Grantmakers of all sorts hope that their processes are efficient and effective, helping their nonprofit grantees progress toward their missions and helping the grantmaker itself accomplish its own goals and objectives. But as the philanthropic sector changes—whether it’s the integration of new technologies or increased awareness of the challenges nonprofits face—grantmakers need to adapt their practices and keep them updated to ensure maximum impact.
According to Melissa Sheetoo at nonprofit software firm CyberGrants, reviewing best practices can be helpful for newbies and seasoned pros alike.
“Grantmaking is a multistep, complex process and it can be very cumbersome, especially if the steps aren’t automated,” Sheetoo told Nonprofit Business Advisor.
“Even those that have been in the grantmaking business for years can benefit from taking a fresh look at how/why they support the organizations that they do and if/how they can improve their process,” she said.
To help in that effort, CyberGrants recently released guidance that offers a series of tips for addressing key facets of the grantmaking process. They include:
- Focusing on collaboration. According to the guidance, collaboration is the key to ensuring both parties are getting what they need out of a partnership. And the first step in that is to investigate and evaluate what needs the nonprofit is facing, above and beyond cash.
“Grantmaking can go beyond simply writing a check and expand into a true, collaborative partnership. Oftentimes, the grantmaker has experience with operations, strategic planning, technology, etc., and that knowledge can really benefit the nonprofit,” Sheetoo said.
She added, “Post-funding, seeing firsthand how the grantmaker’s funds are being used can speak volumes in contrast to reading a narrative on what has been done. And face-to-face discussions are always helpful in fostering great relationships.”
- Emphasizing the value of measuring and tracking progress. Nonprofits these days should understand the need to collect data that can be used to measure their impact, but it’s important that both sides are involved and seeing satisfactory progress, Sheetoo said.
“The expectation is that the grantmaker would be measuring the effectiveness of their giving … both in terms of whether the NPO is meeting its goals/making a difference, and in terms of achieving their own (the grantmaker’s) mission,” she said.
- Making it public. According to CyberGrants, letting the world know about the impact and good your foundation has done through its grantmaking helps both parties. And there’s no time like the present, Sheetoo said.
“Grantmakers can share their efforts at any/all steps along the way!” she said. “Publicizing your efforts not only reflects positively on your organization, but it helps shine a light on the NPO as well.”
- Embracing transparency. According to CyberGrants, grantmakers should be transparent about the full process—from application to consideration to decision-making, funding and follow-up—so that nonprofits know what to expect. On this front, software that automates communications to keep applicants in the loop could be especially helpful, Sheetoo said.
- Engaging applicants every step of the way. Being transparent about the process is a good start, but keeping up communications with applicants and grantees throughout is also crucial—even when the applicant was rejected, CyberGrants said.
“Grantseekers are passionate about their organizations and often pour their hearts and souls into the causes and grant applications,” Sheetoo said. “Especially since they’re often juggling multiple priorities and applying for many different grants, it’s important to communicate throughout the process.”
This helps nonprofits know where they stand, and is really simple for grantmakers if they’re using software to automate the process.
- Following up. Too often, grantmakers select grantees, send off the check and wait for progress reports. Instead, they should be actively following up with grantees and seeing how else they could support them and maximize impact, CyberGrants said.
“In addition to cash, nonprofits can often benefit from volunteer hours (skills-based and/or extra sets of hands to get things done), board service and in-kind or product donations,” Sheetoo said.
Foundations also often have deep experience working with nonprofits and can provide assistance in terms of strategic development, goal setting, finding alternate sources of funding, polishing applications and more, Sheetoo said.
- Setting realistic goals. Foundations should be leery of placing unduly restrictive limits on how much of a grant can go to overhead and operational expenses, Sheetoo said.
“There has been a lot of press lately about nonprofits that spend ‘too much’ on overhead. However, overhead costs can help a nonprofit grow and make more of an impact if they lead to greater visibility, stronger leadership and more efficiency in the long run,” she said.
Rather than setting a strict limit on overhead percentages, check out the nonprofit’s ratings and reviews, recent accomplishments and long-range plans, she said.
- Exploring disbursement options. According to CyberGrants, the options for grant payouts have expanded in the last decade and a half, and grantmakers should evaluate how their processes are serving their security needs and those of their grantees. For example, they can offer electronic ACH payments or positive pay banking files to help reduce check fraud and reduce overall cycle time, the company said.
“There are so many more options for disbursements now,” Sheetoo said. “Grantmakers should consider the overall security, reliability, timeliness and efficiency when determining the best method for their needs.”