When thinking about funding and its impact, it’s easy to assume that big grants are the ones that truly move the needle. In my experience, that’s not always the case. Under the right circumstances small to modest grants, under the right circumstances, can generate big results.
Beyond my responsibilities at Propel Philanthropy, I also manage a fund committed to providing capacity-building grants to nonprofits for over half a decade. While these funds went almost exclusively to social impact infrastructure organizations — those supporting the philanthropy, nonprofit, and civil society sectors — the strategies and principles apply across a broad spectrum of organizations.
Creating the Right Circumstances: Over the last five years, I have honed approaches to identifying those right circumstances.
These involve:
Identifying organizations with challenges that can be met with small grants: For example, nonprofits with needs fulfillable within a 15k to 120k budget range.
Focusing on identifying catalytic opportunities: This approach involves giving greater importance to the opportunity to achieve social impact and less to the specific theme, geography, or implementation strategy. You will find examples by following the link to stories at the end of this blog post.
Valuing charisma: Recognizing the importance of charisma when hiring a development person or leader. Admittedly, this is a subjective and non-scientific approach. However, one can also review the track record of the person being hired.
Considering readiness: It is important to evaluate an organization’s readiness for capacity building, particularly before hiring development staff, and to have realistic expectations before providing grants.
Building trust: Building trust requires establishing a relationship with grantees, respecting their expertise and proximity to the problems. However, I do engage as a thought partner because sometimes I have a perspective they haven’t considered.
Embracing risk: I’ve Adopted the mindset of a venture capitalist who understands that while some investments might perform below expectation, the ones that succeed will far outweigh those that don’t; this has undoubtedly been my experience.
Mitigating Risks
Risk management is critical when investing in organizations. Shared responsibility is a strategy I’ve employed by agreeing to fund only part of a requested sum, with others contributing the remainder. I’ve also found that creatively lessening the size of a grant can reduce risk. For example, instead of funding a full-time assistant, an organization may agree that it could benefit from bringing on a part-time volunteer coordinator who could also assist as needed. One way to prevent creating dependency is to set up a scale-back type agreement over several years. For example, a funder might go from 100% in year one to 80% in year two, and so on.
However, I should add that I have been managing a very small fund in relationship to most, and I would have given much more liberally if that was not the case. If possible, the more we can do to enable a promising nonprofit to grow, the greater the potential results. Some of the conservative approaches just mentioned may be particularly helpful for a funder that wishes to “get their feet wet before jumping in.”
Conclusion
It’s my firm belief, backed by years of experience, that modest grants can drive big results. And by “big results,” I mean the kind of transformational change that enables organizations to grow and increase their capacity to serve.
Check out our collected stories for real-life examples on how modest grants have driven big results. Please keep checking back as Propel Philanthropy adds more examples of catalytic capacity-building funding.