Giving More Than Money Is Wise — but Many Grant Makers Don’t Know How

In a time of significantly reduced endowment values, foundations must look carefully at whether they are spending money in a way that accomplishes their goals.

They might start with a review of their attempts to provide charities with advice on strategic planning, budgeting help, and other forms of assistance beyond the grant.

In a study conducted by our organization — the Center for Effective Philanthropy — we learned that foundation CEO’s and other officials who focus on grant making overwhelmingly believe that providing such assistance is important to their ability to achieve their goals. But most simply aren’t providing it in a way that is likely to make much difference.

We found that just 10 percent of grantees are getting assistance in ways that really seem to matter. It is only those grantees who report that their funders either had a more positive impact on their organizations or helped them achieve greater sustainability.

We based those conclusions on data from surveys of more than 21,000 nonprofit grantees about their experiences with one of nearly 150 foundations.

The problem? Most foundations offer limited assistance beyond grants — providing just two or three types to those receiving anything at all, rather than focusing intensively on assisting some of their grantees with a range of challenges they face as they try to manage and strengthen their organizations and programs.

The majority of grantees who get assistance beyond a grant are served something more akin to an appetizer than a full meal, and the result is less than fully satisfying.

When done right, however, providing assistance beyond a grant can be quite powerful. Our analysis reveals that when foundations provide a comprehensive set of assistance activities — typically eight or nine — focused on a wide range of organizational needs, grantees have a meaningfully different experience. The same thing happens when a foundation offers a set of assistance activities — typically four or five — that tap into its expertise in a particular field, such as education or the environment.

One example of a grant maker that takes a comprehensive approach is the Hartford Foundation for Public Giving. When we surveyed the foundation’s grant recipients in 2006, Hartford came out on top among community foundations on the dimension of assistance beyond the grant.

The staff and consultants retained by the foundation provide a higher-than-typical proportion of grantees with comprehensive assistance — just the kind of approach our research reveals to be most closely connected with grantee perceptions of greater positive impact on their organizations. The assistance the foundation provides touches many dimensions of the organization, including management issues, technology needs, and help with board governance.

“They are just there for us,” says one grantee of the foundation. Another grantee told us, “I don’t know if we would have gotten that multimillion-dollar investment from a national foundation if we hadn’t been on the front end of some capacity building and planning that the Hartford Foundation had supported.”

The exemplars that emerged in our analysis — including not only the foundation in Hartford, but also the Wallace Foundation and the Winter Park Health Foundation — tend to share some common characteristics.

• They focus on providing more-intensive assistance to the grant recipients they are in the best position to help, rather than scattering a couple of types of assistance across a larger number of grantees.
• They can articulate clearly how the provision of assistance beyond the grant fits into the efforts to achieve their missions.
• They have made the investment required to provide assistance well — by hiring more staff members, using third-party consultants, or making fewer, larger grants.
• They seek to assess the results of the assistance they provide to ensure that it is having the desired effect.

Our findings remind us that it’s much easier for grant makers to embrace the rhetoric of strengthening nonprofit groups than it is to actually do it. This is difficult work, requiring focus and discipline.

To us, this feels like a familiar plot line. Research we conducted in 2006 showed that simply providing operating support to grantees — which is sometimes portrayed as a panacea by its advocates — is not all it takes to make a difference. Our analysis in that study demonstrated that it is only when grants are significantly larger than is typically the case, and committed for several years at a time, that money for operating support makes a genuinely positive difference to nonprofit organizations.

Just as operating support is rarely provided in ways that really make a difference to grantee organizations, because the grants are frequently too small and short-term, so too is assistance beyond the grant infrequently provided in ways that appear to make a substantial difference.

In both cases, foundations need to focus their resources carefully and make significant investments to a greater degree than many do today.

Supporting nonprofit groups in ways that really strengthen them for the long-term isn’t easy and it can’t be achieved without confronting some tough choices. It’s time to move beyond rhetoric about strengthening grantees to a sober, data-driven assessment of what’s working — and what is not.

Phil Buchanan is president and Ellie Buteau is director of research at the Center for Effective Philanthropy, in Cambridge, Mass. They are among the co-authors of More Than Money: Making a Difference With Assistance Beyond the Grant.