Next Modern Grantmaking trainings

We’re next running our ‘Modern Grantmaking Fundamentals’ training on 9 October. These workshops often sell out so book your place here now!


Take no risk, make no impact 

Nobody, with the exception of the KLF, likes to set fire to money that could be used to help people in need, or to protect the world around us. 

This means that both grantmakers and their board members often find themselves worrying about whether a grant is or isn't too risky.

Now, nobody enjoys feeling worried, whether about a risk or anything else. So as human beings we have a very strong instinct to reduce or eliminate risks, to rid ourselves of that unpleasant feeling in our stomachs.

But as grantmakers, this leads to some real problems.

You gotta take some risks

A funding organisation that takes literally zero risks is also an organisation that makes literally zero impact.

Everything in life has a risk attached to it, and the moment a funding organisation hands money to anyone there’s a non-zero risk that that money won’t be spent perfectly, and a non-zero chance it might be wasted or cause other problems like legal or reputational blowback.

“Fair enough”, you might say “but if we can’t have zero risk, at least we can aim to minimise our risks, right?” 

But this is also the wrong way of thinking about risks in grantmaking. While very low risk grants are absolutely worth making (there’s plenty of impact in buying a meal for a hungry person) the biggest wins in the history of philanthropy and grantmaking have conspicuously involved making grants that had quite a high risk of failure. For example, grants made in the past to fund vaccine research or to campaign to give excluded people the vote were clearly high risk, but, in retrospect, they were also the definition of high impact grantmaking.

So unless your organisation has an explicit strategy which says "We aim for moderate impact" (and who has?) then your funding organisation needs to be making a certain amount of medium and even high risk grants, mixed in with the usual safer bets.

How your organisation can resist the temptation to always reject risky grants

We know that in the heat of the moment, when a panel of people are sitting around and assessing a grant, higher risk grants will pretty much always tend to be marked down compared with lower risk. This is partly due to scoring systems that treat risk as axiomatically undesirable, but a bigger driver is the all-too human desire to be thought of as smart and respectable. The most risk-averse person on a panel can also look like the most ‘grown up’ or ‘professional’ among their peers, and then can make other people feel afraid of being branded ‘optimistic’, a word loaded with undertones of lamentable amateurism. This can steer the whole group to go along with its most cautious member.

So what can you do to counteract this? We have three suggestions:

1 - You can give rough-and-ready risk scores to all the grants contained within your organisation’s current grants portfolio, perhaps just marking everything as either 'high', 'medium' or 'low'. This allows you, with a certain amount of hand-waving, to count them up and share a 'risk profile' for your whole portfolio. 'Risk profile' sounds fancy, but all we mean is it gives you the ability to say “Almost all of our grants are low risk” or “About half of our grants are high risk”. Once you've determined this you can challenge your colleagues to agree what proportion of medium or high risk grants you should be making. 1%? 10%? 40%? If you can encourage a consensus among your colleagues or yourboard about this, then every assessment meeting can involve a quick check that the group hasn't erred on the side of "too little risk". 

A quick aside: the practice of risk scoring a portfolio of investments to check for balance, is entirely normal in for-profit investing, but pretty uncommon in grantmaking institutions. Commercial investors use this method because they know that the tendency to invest exclusively in low risk assets will, over the long run, produce underperformance. This is a relatively rare situation where we think grantmaking really can learn something useful from the private sector, even if it does - we admit - occasionally go wrong and destroy the global economy.

2 - You can train your assessors so they learn to spot the connection between risk, biases and systemic inequalities. Your instinct might say that a 100 year old charity with a royal patron is relatively low risk, but is that right, or is that just the sum of several prejudices? And when you see that a new group set up by young people from a marginalised community doesn’t have charitable status or three years of accounts, do you mark it down for elevated risk, or do you mark it up because - at last - there’s an application from a community you’ve never funded before? Tackling these questions head on in training can help grantmakers to avoid the mistake of consistently marking applications down because they don’t conform to some ‘ideal grant norm’ that probably needs to be questioned anyway. 

3 - You personally can recommend that a grant be rejected for being too low risk. In many funders this will come as a shock to the people around you - often it will never have been tabled as a reason for rejection before. But by doing this you may be able to force an overdue conversation about whether your organisation is aiming at the right risk level, or simply the lowest risk level.


Latest Reading - Modern Grantmaking recommends 

• UK Grantmaking has launched! This new service collates data and insight on over £20 billion of funding from across all funding sectors, using data from regulators, funder accounts and data published using the 360Giving Data Standard to provide an interactive platform for understanding grantmaking in the UK. For the first time, funders, sector bodies, policymakers, researchers, fundraisers and sector media can access this valuable data in one place. 
• The Institute for Voluntary Action Research (IVAR) has published a new report on various approaches to assessing the impact of unrestricted funding. This report includes a range of tangible tips, including starting with minimising tailored, often complex, reporting requirements and using conversations as a means of gathering qualitative information for analysis and learning. Read the full report here. 
• Congrats to Dulverton Trust who are celebrating having just made its highest ever proportion of core funding grants. We love it when funders publicly celebrate making unrestricted grants, more please!
• Stupski Foundation has dropped another ‘Break Fake Rules!’ episode. This month, Ludovic Blain from the California Donor Table discusses the myth of unrestricted funding and “how donors and foundations can work together to leverage every available funding tool to build but sustain community power”.
• The new Global Resources Report is out! This is the most comprehensive record of funding for LGBTI communities worldwide and a decade of data makes this report the most comprehensive to date. Access this important resource here: 2021–2022 Global Resources Report: Government & Philanthropic Support for LGBTI Communities - Global Philanthropy Project
• Warren Buffett recently changed how his wealth will be spent following his death, telling the Wall Street Journal that he does not plan to continue donations to the Bill & Melinda Gates Foundation after he dies. Instead, he will put his wealth in a new charitable trust overseen by his three children.
• Charles Keidan at Alliance has written a piece on four reasons to pay attention to the recent mega-philanthropy announcement from Melinda French Gates. 

How about a new job or trustee role in grantmaking?

• Kent Community Foundation (UK) is hiring for a Grants Officer.  £27,850 per year. Deadline is 5pm, 12 July.
• The Sainsbury Family Charitable Trusts (UK) is hiring for an Assistant Trust Executive. £47,816 per year. Deadline is 11.59pm,17 July 2024.
• The DFN Charitable Foundation is hiring for a Director. Between £80,000-£100,000 per year. Deadline is 12pm, 22 July 2024. 
• FILE Foundation (UK) is hiring for an Impact & Learning Analyst. Up to £42,000. No deadline listed. 
• The Ford Foundation (US) is hiring for a Program Officer - Technology and Society. Between $165,000-$185,000. No deadline listed. 

Want to see your job ad in next month’s newsletter? Ping us, it’s free! Just… #ShowTheSalary


Grantmaking 'joke' of the month

Knock knock

Who’s there?

A foundation CEO telling a joke.

What? That’s not a punchline. No, wait, OMG that’s the funniest thing I’ve ever heard! HAHHAHAHAHAHAHAHAHAHA.


Got any terrible or actually funny grantmaking jokes to share?......tell us. 


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Who are we?

Gemma Bull and Tom Steinberg run Modern Grantmaking, and we write this newsletter. We do consulting and training exclusively for funders, and wrote a book on how to be a modern grantmaker, too.