexible funding is to take the plunge and experiment. Encourage grantees to speak up about the need for funding designed to support institutional strengthening. Make the case to your board members.
Or better yet, implement flexible support as an emergency response to the Covid-19 crisis. The public-health and economic crises posed by the coronavirus present grant makers with an urgent opportunity to loosen and eliminate restrictions on current grants — to help grantees who are serving communities on the front lines of this pandemic. And while flexible funding is coming into view as an effective tool during a time of emergency, committing to it now can help build powerful trust between foundations and grantees for the long term.
At the Ford Foundation, many staff who were skeptical about the Build approach to grant making are now its biggest champions. They are benefiting from more candid and authentic relationships with the leaders and organizations they fund. And they are seeing strong results in achieving their program goals.
For grant makers willing to take the leap, many funding colleagues can show you the way. The Trust-Based Philanthropy Project, Grantmakers for Effective Organizations, the Full Cost Project, and many others offer tools and resources for funders on how to make larger, longer, more flexible grants. And at the end of the day, the best coaches are leaders like Cristina Jiménez, Fatima Goss Graves, and Purity Kagwiria, who know what it takes to change the world.
