In the nonprofit sector, collaboration is the key to scaling impact. While there are many forms of collaboration (with the private sector, other nonprofits, community stakeholders, etc.), relationships between grantors and grantees are among the most important. Nonprofit-grantor relationships are integral to the conception, implementation, and assessment of programs, which is why it’s vital to make these partnerships as healthy as possible.
Grantors are increasingly emphasizing accountability and transparency in their relationships with nonprofits, which means they’re taking a more active operational role than ever before. Nonprofits should welcome this involvement as an opportunity to develop strong working relationships with grantors. The shift toward capacity-building is another clear trend in the sector, and collaboration can help organizations bring all available resources to bear on their efforts to improve financial management, performance tracking, and other critical capacities.
With these facts in mind, let’s take a look at a few of the ways nonprofits and grantors can make the most of their relationships.
Focus on capacity-building
Almost 90 percent of nonprofits have annual budgets of less than $500,000. This is one of the many reasons organizations need to be capable of using their limited resources as efficiently as possible – a fact that grantors are increasingly realizing.
According to the Center for Effective Philanthropy, 60 percent of foundation leaders say they provide some grantees with capacity-building support, which is intended to help them streamline their operations, invest in staff, improve fundraising, and address communication issues.
However, just 23 percent of foundations provide capacity-building to more than a quarter of their grantees. This is a reminder that nonprofits need to make a compelling case for capacity-building grants, while funders should recognize that this form of support will build stronger organizations and ultimately lead to greater impact.
Considering the fact that 82 percent of nonprofit leaders who’ve received capacity-building assistance say it was “very or extremely helpful,” it’s clear that grantors should be having serious discussions with grantees about how that support can be deployed most effectively.
Make frequent and open communication a top priority
One of the most pressing problems in the nonprofit sector is the fact that organizations aren’t reimbursed for the indirect costs they incur when they provide services. While foundations and other grantors attempt to account for these costs, a report by The Bridgespan Group found that “grantees’ actual indirect costs nearly always exceed these allocations.”
This phenomenon, which has become known as the “nonprofit starvation cycle,” could be addressed with more upfront and consistent communication between grantors and grantees. Nonprofits and grantors should work together to determine what the actual cost of their programs will be and make adjustments in real time if conditions change.
Communication isn’t just important for financial planning – it underpins every element of a healthy relationship between nonprofits and grantors. From donor outreach to operational planning, nonprofits and grantors should communicate regularly and take advantage of their respective networks to scale impact quickly and sustainably.
Don’t ignore the private sector
At a time when consumers have never been more focused on corporate social responsibility, more and more brands are looking for opportunities to engage with communities and take action on issues that matter. Nonprofits should leverage this shift to build relationships with companies that want to be change agents.
As companies explore the ways they can get involved, they often look to organizations that already have on-the-ground experience working in communities at the grassroots level. This is why nonprofits need to have processes in place to solicit and deploy support from the private sector. Nonprofits and grantors can also educate companies on their programs and how to contribute most effectively.
Collaboration has always been indispensable in the nonprofit sector, and the opportunities to bring organizations, companies, and communities together around a common set of goals are only going to increase in the coming years. Nonprofits and grantors should take the lead in demonstrating what successful collaboration looks like.
