Thought Leadership

Helping Funders Drive Impact Beyond Grants

This is an abridged version of a post published on Arabella Advisors' Greater Good blog.
Philanthropy is undergoing a sea change: Social entrepreneurs, change agents, and impact-minded donors are using a wider variety of tools to pursue the social good they seek. They are going beyond grantmaking to amplify their impact.
This change brings exciting new opportunities, but it also brings new challenges. Among them: the need for foundations and other funders to operate effectively in areas that may be outside their core competencies. Recently, three of my Arabella colleagues — Gwen Walden, Lauren Marra and Katrina Briddell—explored this challenge in an article for the Spring 2015 edition of The Foundation Review.
The article, "Going Beyond Grantmaking: Using External Help to Extend a Foundation’s Core Competencies and Increase Its Impact," uses a series of case studies to explore how funders can use third parties’ specialized skills and experience to extend their own capacities to do things such as develop effective impact investing programs, incubate new projects and organizations, facilitate collaborations that cross institutional and even sector boundaries, advocate for change and more.
Four takeaways:
  1. By going beyond grantmaking, funders can significantly amplify their impact—and consultants and other intermediaries can help. The authors note that “funders can effect transformational change at the systems level” through endeavors that go beyond grantmaking, but they also note that “taking on these endeavors is neither easy nor low risk.” Consultants and other intermediaries can help by providing issue expertise, technical acumen, and networking support, as well as additional capacity, external perspective, and skill implementing complex programs and unfamiliar vehicles.
  2. Experts can be particularly helpful for funders using innovative vehicles that enable more effective collective action. Working with savvy fiscal sponsors and experts in collaboration, innovative funders with overlapping but not-quite-identical missions are pooling their resources and generating shared impact—often more effectively than they could by going it alone. One of the keys to their success is working through intermediary organizations that have both the technical expertise to efficiently manage operational demands and the facilitation skills to build alignment with programmatic questions. Such organizations are enabling funders to work together quickly and efficiently to respond to emergent needs in our rapidly changing world.
  3. Funders have key roles to play in decision making and relationship management. Funders also need to maintain crucial relationships with stakeholders such as grantees, fellow funders, and partners from other sectors and take the lead on important communications. For initiatives that extend beyond grantmaking to succeed, funders should plan to invest the necessary time to maintain these relationships, while bearing in mind that all partners may be on comparatively unfamiliar ground.
  4. Funders have an increasing number of tools they can use to drive impact — as well as more opportunities to use multiple tools at the same time. “Sometimes,” the authors note, “the right solution is for donors to collaborate to conduct advocacy, which eventually leads to the need to incubate a new organization — which might wind up taking grants, making grants, deploying impact investments, or all of the above.”
Efforts that go beyond grantmaking can and often should go hand in hand with grantmaking programs. The point is to find the right mix of approaches to produce the outcome you seek.
Steve Sampson oversees writing and learning programs throughout Arabella, and engages on a wide range of client projects and external publications spanning the full range of philanthropic endeavor. He helps Arabella staff members synthesize information, generate insights, and create written products that efficiently communicate the ideas donors and investors need to maximize their impact.

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