6.1 Grantmaking strategies and processes

Grantmaking strategies and processes are crucial for effective philanthropy. They involve systematic approaches to giving, including needs assessment, goal-setting, and developing guidelines. Funders must balance different strategies, like outcome-oriented and capacity-building grants, to maximize impact.

Effective grantmaking requires careful planning and evaluation. This includes creating comprehensive plans aligned with organizational goals, implementing monitoring systems, and engaging stakeholders. Funders must weigh risks and benefits of various approaches to make informed decisions and drive meaningful change.

Strategic Grantmaking Process

Key Components and Initial Steps

Top images from around the web for Key Components and Initial Steps

• 

  Time to Reboot Grantmaking | Bridgespan View original

  Is this image relevant?

• 

  Time to Reboot Grantmaking | Bridgespan View original

  Is this image relevant?

• 

  Creating Strategy: Common Approaches | Boundless Management View original

  Is this image relevant?

• 

  Time to Reboot Grantmaking | Bridgespan View original

  Is this image relevant?

• 

  Time to Reboot Grantmaking | Bridgespan View original

  Is this image relevant?

1 of 3

Top images from around the web for Key Components and Initial Steps

• 

  Time to Reboot Grantmaking | Bridgespan View original

  Is this image relevant?

• 

  Time to Reboot Grantmaking | Bridgespan View original

  Is this image relevant?

• 

  Creating Strategy: Common Approaches | Boundless Management View original

  Is this image relevant?

• 

  Time to Reboot Grantmaking | Bridgespan View original

  Is this image relevant?

• 

  Time to Reboot Grantmaking | Bridgespan View original

  Is this image relevant?

1 of 3

• Strategic grantmaking implements a systematic approach to philanthropic giving incorporating organizational goals, research, and evaluation
• Needs assessment initiates the process involving thorough research to identify community needs and potential areas for impactful giving
• Clear goal-setting and prioritization of focus areas align grantmaking with the organization's mission and vision
• Development of grantmaking guidelines and criteria ensures consistency and transparency in the selection process
• Due diligence procedures include financial and programmatic review of potential grantees for responsible grantmaking (reviewing tax forms, audited financial statements)

Monitoring and Relationship Building

• Grant monitoring and evaluation systems track progress, measure impact, and inform future grantmaking decisions
  • Utilize key performance indicators (KPIs) to assess grantee performance
  • Conduct site visits to observe program implementation firsthand
• Effective communication and relationship-building with grantees and stakeholders integrate into the grantmaking process
  • Regular check-ins with grantees (quarterly reports, annual meetings)
  • Hosting convenings or networking events for grantees and other stakeholders

Grantmaking Strategies Effectiveness

Outcome-Oriented and Capacity-Building Approaches

• Outcome-oriented grantmaking focuses on achieving specific, measurable results requiring clear metrics for evaluation
  • Example: Funding a literacy program with the goal of improving reading scores by 20% within two years
• Capacity-building grants strengthen nonprofit organizations' infrastructure and long-term sustainability
  • Necessitate different evaluation criteria than program-specific grants
  • May include funding for staff training, technology upgrades, or strategic planning

Flexible Funding and Collaborative Strategies

• General operating support grants provide flexible funding for organizations
  • Require evaluation of overall organizational effectiveness and impact
  • Allow nonprofits to allocate funds where most needed (staff salaries, rent, utilities)
• Collaborative grantmaking strategies involve multiple funders and leverage resources for greater impact
  • Require careful coordination and evaluation of collective outcomes
  • Example: Multiple foundations jointly funding a city-wide initiative to reduce homelessness

Innovative Grantmaking Approaches

• Participatory grantmaking involves community members in decision-making processes
  • Potentially increases relevance and effectiveness of grants
  • Requires unique evaluation approaches (community feedback surveys, focus groups)
• Venture philanthropy applies business principles to grantmaking
  • Often involves longer-term, high-engagement relationships with grantees
  • Requires comprehensive performance metrics (social return on investment, scalability potential)
• Impact investing strategies seek both financial returns and social impact
  • Necessitate evaluation of both financial and social performance metrics
  • Example: Investing in a social enterprise that provides job training for disadvantaged youth

Grantmaking Plan Development

Strategic Alignment and Resource Allocation

• Comprehensive grantmaking plan articulates the organization's mission, vision, and strategic objectives related to philanthropic giving
• Plan includes detailed analysis of the organization's financial resources and projected grantmaking budget over a specified period
  • Consider multi-year budgeting to support long-term initiatives
• Identification and prioritization of focus areas or issue domains based on organizational goals, expertise, and potential for impact
  • Example: Environmental foundation prioritizing climate change mitigation, biodiversity conservation, and sustainable agriculture

Implementation and Evaluation Strategies

• Plan outlines specific grantmaking strategies and approaches to be employed
  • Include types of grants (project-based, general operating)
  • Funding levels (small grants vs. large-scale investments)
  • Duration of support (one-time vs. multi-year commitments)
• Timeline for implementation clearly defines grant cycles, application deadlines, and review processes
  • Example: Annual grant cycle with LOI deadline in March, full proposals due in June, and funding decisions by September
• Plan incorporates mechanisms for ongoing learning, adaptation, and refinement of grantmaking strategies
  • Based on evaluation results and changing contexts
  • May include annual strategy reviews or mid-course corrections

Collaboration and Stakeholder Engagement

• Strategies for collaboration with other funders, grantees, and stakeholders maximize impact and leverage resources
  • Identify potential funding partners with aligned interests
  • Explore opportunities for pooled funds or matching grant programs
• Plan includes approaches for engaging diverse stakeholders in the grantmaking process
  • Advisory committees, community listening sessions, grantee feedback mechanisms

Grantmaking Approaches: Risks vs Benefits

Financial and Programmatic Considerations

• Risk assessment in grantmaking evaluates potential financial, reputational, and programmatic risks associated with different funding strategies
• Restricted funding approaches provide greater control over grant use but can limit grantee flexibility and innovation
  • Example: Specifying exact budget line items for a grant vs. allowing reallocation as needs change
• Unrestricted funding empowers grantees and supports organizational sustainability but may carry risks related to accountability and alignment with funder priorities
  • Benefits include allowing nonprofits to respond quickly to emerging needs or opportunities

Grant Duration and Engagement Level

• Short-term grants allow for greater adaptability but can limit the potential for sustained impact and organizational stability
  • Example: One-year pilot project grants vs. multi-year program support
• Long-term funding commitments support deeper partnerships and systemic change but may reduce a funder's ability to respond to emerging needs or opportunities
  • Benefits include allowing grantees to plan for the future and invest in long-term solutions
• High-engagement grantmaking strategies can lead to greater impact but require significant resources and may create power imbalances in funder-grantee relationships
  • Example: Providing intensive technical assistance along with funding vs. a hands-off approach

Innovation and Experimentation

• Innovative or experimental grantmaking approaches may yield breakthrough solutions but carry higher risks of failure or unintended consequences
  • Example: Funding a new, untested intervention for addressing a social issue
  • Benefits include potential for transformative impact and learning valuable lessons even from failures
• Balancing portfolio of grants with varying risk levels helps mitigate overall risk while still allowing for innovation
  • Combine proven, evidence-based programs with some higher-risk, potentially high-reward initiatives