Grantees as Customers: Four ways funders can serve and empower grantees

By Dave Peery  (Originally published on the Stanford Social Innovation Review Blog)

At the Peery Foundation, we think of grantees as our customers and act accordingly. We’re not investing enough resources on our own to solve social issues at a systemic level, so we try to focus on our core function: to invest in social entrepreneurs and leading organizations. This means we leave the big, hairy problem-solving to grantees and focus on how to create a funding environment that better enables their success. We don’t do any of the following perfectly, but here are some of the ideals we try to live by:

We use empathy to design our funding approach.

We’ve spent the past six or seven years designing a grantee-centered approach to funding. This has required that we impose on ourselves the same expectations we have of prospective grantees. For example, we expect that organizations design their interventions based on insights from beneficiaries and their communities. We, in turn, should be designing our funding strategies with input from social entrepreneurs.

I’ve had countless interviews with nonprofit leaders and staff about what is working and what is not with their funders. For example, Jane Leu, founder of Upwardly Global (one of our grantees), articulated for me how multi-year grants enable organizations to grow much more quickly. These conversations have directly informed an approach focused on trust, responsiveness, and long-term, unrestricted support—and we are seeing results. We recently made a multi-year grant to help one organization hire a program director to scale up. This commitment provided a local school district with the confidence to devote significant district resources, more than doubling the reach of the program. Predictable funding gives entrepreneurs the confidence to make important hires now and take risks that can propel their work forward. And while that may seem obvious, it’s not always so for donors who haven’t been in the fundraising chair.

We communicate with intention.

People often ask how we develop open lines of communication with our grantees. It starts with simply having the conversation at the outset about what kind of funding relationship you intend to have. Letting them know they can share the good, bad, and the ugly—without consequence—and letting them know they should decline things we offer if they don’t need them. “If we offer to send you to a conference and it’s not a priority, please tell us. You won’t hurt our feelings!”

Intentional communication is important to shifting the power dynamic. Small actions and words communicate how we see our respective roles, and who holds the power. For example, when we meet with our grantees, where does this happen—at our office or theirs? When we conduct due-diligence, who spends more time on the process—us or them? We make a point of saving grantees’ time by meeting at their offices, and asking only for documents they already have for diligence and reporting. We are in service to these incredible people who are impacting our world. We are powerless to fulfill our mission without them.

We value honest feedback.

We once asked a new grantee to articulate its milestones for the next 12 months, and in an effort to keep it simple and make the team’s life easier, we requested that they submit just one page. When they sent the one-pager, they told me, “Here it is, but making it three pages long would’ve actually been easier!” I was glad they spoke up—though our intentions were right on, the request should have been about communicating the organization’s milestones in the easiest way possible.

Honest and regular feedback from grantees is critical, but it can be hard to get. Tools such as the Grantee Perception Report by the Center for Effective Philanthropy are great and go very deep, but we need more safe, simple, and accessible ways for grantees to rate and critique their funders.

It recently occurred to my colleague Jessamyn Lau that using a feedback system similar to Uber taxi service—where both the driver and passenger rate each other, establishing a level playing field of respect—could be a way to solicit feedback on the performance of our foundation’s and staff’s performance. Right now we are developing a simple feedback tool that will allow anyone who interacts with us to immediately and anonymously rate their experience, with results given to us at the end of a year.

We encourage grantees to make the rules.

In the world of grantmaking, the funders typically make all the rules. But what if, for example, nonprofit websites had a section listing the kinds of funding they do and do not accept? “We don’t accept restricted funding, as it can hamper our ability to innovate and achieve our mission.” Or what about reporting? “We distribute a quarterly report to all of our investors, which includes all of our performance metrics and updates.”

We are part of a funder collaborative called Big Bang Philanthropy, where our shared grantees issue the same quarterly reports to nearly all of us. We’ve encouraged other organizations to do the same. Not all funders will accept this style of reporting, but, for those who will, it allows grantees to spend less time on reporting and more time running their programs. As grantees streamline their accountability to funders, they will ultimately have a cohort of committed supporters who are bought into the vision the grantee is setting, rather than their own.

In the spirit of learning from those we serve, I’ll close with the words of Rob Gitin of At The Crossroads (ATC), which helps homeless youth move forward in their lives via unconditional and long-term relationships. Many agencies serving the homeless have so many rules that clients feel they have to “game the system” to get help; ATC focuses on building relationships of trust to facilitate the best support for the youth it supports. “They shouldn’t have to lie to be better-served by us,” Rob told me. “Without a foundation of honesty you can’t serve them.”