OP-ED: Grantmaking Today and the Donor/Donee Relationship

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BEFORE EMBARKING on a discussion of the nature of grants and relationships with grantees, a funder must step back for a moment and recognize that grantmaking has dramatically changed in the past twenty years. There is much research on foundations and donors, or various program categories, but little really on how nonprofit organizations themselves have changed over the years. So, the backdrop from my perspective and observations, especially in major cities, is that we now face today:

• a far greater number and array of funders and philanthropic resources supporting nonprofit organizations.
• a vast increase in the number of nonprofit organizations. New York City alone has more than 8,000 charities operating programs, while the IRS reports over a million nationwide. Consequently, there is a smaller number of program participants.
• a large number of funders for a specific project, where one funder is often supporting only a part of the same program.
• a significant expansion of benefits and services to populations that are not truly needy.
• a tremendous increase in federal, state, county, and city funding to nonprofit charities, some of which now receive support from two or more of these funding streams at the same time. Substantial government funding does have a profound impact on how nonprofits behave, provide services, and innovate.
• Some people have chronic illness and need long-term care, but many nonprofits are providing services and program activities for the same people on an ongoing basis, rather than having them get in and out after resolving a specific problem or need. 
• change in the nature of proposals: Few today actually document or prove “need” or provide a basis in scientific research for their methodology or program approach.
• There has been a significant increase in litigation and political advocacy by nonprofit organizations, and I question whether this is truly a legitimate charitable activity, especially under the main 501(c)(3) IRS tax-exempt section.
• Expectations for self-help and personal responsibility by program participants is still lacking in too many programs.

This is the context in which grantmakers review proposals today. However, our immediate concern is the relationship between grantor and grantee. Thus, it is interesting to note conclusions of “Listening to Grantees: What Nonprofits Value in Their Foundation Funders” (The Center for Effective Philanthropy, 2004, 32 pp), a report based on the survey of thousands of grantees of dozens of foundations. The Center identified three dimensions of foundation performance that grantees value in their foundation funders. They are:

1. Quality of Interactions with Foundation Staff: fairness, responsiveness, and approachability
2. Clarity of Communication of a Foundation’s Goals and Strategies: clear and consistent articulation of objectives
3. Expertise and External Orientation of the Foundation: understanding of fields and communities of funding and ability to advance knowledge and affect public policy

However, my experience in grantmaking over the past twenty years clearly shows: