Due diligence and advice for grantseekers
At LaPiana Consulting, we collaborated with Grantmakers for Effective Organizations (GEO) to update their guide, Due Diligence Done Well, and many grantmakers have embraced the principles we presented since then.
As an Executive Director, I didn’t always embrace this process. With some foundations and program officers, I felt we were developing a relationship designed to create positive community change. In other cases, I felt as though I was being quizzed without a clear sense of what the questions were designed to reveal about my organization and its work. Even today, the grantmakers I talk with experience this dichotomy in a similar way, with the most successful experiences yielding strong relationships and the most frustrating never getting beyond a “sales pitch.”
Although one part of the due diligence process might be considered “good hygiene” – collecting the basic legal and financial documents needed to ensure that the foundation can comply with its own requirements – due diligence should primarily be about building a shared understanding of how the grantmaker and grantseeker can work together to benefit the field or community about which they both care.
Given that, how can you as a nonprofit leader participate in the due diligence process to ensure that it is mutually beneficial?
Submitting a proposal or letter of inquiry is just one point in the process. Foundations ask for information in the proposal or LOI to make a basic determination regarding fit with the grantmaking focus of the foundation. If there is a fit, the next steps are all about deepening their understanding of your organization and gathering the additional information to make a funding decision. Even in the presence of an existing relationship, there’s more to learn. Here’s some of the advice we give to grantmakers and its application to you as a grantseeker:
Unspoken assumptions about how the process will unfold will almost certainly lead to misunderstandings or disappointment. Ask the grantmaker about his/her information needs and the best way for you to supply information. Discuss expectations and timelines.
One program officer said that an immediate red flag comes when a grantseeker (wrongly) claims that his/hers is the only program in the region, state or country that provides certain outcomes or works with a particular population. Grantmakers invest time in understanding what is happening in the field and community; you should too. You can point out what differentiates you from similar work done by others, but be realistic in the depiction of those differences. Grantmakers should and will spend time talking to foundation colleagues and others in the field and community as they gather information.
Build a relationship based on mutual respect and trust:
Engage in a dialogue. A meeting with a program officer shouldn’t be regarded as a sales meeting or one-sided communication. Ask the program officer about the information he/she is seeking and discuss the best way to convey that information. If you do plan a presentation, make it short and leave plenty of time for discussion. Also, think about what you want to know, especially if this is a foundation that you haven’t worked with before. What are the expectations regarding measurement and outcomes? What does the foundation know that can help you be more effective?
Be honest. If you’ve had struggles in delivering programs or have faced organizational challenges with your board or in retaining staff, talk about it. What have you done to address these problems? You need to pass the “smell test” – if you are painting an unrealistically rosy picture or trying to gloss over any problems, the truth will eventually emerge and if it comes from another source, it will harm your credibility.
Be respectful. Program officers understand the power differential and most want to “level the playing field” by demonstrating that they – like you – are concerned about how to achieve your mission. Also, just like you, program officers work hard and are juggling multiple demands on their time. I have heard more than one story from program officers about prospective grantees who call the program officer to criticize the time the decision is taking or complain that the program officer is talking to others in the community. I don’t know of any program officer who has decided against making a grant based on the poor manners of the Executive Director, but it sure doesn’t help the relationship. Frame your questions in nonjudgmental ways.
The grant decision isn’t the end — it’s the beginning of a new stage:
If the decision is affirmative, there’s a lot of work ahead. What benchmarks or requirements are set in the grant document? What do you need to do if there’s a change in the budget or if something isn’t working? How often will you “check in” with one another about the grant? You should expect different answers to these questions based upon not only the significance of the grant in terms of your budget, but the significance of the grant in relationship to the foundation’s grantmaking budget.
Always think about the future:
If the decision is negative and your grant application was not accepted, seek an opportunity to learn how you might better communicate your work in the future. But don’t seek that discussion as a way to convince the grantmaker that he or she should reconsider the decision. You may need to accept his/her decision as a learning experience and move on, but you should also conduct a final conversation in a way that can leave the door open for reconnecting in the future.
Image credits: flickr.com, bluenose.com, aicpa.org, greeklaw.gr, thecriticalpath.info.com