I’m traveling to the Social Venture Partners conference in Cleveland. So today I bring you Bill Somerville’s recent op-ed in the Chronicle of Philanthropy, (sorry I don’t have a free access link today). In case you missed it, I wrote about Bill in a Financial Times column this spring. You can find that column here.
In Grant Making, Speed + Accuracy > Size
By Bill Somerville
As this fall’s spate of hurricanes spun through the Gulf Coast — and the economy continued the downward spiral that is causing big problems for America’s needy — foundations have been served a painful reminder of the importance of philanthropy in getting people through tough times.
Foundations have been somewhat reserved in their response to these disasters, but at least the Council on Foundations and other leading organizations have urged grant makers to focus on the need to respond not just generously, but quickly.
In philanthropy the best results almost always require foundations to dispatch grants at the right time, but with the exception of major disasters, the right time is preposterously slow in arriving — often six, nine, sometimes even 12 months after receiving a proposal. Indeed, foundations are famously poky institutions. They bring to mind Samuel Johnson’s timeless definition of a philanthropist (or “patron” in the parlance of his day) as “one who looks with unconcern on a man struggling for life in the water, and, when he has reached ground, encumbers him with help.”
Unfortunately, the characterization still holds true.
As grant makers, we expect the charities we support to be fleet, flexible, and ready to turn on a dime. Foundations, on the other hand, make grants at our own convenience — and then call it our schedule.
A chief reason for the agonizingly slow process is that most foundations allow unnecessary paperwork to clog the arteries of their bloated bureaucracies.
Instead of searching for outstanding charities — which should be the heart of our work — we wait for people to find us. No, not people, but proposals, which hardly rates as the same thing. By relying on the grant proposal as the means to identifying worthwhile projects, grant makers lapse into an exhausting routine of accepting proposals, reviewing them, and then responding. Tortuous deliberation emerges as the institutional product.
More than once, I’ve heard nonprofit executives complain, with only the faintest exaggeration, that they must spend $5,000 worth of effort to secure a $1,000 grant. It is hard to imagine a more impractical or wasteful arrangement.
The second reason foundations plod when they could as easily sprint stems from paralytic fear of making a mistake.
Most grant makers dread the prospect of public failure. To shield themselves from embarrassing recriminations for the project that fails, the organization that goes belly-up, or the crook who absconds with the money, grant makers coat their operations with a thick layer of protective documentation — biographies of board members, annual budgets, audits, five-year plans.
But this paper-thin armor provides almost no real defense against the possibility that a project will collapse or that a scoundrel will put his hand in the cash box. What all these documents are really designed to do is cover the grant maker who approves an allocation that goes astray.
Many foundations harbor the illusion that the more procedures and record-keeping they impose on the grantee, the greater due diligence they have achieved. Not so.
Due diligence is a process, not a pile of papers destined to languish forever in the file cabinet. Due diligence emerges over time from the effort of locating outstanding people, cultivating mutual trust, and clarifying the aims and design of a prospective project. Due diligence isn’t certified; it is excavated — mined from extensive experience in the field. Over the years, I have found that due diligence is possible only when I wrench myself out of my office to thoroughly familiarize myself with a potential grantee and the social context of the group’s agenda.
Once I get firsthand knowledge of potential grant recipients, I can figure out how much of a risk I am willing to accept.
Of course, there is one more reason why most foundations prove so leisurely in dispatching their duties: Nobody demands that we move faster.
Nonprofit executives may mutter to one another about institutional arrogance and grind their teeth all night in dismay. But they still have to line up in the morning to ask for support, while pretending that our timing makes sense.
Few people in the nonprofit world have the power to challenge the grant-making status quo. And there will never be a public hue and cry for foundations to act in a prompt manner because the inner workings of philanthropy remain invisible to the outside world.
It all comes down to us — grant makers who care enough about the vitality of nonprofit organizations to insist that we respond to requests with cheerful alacrity.
What steps can we take?
First, we can pare back the paperwork and triage the response to proposals we receive.
The vast majority of proposals get turned down. Don’t make them the center of your work. Create a “not favored” status so staff members can quickly execute the inevitable denial. Ask for a proposal abstract to highlight ineligible requests, which will eliminate the time spent wading through many pages before concluding the obvious.
Foundations should also request just a single copy of a proposal, saving room, time, and storage, and reduce application requirements. A one-page letter of intent should cover most applicants’ identity, mission, and brief summary of their projects. For full proposals, set a limit of seven to 10 pages. The audit, five-year plan, and other documents can come later, if at all.
Second, grant makers must alter their approach to time.
They should stop going to meetings unless they absolutely must. Speed and simplicity should become the watchwords of effective foundations. Staff members and board members should be urged to respect those values and be rated based on their nimble response times.
Foundation officials also need to learn to answer the phone. When prospective applicants call, ask them about their projects and determine whether it is worth their time to pursue a grant. A three-minute phone call can substitute for the “letter of intent” many foundations require of grant seekers, and it can help avoid further action on proposals destined to be denied from the start.
Third, foundation boards need to give executive directors more control. In a healthy foundation equipped with a skilled staff and lubricated by trust and the steady flow of information between the executive and trustees, those grants deemed “small” — be they $5,000 or $50,000 — can be efficiently dispatched by the executive director. Small grants usually require a quick response; they cannot linger until the next meeting of the board or its grant committee. If board members find they don’t trust their executive to make small grants, two options remain:
* Resign from the board.
* Fire the executive and find one who does inspire trust.
In sum, these changes clear the path for one of philanthropy’s great overlooked virtues: timeliness.
By timeliness, I mean the art of delivering precisely the right amount of money at precisely the right moment to have the optimum impact. The best-timed grants need not involve a great deal of money. (Memorize this formula: Speed + accuracy > size.)
A few years ago, I received a phone call from a court-appointed children’s advocate requesting a small grant to purchase a bed.
Why a bed? This lone piece of furniture was the final obstacle in reuniting a mother and daughter previously separated by court mandate.
The mother had worked extraordinarily hard to turn her life around. She kicked a drug habit, found steady work, and secured a new apartment. She had done everything required by the court to establish a safe haven for her family — except she didn’t have enough money to purchase a bed for her daughter. And without the bed, the girl would remain a ward of the court.
We had worked a good deal with children’s advocates. We understood the system, and we knew the impact our grant might have.
The only hitch was that the family needed the bed immediately.
Our foundation wrote the check to the children’s advocacy group and sent it out in the afternoon mail. Staff members of the organization purchased a bed the next day.
The mother and daughter were reunited, and the family flourished.
A preposterously small sum delivered at precisely the right moment made all the difference in their lives.
Bill Somerville is president of the Philanthropic Ventures Foundation in Oakland, Calif., and co-author of Grassroots Philanthropy: Field Notes of a Maverick Grantmaker (Heyday Books, 2008).