A New Report Shows Promising Shifts in Funders’ Practices. Whether It’s Enough Is Still Up for Debate
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Institutional philanthropy can be a tough ship to turn. Martin Charles Hatch/shutterstock
We’ve spent a good amount of time here at IP gauging the nature and evolution of philanthropy’s response to the pandemic. In those harrowing days in the spring of 2020, funders pledged to roll out emergency funding, ramp up general operating support and dial back onerous reporting requirements. Three and a half years later, it’s still difficult to get a definitive sense of whether funders followed through on their commitments and to what extent grantmakers made those changes permanent — or walked them back.
The Center for Effective Philanthropy (CEP) has been keeping tabs on this issue since those early days and taking a fairly sunny line, publishing a series of reports showing that funders did, in fact, lean into trust-based practices as the pandemic set in. Better yet, grantees felt those changes on the organizational level. In early 2023, CEP surveyed 500 nonprofit leaders and found that over the previous year, a majority of respondents reported “an increase in trust from funders and are experiencing changed practices, such as streamlined applications and reporting, removal of restrictions, and receipt of multiyear funding from foundations.”
CEP’s new report, “Before and After 2020: How the COVID-19 Pandemic Changed Nonprofit Experiences with Funders,” strikes a similarly bullish tone. The CEP analyzed 61 Grantee Perception Reports (GPR) — surveys that the CEP administers to grantee organizations at the request of funders — in the years preceding 2020 and again in 2021 and 2022. It found that the time nonprofits typically spent on a single funder’s proposal process fell by 25% during the pandemic, from a median of 20 hours pre-2020 to 15 hours in 2021 and 2022. The time grantee organizations spent on reporting and evaluation also dropped — from a median of eight hours pre-pandemic to six hours in 2021 and 2022.
Findings pertaining to general operating support were also encouraging. The average proportion of grantees receiving unrestricted support from funders who conducted a GPR rose from 23% before 2020 to 30% in 2021 and 2022. In addition, 67% of funders that commissioned GPRs are providing a higher proportion of general operating support than they did pre-2020.
That all sounds well and good. At the same time, I’ve periodically reported on assessments of funders’ 2020 response, and one thing I’ve learned is that, as obvious as it sounds, these kinds of reports need to be assessed through a lens of relativity.
Those attuned to the difficulties of galvanizing change in the foundation world — “turning around the Titanic” springs to mind — realize that while it’s easy to ask grantmakers to “cut red tape,” funding leaders also need to make sure they’re allocating support in the most effective way possible, and sometimes they determine that does, in fact, mean 20-page evaluation reports every six months. Nor can internal advocates for general operating support magically flip a switch and generate buy-in from staff or board members who, consciously or otherwise, may be concerned about diluting their power or influence.
Considering this sector’s inherent caution and tendency toward institutional inertia, a sympathetic read of the CEP report suggests that grantmakers have, in fact, implemented meaningful changes. Consider funders’ efforts to reduce grantees’ administrative burden. The CEP found that when you factor in the time required to address a single funder’s proposal, reporting and evaluation requirements, organizations spend a median of eight fewer hours jumping through administrative hoops than they did pre-COVID. Multiply that figure by 10 funders, and suddenly nonprofit leaders have a decent chunk of extra time on their hands.
On the other hand, the fact that the portion of grantees receiving general operating support only rose to 30% from 23% can be read less sympathetically. It means that “on average, 70% of grantees at the funders in this sample don’t receive unrestricted grants,” said Katarina Malmgren, CEP’s associate manager of research, in an email. “Or formulated another way, the average funder in this dataset provides unrestricted grants to 30% of its grantees.” I, for one, had hoped that figure would be higher.
In addition, since the GPR data set only includes disbursement figures from the foundations commissioning the GPR, we don’t know if nonprofits received a greater overall amount of general operating support post-2020 — although I’d like to think they did, even marginally — only that a greater proportion of them did. Lastly, while 67% of funders that commissioned GPRs are providing a higher proportion of unrestricted support than they did pre-2020, general operating support may still be a small slice of the total funding they disburse annually.
I don’t mean to split hairs here, and I’d like to go on record stating that CEP’s findings on general operating support constitute progress. But that doesn’t take away from the fact that many nonprofit leaders feel foundations could be disbursing a lot more flexible funding.
Another finding that caught my eye was that “funders that were conducting their second GPR did not significantly increase their provision of unrestricted support after 2020.” This seemed counterintuitive, as it suggested that despite all those highly publicized calls for philanthropy to ramp up general operating support throughout 2020, funders who sought out grantee feedback through the CEP’s GPR process nonetheless stuck with the pre-2020 status quo.
However, the CEP also found that “funders that commissioned their third GPR (or more) did significantly increase their proportion of general operating support by 9% on average, approximately double the increase of past repeat GPR users.” Malmgren wasn’t entirely shocked by this finding. “This is a trend we have seen in GPR users even before the pandemic — normally, the amount of general operating support does not change until a third GPR,” Malmgren said.
Funders’ incremental movement on the GOS front underscores how nonprofit leaders need to manage their expectations when it comes to how fast that philanthropic Titanic can turn. Do leaders wish that 70% of funding was GOS? Probably. It would enable them to allocate money as they see fit, minimize the temptation to chase grants that distort their organizations’ missions, and reduce the amount of time and energy spent on project-based application and reporting requirements.
But leaders know that ain’t happening. If a global pandemic and a national racial justice reckoning only led to an incremental increase in GOS — or, for that matter, equally tepid movement on the 5% annual payout issue — perhaps nothing will prompt transformative change. Some leaders will begrudgingly concede the point. Others will counter that accepting merely incremental change lets funders off the hook, especially when some grantmakers appear to be walking back from trust-based philanthropy practices.
Fortunately, the CEP argues that some 2020-era reforms will remain on the books. The report noted that in 2021, 90% of foundations said they would be “sustaining at least some of” the changes made to simplify reporting and evaluation processes. Let’s hope so. Assuming these changes haven’t hindered funders in any way, there’s no reason to reverse them, especially now that grantees have become accustomed to a more streamlined approach.
I also hope funders continue their efforts to make application processes as efficient as possible. This is an equity issue because it opens up funding opportunities for under-resourced organizations that lack the capacity to dig into gargantuan applications or hire an expensive grant writer. (Note that this specific CEP report did not look at grantmakers’ post-2020 commitments to racial equity efforts.)
The report ends with the somewhat conservative conclusion that this analysis reveals “a level of change that goes beyond the shifts we usually see” among CEP’s GPR users who intentionally seek out grantee feedback. “This finding suggests that the events of 2020 shifted these funders’ practices, making them more motivated to support nonprofits in ways that are more sensitive to the needs of these organizations.”
As always, the devil is in the details — or more precisely, the complexion and scale of the changes. If funders reintroduce red tape or dial back on general operating support, it will be as if philanthropy’s supposed 2020-era awakening never happened. If funders double down on reforms, nonprofit leaders will be ecstatic (and pleasantly shocked). Based on the CEP’s informative findings and my discussions with nonprofit leaders, my own low-risk prediction is that we’ll end up with something in between — a “new normal” that’s a welcome change from pre-2020 but falls short of what nonprofit leaders really want.
