There is more than one way to power positive change in the world. And at a time when the need is greater than ever, grantmaking organisations understandably have to ensure their funding is distributed effectively.
Ordinarily, grantmaking can face a variety of challenges. There are concerns about how grantmakers can ensure they’re making the right decisions. Communities have endless needs and it can be a hurdle to decide which groups to prioritise for funding. Also, there are questions about how grantmakers can assess what is value for money.
So, with a plethora of worthy causes and only so much funding available, how can grantmakers be sure that they’re making the right decisions? How will they ensure that the funds are optimally utilised?
Here we dive into two approaches to grantmaking: strategic grantmaking and responsive grantmaking and the pros and cons of each as well as considerations into which better fits your program’s mission and goal outcomes.
What is strategic grantmaking?
Strategic grantmaking is a grantmaking style in which the funding organisation takes the initiative to lay out a detailed scheme to attend to a certain area of focus.
The funding organisation is saddled with the responsibility of taking the first steps and ultimately ensuring the actualisation of the grantmaking. The funder champions the cause, hence the style’s nickname of “proactive grantmaking”.
This method of grantmaking requires the funder to build relationships with the grantees and even other funding organisations. It also involves the use of best practices to ensure that the funds are properly utilised.
Usually, when funders adopt the strategic approach of grantmaking, they are committed to being on the frontline and are there for the long haul. Some grantmakers that have taken this approach are Grantmakers Concerned With Immigrants and Refugees, Grantmakers for Education, and Grantmakers in Health.
Pros of strategic grantmaking
Let’s consider the benefits of strategic grantmaking, such as:
- Strategic grantmaking accelerates learning and broadens the funding organisation’s knowledge about the target issue.
- Since all attention is on the target issue areas, the organisation can easily spot budding concerns in those areas.
- It boosts the funding organisation’s reputation and popularity for their significant contribution towards a particular cause.
- Strategic grantmaking boosts the possibility of making a remarkable impact on a particular issue.
- As a grantmaking style, it makes for smoother communication about the organisation’s exploits in a certain issue area.
Cons of strategic grantmaking
Strategic grantmaking, however, does have some shortcomings to consider, such as:
- Strategic grantmaking can be resource-intensive as time and funds are needed to conduct profound studies and create efficient schemes for successful grantmaking.
- It can be challenging to steer the funding organisation’s grantmaking ambitions towards different goals.
- It can restrict resources to only the target issue areas and avoid giving consideration to budding needs or concepts.
What is responsive grantmaking?
Responsive grantmaking is a style of grantmaking where the funding organisation receives and responds to proposals.
Instead of the funding organisation naming their cause, they solicit proposals and requests for funds.
This certainly does not mean that the funding organisation sits back and waits for grantseekers to make the move.
The funding organisation can invite proposals from various grantseekers. Applications that are found to align with the values of the funding organisation and otherwise qualify as a good fit will then be funded.
Responsive grantmaking is also a great fit for the growing trend of participatory grantmaking, where you include the community in your grantmaking decision-making process.
A great example of responsive grantmaking is the number of organisations that rallied around the COVID-19 crisis to provide a way for people and organisations in need to submit requests for funds.
Pros of responsive grantmaking
Here are some of the strengths of responsive grantmaking:
- It gives grantseekers improved opportunities to receive funds.
- Since it doesn’t require a great deal of pre-grant preparation, it can be easier to get started.
- It allows multiple ideas to enter the funding organisation, thus helping the organisation better connect with its community.
- Responsive grantmaking guarantees a swift response to emergencies and sudden needs.
- Responsive grantmaking can support a variety of grantseekers and areas of focus.
Cons of responsive grantmaking
As they say, nothing is perfect in this world. So, if it has advantages, it must have disadvantages as well. Thus, some of the drawbacks of responsive grantmaking are:
- Responsive grantmaking permits excessive proposals, giving the funding organisation a lot to juggle (though a good grant management software can help)
- It’s possible the funding organisation’s resources are spread thin across multiple issue areas, therefore decreasing notable impact in one specific focus.
- Since the funding organisation doesn’t really concentrate its efforts on one issue area, its body of work might appear unimpressive.
Which grantmaking style should you choose?
Having picked apart the strategic and responsive approaches to grantmaking and weighing their strengths and shortcomings then comes the question of which to choose.
Simply put, the choice of grantmaking style is dependent on the funding organisation, its mission and its desired outcomes.
The strategic approach will work better if the funding organisation is certain that it wants to make an impact in a specific issue area. Also, if the funder considers making numerous grants to be ineffective in yielding the desired outcome, a strategic style is ideal.
However, if the funder is indeed eager to show its support to the community through a variety of initiatives and seeks input and direction from the community, then the responsive approach is the answer. This is ideal if the funding organisation prefers to stay open to the variety of ideas springing forth from the community.
Additionally, responsive grantmaking works like a charm if the funding organisation is new to the scene and is unsure how best its funds can be distributed.
Strategic and responsive grantmaking, in tandem
While strategic grantmaking and responsive grantmaking seem like exact opposites, we must emphasise that they’re not like oil and water. That’s to say they are not mutually exclusive and can very well accommodate one another.
Therefore, a funding organisation can effectively combine both styles.
“How?” you ask?
Well, since responsive grantmaking works better for a funder wading into the waters of a new issue area, it will help the organisation gain the required knowledge. When the funding organisation has gained sufficient knowledge about that issue, it can proceed to employ a masterful strategic grantmaking scheme.
Both styles can also be employed where a funder divides its body of work. Strategic grantmaking could be used for one area, while responsive grantmaking could be used for the other. This way, the funding organisation will reap the benefits of both methods simultaneously.
What’s more? Responsive grantmaking, due to its flexibility, can help manoeuvre and support strategic grantmaking.
So, while these two methods of grantmaking are distinct, nothing stops you from making the most of both!
Power positive change, your way
You’re committed to doing good and bringing about social change in the world. But the decision on the best approach to your grantmaking comes down to you as the grantmaker, your organisation’s mission and the outcomes you desire.
Whether you choose strategic, responsive or a combination of both, your grantseekers and community will delight in the opportunity you provide and the possibility of funding for positive change.
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