Kathleen P. Enright
The economic crisis has had a major impact on the nonprofit sector, including the work of grantmakers.
We expect to face tough times - and tough decision making - well into 2010 and beyond.
But the economic crisis could lead to greater innovation, increased collaborations and stronger nonprofits.
Grantmakers play a vital role in helping to achieve this "silver lining" of these challenging times.
The economic situation has meant that nonprofits have had to rethink their strategies.
So, too, must grantmakers. It's not just about belt-tightening. It's about working smarter.
In the spirit of year-end list making, here are my top five recommendations for smarter grantmaking in 2010:
1. Increase support to high-performing nonprofits. It may be tempting to concentrate resources on the organizations in greatest need, but a better strategy is to focus on the strong rather than the ailing. In this economic climate, even the strong are struggling, so grantmakers would be well-advised to maintain or increase support to the highest-performing groups in their grantmaking portfolios.
2. Engage stakeholders. Grantmakers should reach out - and listen closely - to grantees to get a clear picture of what nonprofits are experiencing and a better understanding of the help they need.
3. Develop new alliances. Grantmakers want their grantees to collaborate. So, too, should grantmakers. The Obama administration is encouraging public/private partnerships to address pressing social needs. Grantmakers must embrace these opportunities and use the full range of their convening power to bring key players together to maintain progress on the issues they care about.
4. Provide flexible - and full cost - funding. Access to unrestricted funding can make or break nonprofits in this uncertain economy. Grantmakers might increase the amount of general operating support or release restrictions on current grants. And when making grants, grantmakers must make sure they consistently pay the full cost of services.
5. Commit to the "new normal." The cracks in the nonprofit system were visible prior to the collapse. Many nonprofits have scant unrestricted assets and no long-term reserve funds. Grantmakers often work in isolation from those closest to the problems they are trying to solve. The answers haven't changed, only the urgency of philanthropy's response. Grantmakers must provide more flexible dollars and cover overhead in project grants, engage more powerfully with grantees and fellow grantmakers, and ensure that the highest-performing nonprofits are well supported. These changes should not be viewed as short-term fixes in response to the economic crisis, but as part of the "new normal" for how grantmakers support nonprofit success.
Kathleen P. Enright is president and CEO of Grantmakers for Effective Organizations, a community of 350 grantmaking organizations committed to improving the effectiveness of their nonprofit grantees.