In September 2008, at the Association of Small Foundations National Conference, in Denver, CO, over ninety participants gathered for the CGR-sponsored session called, Beyond Your Comfort Zone: Taking Risks in Grantmaking.
Senior consultant Ann Tartre facilitated a lively dialogue among participants and three expert panelists, Lou Beccaria, President and CEO of the Phoenixville Community Health Foundation, Lynn Mavrakis, Executive Director of the Homer and Mildred Scott Foundation, and Tim Sweeney, Executive Director of the Gill Foundation.
Risk is in the eye of the beholder.
What seems risky to one donor or in one community may seem less so in another. Understanding one's own tolerance for risk and the unique context in which you give is critical to managing risk--and finding one's "comfort zone." The session allowed participants to explore:
- what risk means to them and others, depending upon context;
- pros and cons of risky programming, through real life examples;
- useful resources, CGR’s and others, to help donors navigate risk.
The session kicked off with participants sharing an experience with risk in grantmaking, or “what keeps them up at night” when they consider whether or not to make a grant.
Common concerns included:
- tackling issues that were unfamiliar or new;
- supporting advocacy and getting involved in public policy, especially around controversial issues;
- responding to applications when the foundation or donor thinks the nonprofit may not be ready for what they are proposing;
- assessing organizational situation – the proposal may be great, but is this the right organization to take the lead?
Examples and advice.
Lynn Mavrakis tackled the last two challenges by sharing how the Homer and Mildred Scott Foundation, in Wyoming, incorporates thorough site visits into the review of every potential grantee. In some some cases, the Foundation has organized a “sustainability course” to help the nonprofit applicants or grantees to address core organizational issues that might affect the nonprofit’s ability to carry out a grant. The course is not a pass/fail, but rather a step to help the organization identify ways to avoid potential pitfalls with growth or with new programs.
Lynn warned that sometimes a capacity building or new program grant “may do [more] harm.” She added that one needs to be prepared “to tell grantee that they are not ready for the activity they are proposing.”
Lou Beccaria, of the Phoenixville Community Health Foundation, in Pennsylvania, echoed the honest communication theme of Lynn’s comments by urging participants to cultivate an approachable demeanor. Lou organizes brown bag seminars with grantees with the aim of keeping lines of communication open and fostering deeper relationships, beyond a specific grant cycle or request.
Tim Sweeney of the Gill Foundation, a national foundation located in Denver, CO, explored the unique challenges associated with a public policy agenda. For some donors, the longer timeframe of such an agenda can feel risky. To be successful, fellow trustees and donors must be comfortable with a longer term vision and tolerance for risk since public policy grants often demand substantial funding and an outcome that may be difficult to control.
As Tim admits, “With public policy grants, [you] don’t see results overnight – it can take years….[but] if you are trying to have an impact, one way to do that is through public policy grants”
Tim also noted that public policy grantmaking can include support for lobbying. Though, when this kind of grantmaking is not the right fit your foundation’s culture or comfort level, there are other ways to advance a public policy agenda. Many foundations opt to support credible research, surveys and studies that inform policy makers and the general public about an issue--without taking a specific stand. The Piton Foundation, also in Corlorado, is one such example.
Picking up on Tim’s discussion of public policy, Nayantara Mehta, from the Alliance for Justice, offered cogent advice regarding donor support of advocacy programs. She confirmed that foundations can indeed make grants to organizations that lobby and for lobbying purposes. Foundations will not lose their charitable status or pay an excise tax when they support grantees that lobby, as long as they stay within simple rules.
Beyond legal issues, however, Nayantara suggested that one important way to manage risk when considering advocacy is to talk with fellow donors and community leaders at the start.
According to Nayantara, “It always helps to be aware of public opinion on particular issues.”
Summing Up – Managing Risk
- Develop open, honest and direct communications with grantees;
- Have patience – or, decide whether you have the patience to tolerate bumps, uncertainty and longer time horizons;
- Align your tolerance for risk with the mission and values of your foundation—while more compelling, an audacious mission also will demand a higher tolerance for risk;
- Don’t be afraid to fail…as long as you communicate well and learn from the experience.
Tools to Help
- "Take the temperature” meetings and a “sustainability” checklist or course for potential grantees -- for more details, contact Lynn Mavrakis, executive director of the Homer and Mildred Scott Foundation [307.672.1448] and mention this session.
- Review and discuss drafts of proposals before they are formally submitted.
- Public policy and advocacy rules, the Alliance for Justice offers guidance especially for foundations considering an advocacy agenda as well as help evaluating whether a nonprofit organization is ready to take on an advocacy effort.
- Use CGR’s strategic checklists (organized around topics ranging from Housing to Education to Health & Wellness) to respectfully assess an organization’s readiness to take on a risky project.
- Grantcraft's Guides on topics like Working with Start ups; The Effective Exit; and Advocacy Funding
- California Wellness Foundation, reflections on public policy
