(or:  To get more impact from funding, first look in the mirror)

 In my last post, I explored how, once we factor in compliance costs to grantees, funders give considerably less than we think – and in fact some of our grant-making practices reduce the very impact we seek to make.  So what can we do about it?  Here are some practical ideas for streamlining compliance costs and increasing our community benefit:

•  Be clear about what won’t get funded – it is a waste of everyone’s time to receive applications that have little chance of success.  It isn’t hard to have clear criteria and to be available for open and honest discussion about things on the margins.  (Doing this well will reduce the number of applications we receive, which may also require letting go of feeling secretly pleased to receive lots of them! But funding is not a popularity contest…)

• Combine responsive and proactive funding.  Funding which anyone can apply for (responsive funding) is open and inclusive but has high compliance costs.  Funding which is invitation only (proactive funding) has lower compliance costs because of the much higher chance of success – but is limited by our understanding of who is out there doing great work.  A combination of both seems a good middle ground.

• Maximise multi-year funding.  You can’t change the world in a year.  You can’t even employ someone to change the world in a year.  Multi-year grants have significantly lower compliance costs and much better results.

• Allow flexibility in how the grant is used.  When we buy shares in a business we don’t tell companies how to use the funds; why then are we often so prescriptive in how grants are used?

• Use a two-step and scalable application processes.  A two-step process allows us to shortlist potential grantees on the basis of an initial, less time-consuming application.  And having different kinds of applications depending on the scale of the grant makes sense too – it’s much better for everyone if processes are proportional to the amount on offer and the chance of success.

• Track how long application and reporting processes take and calculate grant efficiency.  It’s easy to add a field to forms asking how many hours it took to apply, and from this we can calculate our funding efficiency using the formulas previously suggested.

•  Make grant reporting meaningful. For grantees, accountability reporting is usually just another irritating compliance chore, and the end result is often unacknowledged, sometimes unread and rarely used as a learning tool.  Many of us need to rethink our approach here.

We’ve been exploring these issues at Todd Foundation, and goodness knows we have a long way to go – but we’re making a start.  We have reworked eligibility and selection criteria; we provide 37% of our funding proactively, 48% for more than one year and 26% without any restrictions on how it is used; we use both two-step and scalable application processes (which take an average of 2 hours for an initial application, 5 hours for new proposals from previously funded grantees and 8 hours for proposals from new applicants).  We’ve also recently adopted Roundtable Reporting, where grantees report face-to-face in groups rather than through a written report.  And our next step will be to formally put in place new metrics like grant efficiency and community benefit efficiency.

It is a long journey and we’re still just starting out.  But one thing seems clear – if we want our funding to have more impact, we should first look in the mirror and review our own practices.