Seeking More Equitable Philanthropy: Addressing 8 Philanthropy Myths

The 2019 Pooled Fund Grant Committee is learning a lot as we implement the following new grant criteria around increasing equity and reducing disparities this year, funding organizations that are:

  • Focused on providing services to communities affected by inequity due to race, gender identity, and/or other characteristics historically linked to discrimination and/or exclusion.
  • Accountable to the community being served. “Accountable” means
    • Ensures that people or communities being served are visibly leading;
    • Develops leadership of the people being served;
    • Engages the community being served in ongoing decision-making, planning and assessment; and/or
    • Draws on the strengths and assets of the community being served to achieve the long-term goals of reducing disparities and increasing equity.
  • Have the expertise to do the work. “Expertise” includes being able to demonstrate
    • An understanding of the root causes of the issues facing the community being served.
    • A track record of success in reducing disparities and/or achieving more equitable outcomes

We noticed some recurring ideas about what to expect from nonprofits, when reading a proposal, and philanthropy in general. We wanted to create a tool that would help grant committee members identify these recurring ideas (or “myths” as we call them) when they came up in conversation, and have the knowledge to do some “mythbusting.” We hope you enjoy learning about these myths, and try out some mythbusting of your own!

Myth #1: There is a perfect organization budget size for our grants

Budget size is a consideration when evaluating grant applications, but don’t let it cloud your judgement. Sometimes we think “our grant is just a drop in the bucket” or “do they really need our money?” when evaluating a larger organization. The reality is that our grant might enable a larger organization to fund projects or capacity building initiatives that they can’t get funding for elsewhere.

When looking at a smaller organization, we might think “they don’t have the capacity to absorb our grant” or “let’s wait until they’ve grown a bit.” This mindset focuses on where they are now, not what they’d be able to do with our grant. With our structure of breaking up a large grant into smaller multi-year gifts, larger grant amounts are easier to plan for, and give organizations room to grow strategically.

Myth #2: Giving general operating grants means we don’t know where our funds are going

Whether they’re project, capital, or general operating, our grants are investments in organizations we believe are working to increase equity and reduce disparities in Washington. There are so many ways to support that goal, and sometimes it’s easier to picture our funds supporting something concrete, like a new program or serving 100 more individuals. The reality is that no matter the purpose of our grant, we are committed to the organization, and trusting them to know the needs of the community they serve best. A trusting relationship is key, and something we all actively develop over time.

Myth #3: Overhead is supposed to be a certain percentage of an organization’s budget

“Overhead” is a term that typically describes the funds nonprofit organizations spend on administrative costs, like staff salaries and rent. The myth that the effectiveness of a nonprofit can be measured by how little they spend on these items is a pervasive one! This myth often goes hand in hand with myth #2. Some foundations only allow for a percentage of their funds to support general operating expenses, and some nonprofits boast a small overhead percentage as a way to say that your support would mostly go directly to the community being served. In reality, there is no overhead percentage that indicates an effective nonprofit, because organization effectiveness is not measured by how little an organization spends on administrative expenses. There is no hard and fast accounting rule for how administrative costs are reported, so nonprofits can make somewhat subjective decisions about how to allocate costs.

Myth #4: Nonprofit employees can be paid less because they believe in the cause and aren’t doing it for the money

Nonprofit employees are often drawn to their work because of the mission of an organization, but that doesn’t mean that they shouldn’t be paid a livable wage for the community they live in. Nonprofit work is challenging and complex, and employees are often tasked with many different responsibilities, which can lead to burnout and a high turnover rate. When evaluating organization financials, compensation is important to notice, but don’t give it too much weight in your overall analysis.

Myth #5: We aim to make risk-free grants

While some might believe that funding a more established organization is less risky, the reality is that all philanthropy includes risks. Failure is an essential part of this work, and our goal is not to make grants that are “guaranteed to succeed” but rather to invest in meaningful work and learn along the way.

Myth #6: There is one “right way” to fund

There are a lot of opinions on the right way to make the world a better place. Some believe that it’s better to address immediate needs and others prefer to focus on changing inequitable systems. Some feel strongly that one issue area over another is more important. As a collective, at Washington Women’s Foundation we embrace the many different opinions and perspectives that our members bring to this work. We don’t believe there is one right way to fund, rather there are many, and drawing on the diverse perspectives of our membership enables us to make decisions about funding priorities.

Myth #7: Our goal is to enable nonprofit organizations to be self-sustaining after our grant

Our multi-year grants are great for helping nonprofits plan ahead a couple years, but the ultimate aim is not long-term sustainability. Our goal is to support the goals of the organization as a whole. Our grant can become a contributing factor to an organization’s sustainability, but sustainability in itself is dependent on multiple factors. We trust organizations to know what next steps they need to take to keep their work going (see our note about trust in Myth #2). That’s why we don’t ask how nonprofits will fund their work after our grant is complete.

Myth #8: Data is an objective way of evaluating a nonprofit’s work

While data on paper appears to be a collection of numbers and figures, data is collected and interpreted by humans, who are subjective. Sometimes for the sake of creating an easier-to-digest narrative, data also runs the risks of generalizing the applicability of a trend to all individuals, erasing context, simplifying a complex issue, and/or pathologizing whole communities. Data also takes time and resources to collect, often in the form of dedicated staff or paid analysts, which are tools not readily accessible to all nonprofits. While we think data is important, we strongly encourage one to exercise caution when reviewing data, and to not make judgments solely based off data-driven narratives.

4 responses to “Seeking More Equitable Philanthropy: Addressing 8 Philanthropy Myths

  1. Thank you for this myth busting blog! I think each year we – as a group or individually think of our grant making we should have this blog in front of us.

    1. Thanks for posting the new grant criteria and shining a bright light on the myths around non profit organizations. Sound analysis which will assist us with our philanthropic decisions.

  2. This is a fantastic list that summarizes some of the perennial questions that arise among our collective giving members. It also reflects grantmakers’ increasingly realistic understanding of our role, and a more appropriate, humble approach to funding. Thanks so much WaWF for this excellent post.

  3. This was a great description of the issues – thank you for sending it. I would also like to recommend Melinda Gate’s book, The Moment of Lift, as a phenomenal description of learning how to serve communities affected with inequalities. The beginning of the book is a bit slow, but the end is incredibly powerful as she describes her work with low caste people in India in response to the AIDS crisis.

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