How can philanthropy be more effective in environmental grant making? (commentary)

How can we maximize the effectiveness of grant-making in the international conservation field?

This article is based on my experience in international environmental conservation, both as head of implementing nonprofits for 35 years, and as a foundation grant officer supporting in-country organizations for 15 years. I have witnessed both very effective—and ineffective—grant making practices, and would like to share my perspectives on best practices.

I have tried to make my comments generally relevant to non-profit grantmaking, but note that some of the lessons I outline are especially relevant to the international environmental conservation field.

For one, international grantmaking is cross-cultural, which gives greater importance to the need for grant makers’ expertise and direct experience in the cultural and political aspects of the recipient’s country.

Another is that conservation grantmaking typically tries to accomplish something contrary to the market forces that dictate much of human behavior, and so is more difficult to undertake successfully than most grantmaking, placing greater emphasis on the need for donor expertise, rapid responses, and flexibility.

Finally, grantee organizations in the developing world sometimes exist in an environment without laws supporting the social sector, or a tradition of non-profit giving, making it increasingly important for donors to value their time and administrative costs.

These are my seven key takeaways from nearly four decades of experience.

View the implementing organization as the client.

Possibly the overarching point I would emphasize concerns how a donor views their relationship with the implementing organization. The proper way, that achieves the best results, is to view the donee (not the donor) as the client. As without the donee’s effective work, a donor cannot accomplish anything; and the more the donee can accomplish, the more does the donor.

However, I have found that only about 20% of donors or foundation officers share this point of view and treat their donee’s time and resources with the value they deserve. Most foundations treat themselves as the client, i.e. they get to set the rules of the relationship to address primarily their own needs, timeframes and requirements. This fundamental rule permeates many of the following points.

Make your application and reporting procedures as simple as possible.

One of the most important things donors can do is to be acutely aware of the transactional and administrative costs it imposes on the donee in applications and reporting, and to reduce these to the greatest extent possible. If one is treating the donee as the client, it becomes more important to save the donee’s time collectively than it does to save your time as the grantor. While donors need to request adequate information in order to make good decisions and comply with legal requirements, they should develop application formats and reporting procedures that minimize the donee’s costs in time and expenses to the extent possible.

This is especially important when funding implementing organizations based in the developing world, as they operate in countries without favorable laws to nonprofits, and have limited funding sources. In particular, they have few opportunities to raise unrestricted funding that can support their administrative and fundraising costs, and so imposing unnecessary process costs on them weakens their ability to raise funds or purse the very mission you want to fund. As these organizations cannot support a large fundraising department, one is also often using up the time of the lead people of the these donee organizations in the application and reporting process, which takes their valuable time away from accomplishing the mission.

Some items to consider are:

• Requiring applications to clearly articulate goals and cover defined subjects, but allow the applicant to use their own format; you will find such applications often make more sense and take less time;
• Set out budget formats that define relevant categories of expenses but not detailed lists; and
• Allow grant reports to be in flexible formats as long as they contain the required information on grant activities and progress towards goals.

One of the reasons to have flexible application and reporting requirements is that conservation projects are typically trying to do something difficult, like create a new protected area, change laws or policies, or convince a population to do something differently, i.e. more sustainably. This requires deep involvement with the social and political issues of a place that are changeable, and mean that project goals, strategies and methods may have to continuously evolve in an adaptive management space. If you have chosen your donees wisely, they will know a lot more than you will about how to spend the budgeted funds to achieve the mission objectives, especially as circumstances change. Putting the donee in a straitjacket reduces program effectiveness.

In my experience I have not found that a lot of added detail in the application process has led to better results in field implementation. The likelihood of success of a conservation grant has a lot more to do with the people involved and the character of the organization, and how will they deal with the politics and communities involved in the developing country. For that, a foundation needs good staff who can identify the right grantees, not detailed descriptions of what the applicant hopes to do. There is actually something of an inverse relationship between implementing organizations who are effective on the ground and those that can write good proposals, as the truly effective organizations spend their extra money on program, not fundraising staff.

Also, the more expertise a donor has, especially the program staff, the more confidence they have that the chosen donee organization cares about the results as much as you do, and will handle the money wisely.

Consider programmatic grants

With donees with whom one has experience and trust, consider programmatic grants that set out broad goals and objectives in a defined program. This ensures that you are getting what you want while allowing grantees much more flexibility in how to achieve it. If you have picked the right grantees, they will be able to do a lot more with your money than with highly specific project grants.

My organization once received a multi-year grant to support a general program to create regional protected areas in the Peruvian Amazon. This allowed my organization to allocate resources to the highest priority areas, create the long-term relationships with communities that are needed for lasting conservation results, and allowed us to both jump on new opportunities or quickly shift priorities when politics changed, so as to maximize results. I estimate this flexibility resulted in 50% more programmatic results than we could have achieved with a more restrictive grant structure.

Recognize the need for a timely or rapid response.

The speed in which a grant is made can be a huge factor in grant effectiveness, but very few foundations pay adequate attention to the need to make a fairly rapid response. The ability of a foundation to act quickly can significantly increase the effectiveness of its grant making, sometimes manyfold.

Especially in the international conservation field, the best projects arise when there is an alignment of social or political factors that allows a project to move forward (i.e. a president, mayor or community decides to do something), or an opportunity emerges to protect a natural area or species (i.e. a new program is launched or a landowner wants to sell a key parcel). These are transient, and will exist for only a limited amount of time. The good implementing organizations can identify these opportunities, and foundations need to be able to respond in a matter of 3-6 months if they are to truly to maximize the benefit of their dollars in helping the implementing organization succeed in realizing them.

To take advantage of these kinds of circumstances, one needs to provide funding within 3 to 6 months of grant initiation, which is vastly different from the 18-month typical process cycle for most foundations. This relates to the concept of “who is the client.” If the foundation regards itself as the client, it costs it nothing to go through a long procedure that dots all the i’s and crosses all the t’s; but externally, in terms of mission accomplishment, it can cost everything, as the opportunity can be gone in the 18 months it takes to process a normal grant.

Acknowledge that longer-term grants can significantly increase effectiveness.

One-year grants are rarely adequate to achieve an effective result in the international conservation field. Two to three-year grants are more appropriate for most conservation projects, and its better if they can be renewed to last for four to eight years. There are a number of reasons for this, some internal to the implementing organization, and others external or programmatic.

Internally, it’s difficult to hire and maintain staff based on one-year project funding, and having capable long-term staff is the essence of success for an implementing organization. This is especially true for tropical conservation projects, as implementing organizations in developing countries have very little opportunity to raise unrestricted funding, so project grants tend to sustain their activities. It is almost impossible for them to survive with one-year short-term project grants, given the vagaries of project funding and the proposal process, and donors need to be aware of this in providing longer grant terms that allow the NGOs to maintain good staff.

Externally, most conservation projects require working with communities or political actors to achieve results, where one needs to first build trust with the community or administration and then implement project actions, which may take several years. In fact, many conservation projects may require a commitment of four to eight years by the implementing origination to build trust with the communities or local actors, implement the project, and then develop the capacity in the local actors to sustain the project into the future. Donors should orient their funding around this reality.

Fund indirect costs (overhead)

Donors absolutely need to fund the legitimate indirect costs (overhead) of implementing organizations, or else they weaken instead of strengthen that organization. All organizations have legitimate overhead costs that support their financial operations and accountability, proper administration, and the leadership and general costs that cannot be avoided. It is essential that donors pay these as a proportion of their grants, especially in developing countries where organizations have very limited alternative sources for these funds.

Note that I am talking about indirect costs in the range of 10 to 15% of budget, to pay for the essential operating functions of an organization. Many large NGOs in developed countries now have much greater indirect costs, sometimes exceeding 25%, to support their major fundraising and outreach efforts. I am not suggesting paying for these, I’m just noting the necessity of donors to pay for the basic indirect costs that allow an organization to function.

Leverage donor staff expertise

Larger donors such as foundations are far more effective if their program staff has significant knowledge and experience in the subject matter for which they are granting. For one, how well the donee can write a proposal can have little to do with how well they can execute on the ground. Also, achieving many conservation projects typically involve a complex interaction between biological, economic and social factors. Having experienced staff is therefore essential for a foundation to make good judgements regarding a project’s inherent worth, probability of success, and relative cost.

In the international conservation context, there are added requirements for donor expertise, as working cross-culturally places even more reliance on the donor’s ability to understand the culture, economics and social mores of the country in which it is acting. In my experience, this kind of understanding can only be achieved by program staff who speak the language of the subject country and have spent several years working on and ideally living in the region.

I would like to take note of two tendencies that I think are counter-productive. One is a tendency for foundations to require more process the less expertise there is in its program staff, as if additional detail will make up for a lack of ability in judgement. The problem is that there are a lot of NGOs that are adept at writing good proposals, but not at achieving on-the-ground results, so one really needs people with experience to distinguish between great-sounding proposals that will achieve little, with those that will be effective.

The other is a tendency in some foundations to hire people from the for-profit sector to work in a non-profit donor or implementing organization; this is rarely effective. For one, in any field, the more experience and knowledge one has, the better one can execute programs. And, the two fields are fundamentally different, in particular the need to focus on mission accomplishment instead of revenue generation, the need to be collaborative instead of competitive, and to hire internally motivated staff instead of externally motivated. The recent trend of putting for-profit people in management positions of nonprofit foundations organizations is especially damaging, and has led many of the larger groups to be fundamentally less effective than they once were.

Conclusion

To summarize, my advice to grant-making institutions working in the international conservation field is to treat the donee as the client, fund programmatically, create grants for an adequate amount of time to achieve program goals, and provide grantees with a relatively rapid response.

In the international field especially, developing program staff that have deep experience in the grant-relevant circumstances and cultures of the countries in which you fund is especially important. It’s also important and relatively easy for donors to simplify the application and reporting process.

If the donor views the donee is the client, it will be acutely aware of the benefits or costs of each of these elements to the donee, and it will internalize these to create a balanced relationship that takes into account the legitimate requirements of both donor and donee.

Many of the ideas expressed in this article are in line with the principles of “trust-based philanthropy,” which advocates less emphasis on process and more on developing a relationship through evaluating the character, expertise and achievements of the donee organization. This relates to an essential point I made earlier: How do donors exercise the power relationship in which they have the funding—by regarding themselves as the client, or the donee? Because donee organization is going to be the one that does the work, donors should place the donee’s foremost.

Byron Swift serves as Senior Advisor for wildlands at Re:wild. Over his career he headed Nature and Culture International, Rainforest Trust and IUCN-US, and worked as a private foundation officer.

Article published by Rhett Butler

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