Grant Makers Need to Speed Up Their Pace

In the days after Hurricane Katrina, many companies rushed to provide aid, as did numerous private foundations. But, with the exception of major natural disasters and catastrophes like the 2001 terrorist acts, grant makers rarely display such a sense of urgency.

By contrast, most nonprofit groups are acutely sensitive to the pressures of time. Urgency drives nonprofit operations. Salaries, rent, and other overhead costs have to be paid. Program and policy deadlines have to be met. Services to clients must be delivered.

Since the great majority of nonprofit organizations have few, if any, financial reserves, they are continually raising money to meet the current year’s budget. Little wonder, then, that so many executive directors cite the pressure of fund raising as the major reason for leaving the nonprofit world.

Nonprofit groups, especially those that are engaged in advocacy work and efforts to influence public policy, also have to respond to the world around them, an environment that is constantly changing and demanding a timely reaction. In most cases, nonprofit groups have to raise money every time they are faced with a new opportunity to respond to research or a controversial Congressional policy or a national crisis. Even when small amounts of money are involved, the process is usually slow and cumbersome and drains attention away from the substantive work the nonprofit group pursues.

Foundations, on the other hand, work at their own deliberate pace, free of pressure, except occasionally from their trustees. Staff members never have to worry about whether they or their colleagues will get a paycheck; they face few financial crises. Boards meet several times a year to make grants, but rarely meet more often than that. Foundations do little to align their practices with the needs of grantees.

What matters most to grant makers are their own procedures, their measured decision-making approach, and the satisfaction of their trustees.

A group of college students who have sought my advice got a harsh introduction to the world of philanthropy when they started a project to promote student activism on campuses throughout the country. They started to raise their modest budget in early May, with the goal of starting the project as the fall semester opened.

While one major foundation and several small donors were able to provide grants within two months, most of the foundations the students approached, while sympathetic, even enthusiastic, said they were either unable to give money or found it impossible to speed up the process of awarding it.

The reasons the foundations offered to the students were varied, but went like this: You don’t quite fit into our program area; we’ve already spent all the money allocated for that program area; we have no discretionary money for small grants; our program priorities just changed; we have to wait for our next “granting” cycle, which is several months away; we can’t give outside our program silos; or our grant-making process will take time and can’t be sped up.

In this case, as well as in many others, the importance, momentum, and urgency of the proposed project did not match the established, rigid process and procedures of the foundations. Foundations could have shown greater flexibility, imagination, and determination in their response.

Foundations could make several changes that would allow their grant making to be more effective and timely. Foundations should:

• Introduce a “rolling” grant-making process, one that permits them to make grants throughout the year without waiting for board meetings. Board members could be on call to make decisions between official board meetings. A few foundations have already established such a process, so why can’t more of them do the same?
• Give program officers discretionary control over a certain amount of money each year, say $75,000 to $200,000 a year. That would enable grant makers to provide more rapid responses to proposal requests, especially for small grants. If program officers are good enough to be hired, they are good enough to be entrusted in making decisions about the use of relatively small sums.
• Create pools of money that would be specifically available for projects that fall outside their major grant-making programs. Especially significant would be pots of money that foundations could reserve to make small grants quickly. While some foundations have started to reserve money to support ideas and opportunities that are outside their standard grant-making areas, few have reserved any money for small grants. But for many nonprofit groups, such small grants can be the most important, but also the most difficult to secure.

That is not all it takes to make foundations more responsive to the needs of grantees. Foundations would also need to encourage their program officers to become more eager to take risks, to demonstrate an openness to new ideas, and to show a willingness to listen to the recommendations of experienced nonprofit officials. Foundation program officers need to fight for money to support good people and programs rather than offer reasons that they can’t do so. It is the job of foundation chief executives to encourage and support innovative and aggressive grant making.

All too often, however, foundation leaders make grants to their friends and established nonprofit groups rather than to the new, exciting, and promising projects, even though many of those programs won support from enlightened program officers.

The sense of urgency that nonprofit groups display every day must become a part of the grant-making process. After all, don’t foundations exist to meet the needs of nonprofit organizations, rather than the other way around?

Pablo Eisenberg, a regular contributor to these pages, is senior fellow at the Georgetown University Public Policy Institute. His e-mail address is pseisenberg@erols.com.