Many foundations report receiving hundreds more applications at a time when demand for services is rising. Communities can help build a better granting system, Kyle Empringham says.
The non-profit sector is facing a new financial reckoning. From trade wars to standing threats to the fundamentals to our democracy, the compounding crises that are thrust upon our socioeconomic systems have created an incredible amount of uncertainty.
In times of scarcity, those who have capital and resources tend to either hold steady or scale back their expenses to preserve their own interests. The problem? This trend fuels an uncomfortable paradox: that non-profits working to solve social and environmental problems need more when economic times are rough. Not only does the demand for core services increase; it often costs more to maintain the services that communities have begun to rely on.
This year, we’ve seen these pieces come to a head. Lumiere Consulting convened more than 70 funders in Canada to talk about the state of funding; namely, they focused on those that have an open call for applications. The results have been staggering: many foundations reported getting hundreds more applications year over year. Foundations that were used to individually adjudicating applications now found themselves with piles that were five to eight times larger than the year before. As the fundraising lead at The Starfish Canada, I’ve heard this conversation from so many funders and collaborators this year that I’ve lost count.
There are numerous factors that might play into this result. Many professionals in the field have pointed to a cutback in federal funding; when government funding fluctuates, organizations may be forced to pivot to another source to sustain operations. Another theory relates to the onset of artificial intelligence, which significantly reduces the time non-profits need to complete an application, making the concept of grant applications more accessible.
No matter the cause, the results are clear; unless funders decide to increase their annual disbursements, success rates for open grant streams will decline, and the services communities rely on will continue to falter.
For every 100 applications, 99 would be rejected. For those funders that don’t offer feedback, that time and effort may feel wasted for unsuccessful applicants.
Lumiere’s research confirmed that success rates for multiple funders have plummeted, with some recording rates around 1.5%. For every 100 applications, 99 would be rejected. For those funders that don’t offer feedback, that time and effort may feel wasted for unsuccessful applicants.
As principles of economics suggest, some scarcity can be helpful – especially if it fosters innovation and new ways of thinking. The Vancouver Foundation grappled with the inundation of requests after it released a call for the Transforming Systems Grant. The foundation’s solution randomized the order in which expressions of interest were read, then adjudicated whether each EOI qualified for a full application until a threshold was met. The problem? Hundreds of applications were left unread. If we assume it costs, on average, $1,000 of time to write an application, that means hundreds of thousands of dollars in time and money were spent in the non-profit sector on applications that were immediately discarded without a single staffer reading them.
While economic systems underlay these issues, we need to investigate the imbalance of power between charities and those who fund them, particularly in how we design systems that support the sector. If the Vancouver Foundation had taken a full-systems approach to a granting stream about transforming systems, it would have been clear that its process would cost the sector an inordinate amount of money.
When we root community in our decision-making, and when we believe that charities deserve to work in abundance, incredible relationships are possible. Three thematic solutions come to mind:
- Let community decide where funds go. Some funders dedicate funding to a granting stream but let the decision be made by a completely Indigenous circle of community members. From what I’ve heard, these circles approach decisions with generosity and deep gratitude for the lands and people that steward them. And from a funder’s perspective, power is distributed in the community while mitigating the risk of a “bad investment.”
- Fund while learning. As Future of Good contributor Thi Dao writes, funders can, and should, distribute funds when they’re not completely sure if the funding fits current or emerging priorities. Giving funds to groups where they can learn more about a sector simply through being in closer relationship with the grantee can be an incredible way to distribute power. If the relationship is set up well, a funder distributes power not just through funding, but through the humility of not knowing the answers or even expecting a certain kind of impact. The Zero Emissions Innovation Centre did this with The Starfish Canada, and as Sarah Lucina, ZEIC’s director of grants and strategic initiatives, told me, it helped them understand their priorities as a new funding stream came online.
- Fund quickly. The Canada Revenue Agency doesn’t mandate that a funder needs to take four, six, or 12 months to decide if an organization should be a grantee. It is organizational policy, rather, that gets in the way. When we see a need for emergency relief for natural disasters, we often deploy as fast as we can. If we’re currently working in a crisis – if we’re facing runaway impacts from climate change and a democracy that’s at risk of losing its resilience – shouldn’t some form of fast funding be the norm? (Shoutout to the Minnesota Council on Foundations, which has figured this out for its democracy funding.)
