The Case for Funding Collaboratives - Exponent Philanthropy
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The Case for Funding Collaboratives

Photo by Luis Quintero

While the U.S. Census happens only once per decade, New York State is already working to build the nonprofit infrastructure for a successful 2030 count. This effort is led by the New York State Census Equity Fund — a group formed in 2017 by a coalition of funders who came together to create a statewide, grassroots effort to make sure the 2020 Census had the best chance of tallying all New Yorkers.

Because the Fund is a donor collaborative that includes community, private, and family foundations, it has the flexibility and structure to manage a process that has a lengthy time horizon and considerable moving pieces. Funding collaboratives, in which donors come together to pool money and resources for a shared cause, have been gaining popularity in recent years — awarding more than $2 billion annually, according to a 2021 Bridgespan survey. These collaboratives are especially attractive for lean foundations that are looking to maximize their resources to achieve greater impact.

The Benefits of Funding Collaboratives

Our organization, The New York Community Trust, has created or managed more than 30 funder collaboratives — including the New York State Census Equity Fund — with a variety of missions and timelines. After decades of managing these partnerships with foundations, corporations, government agencies, and individual donors, we’ve learned that collaboratives are especially effective in the following areas.

Sustain a Long-Term Effort

Foundations that tackle complex issues like immigration, education, or climate recognize that they cannot achieve success unless they develop initiatives for the long haul. Collaboratives such as New York State Census Equity Fund understand that sustained action is best accomplished when there are multiple players at the table.

Coordinate a Streamlined Crisis Response

Grantmaking processes are often deliberate and complex. But in the face of a fast-moving crisis, foundations must move quickly, while also staying smart and accountable.

Funding collaboratives — especially those with clear funding objectives, provide room for donors to provide input, and are respectful of the demands of nonprofits — can prove especially effective in the face of disasters and other crises.

Foster a Meaningful Relationship with Government

Philanthropy can provide additional resources and understanding to help ensure government efforts achieve fair and equitable results. Funding collaboratives have the power to forge meaningful partnerships with the government because they can leverage multiple perspectives — and more funding — toward the outcomes each partner seeks.

Facilitate Learning

Good program officers are constantly learning — but they often focus their attention on their organizations’ grantmaking strategies and procedures. Funder collaboratives can open new learning opportunities by connecting program officers and leaders with colleagues who are addressing similar problems and missions at other foundations.

They can also build larger networks of nonprofits and other partners who can benefit from the experiences of colleagues.

When Should You Consider a Funding Collaborative?

Although collaboratives are powerful and effective tools for grantmakers and the communities they serve, they are not suited for all situations or all funders.

To decide whether to start or join a funder collaborative, it’s important to assess whether your organization is ready, willing, and able to share decision making with external partners. You also need to determine what resources you can contribute.

But having the desire, ability, and resources to participate in a collaborative doesn’t guarantee success. That’s why we’ve created a decision tree to chart the questions you should ask before starting a collaborative based on some hard lessons we’ve learned along the way.

These questions include:

  • Are you the only funder who owns the idea, or is it shared by other colleagues?
  • Is your goal best achieved collectively?
  • Will the work of the collaborative expand beyond the scope of what is already accomplished?
  • Does it fill a fully researched or clearly defined need?
  • Would a collective effort have traction to influence, promote, or advance more effective policies?
  • Do you have at least four contributors and a robust fundraising plan to gain more support?

What Happens Next?

After answering these questions, if you determine that a funding collaborative is the best choice for your organization to address a specific problem or advance a new program, you’re still not done. You must also make sure you have the right partners and create a process that is designed for success.

Leanly-staffed family and private foundations must also take special care to make sure they have partners with the capacity to lead and administer the collaborative. This is especially true when your foundation has limited human and financial resources.

With that in mind, you might explore whether your local community foundation has an existing collaborative that you can join — or whether they might be a good partner for you as you get a new collaborative off the ground. Community foundations are often excellent partners because they can anchor the work with their deep community roots. They also have the infrastructure and connections to use the resources that each partner brings to the table to grow and extend your impact.

Not every collaboration is warranted or reaches its potential. But when funders properly align and work in harmony, they can learn, achieve outsized results, and go farther than they would have on their own.

About the Authors

Kerry McCarthy is vice president for philanthropic initiatives at The New York Community Trust where she works with donors to create philanthropic strategies to meet their charitable goals and make an impact. She also develops content and programming for donors to help guide their giving. 

Julia Chang is the philanthropic initiatives officer at The New York Community Trust where she helps donors achieve their philanthropic goals, provides philanthropic advising services, and helps connect donors to nonprofits. 

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