As the spread of the Covid-19 pandemic causes an outpouring of philanthropic response, Tri-Sector Associates interviewed over 20 leading philanthropists, corporate foundations, private banks and philanthropic aggregators across Asia to identify needs and trends in the sector. Our research identified 3 common needs highlighted by interview respondents, which were published in our May 27, 2020 article titled, “How are impact-driven funders thinking about giving better?” The following article series will provide recommendations and best practices to help funders address each of the top 3 needs highlighted in our research.
Today we will begin by diving into the top need identified by interview participants - the need to expedite grant processes to disperse funds quickly in response to the crisis, while at the same time ensuring accountability to their donors, boards, and institutional priorities. The article outlines four recommendations to support the strategies respondents are deploying to meet this need and mitigate the challenges they are encountering in the process. The recommendations are based on global best practices and showcase real-life examples of organizations tackling each solution.
#1: Use Strategic Reviews to Prevent Mission Drift When Funding New Programs
Strategy: Expanding Funding Mandates to Address New Societal Needs
Due to Covid-19, some interview respondents have reported receiving requests outside of their typical funding mandate as unprecedented situations arise for their grantees and the communities they serve. To respond to these emerging needs, many donor organizations are creating new funds or accepting requests to repurpose existing grants, enabling grantee organizations to address the evolving needs on the ground.
Challenge: Preventing Mission Drift
Simultaneously, organizations are grappling with how to prevent mission drift and determine which new initiatives align with their organizational priorities.
Sector Inspiration: Conduct strategic review of the organization's theory of change to clarify the link between the overall organizational mandate and the organization's philanthropic response to support new societal needs
Example: The Lumina Foundation, based in North Carolina, USA, is dedicated to making post-high school learning opportunities available to all. Initially, their core mission was to promote higher education opportunities in the U.S. However, after the 2017 Charlottesville protests shook North Carolina and highlighted the racial disparities in access to higher education opportunities in America, the Lumina Foundation realized that incorporating a focus on racial equity was essential to achieving their mission of increasing rates of post-secondary learning opportunities for all. Today, they have incorporated racial equity as one of the 5 areas of focus for their organization. As organizations broaden their funding mandates to respond to Covid-19, they should consider how each new aspect of their philanthropic response relates to their core mission.
#2: Implement Systematic Pre-Approval Frameworks to Ensure Quality Control During Rapid Grant Disbursement
Strategy: Adapting Due Diligence Processes for Quick Disbursements
In the context of Covid-19, time is of the essence. With lockdowns being implemented across Asia, disruptions in the economy, social service delivery, and access to food and medical care have led to a surge in the need for social assistance. While grant funding applications and due diligence processes typically take weeks or months, many organizations require immediate funding support to respond swiftly to the crisis. Consequently, funders are shortening their application and due diligence processes.
Challenge: Ensuring Quality Control
As funders move to implement faster grant review processes, they face the challenge of maintaining the same level of quality control that their current due diligence processes were originally designed to ensure. Grant applications and due diligence processes are essential for directing funds to impactful programs, and revising these processes requires achieving the same level of assurance using a shorter and more efficient process.
Sector Inspiration: Systematic Pre-Approval Frameworks for New Grants and Repurposing Grants
To strike a balance between expediting processes and ensuring quality control, funders can develop systematic pre-approval frameworks to make their funding criteria more straightforward and transparent for applicants. Having a clear list of criteria that grant applicants must meet reduces the time required to compile application materials and may shorten the due diligence process for the funder. Instead of engaging in multiple rounds of due diligence questions with applicants, funders can outline a systematic pre-approval framework that simplifies the submission of necessary information for applicants and streamlines the evaluation process.
Example: Fast Grants has successfully implemented an expedited grant-making process that ensures grant approval or rejection within 48 hours from the time of application. To achieve this, they established a set of high-level criteria to determine whether a grant application aligns with their requirements. Open Philanthropy offers a more rigorous approach, explaining on their website how they assess grantees and outlining a comprehensive and transparent due diligence process that includes clear documentation on how they evaluate each proposal. As funders adapt their due diligence processes to facilitate faster fund disbursement, they should consider incorporating concrete decision-making timelines accompanied by clear and transparent guidelines for proposal criteria that align with their funding requirements.
#3: Use Proxies to Measure Impact When Traditional KPIs Are Not Available
Strategy: Allowing for Flexible KPIs and Deliverables to Encourage Social Service Agencies (SSAs) to Respond to Changing Needs
Many service providers have submitted requests to adjust their Key Performance Indicators (KPIs) and reporting deliverables to account for changes resulting from the Covid-19 pandemic. For example, organizations may be unable to deliver services and collect data in-person during lockdowns or stay-at-home orders, making it challenging for them to meet the KPIs specified in their original pre-Covid-19 funding agreements. Some funders intentionally provide flexibility regarding KPIs to enable organizations to adapt to the evolving needs on the ground and maintain or receive new funding.
Challenge: Ensuring Positive Impact
Measuring KPIs allows funders to assess whether the programs they support are achieving the social impact they promised. Offering flexibility with regard to KPIs raises the question of how funders can continue to ensure that their programs effectively address the needs of the communities they serve.
Sector Inspiration: Identifying New Proxies for Outcomes Based on Available Data to Ensure Program Quality
When traditional KPIs cannot be measured, identifying appropriate proxies can be an effective way to determine whether the intended outcomes are being achieved.
Example: The Poverty Probability Index created a system to determine whether an individual is likely to be in poverty by measuring indicators other than income and wealth. These traditional indicators can be difficult to measure accurately in developing contexts and may not provide a complete picture of whether someone is experiencing poverty. For example, in Indonesia, the type of flooring or the number of appliances in a home has been identified as reliable indicators of whether a family or individual is experiencing poverty. When introducing flexibility to KPIs during this time, funders should consider whether suitable proxies are available to substitute for traditional KPIs.
#4: Create Aggregate Impact Scores to Measure the Effectiveness of Unrestricted Funding
Strategy: Providing unrestricted organizational funding
Unrestricted funding enables service providers to adjust their approach as they discover what works best, cover critical overhead and fixed costs, hire additional staff, and expand their offerings. Unrestricted funding is particularly vital during Covid-19 when organizations need more flexibility to respond to evolving needs on the ground.
Challenge: Holding Organizations Accountable for Achieving Specific Goals and Responsibly Managing Funds
Non-profit organizations often encounter challenges in securing unrestricted organizational funding because many donors prefer to support specific programs or provide direct assistance to beneficiaries rather than covering overhead or fixed costs. Funders often prefer to have a clear understanding of what their funding has achieved, and unrestricted funds make it more challenging to assess the impact achieved with each dollar.
Sector Inspiration: Creating an Aggregated Impact Measure Across an Organization's Work
While most impact reporting is done on a program-by-program basis, developing an impact measure score that aggregates an organization's overall impact can be a way to ensure that unrestricted funding is spent responsibly and achieves its intended goals.
Example: New Profit has implemented a system to convert the overall impact of their grantee organizations into an aggregated metric, allowing funders to quantify the total impact achieved through their unrestricted funding. When providing unrestricted funding to enable grantee organizations to respond to changing needs, funders should consider creating an overall impact score to measure the organization's impact as a whole.
With significant changes taking place in the philanthropic sector, now is the time to leverage philanthropic innovations and adapt best practices to local contexts. If you're interested in joining other philanthropic organizations taking action based on these insights, please reach out to the authors to learn more about our current initiatives.
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Authors
Kevin Tan
kevin_tan@trisector.org
