Take care when taking out that checkbook. (Photo Credit: jridgewayphotography, licensed under CC BY ND 2.0)
I usually sleep soundly, but there are nights when work worries keep me up. The number one cause of a restless night: wondering whether a grant we made with the best of intentions is, in fact, making a partner organization worse off than it would have been without it.
Funders can do harm with their generosity in three ways, which sometimes combine to toxic effect: dependence, distortion, and delaying the inevitable.
We foster unhealthy dependence when we provide grants that are large, relative to the size of an organization’s annual budget. Caution lights start flashing for me when grant size reaches 20 percent of the total, but there are no hard-and-fast rules. In cases where we are a large funder—and particularly when we are the single-largest funder—changes in our strategy or in the allocation of our grantmaking budget can wreak havoc on a grantee’s organizational health, leaving a resource hole that cannot be filled quickly, if at all. We try to mitigate those risks to grantees with lots of advance notice about a change in funding levels, but the damage to an unprepared organization—not to mention the stress on leadership and staff—can be substantial.
We distort organizational priorities when we offer resources for work that is not squarely aligned with an institution’s mission, and requires hiring new staff or otherwise extending the grantee into new commitments. This is an easy trap to fall into, for both parties. For us, it’s easier to work with known partners than to establish new relationships, and we may tell ourselves we’re encouraging the organizations to boldly pursue a promising new direction. For the grantee organization, taking on new work—even when it’s only a second cousin to their current concerns—permits them to maintain (and maybe even deepen) a relationship with a long-time funder. While sometimes this works out splendidly, and both we and the grantee make the most of connections between longstanding efforts and a bright shiny new initiative, in many cases the organization’s mission just gets fuzzier, its story harder to tell. And when the project is over, leaders—having compromised their principles—end up having to make unwelcome decisions about whether to sustain the new work or let it end, with all the consequences for both staff and institution that entails.
We delay the inevitable when we make grants to keep an organization financially viable—at least in the short run—when we know the prospects for long-term sustainability are slim. It’s incredibly painful when the withdrawal of our support sounds the death knell to a non-profit organization; I admit that more than once I have been persuaded to approve a grant because failing to do so would have meant that a once-valued partner would close its doors and good people would be without a job. But life support for a grantee is no favor at all in the end, either to that organization or to our shared mission. It is better to face the music, and—even for the staff—to find another place to dance.
Sure, in all these cases, it’s not just the foundation that is responsible for the damage. It is incumbent on the grantee’s leadership team to make sure they are not jeopardizing their organizational health. They have to continuously work on diversifying their funding base, ensure that their commitments are in line with their raison d’être, and have a clear-eyed view of their own institutional viability. But the funder-grantee relationship is inherently unequal, and I’m very much aware of the responsibility those of who are making the funding decisions bear—decisions that, in the end, determine how much money is available for rent, payroll, equipment, travel, and everything else that makes nonprofits’ work possible. Day in and day out, when we think about writing the checks, we absolutely, positively have to check our own practices, and make sure that first, we are doing no harm.
