Starting a new grant-making program is both exciting and daunting. There are so many social problems to be addressed, and so many possible ways of addressing them. Designing a grant program is undeniably complex and requires time and thoughtfulness.
Many funders spend a considerable time thinking about the issues they hope to address, and an inadequate amount of time up front thinking through the impact they would like to have with their grant-making and how to allocate their resources to achieve their goals. Although there is no single "right way" to develop a strong program, considering the grant-making strategy behind the program design will inevitably increase the likelihood that an effective program will be developed.
A grant-making strategy is a purpose driven framework which enables grantors to design, implement and evaluate their granting programs. The plan consists of information around the issues you want to address through your grant, your long-term goal, and the steps to take to meet your goals.
Why Are Grant-making Strategies Important?
Bringing about change in the community through grant-making is a complex process, and to ensure that it is impactful, requires a well-designed grant-making strategy.
A well-designed grant-making strategy will help-
- In keeping stakeholders informed about the mission, focus, and goals of grant-making as well as making available tools to track progress.
- In providing a clear communication pathway between internal and external stakeholders
- Consistently review your steps and evolve in your grant-making efforts.
Organisations will already have some ideas on which issues, organisations, and locations they want to support through their grant-making efforts. To make a larger impact through the distribution of these funds, grant makers need to design and adopt a strategy to help keep track of ongoing and future progress.
What Are Grantmaking Strategies?
A grant-making strategy is essentially a method of directing funds to worthy organisations.
It explains how organisations plan to accomplish their objectives— their areas of focus in terms of a specific cause, the kind of organisations they want to promote, and their commitment as donors. By working with a clearly defined set of objectives and goals offers grant-giving organisations a sense of focus and direction, it indicates priority and generates greater outcomes. As each organisation’s giving practices differ from one another, there is no single grant-making strategy that fits all.
There are 2 major approaches to grant-making, responsive grant-making, and strategic grant-making.
Responsive grant-making style allows funders to be broad in their grant-making approach, and more welcoming of ideas from organisations seeking grants. Requests are generally initiated by non-profits, rather than by a funder seeking them out. This doesn’t mean that a foundation doesn’t have core areas of focus, but it does mean that within those areas it wishes to be responsive to the needs non-profits feel most keenly. Grantors usually opt for responsive grant-making when they are keen to keep themselves updated on the range of opinions and ideas flowing within the community. It can be a way to show support to the community when a funder is not interested, or able to put in the required effort and resources into a strategic approach. For some foundations, responsive grant-making is simply the best fit for their missions – particularly those whose missions are very broad and highly localised.
On the other hand, strategic grant-making involves grant-making with specific and clear goals along with pre-designed strategies on how these goals should be achieved. This is usually the approach taken by government or large research organisations. This strategy can also benefit foundations who are clear about their objectives and goals and wish to direct their focus towards addressing issues in a specific area.
In this instance, the funder drives the grant-making agenda as opposed to grantees. Strategic funders typically see themselves as accountable for successful outcomes. For example, a strategic grant maker may decide to focus on reducing the stigma of substance abuse and deploy strategies that include a state-wide communications campaign, increased support for Alcoholics Anonymous and policy advocacy to health insurance providers cover treatment. A strategic funding approach can also be a way to achieve more measurable impact, within an area of focus as opposed to giving out a variety of different grants across multiple sectors. Responsive and strategic grant-making each come with a set of pros and cons, but, in truth, there will always be room for both grant-making approaches.
Below is the list of important steps to consider when designing your grant-making strategy:
1. Identify and specify your focus
One of the first decisions funders should start with is to determine the problem they are attempting to solve. Often, the issue that funders choose to focus on is based on internal criteria. This may include addressing organisational goals, a public mandate; an existing grants program; or the shared value of foundation members. These parameters may range from broad outlines of intent to specific identification of a subject area. Once an organisation is clear on its focus then it can work to determine which strategic approach would be the best fit.
2. Analysing & Determining knowledge gaps
This step will help in understanding where the "funding gap" exists in the identified issue. Conducting research using primary and secondary resources to analyse these gaps will provide context around:
- why the need exists
- number of individuals impacted by the issue and how much they are impacted
- what actions are currently being taken by the government bodies or other charitable organisations towards supporting the issue.
This research data will direct your efforts and funds in the right direction and will assist in making the desired impact.
3. Interact with the community
Simple steps such as encouraging feedback from the community, from grantees or unsuccessful applicants will provide valuable information on the grant-making process. This will allow for key insights on the happenings around the community as well as allow for changes to the grant-making processes to be considered.
4. Consider the constraints of the grant
Grants may be large or small, short-term or long-term, and general or specific in purpose. Organisations may choose consistent guidelines for each grant or base them on special circumstances. Other ideas include capital grants, scholarships, and program-related investments. It is important to consider what is the best fit for the intended outcome.
Once the above steps have been considered, it should begin to become clear which grant-making strategy aligns best to either a strategic grant-making approach or a responsive grant-making approach.
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