tactical philanthropy

I continue to find Tactical Philanthropy to be an extremely interesting read, particularly posts about the Streamline Project - an attempt to make the grant application process much less onerous through standardization. As I said before, it's kinda like the "common application" for nonprofits.

In this post, they tackle a topic that should be of interest to any budget-conscious ED or Development Director - the inordinate amount of time we sometimes spend jumping through a series of very particular hoops for funders, and what that "lost" time and money means for the efficacy of the grantmaking process:

If you are buying the services of my firm Ensemble Capital, you don’t care what our company’s “client acquisition” costs are. But if you are investing in the company, you care very much about these costs. Another way to think about it is this; all of the money in a foundation has already been given to nonprofits, it is just being held for future delivery. This is factually the cases since the IRS only grants an income tax deduction for gifts to nonprofits because the gift is considered a “completed gift” to a nonprofit. That money literally belongs to the public. So whether a cost is paid for by a nonprofit or paid for by a foundation, the end result is the same. We know that foundations care very much about keeping their own administrative costs down, so the logical extension of this decision would be to minimize the cost to nonprofits of obtaining grants.

I think the concept of “net grants” is a powerful one and something foundations should understand when they think about their grant making. Realize too that the costs of the nonprofit that actually obtains the grant are not the only relevant costs. If 100 nonprofits spend $1,000 each to pursue a $100,000 grant, they the net grant would be $0. Nada. Nothing gained. In effect the foundation has just taken $1,000 away from the 99 nonprofits that failed to get the grant and delivered the money to the winning grantee.

It's a powerful argument for streamlining the process. There have been some attempts at this within the political realm - most notably the New Progressive Coalition. NPC tried to put many organizations on an even playing field where, once they completed an application process, they could be exposed to an open market place of donors for little to no additional costs. Conversely, the process was supposed to provide potential donors with enough information about each organization to invest with confidence. Unfortunately, many participants found the process to be even more cumbersome than the traditional grant making process, and the Return on Investment even smaller. So far NPC boasts barely more than $100,000 in monies raised for the accepted 35 participants.

Still, streamlining the process is definitely something for funders - non profit and partisan alike - to think about. I hope they're reading Tactical Philanthropy as closely as I am.