Every organization driving social change deals with resource and capacity limitations. Each is in a constant search for funding to implement its mission and develop its potential. During the pandemic, the complex and competitive funding landscape has undergone noticeable shifts—changes in practices with significant implications for implementing organizations and their strategic planning. Kathy Reich, who directs the BUILD program at the Ford Foundation, and Nidhi Sahni, head of Bridgespan‘s U.S. advisory services recently joined Rachel Flynn, Associate Director of Funder Alliances at the Skoll Foundation, in a conversation about the trends they’ve seen in the funder landscape over the last couple of years—both promising and disappointing—and what they see on the horizon.
Rachel Flynn: We’ve seen encouraging trends emerging from funders and between funders and doers in the last 18 months or so. I’m thinking of less restrictive ways of grantmaking, a real emphasis on trust-based philanthropy, a real focus on equity. How have your organizations embraced them and how do you see their long-term real viability?
Kathy Reich: Ford has tried to respond to this moment of multiple intersecting crises by purposing more of our assets for mission. We issued the first ever social justice bond, borrowed a billion dollars against our endowment, and committed to putting all that money into great organizations and networks within a year and a half. We’ve spent more than 900 million of that billion so far.
We also approved another billion dollars for the BUILD program, so that takes the program that I direct to a $2 billion, 12-year program that invests in organizations that are seeking to reduce inequality around the world. A that money has gone out in the form of multi-year general operating support plus core support for institutional strengthening. In 2015, 36 percent of our grantmaking was in the form of general or core support. In 2020, that percentage was 83 percent. So that has been a big change.
Another bright spot I would flag is within the larger philanthropic sector: Large, highly publicized commitments to racial justice and to organizations that are most proximate to the change we all seek.
I know Nidhi will talk about more about another trend: the emergence of well-resourced collaborative funds that are able to get funds out quickly and directly to organizations on the ground. All of this could add up to a real shift of power in the nonprofit sector. However, I think that generally, it is not happening fast enough, it is not happening deeply enough, and philanthropy is still moving in a dinosaur-like fashion. And you know what happened to them.
Nidhi Sahni: For U.S. billionaires, wealth has increased over 60 percent since COVID-19 started. Yet giving went up merely 5 percent. That has been a very disappointing trend. In general, we know that only 20 percent of giving goes to social change leaders on the front line. When you look at the core and you strip out the emergency funding that went out because of COVID, it’s even starker that not nearly enough is going to social change.
One place we’re seeing significant momentum is with collaborative funds. We’ll soon be publishing research that shows more and more are emerging. If you look over the last decade or more, the year when the most collaborative funds were set up was last year. Some of them were time bound but a lot are set up for a longer term. That’s exciting because donors are coming together, and a lot of those are trust-based, a lot of those are unrestricted. The areas of focus are largely around racial justice, climate, and gender. Most of them are led by women, and about half are led by people of color.
The other question the donors are aspiring to address is about funding proximate organizations. The data doesn’t bear it out though on that one. We looked at large-scale giving, for example, in Africa, which spiked last year given COVID. Still, less than 10 percent of the funding, both by African donors and international donors went to local NGOs.
Donors need to take a close look at their processes. When they have aspirations but put all grantmaking through the same legacy processes, they come up with the same answers. They are now beginning to look at the bias in their systems, the bias in their criteria, the bias in their due diligence, and their traditional definitions of good leadership.
Rachel: We’re facing so many compounding crises: COVID, climate change, threats to democracy, racial justice at the forefront at long last. What we hear often from organizations in our community who don’t see themselves fitting neatly into one of these sectors is, “Look, I’m not working in climate change, I’m not working in democracy and governance, how do I stand out to funders?” What would you say to leaders of organizations who aren’t seeing themselves in these big priorities?
Nidhi Sahni: I am very grateful donors came together to address the multiple urgent crises, and I have had donors make it very clear that they don’t only want to fund organizations that are focusing on COVID. Very importantly, stay true to your work. Every donor expects that in the last couple years, of course, organizations were called to action, and you might have had to make strategic shifts and innovate. The systems that you work in might also be different today than they were a few years ago. I think being able to observe that in your organization and articulate how it impacts your work is important.
Our research has shown that funders often silo their work in ways that can limit their impact, especially when it comes to tackling problems for sustained impact. While the last 18 months have brought the equity conversation to the forefront in such a powerful way, I am hopeful it’s here to stay. Every problem, in my mind, in the U.S. is a race problem, and globally it’s a gender problem. Equity is at the core of every problem, and I think asking yourselves as an organization, how do people that are most marginalized experience this problem and what does it mean for the solutions we are developing is going to be critical.
Kathy Reich: I do not think that the onus of change here really lies upon nonprofit leaders, organizations, and networks. I think that 90 to 95 percent of the change that needs to happen is on the funder side. As funders, we’ve created a lot of problems and we need to be assertive in fixing them. Never twist yourself into a pretzel to try to meet what funders are interested in because in two years they’re going to be interested in something else. Stay true to who you are, but also think about how these intersecting crises are affecting your organization, the issues that it works on, and the people that you serve.
Also, be as generous a partner as you can to other organizations in your community, in your region, in your ecosystem even if they do not do exactly what you do. We support an organization through BUILD in Sao Paulo, Brazil, that is an education organization. Well, education is no longer a funding priority of the Ford Foundation. Our priorities in Brazil are indigenous land rights and ending racial violence.
We fund this education organization with multi-year highly flexible general support and institutional strengthening support because they are a generous and essential partner for indigenous organizations and for Afro-descendant organizations. They lend space. They lend convening time. They lend relationships. They have become a real pillar of civil society.
Rachel Flynn: How are funders identifying and supporting organizations that have embraced—both through partnerships and in their own work—working at intersections of various community needs?
Nidhi Sahni: We’ve seen multiple collaboratives doing this. Funders seek to understand how leaders and organizations within the coalition complement each other, how they partner and what outcomes or change they are working towards. Be transparent about the long-term nature of the change, and then work backwards to share what markers of progress you expect to see along the way.
Another piece is to think about regranting. If you do see yourself as being an important connector or hub as part of this partnership, how do you communicate the value of regranting, about supporting the ecosystem? It can be both in terms of your knowledge sharing but also sharing the resources and making a case for why that is the right answer for the collective system.
Kathy Reich: I think that the 5 to 10 percent of the needed change that rests with nonprofit leaders is about speaking truth to power, setting clear parameters around what funders can expect for their money, and refusing to accept project-based funding, especially for something like a multi-sector collaboration. Nonprofits need flexibility for long-term planning and for collaborative processes. Back in those days when I was a funder who only funded projects, I wish people would have told me, “Your money is not worth having.” It would have moved my practice a lot faster to the place where I am now.
Rachel Flynn: How can grantees balance projected funding and time-sensitive funding versus process funding where often results/impact can take more than just one ‘project’ cycle’?
Kathy Reich: My first reaction to this question is, “Well, of COURSE results and impact take longer than just one project cycle!” In a situation where funders are asking for short time frames and quick results, I think the best you can do is to educate them and help manage their expectations about the scale and pace of change.
It helps to clearly define your vision, setting a north star as well as naming concretely what you hope that your organization will be able to accomplish in 10-15 years. Then outline what needs to happen during a single project cycle to keep you moving along that path. Don’t talk to the funder solely in terms of people served during the grant period—talk to them about the innovation and learning that you need to undertake, and the investments that you need to make in your organization’s sustainability, to get to the longer-term vision.
Set ambitious but achievable goals for the project cycle, and don’t overpromise. Make it very clear that with only 1-2 years of project funding, you will be able to achieve limited results and impact. Deeper, more lasting change at a systems level simply requires long term, flexible investments.
Rachel Flynn: In the work of advancing equity in philanthropy, how can systems change increase the level of decision-making and control in the hands of proximate leaders?
Nidhi Sahni: The events of the past two years have demonstrated once again that inequity is baked into our systems. So, if we want to truly transform societies to be more equitable and just, it will take systems-change efforts.
In practice this starts with understanding how power operates in our systems. To supplant this status quo will require a collective effort—including organizations that are working in communities, those focused on narrative and norm change, as well as organizations working with public systems.
As for what that means for philanthropy, it requires developing inclusive giving and capacity building strategies that center equity and justice and the communities most affected, and grantmaking structures and processes that shift power to proximate leaders—either by giving in ways that largely hand over control to grantees and communities, or through genuine collaboration with grantees, their constituents, other funders, and stakeholders. It also requires building a team of proximate leaders internally and/or authentically engaging voices of those with lived experience in the decision-making process.
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