Funding collaboratives

What is a funding collaborative?

Grantmakers can collaborate in many ways. At the most basic level they may come together, at a conference for example, to share information about what works well, and lessons learned. Other than a shared sense of purpose, these ad-hoc collaborations don’t require any specific planning or alignment of goals. Another approach might be for grantmakers to come together to workshop a specific issue or problem. This approach requires a degree of coordination and communication, but grantmakers initiate their own individual grants processes.

A funding collaborative is a more permanent and involved arrangement whereby grantmakers with a shared purpose pool their funds and work together on the development and implementation of a collective grantmaking strategy.

Why collaborate?

• Scale of problem is bigger than any one funder – There are always more projects to fund than there are dollars to spend. If grantmakers fracture their efforts, then no initiative will get enough support. Grantmakers working in isolation also run the risk of duplicating efforts or creating funding gaps. If grantmakers are able to overcome the barriers to collaboration, then we are able to have a greater impact than we could have as lone funders.

• Improve efficiencies – The current economic downturn as a result of COVID-19 will reduce the ability of not-for-profits to fundraise and may also affect the endowments of philanthropic funds. In a resource-constrained environment such as this, funding collaboratives are a way to improve efficiencies and maximise the impact of limited funds in a challenging economic climate.

• Share risk – Being a member of a funding collaborative allows grantmakers to share operational and political risks. For example, a grantmaker acting alone might be reluctant to spend a lot of money on an innovative or risky project for fear that it might not deliver the desired outcomes. A funding collaborative is made up of a dedicated funds from multiple grantmakers, so its purpose can actually be to take risks. Funds invested by members are the ‘risk capital’ which can be used to invest in bigger, more innovative projects that no one grantmaker would be able to fund alone. Similarly, a funding collaborative’s broader membership spreads the political risk across all members, allowing effective advocacy, particularly in contentious or politically sensitive policy areas.

• Opportunities to leverage knowledge – The collaboration of many experienced grantmakers brings diverse knowledge and expertise. Funding collaboratives are able to leverage the unique skills, knowledge and expertise of members.

• Handle giving that’s outside the norm – Funding collaboratives are an opportunity for grantmakers to contribute to a cause or issue that doesn’t directly fit with their mission, but that is adjacent to their main funding priorities.

What are the challenges?

• It’s hard – funding collaboratives are challenging. Having multiple funders, each with their own strategic plans, procedures and agendas, adds an additional layer of complexity that needs to be actively managed.
• Sharing power – decision-making authority also needs to be shared. When entering into a funding collaborative you should do so in the knowledge that things aren’t always going to be funded your way. Collaboration requires compromise.
• Herding cats – Funding collaboratives take time and resources to get off the ground. The more members, the more time and effort are required to get things under way. Scale is important. Your funding collaborative needs to be at a sufficient scale that the benefits justify the time and resources needed to establish and operate it.

What are the key considerations when starting or joining a new funding collaborative?

• Strategic alignment – When considering joining a funding collaborative, you need to ensure that you have sufficient cultural and strategic alignment with the aims and members of the group. Likewise, your funding collaborative partners need to feel similarly aligned to you, so that they are happy to have you.
  
• Flexibility – A successful funding collaborative requires alignment and also flexibility. When contemplating a funding collaborative, consider how much is each party prepared to change or compromise as circumstances change and knowledge emerges.
• The elephant in the room - A differential in the amount of funding each member contributes can create unspoken issues and affect the power dynamic of the funding collaborative. If one member is bringing significantly more funds to the table than others, it may result in an implicit power imbalance. It’s important to explicitly address this potential issue from the outset and devise agreed decision-making protocols.

What is the difference between a clearinghouse and a funding collaborative?

A clearinghouse, such as that run by the Australian Environmental Grantmakers Network (AEGN), serves a different purpose to funding collaborative. A clearinghouse is a place where grantees and projects can be connected to grantmakers and can respond to ideas as they emerge, whereas a funding collaborative establishes a dedicated pool of funds and then develops a collective strategy to invest those funds.

For more information on Dr Jason Franklin visit https://www.jasonfranklin.org

For more information on the AEGN visit https://www.aegn.org.au