Equitable Grantmaking: Essential, Fundamental Practices

To make an outsized and lasting impact in their communities and issue areas, grantmakers must be intentional about equity and inclusion within their boards, governance, and funding efforts. The journey towards equitable grantmaking is not merely about ticking boxes; it’s a transformative process that demands introspection, learning, and action. While adopting equitable grantmaking practices serves as a crucial starting point, it represents just the tip of the iceberg in dismantling systemic racism within philanthropy.

Equitable Grantmaking Practices

The following equitable grantmaking practices serve as a foundational framework for funders who are committed to advancing equity. These essential strategies foster a more equitable philanthropic landscape, urging stakeholders to immerse themselves in their issue areas, expand their horizons, and forge authentic partnerships.

Eliminate Barriers to Entry

Consider all organizations, including the smallest ones and don’t impose a minimum organizational size or budget in your grant guidelines. In the blog “Grantmaking Due Diligence: Organizational Budget Size,” Prentice Zinn writes:

“Organizational budget size alone is not enough information to draw conclusions about need and accessibility to funding. The problem with rules of thumb is that they are often subjective and not based on appropriate data. Like all generalizations, they create blind spots which can lead to overlooked opportunities or reinforced funding inequities.”

Create Clear Grant Guidelines

To save nonprofits time and maximize the relevancy of proposals you receive, create specific and clear grant guidelines that grantseekers can easily access through one or more of the following sources:

• The foundation’s website
• Foundation directories
• A one or two-page information sheet (print and electronic)
• A small brochure about the foundation
• An annual report

Use online questionnaires or a quick phone call to efficiently determine whether an organization’s work aligns with your mission.

Simplify Application and Reporting Requirements

The law requires very little when making grants to most domestic public charities. In fact, making grants to most domestic public charities requires no paperwork, process, nor post-grant reporting. A lot of foundations don’t use the information they request. So, figure out what is vital for your foundation to make a grant decision, and request only that information.

A lot of funders design complex processes that burden nonprofits and undermine effectiveness. Question what hoops you put your grantees through.

Let grantseekers submit financial information in their original, off-the-shelf formats rather than requiring reformatting. Nonprofits spend a massive amount of time tailoring financial data to the individual needs of different funders. You might also consider accepting proposals written for other funders.

Learn More About Simplifying Grant Applications and Reporting Here »

Prioritize Lived Experience

The best way to learn is to get in touch with people who are knowledgeable about your issue — experts, but also people with practical, lived experience —and engage them in conversations. Invite them to coffee or breakfast, visit them, interview them, listen, and learn. Use your unique perspective across organizations and unique access to people with knowledge.

Ask questions such as these:

• What have people tried? What has worked and not worked? Why?
• What are the gaps and opportunities?
• What would it take to move things forward?
• What role can we play—as funders and as convenors, matchmakers, researchers, and advocates?
• What resources can we bring— dollars, deep knowledge, relationships, convening power, our reputation, our voice?
• Should I act alone, or is there an existing coalition?
• Which people need to come together, and under what conditions, to make the desired change?
• Is the time ripe to act?

Rethink Your Data

Collect data that lets you identify racial disparities in your chosen community or issue. Disaggregate your data by race and gender. One of PEAK Grantmaking’s “Strategies for Driving Equity in Grantmaking Practices” is to “collect, analyze, and use disaggregated demographic data to advance equity and impact.” They say:

“For philanthropy to advance equity in all communities, it must first understand the demographics of the organizations being funded (and declined), the people being served, and the communities impacted. It is impossible to change inequity in grantmaking at the organizational level if you cannot first see where the inequities lie. By using demographics as a key metric, you’ll be able to understand how your shifts toward more equitable grantmaking practice are showing up in your results.”

Fund More Nonprofits Lead by People of Color

A 2020 report from Bridgespan and Echoing Green found that nonprofits led by people of color received less funding with more oversight—the unrestricted assets of nonprofits led by people of color were 76% smaller than those led by whites.

The Stanford Social Innovation Review article, “Five Accelerators of Equitable Grantmaking and How to Harness Them,” says equity-committed funders are:

• “Gathering the data on diversity of leadership among their grantees, then setting and pursuing goals to grow investments in BIPOC leaders that align with their theory of change.
• Uprooting onerous proposal and reporting requirements. The historic gap in multi-year, flexible funding for BIPOC leaders has created an administrative burden, robbing program delivery time and impact.
• Appointing board members and hiring program officers with lived experience of the equity issues the funder seeks to address, to identify and connect with a broader set of nonprofit leaders.”

Rethink Your Grantmaking

Think about how long it will take for you and your grantee partners to fulfill your goals. For many funders, the desired impact takes several years, a decade, or more. Offer general operating, capacity-building, and multiyear grants. Impact and change depend on strong, sustainable organizations. Results take time.

General Operating Support

A general operating support grant (also known as gen op) helps sustain a nonprofit’s mission rather than specific programs or projects. Grantees can use these funds to strengthen the organization or further its charitable purpose as they see fit. This might mean looking at salaries and overhead, investing in technology, furthering fundraising efforts, or something else. Gen op grants are valuable for many reasons. They:

• Allow grantee organizations to focus on fulfilling their missions and building infrastructure, rather than on tackling peripheral projects and additional fundraising
• Serve as a vote of confidence for nonprofit leaders, helping to decrease burnout
• Lessen the inherent power imbalance between grantor and grantee and shift the conversation toward the outcomes of the grant and overall impact of the organization

Capacity Building

The Council of Nonprofits defines a capacity building grant as “an investment in the effectiveness and future sustainability of a nonprofit,” while the Center for High Impact Philanthropy (CHIP) and Fidelity Charitable write in a brief:

“In the for-profit sector, investors understand that businesses must invest in their people, systems, and infrastructure in order to lay a solid foundation for performance. Nonprofits are no different:

• Board members, executives, staff, and volunteers need training and supervision to be effective.
• Nonprofits require adequate facilities, technology, and other systems to function efficiently.
• Organizations need opportunities to learn and improve, continuously increasing the benefits they provide to clients and the public at large.”

Common areas of focus for capacity-building grants include:

• Strategic planning
• Board development
• Management and staff training
• Public relations, marketing, and fundraising
• Technology upgrades and implementation
• Facilities and physical infrastructure

Multiyear Funding

A multiyear grant is a grant that funders commit up-front for multiple years. These grants guarantee income streams, lessening the time grantees need to fundraise so they can better carry out their missions. The sector has long recognized the benefits of multiyear funding, including its usefulness in:

• Fulfilling specific goals
• Attracting additional funding
• Building grantee capacity
• Funding advocacy
• Reducing administrative burdens
• Accelerating equity
• Supporting new ventures

Know the Stresses on Your Grantees

Carve out time to listen and learn about your grantees’ real needs and the fields they work in. Make it a practice to understand your grantees income streams. Many funders aren’t aware that earned income and government payments and grants are the top two revenue sources for nonprofits.

Knowing if key grantees are facing shortfalls, and asking how you can help, allows you to be proactive—for example, by offering to fund cash reserves or capacity-building, or by engaging in advocacy. A lot of grantees won’t put essential things they need in proposals. By building open and trusting relationships with them, you will learn more and be able to partner—not just fund.

Equitable Grantmaking Going Forward

By eliminating barriers to entry, streamlining application processes, and giving gen op, multiyear and capacity building grants, funders can catalyze meaningful change. Embracing diversity, engaging with grassroots organizations, and amplifying marginalized voices are not just recommendations; they are imperatives in the pursuit of equitable grantmaking. As we embark on this journey, let us challenge ingrained norms, rethink data collection methodologies, and extend support beyond grantmaking dollars.

Have You Registered for Our Annual Conference?

---

---

About the Author

Andy Carroll advises staff, trustees, and donors of leanly staffed foundations around advocacy and Catalytic Leadership in Philanthropy. Follow him on Twitter @andycarrollexpo, and check out his Catalytic Philanthropy Podcast. 

Hannah Smith manages editorial content and publications at Exponent Philanthropy.