Foundations, it’s time to stop using grant applications to distribute funding

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Hi everyone. Today’s post will be long and serious. But before we get into it, here are ways you can help victims of Hurricane Dorian. Also, my org RVC is growing and hiring a Capacity Building Lead. It’s an amazing position that combines capacity building and equity. Don’t take my word for it, here is a quick video from the team.

Our sector talks a lot about grants. Out of 380 posts on this blog, the most popular post of all time is “Answers on grant proposals if nonprofits were brutally honest with funders.” On GrantAdvisor (a Yelp-like website where you can provide anonymous review of foundations) the top complaints are about grant processes. I came up with the FLAIL Scale a while ago, a 61-point checklist for funders to measure how aggravating their grants are, followed up with the GRAVE Gauge, to determine the level of annoyingness of grantseekers. There are endless articles and workshops on how to increase your chances to get grants. And many foundations, to their credit, have been working to streamline their grant applications.

But maybe we are not having the right conversations. Maybe the question is not “how do we improve grant applications” but rather “are grant applications the best way for funders to determine who should be funded? Have they ever been? Is this tool broken or even harmful, and if so, can we afford to keep using it?”

After much thinking and talking to other nonprofit folks, especially people of color, I’m going to argue that the grant application practice is harmful to nonprofits and the people we serve, and we need to use a different method to allocate funding, one that is grounded in equity (another topic our sector talks a lot about yet implement very poorly). Here are several critical things we need to consider:

Wasting of time, energy, and resources: Among the weaknesses of grants is the endless amounts of time we collectively waste on them. This amount is staggering if we think about it. Imagine a grant that’s for $20,000 that takes a nonprofit on average 10 hours to apply for. 10 hours for 20K is not bad, right? But let’s say that 100 organizations applied, and only 5 are selected. This means that 95 organizations wasted a collective 950 hours. Multiply this by thousands of other grants across the sector, and we pour millions of hours down the drain every single year.

Even successful grant applications are problematic. According to this article, 46% of grants cost more than they’re worth, when we factor in how many hours are spent on them and multiply these hours by average wages per hour by both people who write the grants and those who review them

And why does it seem OK to waste nonprofits’ time, but not funders’ time? So much of the point of an application is defining the needs, outcomes, evaluation, etc. But need we do this over and over and over again, answering the same questions in 3 pages, then 1 page, then 750 words, then 250 characters, depending on the whims of individual foundations? Most of our time wasted is in translating the EXACT SAME INFORMATION from one grant to another, and information that is often easily accessible on the web, so that it is slightly more convenient for funders. Why is it OK to ask a hundred nonprofits to spend 30 minutes to print out, collate, and staple copies of our 990s, instead of asking 12 reviewers to spend two minutes each googling that information, which is readily available on the internet?

Why can we not all just have one excellent, comprehensive proposal package that we can submit any time we have potential alignment with a foundation? Imagine a job applicant having to tailor not only their cover letter, but also their resume, every single time they apply for a job, because some employers want candidates to describe their job experience in one paragraph, others insist on 500 characters, others want that information as separate attachments. This is what we’re doing to nonprofits.

This is ridiculous when nonprofits are mostly the ones running programs, some of which actually save lives. The waste of time is a serious problem that should horrify every funder who administers a grant. The more time you have us spend applying for your grants, the less time we are helping people. Who knows how many lives are lost or harmed while we copy-and-paste from one narrative to another, or remove words and punctuation so we fall within the character counts.

(This is in no way meant to undermine the brilliant grant professionals in our sector, whom I count myself among, and whose tireless work along with other fundraisers ensures nonprofits are able to continue providing services.)

Reinforcement of power imbalance: Grant applications, even when we do not mean for them to, by their nature reinforce the power imbalance between funders and grantees. Every type of applications, such as job applications, inherently does this. It sets up one side as the benevolent giver, and the other side as the supplicant, the taker. But are funders and grantees not on the same team? Are we not trying to address the same societal problems? How can we be partners and think creatively when one is fearful and nervous around the other?

In many ways, my organization, RVC, is a funder, and we too have fallen into the grant application trap. Two years ago, RVC launched the Community Impact fellowship, a leadership and capacity-building program that recruited and sent fellows of color to organizations led by and serving people of color. We would pay 90% of the fellows’ salary and benefits, and also provided ongoing training and mentorship. For $5,000 to $20,000 a year, an organization would receive an amazing leader to help full-time with fundraising, programming, operations, etc.

Of course, we had more organizations who wanted a fellow than the number of fellows available. Immediately, we started down the traditional grantmaking route, creating a process that included an application, scoring rubric, site visits, and clandestine deliberations. Instantly there were problems. An image that distinctly burned itself in my mind is the site visit with a potential host organization. The air was tense. Everyone dressed differently. The ED and staff seemed nervous and deferential. We could not have an honest conversation. I left that site visit feeling really crappy. These were fellow leaders of color that I would normally get drinks with to laugh and complain about inequitable funding practices; and now it seemed like we were in two different worlds, caused by my organization’s belief that applications were the only “fair” way to do things.

Perpetuation of the myth of meritocracy: This perception of “fairness” is a huge issue. Grant applications give the illusion of fairness and objectivity. If every nonprofit has the same chance to apply, and there’s a “level playing field,” then clearly whoever gets a grant must be the most deserving organization. Right? Ideally, yes. But that’s not what we have in the real world.

In the real world, as I mentioned before, there is no level playing field. The field will NEVER be level. Organizations have different levels of capacity for grantwriting. Some organizations have whole teams of grantwriters. Others, especially the grassroots ones serving and led by marginalized communities, have a part-time ED who struggles to write proposals while also delivering programs. The grant application process rewards whoever writes the “best written” grants, not which communities are most affected by injustice and therefore need the most support.

At the root of the problem, foundation staff and board trustees are primarily white (and able, urban, English speakers, heteronormative, etc.), which means there is already bias, unconscious and conscious, built into the grant application process. Reviewers, who are also mostly white, will choose organizations they are most comfortable with, meaning organizations whose language and cultural customs most closely align. Due to implicit bias, which we all have, people do not even realize they’re doing this. According to this article by CEP, “Building Movement Project’s ‘Nonprofit Executives and the Racial Leadership Gap: A Race to Lead Brief’ found that executive directors of color were more likely [than white EDs] to report challenges developing relationships with funding sources.” This is sad, but hardly surprising.

Furthering of inequity: So there is no meritocracy when it comes to grants. And it’s dangerous to perpetuate the myth that there is one, because that only helps to justify inequity in funding and makes us all complacent. 90% of philanthropic dollars, as I and other leaders in the sector keep saying, go to white-led organizations. The belief in the false myth of meritocracy means many funders blame this number on the communities-of-color-led nonprofits themselves (because if the grant application philosophy and system is “fair,” then it can only mean that it’s these organizations’ fault that they don’t get as much money as other orgs).

The meritocracy fallacy diverts us from what is actually happening on the ground. And it is this: Significant grant awards are given all the time with barely any application effort. With perhaps a 2-page LOI, a 3-page concept paper, or sometimes just a conversation or two, organizations who play the game well can get millions. I’ve seen it. I’ve experienced it. This is not to say this no-application process of allocating funding is a bad thing. In fact, it is often a good thing, and cutting through the red tape is a way to build strong, lasting partnerships.

What is problematic, however, is that these large grants go mainly to white, mainstream organization. These organizations deliver many vital programs and services. But the system is broken when significant, often multi-year grants with streamlined application processes go to white-led organizations, while small grants with some of the most burdensome and time-consuming applications are the only ones accessible to communities-of-color-led nonprofits. The “fairness” and “objectivity” of grant applications has been used to conceal fact that grants are neither fair nor objective.

With all these factors in mind, it’s clear the grant application as a concept and practice is broken and is actually exacerbating the inequity most grants are intended to address. Philanthropy’s role (just like nonprofits’ role) should be one of restoring balance. Unfortunately, the default Hunger Games model of allocating funds based on who writes the best grant has been preventing foundations from playing this role. We can keep trying to work with this broken process, with nonprofits continuing to improve our skills to play the grant game and funders continuing to incrementally improve their grant practices. But that’s like putting up new wallpaper in a house that’s on fire.  

With few exceptions, even those of us who complain about grant applications have unquestioningly accepted them as the one and only way to distribute funds. So much so that we do not realize how ineffective and harmful they are. Imagine a food pantry allocating foods the same way we allocate grant funds. There’s more people who need food than there is food available. So we ask people to write applications, including essays explaining how hungry their family is and how they will use the food; never mind that the hungriest people may not have the energy to write the best essays. A team of staff at the food pantry reviews each application, scoring them on a rubric. The families with the highest scores get food. The families with the lowest scores get feedback on how they can improve their application so they can resubmit their applications the following week.

If we can’t imagine allocating food to hungry families that way, why do we think it is OK to allocate resources to communities most affected by systemic oppression that way?

A new way to allocate funding

We need to shift our philosophy around grantmaking from equality to equity. Funders have been talking about equity for a decade or more now, but grantmaking has been firmly rooted in equality. Equality is about assuming everyone has the same resources so therefore can fairly compete for grants, while equity is about figuring out which communities have the most pressing need and ensuring significant resources and power are concentrated within those communities.

What this means is funders abandoning all pretense of creating a “fair and objective” grant application process, and courageously and publicly focusing resources directly on the communities that are most affected by injustice and helping them through whatever means necessary to be successful. I’m going to call this the Targeted Trust-Based Partnerships approach (shout out to Whitman Institute for their Trust-Based Grantmaking framework). Basically, take what you’ve been doing for large white-led organizations (i.e., giving them significant amounts of funding with trust and thus very little red tape) and intentionally doing that for grassroots organizations led by marginalized communities. Treat them as partners to be trusted and respected, not contestants jumping through hoops. (Increase your payout and fund these large organizations too).

This does require foundations to do more work to understand the needs of communities and the organizations that are led by and serving those communities, as opposed to the burden falling on nonprofits to spend all that time customizing data to fit the requirements of foundations. It would entail, on the part of program officers, more research, more conversations, more being physically present in communities, maybe occasionally volunteering at programs. This is how authentic partnerships are built.

My own nonprofit, after much reflection, switched to this strategy. Instead of casting a wide net where anyone could apply to host a fellow, we made a deliberate decision to place our Community Impact fellows specifically at grassroots organizations led by and serving people of color, of a certain size, in a certain geographic area, and in alignment with our values. When our parameters were well-defined, there was no more need for applications. We just have conversations with potential partners who fit our criteria to see if this would make a mutually beneficial partnership to advance the common goals of supporting leaders of color, building community wealth and power, and fighting injustice.

So far, it’s been working out great. Power dynamics are decreased (they still exist, but are definitely lessened). Partner organizations can be more honest about their challenges. Programs and services are reaching the communities that are most in need of resources.

I know there are other funders that are abandoning traditional grant applications to try new things, such as participatory grantmaking. I was speaking at Philanthropy New Zealand’s conference a few months ago when a program officer raised her hands and said her foundation had abandoned applications altogether. Most people in the room were amazed and curious how it worked.

Still, there is a lot of resistance to change. Another program officer in NZ raised her hand to say that without applications, funders would just fund whoever they know, which would only increase inequity. That is a valid point, but the reality again is that due to implicit bias and other factors, funders collectively HAVE been funding who they know, and then reserving burdensome applications for smaller grants for marginalized communities under the false aegis of meritocracy.

Our field has been talking about equity and innovation a lot. Getting rid of grant applications is a start to reaching both. Foundations must figure how to get resources to the communities that most need it, and the grant application should be phased into obsolescence and new ways must be explored if we have any hope of making a dent in many of these problems we’re trying to tackle.

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