Running a great grants program is not as simple as signing cheques and handing them out. Ill-considered grants are likely to be a waste of money and can even be counter-productive. Design your program thoughtfully to maximise your impact.
What are we talking about when we refer to program design?
Very broadly, program design captures how you want your grants program to run. It's the overall ethos - the big picture. If you want to get into the nuts and bolts of structuring your program, take a look at the help sheet Program Design Framework.
Choosing a strategy
The most common structure for a grants program is a competitive process where grants are handed out in response to needs described on application forms.
The US Council on Foundations outlines this and four other grantmaking strategies in its paper Comparing Grantmaking Strategies:
- Responsive grantmaking - accommodating requests that fall within the grantmaker's mission and guidelines.
- Strategic grantmaking - directing grants to address specific needs, with a defined impact in mind. You are not limited to one grantmaking model. Responsive grantmaking, for example, can be considered strategic.
- Proactive grantmaking - identifying organisations or programs that target specific issues the grantmaker is interested in and wants to fund over a three- to five-year period.
- Initiative grantmaking - goes one step further and can involve collaborating with other funders or community partners and investing significant money and time to address a specific issue.
- Collaborative grantmaking - working with other funders on specific areas of interest that all agree to support.
Deciding which issues you want to address
In deciding what issues to address, it’s good to start with your organisation’s overall mission and vision. You should be able to draw a clear line from your organisation’s strategic goals, to the issues you choose to address, and the outcomes you are seeking.
When you're trying to decide where to direct your funding, it can help to undertake a scan of the funding landscape. This can help you to identify where your support can be especially effective, where you can help to develop a new direction or innovation, or where you can work with others to accomplish something bigger than you could manage on your own. Consult the help sheet Funding Landscape Scan to find out how to go about it.
If you're considering making education-based grants, for example, you will probably find that there are immediate needs to be filled - such as giving individual children the resources they need for school - but also systemic issues that need to be addressed to break the cycle of disadvantage. You might decide that you want to fund advocacy as well as interventions.
You will need to consider what you want to exclude as well as what you want to include in your program. Many grantmakers explicitly exclude religious groups and activities, for example. It should be understood, though, that many religious organisations do great secular work in the community. You should draw a clear distinction between the purpose of the applicant's program (which you assess for funding) and the identity of the applicant.
There are no absolutes when it comes to the legalities of grants programs exempting religious groups or grants for religious purposes, but it is possible that such exemptions could be viewed as discrimination. You should:
- clearly explain your eligibility criteria, including any exclusions, and why they are in place
- distinguish between the organisation that applies for a grant, and the project, program or activity for which it seeks funding
- evaluate applications based on how they comply with your funding priorities and how they fit with your funding criteria
- conduct background checks when new applicants apply
- have solid grounds for your decision to fund or not to fund an organisation, and make those grounds available if questioned.
Balancing your portfolio
A balanced grantmaking program reaches all sectors of the community, seeks diverse outcomes, and doesn't fund two similar projects in one community.
Balance means spreading your grants between new grantseekers and those with whom you have an established relationship. It means spreading grants between big and small groups.
To ensure diversity you can convene advisory groups with representatives from across your community - youth groups, for example, and groups from culturally and linguistically diverse backgrounds. You also need easy-to-use application forms.
As a grantmaker you are challenged with striking a balance between competing forces:
- between high-profile, whole-of-city interventions, and small, local or emerging projects
- between providing a few grants that have a big impact, and providing more and smaller grants
- between what you consider to be your area of responsibility and what you consider to be the responsibility of others. You might go outside your traditional area of responsibility in order to address a high-priority need, for example, or to put pressure on government or other levels of government.
In balancing your portfolio, you might decide to allocate some of your funds to groups that do not have deductible gift recipient (DGR) status. You can find out more about doing so in the help sheet Unincorporated Associations
As well as providing much-needed funds, your grants program can encourage applicants to build on their own resources rather than become dependent on funding. There is a risk that when an organisation receives funding, other inputs - such as volunteer labour - fall away. As part of your application process or agreements you can encourage grantseekers to work together, or encourage them to increase the number of people they get involved.
Providing matching grants is a very explicit way of doing this. This means you match the amount that the grantee can raise itself in cash or in kind (up to a declared limit). If you choose to operate this way, though, there is a risk that some good projects will founder because matching funds are not available. To help to protect against this, you can provide the applicant with suggestions about where they might go to find the additional funds or support they need.
Grantseekers can sometimes feel very confused about whether a grantmaker intends to fully fund the delivery of a service, or only make a contribution. Where a grantmaker does not pay for full services, it can be tougher for not-for-profits to offer staff competitive wages, and to plan and invest in developing capabilities and attracting and retaining staff. Whether you are able to offer full funding and help to cover overheads on not, be absolutely clear about it from the outset.
Good projects sometimes fall down because of ineffective on-the-ground handling. Mentoring can help to counter any lack of inexperience in the community. You can put it in place from the outset of a project or you can call on mentoring when things flounder.
Effective mentoring requires:
- preparation. Think though what you want the program to achieve and how each aspect will be managed, supported and measured.
- careful selection of mentors. Not everyone makes a good mentor, and the mentee should be involved in the selection process.
- training of both mentors and mentees.
- process ownership. Mentees need to gradually acquire the confidence and skills needed to manage the relationship.
- post-training support. Mentors want and need access to continued expert advice on how to perform the role and develop their skills.
- effective measurement. This helps to keep the program on track and stimulates mentor and mentee good practice. It can be as simple as reviewing the relationship and what each party is gaining from it.
Setting rigid outcomes requirements can hinder community development. Sometimes it can be hard to see where a community development process will end because community development is about encouraging the community to set its own directions and engage in its own processes.
Placing too firm an emphasis on outcomes and objectives assumes that community development is a planned, clearly defined activity that can be aimed at achieving a particular end. But community sector work can be messy and unpredictable and if a desired outcome or objective is imposed, it can reduce the community's sense of ownership and cloud the funder's understanding of community needs.
So what can you do instead? Community development expert Jim Ife offers these tips:
- Express objectives and outcomes in general terms, preferably in terms of principles (such as maximising participation or raising awareness).
- Use funding guidelines to ensure that evaluative criteria develop as the project develops - grantees can be encouraged to define and redefine evaluative criteria in consultation with the funder.
- Evaluative criteria can be process-based; for example, requiring local participation in planning and decision-making, rather than specifying what decisions must be. Process becomes the outcome rather than a means to achieving an objective.
- Criteria can be values-based; for example, requiring a program to respect human rights and equity principles. The emphasis is less on what is achieved than on the principles embedded in the program.
- Accountability does not have to be financial. It can also relate to the quality of service, the way people are treated, whether or not a program is enjoyable, and so on.
Reducing red tape
Red tape refers to requirements imposed on grantseekers by grantmakers to ensure accountability, the meeting of which costs grantseekers both energy and resources.
While grantseekers do need to be accountable to some degree for the funds they are granted, problems arise when accountability requirements are unnecessary or disproportionate to the assessed risk or value of the grant awarded.