Donors often gravitate to the analogy of customers when discussing those nonprofits they fund. For example, Dave Peery, managing director of the Palo Alto–based Peery Foundation, wrote, “we think of grantees as our customers and act accordingly.”
But this thinking doesn’t quite make sense. It’s a bad analogy. Givers don’t have customers. After all, the money is flowing in the opposite direction: customers pay for something; grantees are recipients of funding. As a result, the power dynamics are totally different: In most industries, customers have choices, meaning businesses will, at least in theory, pay a price for ignoring their preferences.
While I can choose which restaurant to go to, most of us who lead a nonprofit don’t necessarily feel that we have a choice of who we raise money from. We look to raise money from almost anyone we think will give! The choice about whether to establish a relationship lies with the givers.
Here, then, are 10 rules for establishing strong working relationships with those organisations you support. These are rules that I’ve gleaned through the Center for Effective Philanthropy’s surveys of tens of thousands of grantees about hundreds of grantmakers – and from working with both exemplars and those struggling to improve their relationships with the nonprofits they fund.
1. Don’t force a fit.
Look for alignment between your goals and strategies and the goals and strategies of nonprofits. It’s a mistake to think you can use the leverage you have over grantees to get them to adapt to what you think is right. Pressure to modify priorities contributes to less positive relationships. For example, grantees pressured in this way are less forthcoming with information about problems. So, it’s crucial to prioritise alignment and fit and not try to force a match.
2. Recognise that if you’re a big giver, you live in a bubble of positivity. Take steps to burst the bubble and learn.
I’ve heard too many big givers insist that they know exactly what grantees think – that they are so down-to-earth and accessible as people that they have negated the power dynamic and created open, two-way communication.
They’re wrong. The power dynamic always exists between the funder and the funded, and the only way to know grantees’ views is to find creative ways to get feedback.
3. Don’t assume you have what it takes to strengthen nonprofits or build their capabilities. Ask what they need and offer it only if you’re positioned to do it well.
Being good at strengthening organisations takes focus and resources. If you’re going to seek to strengthen the nonprofits you fund, find out what they are offering, and then ensure you have access to the skills and experience needed to do it well.
For individuals, time is key. Make sure you can commit to regular, predictable hours. Volunteering can be a rewarding and effective way to contribute but be sure to approach volunteering with modesty and a focus on what the nonprofit needs.
4. Don’t restrict your gifts, and make them last.
For those organisations with goals and strategies that significantly overlap with yours, provide the unrestricted, long-term, significant funding that’s most helpful to grantees.
To make progress against shared goals requires strong organisations, but givers too often restrict funding, creating challenges and limiting nonprofits’ ability to allocate resources in ways that make the most sense. Nonprofits need flexible support, and they should build up financial reserves of at least three to six months’ operating expenses.
5. Calibrate what you ask of nonprofits to the size of your gifts.
I’ve seen grantmaking institutions with hugely cumbersome selection and evaluation processes that are making small, one-year grants. I’ve seen individual givers with unrealistic expectations for the time and attention they’ll receive given the amounts of their gifts.
Givers should be conscious of transaction costs on both the giver and grantee sides, which take time away from more important and valuable work. Right-size your process requirements to the size of the grants or gifts you’re making.