Grant Makers Still Lag In Providing Essential Support, New Reports Find

Foundation leaders say they want the organizations they support to be as strong and effective as possible, yet few grant makers engage in the practices they identify as being essential to helping the charities succeed, according to two new reports.

One of the reports, from the Washington group Grantmakers for Effective Organizations, says foundations don’t necessarily provide the kind of grants that charities need most in the most efficient way.

The other report, from the Center for Effective Philanthropy, a research group in Cambridge, Mass., says that few grant makers provide the assistance beyond grant money that charities need to succeed.

And, according to officials from both philanthropy groups, now is the time — before the economic downturn does too much damage to charities — that foundations should deal with the deficits they identify.

“The evidence is that foundation practices still lag behind our own attitudes about what we ourselves think would be the most effective way to support grantees,” says Kathleen P. Enright, chief executive of Grantmakers for Effective Organizations. “Especially in light of the current economic climate, we need to make certain that we are supporting the nonprofits that are providing the critical services in the most effective, most meaningful way.”

Says Phil Buchanan, president of the Center for Effective Philanthropy: “In the current economy, funders need to look hard at the effectiveness of everything that requires resources. Our analysis raises some tough questions about foundation practice today.”

‘Beyond the Grant’

His group’s report, “More Than Money: Making a Difference with Assistance Beyond the Grant,” identifies 14 ways, such as strategic-planning advice, staff training, and use of foundation facilities, that grant makers can help charities aside from making a grant. It says, however, that while most foundation leaders believe that providing such assistance is critical for the achievement of their goals and the charities’ goals, few offer such help, and, among those that do, few know whether it is working.

“Just 10 percent of grantees receive assistance in ways that make a meaningful difference,” says Ellie Buteau, the report’s lead author.

The report draws on three sources: a past survey of charities that received grants from one of 148 foundations; a past survey of program officers and heads of foundations with at least $100-million in assets; and recent interviews with key staff members at three foundations and at some of the nonprofit groups that receive grants from those foundations.

Grantmakers for Effective Organizations’ report is based on a new survey of 820 U.S. foundations of all sizes, and builds on a similar study in 2003 by the Urban Institute. Among other findings, it says that foundations continue to lag in the amount of general operating support they distribute. That trend persists, the report says, despite the widespread belief that general-operating grants — money not earmarked for specific programs or purposes — is critical to providing support and flexibility to charities.

Survey respondents said they devoted a median of 20 percent of their grant dollars to general operating support during the last two years. And only one out of five foundations reported that their grants often or always include overhead to cover the amount of time nonprofit groups spend reporting on their grants. Only two out of five grant makers said that their application requirements were often or always proportionate to the size and type of grant.

Gap in Coverage

For charity officials, those findings back up what they already know: They spend an inordinate amount of time chasing dollars, are not usually compensated for the administrative work foundations require, and are too often restricted in how they can spend grant money.

Jetta Bernier, executive director of Massachusetts Citizens for Children, an advocacy group in Boston, says that the grant-seeking process is grueling, and then, when grants are made, they don’t typically cover all the work they are intended to support. Her organization, for example, received a $75,000 grant this year for a program to reduce child poverty. The grant came with an explicit ban on spending any of the money on indirect costs, like salaries, rent, and office supplies.

“That just means we have to run around and find more money to supplement the core grant because we can’t run the program it’s intended to support if we can’t stay in business,” Ms. Bernier says.

At Sisterhood Mobilized for AIDS/HIV Research and Treatment, in New York, Susan Rodriguez says she spends far too much time chasing grants, time she would prefer to spend improving her organization’s programs and services.

“There are some grants that would be great to have, but we don’t even try for them because they are small and wouldn’t cover the time it takes us to fill out the application and go through the whole process,” she says.

According to the study from Grantmakers for Effective Organizations, most grant makers don’t realize how much time that process takes. Six out of 10 respondents said they don’t solicit any feedback from charities about the proposal and application process. Only 12 percent reported collecting information about how long it takes grantees to meet their administrative requirements.

The report “More Than Money: Making a Difference with Assistance Beyond the Grant” is available on the Center for Effective Philanthropy’s Web site.

The report “Grantmaking Practices That Support Grantee Success” is available on the Grantmakers for Effective Organizations’ Web site, or may be obtained by contacting the group at (202) 898-1840; geofundersuser@geofunders.org.