Using Multiyear Funding to Supercharge Your Grantmaking - Exponent Philanthropy
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Using Multiyear Funding to Supercharge Your Grantmaking

Multiyear funding—support that funders commit up-front for multiple years—is a key to strengthening nonprofit effectiveness, capacity, and impact. These grants guarantee income streams, lessening the time grantees need to fundraise so they can better carry out their missions. When many foundations are cutting grant budgets and reducing their number of grantees, committing scarce funds for a longer time frame is particularly valuable.

Exponent Philanthropy members see the usefulness of multiyear grants in supporting a range of activities. Says Brigitte Lehner Kingsbury of the Orchard Foundation in Maine:

“Ask yourself of a potential grant request, ‘Do you really think this can be done in one year?’ If it can’t, why not make the commitment?”

7 Key Benefits of Multiyear Funding

The sector has long recognized the benefits of multiyear funding, including its usefulness in:

  1. Fulfilling specific goals
  2. Attracting additional funding
  3. Building grantee capacity
  4. Funding advocacy
  5. Reducing administrative burdens
  6. Accelerating equity
  7. Supporting new ventures

Note: Multiyear funding is particularly valuable when coupled with general operating support.

1. Fulfilling Specific Goals

Think about how long it will take for you and your grantee partners to fulfill your desired goals. For many funders, the intended impact takes several years, a decade, or more. Offering multiyear funding gives grantees a sense of security. It lets them look ahead to longer term goals and plan accordingly.

David Greco of All Stars Helping Kids in California wrote in a blog:

“If you’re an investor, do you just give one-year of funding and walk away? No. You recognize investments take time.”

2. Attracting Additional Funding

Many funders don’t know that earned income, and government payments and grants are the top two revenue sources for nonprofits. Sometimes, a multiyear commitment is necessary for a grantee to attract funding from a government agency looking to see if the private sector validates and supports the project.

Multiyear funding can serve as a powerful seal of approval, helping grantees attract additional public and private support. The Council on Foundations says that grantees can record promised funds as assets on their financial statements. This demonstrates increased financial strength, and better positions them to attract new donors or leverage dollars through matching gifts or other programs.

3. Building Grantee Capacity

GrantCraft defines capacity building as, “both a verb (the action of building effectiveness, often by improving specific organizational capacities such as infrastructure, operations, financial health, and programs) and a noun (the results of increased attention to effectiveness).”

Since multiyear grants lend support for several years, they are well suited to building grantee capacity, which understandably takes time. Foundations that fund capacity building activities know that grantees are more likely to deliver desired outcomes if their board, staff, operations, and facilities are strong.

4. Funding Advocacy

Influencing policy takes years of consistent effort. While legislative victories may seem quick, they often require years of groundwork, and several attempts and failures.

Sean Dobson wrote in a NCRP article:

“The campaigns I ran for an advocacy nonprofit almost never concluded in one year – victory or defeat could only be determined after several years, and defeat usually had positive benefits for the organization because the act of waging a campaign brought in new members, new funders, more publicity, more contacts, more experience and more knowledge.”

Effective advocacy demands that foundations not show up to a policy conversation at the last minute. Building long-standing and sustainable relationships with policymakers and their staff takes time and patience.

Get Our Advocacy Field Guide for Lean Funders

5. Reducing Administrative Burdens

The hours a nonprofit spends applying for and reporting on grants can add up to thousands of dollars each year. Multiyear grants lessen the time and labor grantees spend applying for and reporting on grants, as well as the time and labor funders spend reviewing grant applications and reports. Thus, you can support projects without having to review new proposals or enter into new grant agreements with the same grantee each year.

6. Accelerating Equity

Nonprofit Finance Fund’s 2022 State of the Nonprofit Sector Survey found that 82% of BIPOC-led organizations said achieving long-term financial sustainability was their biggest financial challenge. ABFE’s The Case for Funding Black-Led Social Change affirms that Black-led organizational leaders have long called for unrestricted, multi-year funding. But they often get low dollar, one-year, program restricted funding that is administratively burdensome, and robs program delivery time and impact.

Multiyear, flexible funding is a major accelerator of equitable grantmaking, and a key entry point for funders who want to share power with grantees.

7. Supporting New Ventures

When funders commit to new ventures—whether an organization, project, or leader— it’s an inherently risky business that can yield extremely rewarding results. Foundations generally fund startups for three to five years, with the possibility of an extension because most new organizations need a long-term grant to get off the ground.

Scott Brazda of the Stuller Family Foundation in Louisiana says:

“Multiyear grants allow new projects time to develop and take root, giving them a better chance of succeeding.”

Multiyear Grants at Lean Foundations

In the 2024 Foundation Operations and Management Report, we found that more than half (60%) of participating foundations provided multiyear grants. Of those, respondents reported awarding 12 grants, on average, in the preceding fiscal year, accounting for 35% of each foundation’s total grantmaking budget. The average multiyear grant amount was $135,359 (median of $57,151). Foundations that funded 100 or more total grants made significantly more multiyear grants in the preceding year.

The time span for multiyear grants ranged from 1 year to 18 years. On average, respondents awarded multiyear grants for 3 years. Independent foundations provided multiyear grants for a significantly longer period than foundations with other asset sizes. The average length of funding for multiyear grants has remained consistent in the past 5 years.

Learn About Other Types of Grants in the 2024 FOMR

How to Start Giving Multiyear Funding

Some foundations initiate the idea of a multiyear grant. Others respond to such proposals from grantees or use both approaches. Regardless, the more familiar a foundation is with a grantee, the more likely they are to consider giving it multiyear support. But if you fund dozens or hundreds of organizations, where do you begin?

First, think about your mission and grantmaking goals. Which of your grantees most align with your goals? Which have the greatest potential to meet those shared goals? And which keep in touch with you the most?

Next, schedule some time to talk with key grantees. To help set expectations for a candid conversation, say that your foundation is not making grants immediately, but rather taking time to listen, learn, and refine its grantmaking. Meet with leaders and staff to learn more about what they do and how, the challenges they face, and what they could accomplish with the right support. This will uncover exciting opportunities to make a difference with multiyear support.

Common Multiyear Funding Practices Among Lean Funders

When making multiyear grants, our members tend to:

  • Choose organizations that align closely with their mission and goals.
  • Limit multiyear grants to organizations they supported previously.
  • Devote less than 40% of total grantmaking dollars in one year to multiyear support (although some devote most of their grant dollars to multiyear support).
  • Favor organizations that have strong leaders whom they know well.
  • Favor organizations whose leaders and program staff will remain in place for several years.
  • Commit for 2, 3 or 4 years.
  • Require reports on a yearly basis.

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About the Author

Hannah Smith manages editorial content and publications at Exponent Philanthropy. 

Comments

  1. Mary LeRoy

    Hello Hannah,
    I enjoyed reading your article on multiyear grantmaking. I am a trustee of a private foundation that provided several five-year multiyear grants. We need guidance regarding how to determine which nonprofits among the cohort/group should continue to receive multiyear grants after the the period has ended. Any insights you have will be valuable to our foundaiton. Thank you, Mary

  2. Mary LeRoy

    Hello Hannah,
    I enjoyed reading your article on multiyear grantmaking. I am a trustee of a private foundation that provided several five-year multiyear grants. We need guidance regarding how to determine which nonprofits among the cohort/group should continue to receive multiyear grants after the the 5 year period has ended. Any insights you have will be valuable to our foundation. Thank you, Mary

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