This article comes from the winter 2018 edition of the Nonprofit Quarterly.
Based on outcomes, there can be little doubt that new approaches are needed to address the long-standing and intensifying global and national issues of racial inequity, economic injustice, and environmental disregard that have marked this past decade. Previous approaches have not been decisively effective in turning these tides; and although we might argue about why that is, there is at least a very good argument for trying something different philanthropically to dislodge the powerfully dishonest narratives that continue to exert a grip on our collective consciousness. There is a mounting urgency in the social sector, therefore, to examine our own histories of practice; to uncover and confront any ways in which we have reinforced or benefited from the flaws in our own practices and their supporting narratives; and to take on the necessary work of (finally) operationalizing our long-professed values of democracy and justice.
In our sector, grantmaking institutions, of course, hold enormous power, in that they can both model this necessary work, if they so choose, and scale it exponentially by financing nonprofit organizations to take it on as well. The Ford Foundation is advancing grantmaking practice in exactly this inside-out fashion with its BUILD program. Deployed in June 2016, BUILD provides large, five-year general operating grants with significant capacity-building support to nonprofit organizations on the front lines of social change in the United States and around the world. The scale of Ford’s investment—$1 billion to three hundred social justice organizations globally—is surely impressive, but it is BUILD’s ethos, structure, and accompanying practices that deserve study and replication.
Upending Grantmaking Practice
Before we move into the focus of this article, we want to revisit two drivers of current practice between grantmakers and grantseekers in the United States. One is the idea of the muted market, which is—put very simply—the reality that, in large part, nonprofits are paid not by those they are organized to benefit or represent but by a third party.
Simplistically, to thrive over time in much of the business world, institutions must please those who use their products or services. This is a fairly direct relationship. The user is the same as the buyer—and this is the customer. Businesses may be able to fool customers about what they deep down want and even sell them things that are not in their or the world’s long-term best interests, but even if they have many millions of customers, the basic relationship remains very direct.
In contrast, in many nonprofits the buyers can be different from the users. The buyer may be a foundation, a government agency, or even a base of individual donors—or some combination of all of these, purchasing services that will be consumed by someone else: a community theater attendee, a homeless person. This creates a potential, and too often lived-out, disconnection between what users (constituents) really want or need and what the buyer thinks they ought to have. There may be no, or at the very least a delayed, financial consequence to the nonprofit if it is unresponsive to constituents—beyond satisfying the buyer’s contracted requirements. Thus the voice of the user is “muted.” This also places the nonprofit in the morally vulnerable position of broker—the entity presumably responsible for the translation between what the donor/buyer wants to fund and what constituents really need.1
In the case of social change work, this third-party payer will often be one or a number of foundations. The problem in this structure is that the groups funded may find themselves responding more to the foundation than to their constituency. This may lead to a growing disconnect and lack of accountability between the organization and its power base—in other words, it may create a power suck in the very field in which power was to have been built.
The second driver is the infantilizing power dynamic that plays out between the grantor and the grantee. Look at it as the kind of curfews and controlling mechanisms that are used with adolescents. Short cycles of funding and accountability reinforce the primacy of that relationship, as does too much control over how resources are spent. The relationship, as it is currently constructed, is habitually and thoughtlessly power-laden, when in many cases funders might like to think they’d be happy to see the group as primarily accountable to its community. These notions about needed alterations in the deployment of grant funds are not new. For decades, numerous organizations, white papers, and conference panels have addressed the power of less restricted grants over longer periods to increase nonprofit effectiveness. Recall that Grantmakers for Effective Organizations (GEO) was founded more than twenty years ago precisely to lift up and encourage less restricted and more long term grants. And yet, data confirm that these practices remain rare and that their uptake has largely flatlined. According to the National Committee for Responsive Philanthropy, “Together, general operating support and multi-year funding are important in creating healthy and effective nonprofits. Unfortunately, there continues to be a severe shortage of these types of grants at a time when grantees need as much core operating money as possible both to help cope with funding cutbacks and to help offset the increased demands for services.”2 Thus, while the practices are not new in concept, the BUILD program feels radical because it actually employs them with vigor.
BUILD’s Intense Focus
If we were to see this moment in history as being a particularly intense struggle between advocates for democratic voice and equity and powerful but challenged systems of inequity, the degree to which movements can engage their bases and partners becomes absolutely critical.
In interviews with leaders of BUILD grantee organizations as well as with BUILD program officers, an exciting and synergistic set of dynamics emerges that responds to the urgency to advance democracy inside and among our institutions and across societies.
- Both the foundation and the grantees share an explicit equity-centered analysis of how democracies need to evolve, as well as a sense of the opportunities embodied in this historic moment.
- The foundation adjusts its grantmaking to better facilitate the work of nonprofits to accelerate social change.
- The nonprofit, in turn, is able to speed up its own cycles of programmatic development, but also works to ensure that its own organizational and network practices are aimed at creating an ever expanding and more vibrant base of connected political activists.
Regarding the third dynamic, Kathy Reich, BUILD’s director, noted, “In many cases, the promise remains unfulfilled or only partially realized. Ford has been far from perfect in the design or implementation of BUILD, and of course nonprofits haven’t been perfect either. I do think it’s necessary to acknowledge that there’s a difference between theory and practice, and that in practice, we may not achieve this virtuous cycle. We are learning a lot along the way, though, and I very much believe it’s better than what we were doing before.”3
Two years into the five-year commitment to the BUILD program at Ford, a number of lessons are emerging about how this form of grantmaking reflects and inspires deeper democracy in organizations, fields, and communities. These are drawn from early interviews with BUILD grantees and the excellent report on the program, Changing Grant Making to Change the World: Reflecting on BUILD’s First Year, published in November 2018.4
- Accountability is reproportioned. The grantee is more responsive to its field, network partners, external circumstances, and what it is learning than it is to its funder.
- Nonprofits have greater control of their resources. Funds can be used in fluid ways that create the most strategic leverage in the work being done—providing greater flexibility for adaptation based on learning.
- Organizational strengthening is on time, and makes sense to the organization. Strengthening encompasses the technical, inclusive, and adaptive work that drives impact and engagement. Grantees are able to better align administrative systems and organizational culture to their work as it develops.
- Financial security allows for risk-taking. With a more reasonable and secure base of financial support, grantees confidently take on risk and developing sustainability.
- Funder confidence is leveraged across the grantee network. The confidence expressed by Ford created a sense of momentum and safety that encouraged other funders to similarly and safely invest in that organization or one or more of its network partners.
We explore each of these further on, centering the voices of the nonprofit leaders in grantee organizations as they variously describe the particular dynamics and effects of BUILD funding in our current sociopolitical context.
Accountability Is Reproportioned
“For BUILD to work well…we have learned that it’s critical to start with the ultimate goal—the system you are trying to change, the policy win you are trying to achieve, the community you are trying to empower—and then give BUILD support to grantees who are your key partners in achieving those goals.”5
Again, the BUILD program affords its social justice grantees a five-year commitment of large, general operating grants, including funds directed to organizational capacity building. This grantmaking form creates a very different dynamic between the funder, the grantee, and the grantee’s field. Most nonprofits function in a muted market (as described earlier), where those who are meant to benefit from their work are different from those who pay for the work. This at the very least establishes interrupted lines of accountability; it also sets up a system that, in its typical practices, infantilizes nonprofits and, in turn, communities. Two of the most powerful mechanisms of this infantilization are short cycles of grantmaking and restrictions on the uses of grant money. Both have the effect of drawing the organization’s accountability focus to the funder, an antidemocratic dynamic that undermines constituent voice and power.
Sarah Johnson, director of Local Progress, a project of the Center for Popular Democracy (CPD), gave an example of how this constituent responsiveness showed up in Local Progress’s work in connecting progressive municipal government officials with community organizations:
The immigrant rights work that Local Progress launched in 2017 following the presidential election is a good example of where we were able to be responsive to our membership by launching a new body of work—in an area where the need was high—on an immediate basis. We were able to dedicate more capacity to it without, at the time, having identified dedicated funding specifically to support that work. Since then we have found additional funding streams, but that is an example of how we were able to lean in to the energy of our members to define a body of work that met their needs and priorities.
Johnson further underscored that democratic practices are inherently time and capacity intensive, in that they engage constituents at every step:
The amount of time it takes to build a new strategy in a constituency- and membership-based organization requires, in and of itself, a big chunk of capacity. We have built out member steering committees for all of our different bodies of work. Just building those to identify what the strategies are is a project. It takes time to do that and then define the strategies moving forward instead of having to try to backwards-build constituency-based strategies.
Being constituency driven is made far easier by not having to find funds before an organization can structure itself for—and respond to—constituents’ shifting needs and priorities.
Nonprofits Have Greater Control over Their Resources (and, by Extension, Their Programs)
“BUILD grants need to be large enough to make a difference. One error we made with some early grants was not making them significantly larger than past grants, to enable organizations to really think big and strengthen their own leadership, strategies, and systems. Our aspiration going forward is to make each BUILD grant at least 30 percent larger than past levels of support from Ford.”6
One of the most problematic issues in managing nonprofits for greater effectiveness is the fact that external revenue sources so often control how the organization’s cash on hand is allowed to be spent. This is, of course, not true for the revenue sources of for-profit businesses. The result for nonprofits of this external control of fungibility is that their ability to develop in a balanced, fluid, and responsive way is seriously undermined. The fact that BUILD consciously gives more money over an extended period and that the majority of those funds can be used for general operating allows the grantees to remain nimble and responsive to the environment, as well as to any needs that emerge as a consequence of organizational growth, leadership change, or necessary shifts in strategy.
The notion of “slack” can be applied here, though it is seldom used among nonprofits. Slack is “a cushion of potential resources which allow an organization to adapt to internal pressures for adjustment or to external pressures for change in policy, as well as to initiate changes in strategy with respect to the external environment.”7 In a fast-moving and volatile environment, where developments of all kinds are the norm rather than the exception, to not budget as a funder for slack is—as Woods Bowman termed it in his 2007 article, “Organizational Slack (or Goldilocks and the Three Budgets)”—tyrannical.8 Or, to put it another way, undemocratic.
Organizational Strengthening Is on Time, and Makes Sense to the Organization
“Not only does general support provide vital working capital to sustain and improve infrastructure, it also allows organizations to spend more time and resources on programming, planning for the longer term, and responding more quickly to new challenges or opportunities.”9
Nonprofits are often forced to develop special funding applications to resource the necessary infrastructure for their work as it increases in volume and complexity. These extra requests often suffer from a lag time. Sufficient capital on hand to address issues as they emerge cuts down on the need for potential leaders to ignore or delay capacity-building measures that could advance an organization’s work. Interviewees talked in depth about these measures being critical. Sometimes the systems are relatively standard (including, for instance, new CRM capacities), but sometimes they are more organic to the specific mission work of the organization.
For Race Forward, which is the coming together of the historic Race Forward: The Center for Racial Justice Innovation and the historic Center for Social Inclusion, BUILD funding came at a dynamic intersection of the organizations in a moment ripe with opportunity for advancement of their shared causes. The two organizations had often worked in tandem to end structural racism and to operationalize structural and racial equity. “Race Forward had a fabulous air game with a wonderful communications arm,” noted Jennifer Levison, Race Forward’s interim senior vice president of development and partnerships—“including the publication Colorlines and other narrative strategies.” She continued:
It did other things as well, but I think it was known for those things. The Center for Social Inclusion, while it had narrative strategies, was known for policy operationalizing racial equity on the ground. Four years ago, we also brought in the Government Alliance on Race and Equity—so that, in addition to doing operationalizing of racial equity in community-based organizations, we really started looking at the local and regional government sectors and other institutionalized change.
Merging two organizations even as they responded to the exciting acceleration of the national discourse about racial justice left the newly combined Race Forward staff with any number of capacity-building needs. “You wouldn’t normally hear the word longing attached to the merger of e-mail platforms or databases,” said Levison, “but honestly, we were longing for administrative capacity. Database technology work is so unsung, and it’s so important.”
BUILD funding also allowed Race Forward to invest in its programmatic vision. According to Levison, “One of the big things we were longing to do was to build out our Narrative, Arts, and Culture department. We said that we would find a visionary leader for this in our second year of BUILD, and we ended up finding somebody in our first year, so we’re a little ahead of the game on building out what it’s going to look like.”
The fit between what an organization needs for next steps and its ability and willingness to take on the capacity and infrastructure building for those next steps is always highly sensitive, far more so than most funders and consultants generally acknowledge; and indeed, some grantees talked about awkward moments in negotiating that realm of the work, especially early in the process, but much of that friction appears to have dissipated with time and adjustment of processes. About this potentially charged and energy-draining space, Melissa Fourie, executive director of the Centre for Environmental Rights (CER) in South Africa, commented, “They show a lot of interest, but they don’t prescribe, and they don’t tell us what we should be doing. Some of our other funders have strong views about some of this, and that’s really hard to manage.”
Since opening its doors in 2010, CER’s programs have grown exponentially in response to enormous environmental challenges, but its organizational structure and capacity have not necessarily kept pace. As Fourie described it, some areas of organizational change require concentrated effort over longer periods, and this includes advancing diversity, equity, and inclusion within the organization. “The diversity work in itself is a big body of work—and particularly in our very complex [South African] environment, with a lot of unresolved hurt—so it’s really not an easy thing for us. But on the upside, we are pretty plain-speaking people in South Africa, so that actually helps us deal with some of these issues more head-on. We definitely want to see our management structures much more diverse than they are now. We want to see more career paths for our younger Black attorneys coming through. And that’s achievable. I think we can do that by the end of five years. The BUILD reporting requirements are really streamlined and easy and that’s also of course the benefit of a five-year grant.”
Prioritizing Engagement with Constituents and Networks
“One thing that we have been learning and evolving especially since 2016 is our organizational muscle around rapid response,” said Johnson. “That stuff is like a muscle. You can build your ability to do it, to do it quickly, and do it in a consultative way with stakeholders so that it’s not just chaotic and responsive. The second area where we are really experimenting is around translocal coordination of our members who are working on similar issues. Ideally, these two kinds of work are being built together and complementing each other.” She continued:
When white nationalists brought hatred and violence to Charlottesville, we had one member—Wes Bellamy, [then] the vice mayor of Charlottesville, Virginia—who was personally singled out. He was targeted as a result of his history of organizing around racial equity—including both the fight around the Confederate statues and his successful advocacy for a racial equity budget package that dedicated $4 million in funding—including significant funding for public housing, money to fund GED and scholarship programs, the creation of an ethnic studies curriculum within public schools, and a youth opportunity coordinator. We were able to mobilize our whole network to support him, helping them respond in their own ways to that truly horrifying series of events. Two months later, we held our first racial justice convening both responding to the overt racism being expressed in our country and thinking about what it means for municipal governments to be centering racial justice in their work. Among other things, the convening helped us spread information about racially equitable budgeting practices that members in several cities are now actively using, and it helped us build an evaluation tool for policing policy, with significant membership input. That’s an example of something that’s not a new body of work but where we were able to build a rapid response and then build out infrastructure around it.
These are not the only processes Local Progress has had to work on, however, explained Johnson. “We did a bunch of really unsexy, infrastructural work. We updated our CRM and our website. We have a bigger staff, so we need tools that work better. We’re no longer three people looking at an Excel spreadsheet and making a plan together. We have tried to build infrastructure at pace with growth, and I’m proud of that.”
Fourie talked about the responsibility CER feels to share the wealth with its own wide network of partners. “What we’re going to try to do is share some of the stuff. So, particularly our closer partners that we work with regularly, to tell them: this is what we’re doing; here is a copy of the policy we developed; here’s the right consultant we found on governance; this is the process we used. It’s always been part of our organizational culture of openness and sharing of information. I mean, long before BUILD, that’s been one of the things we’re very strong about: that we make public all the resources we have available, share what we have.”
A Longer Runway for Confidently Taking on Opportunity, Risk, and Sustainability Creates More Momentum
Many of the BUILD grantees talked about the timing of their BUILD grant as being critical in that they were in an environment where, if they couldn’t ramp up quickly and inclusively to meet a more regressive yet opportunity-filled moment, they would lose potential momentum in the movement in which they were involved. Said Levinson of Race Forward (which, as was mentioned previously, has built out to meet that opportunity through a merger and an acquisition), “We haven’t had a conversation on race like we’re having right now since the civil rights era. So not only did we want to build that power but we really wanted to create something new—so, not just put together the work of two organizations but create something new and bigger and more powerful. So that’s the nutshell of how we came to be and what our purpose is.”
For Fourie, the change of time frame relieves the usual pressure of an arbitrary time frame that does not fit the arc of the work being done. “I don’t think it’s exclusive to law firms,” she said, “but when we look at how litigation and advocacy develop and how law reform develops, nothing happens within a one-year frame. And nothing happens in a two-year frame. It really does enable better planning—and enables better recruitment, as well, because you’re then potentially not under pressure to recruit now somebody who can hit the ground running. So it’s a knock-on effect to how you grow the organization and then actually approach work.”
Fourie continued: “It was the first five-year grant we ever received. That was an enormous difference, I think. It had an enormous impact on our planning and comfort with longer-term planning.”
Financial Security Allows for Risk-Taking
“Today, with 90 BUILD grantees in 26 countries outside the US, we have seen no evidence that grantees are using BUILD funds inappropriately or wastefully. To the contrary, we have seen plenty of evidence that they are spending them well. For example, at least 14 grantees in the Global South are using BUILD grants to support leadership transition—in many cases, transition of a founder or longtime CEO to new leadership. The new leaders tend to be younger, and are more likely to be women or members of marginalized groups, than previous leaders. Changing the demographics of who leads nonprof