Today’s foundational funding models often pass over fledgling organizations in favor of more established ones, drawing on dated expectations that serve to minimize the collective impact of both donors and their beneficiaries. Philanthropic bureaucracy and aggressive logistical requirements restrict sustainable growth for the very projects foundations are meant to support.
To be more effective, foundations should challenge the norms of philanthropy that have historically disenfranchised organizations based solely on size and age. This kind of exclusion leaves new and growing organizations adrift in a hypercompetitive field, seeking start-up funding they have already out-scaled.
For example, consider a small organization focusing on LGBTQ rights in Kuwait. Managed by a team of skilled researchers and developers, this organization has built a successful advocacy platform used by thousands of people daily. Access to flexible funding would strengthen their operational capacity, allowing them to invest in the security and performance of their platform.
Yet, due to their current annual budget, they’re left to compete for grants that are typically provided incrementally in amounts that are insufficient, even for a lean and focused grassroots organization. The grants they earn will likely not be enough to meet even the most basic reporting expectations for the funding period. Sadly, it’s a scenario that happens all too often.
This unfortunate reality makes it nearly impossible for growing organizations to qualify for the funding needed to ensure long-term sustainability. In fact, in order to qualify, organizations are often required to have a budget in the millions. For example, the Skoll Foundation discourages organizations with annual revenues less than US$2.5 million from applying for the Skoll Awards for Social Entrepreneurship.
Many private foundations have similar eligibility requirements. As a result, they collectively end up supporting a mere handful of organizations that fit the financial criteria, regardless of the actual impact and potential of these entities and whether or not they are operationally efficient. This feeds into the misguided notion that financial assets are themselves an indication of the value produced, instead of looking critically at what is accomplished.
Operating on a lean budget makes a smaller organization less attractive, not only to foundational funding, but to individual donors as well, the majority of whom will turn to larger, more established institutional foundations. This creates and feeds a cycle that makes it difficult for small organizations to survive, much less thrive.
This in turn leaves the sector with less creative initiatives to tackle complex problems and ultimately benefits no one.
Funding organizations that are too institutionally established just because they’re safe bets also neglects the very real possibility that these organizations are too big to operate on a meaningful level, creating conditions which inherently stifle innovation and minimize collaboration with stakeholders.
An example of this is a US-based human rights organization bringing in at least 70 million USD per year and spending the bulk of its donations on administration and fundraising in place of advocacy or community engagement. It’s not uncommon for such organizations to refrain from doing any collaborative funding of their own despite often relying on the crucial work of much smaller grassroots organizations, including anything from data acquisition to on-the-ground expertise and access to networks.
If this behavior is normalized and rewarded with constant access to funding, then what incentive do organizations have to innovate and create, knowing they will not have the resources to sustain that effort in the long term?
Size means bulk, and massive organizations often put too much emphasis on administrative tasks rather than working alongside beneficiaries and connecting with communities in meaningful ways. If foundations tended towards the contrary—accepting and even embracing risk with the organizations they choose to fund—many could multiply their impact, regardless of scale.
By taking more risks, we’re creating a space for mutual learning. Working for the social good becomes an experience, not just an experiment. The way we advocate—how we reach people—is constantly shifting and we need to adapt to those changes. If not, we risk excluding entire communities, especially marginalized communities who lack traditional access to funding.
The Kindle Project, an “outside-the-box grantmaking organization supporting wild solutions by unusual suspects,” emphasizes collaborative and strategic grantmaking that relies on organic outreach, rather than direct applications. To quote Co-founder and Executive Director Sadaf Cameron, “we are guided by principles of trust and therefore offer almost exclusively general support grants. We trust the wisdom of our partners to allocate and spend dollars at their discretion.” This kind of support is increasingly rare for smaller and middle-sized organizations to access, and who need this approach most.
The Shuttleworth Foundation operates on a fellowship model with an emphasis on supporting people, not organizations, who embrace openness as a core value. It takes a fresh approach to foundational funding, dispensing largely unrestricted grants but with fair and reasonable mechanisms for reporting that ensure a return on their investments and partnership.
There are many ways to give support and ask for accountability from grassroots organizations in ways that nurture and build trust. But we must reevaluate our current approaches. For projects and organizations to be both sustainable and effective, we need to lower the barrier of entry rather than rely on the same way of thinking that has left billions underserved and unseen.