The word “impact” gets thrown around a lot, both in our profession and by the general public. We all have a general idea of what “impact” means, at least what it means to us.
Grantmakers use the term “impact” in two important, distinctive ways that affect your grantseeking.The first usage of impact is the one most grants professionals are familiar with — asking applicants to describe what the impact will be of the proposed grant-funded activities.
To us, the discussion about metrics and demonstrating outcomes is not new. Some funders have been moving in this direction for several years now. What is happening is that this way of thinking continues to trickle down from state and federal government funding agencies, to national foundations, until now it is reaching smaller, local and family foundations. Good for them.
The second way funders use “impact” is to emphasize that they want to achieve “impact” with their funding. Of course, they have always wanted to achieve impact. But in today’s economy, this often really means, “We are reallocating our giving so that we can make a few big gifts instead of lots of small grants.”
There are many reasons funders do this . Mirroring the population of individual donors, foundation staff and boards want to be more “strategic” in their giving. Never, ever forget that “foundations” are run by people. There is quite a bit of donor research out there that tells us what motivates people to support causes and explaining how donor motivations and expectations are shifting today.
At the foundation level, the strategic rationale for reallocating grant making into larger grants grows out of the concept that making a few, larger grants will have more “impact” than sprinkling the foundation’s limited grant making funds among several smaller organizations.
One ironic outcome of the economic downturn is that the sheer number of nonprofits who have had to cut services or staff or who struggle to remain openseems to prove to foundations that making a few small grants to many organizations is a poor investment. A grant won’t keep the doors open of a fiscally unsound agency. It only prolongs the inevitable.
Other rationales come into play as well. For example, foundations have also had to reduce staff. If you are making fewer grants, it doesn’t take as many people to manage your grantees. Or, we may suspect that some funders go for one or two high-profile gifts because they want the publicity. That’s their right.
We have always said in our profession, “they who have the gold make the rules.” Foundations are perfectly within their rights to give one giant grant per year that maxes out their funding budget, if that is what they think will get them the most “bang for their buck.” This is a continuing trend we are going to have to keep watching. We are only now beginning to feel the effects of more and more foundations reconsidering their giving policies and reducing the number of their grantees.
Larger agencies with regional or national reach might benefit from larger grant awards. Ensure you have excellent relationships with your long-term funders, that you are up to speed on what inspires them, and come into meetings with big ideas. Are you the one they call when they want to do something new?
Smaller agencies may see a decrease in grant funding or in the number of funders supporting them. A program officer on a funder’s panel just two weeks ago declared that their foundation will be reducing its number of grantees.
It’s not all doom and gloom if you are a smaller agency. However, you will have to be prepared for a possible drop-off in grant funding. You will likely have to work harder for smaller grants from more local funders. And you need to get creative about partnering with other agencies to increase impact.
Succeeding in the New World of “Impact”
1. You must absolutely be able to tell a compelling story
2. It’s essential to link the funder’s grant to measurable impact
3. Invest in better tools or skills for you to measure and report impact
4. Seek opportunities to collaborate and partner to extend impact
Please share your thoughts and concerns about shifting giving allocations.