I spend a lot of time speaking with leaders of nonprofits and the topic of our conversations focuses on money. I think its funny when they speak about program officers at grantmakers because sometimes, they make the job sound so easy. I can understand how having a bunch of money and deciding who to give it to can be easy, but believe me, its not. In addition to challenges of deciding where a grantmaker should invest, the grant process creates unnecessary hurdles. Honestly, if we examined how grants are awarded now compared to how they were awarded in 1911, would there be any differences?
The current grant process for grantmakers can be difficult. Grantmakers’ problems are completely opposite for two different types of grantmakers, the ones you know about and the ones you don’t know about. We’ll examine the latter first. Grantmakers are required to give away 5% of their net assets from the previous year and they want to give to the best nonprofits – in whatever way they determine what “best” is. Grant applications are long and take a lot of time to read and consider, and most grantmakers simply do not have the manpower to do it. According to Foundation Center, 76% of US grantmakers have a staff of 4 people or fewer, and that does not include the 17% that are only volunteer run. These are the smaller grantmakers and because of their small staff size they resort to giving money to the same organizations, having a ridiculously long response time to applicants, or hire consultants to help with the load. For the grantmakers you know about, they are flooded with nonprofits asking for money. Their grant process usually occurs in stages, with a nonprofit providing a summary and then being invited to submit a full application later. These grantmakers have full-time staff who separate relevant nonprofits from irrelevant nonprofits based on grantmakers mission and the different grant criteria. The biggest downside that grantmakers face when having staff or hiring staff to evaluate nonprofits is that cost eats away at the money available for grants. Project Streamline estimates that 13% of grants are wasted due to these administrative expenses.
Two solve waste in the grant process, I think all grantmakers need to have an online presence. This does not necessarily mean they need their own website, but they needed to be listed in some profile directory that provides the public information about the grantmaker, at least. I also think there needs to be a recommendation engine that suggest to both sides, organizations that would be of interest. In addition, I think paper and text should be just one way to evaluate a nonprofit and solutions like video, and showing the actual work should be implemented into the solution. These solutions would cut down on time spent searching for funding and potential grantees, writing and reading unnecessary grant applications, and bring transparency to philanthropy. Most importantly, they will allow grantmakers and grantseekers to focus on their social missions.