Folly #45: A Stick, Not a Carrot
Share funder expertise before the grant application, not after.
A few weeks ago, a foundation leader wrote an Op-Ed in the Chronicle of Philanthropy that implied nonprofits are incapable of monitoring their impact and effectiveness without the guidance of a funder’s restricted grants.
Written by Dan Goldenberg, Executive Director of Call of Duty Endowment, his opinion piece was subtitled, “Without accountability … trust-based philanthropy [through unrestricted grantmaking] is little more than a feel-good exercise.”
What strikes me about these opinions is the author’s conviction that nonprofits are inept at being accountable for their impact.
I disagree.
The main reason for a nonprofit to develop performance metrics is to know if their programs are solving the issue that is their mission. And their board of directors is responsible for reviewing that regularly.
If foundations are issue experts – which many are – why don’t they share their expertise with nonprofits before a grant application? Too many funders punish nonprofits for not having the staff expertise or resources to meet specific metrics required in a grant proposal.
Bogus Assumption #1: Only Funders Can Define Meaningful Metrics
In Goldenberg’s words:
“Trust-based philanthropy lacks accountability. Mutually agreed-upon metrics for determining the results of a grantee’s work ensures that a donor’s funds are being used as intended to fulfill the nonprofit’s mission and that everyone is working toward a common purpose. Such metrics also allow foundations to meaningfully monitor the progress of a project and, if the work goes off track, provide additional assistance before it’s too late and a grant has run its course.”
This suggests that funders must monitor a nonprofit’s mission impact because no one else is.
And there’s nothing mutual or common about it. As a funder, they define metrics and a nonprofit must play along. Metrics are not “mutually agreed-upon”: Call of Duty dictates them by requiring prospective grantees to apply for a “Seal of Distinction.”
Launched in 2013, the Seal of Distinction is accompanied by a $30,000 award and potential access to additional restricted funding, advice, and support. Grants are only provided to Seal of Distinction Winners.
If a foundation is so talented at knowing indicators of success, why not willingly share that knowledge with resource-starved nonprofits working on issues of shared interest as part of the Request for Proposals?
Instead of demanding that a nonprofit jump through hoops for your singular process of defining impact, a foundation can provide “advice and support” upfront to define metrics together. This one chooses not to.
Call of Duty is a $12M foundation that awards $30,000 to nonprofits that jump through their hoops – a modest grant for the work involved. They do not describe what it takes to receive ”substantial restricted grants.”
Bogus Assumption #2: Funders are essential nonprofit watchdogs
No, they’re not.
Nonprofits measure their program impact. If they are simplistic in their metrics, it’s nearly always because they lack the tools, resources and staff expertise to develop extensive qualitative and quantitative measurement. Foundations have that.
Goldenberg’s op-ed makes claims that are downright insulting to nonprofit leaders:
Trust-based philanthropy perpetuates underperforming organizations. Without proof of performance, mediocrity becomes the standard.
Philanthropy without true accountability ignores human nature and behavioral science. In the absence of such measurements, nonprofits have little incentive to improve and are more likely to stick with outdated and ineffective programs.
Meeting a funder’s requirements doesn’t drive nonprofit performance. Nonprofit leaders do. No question that they can do it better with resources shared freely from heavily endowed foundations – not as punishment (ineligible to apply), but as an incentive (coaching and mentoring).
Bogus Assumption #3: The cart is before the horse
Trust-based philanthropy fails to recognize the value of grant maker perspective. A donor’s 30,000-foot view across multiple grantees’ performances allows them to spot trends and provide insights that no individual nonprofit could easily discover on their own.
I completely agree with the second sentence. By why is that information only provided to grantees? Why not share it will nonprofits before they apply? A rising tide lifts all boats.
As for saying that evaluation falls apart without a foundation to define it?
Well, that is sheer funder ego.