Transparency, Accountability, Authenticity - Foundations and Websites

Jim Canales, CEO of the James Irvine Foundation, wrote a guest blog post on Tactical Philanthropy as part of the soon-to-be-renamed "Audacious Ideas" series.  In it, he calls on large foundations to commit to increasing transparency, accountability, and authenticity in their working relationships with their grantees.

He specifically encourages foundations to make their processes more open, more transparent; to be held accountable to grantees (and to make the mechanisms for that accountability known to grantees) and to infuse interactions with grantees and applicants with respect.  He further points out that if the largest 250 foundations committed to these types of activities, the quality of grantor-grantee relationships could be significantly improved.

I applaud Mr. Canales' calls to action, and also agree with him that what he's calling for are things that foundations should be doing anyway -- that what he's calling for should not, in fact, be audacious, though it turns out that it is, among current foundation practices.

I would take his encouragement one step further, and apply it to all foundations, not just the 250 largest.  There is something of a gulf in the foundation world between the largest foundations (which, admittedly, comprise the largest percentage of dollars granted), and the remainder of the over 77,000 foundations that interact with grantees and prospective grantees in one way or another. 

Nonprofits -- those that are on the grantee side of the grantee-grantor relationship -- apply for and receive funding from foundations that are not in that top 250.  And they spend significant amounts of time doing it.  The top 250 foundations are more likely to have websites and to publish annual reports than their smaller peers.  It is generally easier for prospective grantees to find information about them and to interact with them.

The smaller foundations, many of which have few or no staff, frequently feel disconnected from the larger foundations, and that "keeping up with the Gateses" is out of their reach.

Here is one concrete step that I think every foundation, regardless of size, should take to move a little bit closer to Mr. Canales' vision of transparency, accountability, and authenticity: every foundation should have a website.

While not every foundation accepts unsolicited proposals, that does not mean that their work should be hidden from public view.  I have contended previously that foundations should be more transparent.  All foundations should voluntarily disclose basic information about their activities - what their funds support and in what quantities, how decisions are made, whether the foundation accepts unsolicited proposals (and if it doesn't, that's fine - putting up a website with clear guidelines and restrictions goes a long way towards letting prospective grantees know what to expect - and what not to expect).

Brad Smith, the President of the Foundation Center, makes the case in this post that all foundations, as a result of their favorable tax treatment, should accept unsolicited proposals (with the ability to express a preference for solicited submissions).

What do you think?  Should every foundation have a website?  Should all foundations accept unsolicited proposals?

work in progress sign

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Author: Dahna Goldstein
July 28, 2010, 01:30 PM

Streamlining Grants Management - Why More Foundations Are Using LOIs

I've noticed an interesting trend among PhilanTech's clients and the sector at large in the last few months - more foundations are using two-stage application processes, and requesting a letter of intent/inquiry (LOI) from prospective grantees before requesting a full proposal.

letter box

I think this is a good thing, and reflects a couple of realities in the grant seeking and grant making worlds.

LOIs are a relatively low investment way for both the prospective grantee and the prospective funder to see if there's a good fit. Think of it as going for coffee, but not for dinner (more to come in future blog posts about grant dating). If the fit isn't good, neither party has spent too much time, or invested too many resources. If the fit is good, the grantmaker can request a full proposal, which takes the nonprofit much longer to put together and takes the funder much longer to review. But that proposal will be a better use of both parties' time, since the preliminary fit was already established.

This shift reflects, I think, two trends:

  • Increased competition for dollars
    • Nonprofits are submitting more funding requests
    • Foundations are receiving more requests (and generally funding fewer) and are therefore looking for ways to save time and focus their efforts on the proposals they are most likely to fund
  • Funders are thinking increasingly about the administrative burdens placed on their grantees and trying to reduce them. One of the best practices suggested by Project Streamline as part of relieving the burden placed on grantees in grantseeking is to include a two-stage application process.

I predict that we'll see more of this, even as the economy continues to recover. Foundation grants remain an important source of funding for many nonprofits, and both parties will continue to streamline the process by shifting resources and processes and by using tools like PhilanTrack for online LOIs and proposals.


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Author: Dahna Goldstein
July 26, 2010, 04:09 PM

Streamlining Grants Management – Common Application Forms

Common Grant Applications

Common grant applications seem like a no-brainer, right? If colleges can get together and agree on a common application, why can't foundations? Seventeen associations of grantmakers have painstakingly brought groups of their members together and created common application and reporting forms (see the Foundation Center's list of common grant applications). The idea is to have all grantmakers in a region accept the same form, thereby enabling grantseekers to create one grant application and submit it to multiple grantmakers.  The common forms aim to save significant time for the grantseeker.

In principle, this is a great idea.

In practice, it has some problems. In many cases, only a fraction of the association's members actually accepts the common forms. In other cases, the associations acknowledge that some grantmakers that accept the common forms make modifications to the agreed-upon forms, or require additional information from their grantseekers. In addition, nonprofits offen apply to a range of grantmakers, not all of which are members of a particular regional association.

Don't get me wrong. I'm all in favor of anything that streamlines grants management and saves time for both the nonprofits seeking grant funds and the grantmakers awarding those funds. The PhilanTrack online grants management system supports the common forms developed by the regional associations of grantmakers. And PhilanTech's research with the Urban Institute suggests that there are many commonalities in the information requested in grant reporting and application processes by foundations. Those commonalities serve as the basis for PhilanTrack's "Find Similar Questions" functionality.

But common forms only go so far if not all grantmakers accept them, if grantmakers both modify them and require additional information, and if multiple common forms are in use around the country.

There are some pieces of information that almost every foundation requests of its applicants (proof of 501(c)(3) status, for example), and it would be ideal if nonprofits did not have to reenter or re-upload that information for every grant application. PhilanTrack's approach is to enable easy reuse of common information while still enabling foundations to request information from grantseekers in a way that meets their individual process and decision-making requirements.

What do you think? Is it possible to create one common form that each of the 75,000 foundations in the U.S. would use? If not, what are other ways for foundations to get the information they need to make good decisions and be responsible stewards without placing undue administrative burdens on nonprofits?

Author: Dahna Goldstein
May 17, 2010, 05:01 PM

Streamlining Grants Management - Project Streamline

Streamlining Grants Management

Project Streamline Logo

Project Streamline is an ongoing initiative housed at the Grants Managers Network.  Originally formed by representatives of various philanthropic industry groups (which now serve as advisory committee members – see list of organizations below), Project Streamline is taking a hard and close look at both costs and opportunities in grant application and reporting processes.  The initiative aims to raise awareness among grantmakers about the impact of different requirements and processes on the nonprofits they fund, and to ultimately reduce the costs of grants administration for both grantmakers and grantseekers.

PhilanTech wholly supports this effort.  In fact, PhilanTrack was designed specifically to address the inefficiencies in the grant management process.  We also strive to provide grantmakers the information they need to make good decisions and evaluate the social impact of their grantmaking.

The Center for Effective Philanthropy conducted a study a few years ago that determined that, on average, 13% of every foundation grant dollar in the U.S. is spent on grants administration.  With $42.9 billion in grants awarded in 2009 (down from $46.8 billion in 2008)(1), that’s over $5 billion dollars spent on grants administration that could have been spent providing needed programs and services, particularly during a time of increased need.

PhilanTech applauds efforts to streamline grants management, and will continue to post about resources available to both grantmakers and grantseekers – through Project Streamline and elsewhere – to reduce the transaction costs of grants administration to help more grant dollars and resources go to programs and services.

Project Streamline Advisory Committee Member Organizations:
Association of Small Foundations
Association of Fundraising Professionals
Council on Foundations
Forum of Regional Associations of Grantmakers
Foundation Center
Grantmakers for Effective Organizations
National Council of Nonprofits

(1) Foundation Growth and Giving Estimates, 2010. Foundation Center.  New York 2010.

Author: Dahna Goldstein
May 17, 2010, 04:59 PM

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