Room and Respect
Rethinking Grant Making and Management
[Short on time? Scroll down to read the TLDR version.]
Say I want to give you a few thousand or a few million dollars to advance one of my strategies. What’s the best way to ensure I get my money’s worth?
One idea is to have you share your planned activities, in detail, and to write that into a contract, along with a detailed budget closely linked to those activities and some performance measures that reflect the work you will do.
The budget piece is critical. The easiest way to make sure you do what you said you would do is to see that you spend the dollars in the way that you said you would. And the easiest way to do that is to make sure that you can’t spend them any other way.
Voilà! Accountability accomplished.
That, in a nutshell, is how most grant-making currently works.
Of course, there have been some improvements in the kinds of metrics funders demand (with some doubt about whether they are actually used for much), and some philanthropic organizations are beginning to explore new models. But controlling how money is used remains funders’ primary tool, especially for government grants.
Admittedly, the approach has important advantages.
For one thing, it minimizes the risk to the grant-making organization. Barring a recipient flat-out lying, the funder will get exactly what they paid for. Equally importantly, it simplifies the funder’s staffing since the grant manager doesn’t need deep domain knowledge. They just need to be able to tell if the spending matches the budget.
There’s only one small problem. It doesn’t work very well.
Why? One major reason is that it prevents learning along the way and fails to account for changes in circumstances. Recall the third commitment of a data-informed organization: to change what you’re doing if what you’re doing doesn’t work. Unfortunately, your contract says you’re not allowed to do that.
Can it really be that bad? Unfortunately, yes. Any nonprofit that’s had more than a grant or two will have stories. And more than a few grant managers have experienced the frustration of having to deny reimbursement for an expense in line with the grant’s purpose because it doesn’t match the original budget.
In a recent Asheville example, a non-profit that distributes free food rescued from local restaurants applied for grants in the middle of the pandemic shut-down to fund ongoing operations. The proposal specified that they would replace rescue food with prepackaged meals purchased from restaurants, supporting both those needing food and restaurants struggling to survive the shutdown. They won two grants from two different agencies.
By the time the money arrived, however, the shutdown was over and the money was needed to support rescue food processing. One agency had taken the standard approach and was unable to accommodate the change. The other, the City of Asheville, was able to pivot together with the nonprofit.
A Better Way
The City’s flexibility didn’t happen because their financial and legal staff are nicer or more willing to take on risk. It happened because the grant was intentionally structured to make it possible.
Asheville received $26 million as part of the 2021 American Rescue Plan Act (ARPA), a $1.9 trillion economic stimulus intended to aid recovery from the COVID-19 pandemic. It was an unprecedented windfall that came with unusual flexibility and the City took advantage of that.
The first change was to ask every recipient to take their budgets up a level. Rather than provide detailed line-item uses for the funds, they were asked to group them in larger categories that aligned with the planned use, but also allowed pivots in order to achieve the goals in the scope of work.
That change gave the City the flexibility to respond positively when the nonprofit reached out to ask about switching to funding operations rather than purchasing food.
In other words, they were able to give the recipient room to learn and adapt.
Of course, if you loosen spending restrictions, you also lose your primary accountability tool.
Addressing that is the not-so-easy part. But it’s also the part I’m most excited about.
The key is to shift from compliance-oriented accountability to what public policy scholar Dan Honig calls empowerment-oriented accountability, grounded in respect for the expertise and dedication of the people actually doing the work. At heart it requires a change in the relationship between grantor and grantee.
Traditional compliance-oriented accountability is based on a command-and-control mindset, with the grantor in charge. In contrast, the City explicitly framed the relationship with ARPA recipients as a partnership. When problems arise (and problems always arise), they work together to resolve them, shifting strategies and resource uses as needed to accomplish the ultimate outcomes agreed.
It’s more resource intensive - you need a grant manager who remains in regular conversation with grant recipients. In traditional grant-making these are called “field reviews” and are only used when a recipient is “high-risk.”
In empowerment-oriented accountability, we call it conversation and recognize that it needs to be standard practice with everyone because the real risk lies in our collective ability to achieve the outcomes.
And I wonder how much more resource intensive it actually is in the long run. I’m often amazed how stingy we are with resources on the front end, even as we happily throw money year after year at efforts that never seem to yield much improvement.
Giving grant recipients (and grantors!) room to learn and shifting to an empowerment-oriented accountability grounded in partnership and respect is one critical step in making better use of grants to accomplish strategic goals. I’ll look at some others in future issues.
Links & Thoughts
Participatory AI. Incorporating lived experience and the perspectives of those impacted is an effective way to prevent or mitigate harm in policy development and implementation. But participatory approaches break down for so-called AI foundation models trained on massive datasets — it’s impractical “for impacted communities to meaningfully shape a foundation model that is intended to be universally applicable.” A new paper introduces a multi-layer approach that can help address the challenge. Technical, but worth a skim. HT The Living Library.
THESE MAPS RULE! This arguably doesn’t belong in a data newsletter, but I don’t care. It’s too cool. An 18th century project to crowdsource a map of the Kingdom of Spain failed utterly in its goal, but provides us with a fascinating look at the tradeoff between efficiency and expressiveness and a window into the richness of human creativity and difference. HT Benedict Evans.
tldr
The traditional approach to grants accountability is to build the contract around a detailed budget, and then to allow expenses only as they match it.
The advantage of the approach is that it minimizes risk for the granting organization and makes grant management a purely financial function.
The disadvantage is that it doesn’t work well since it prevents learning and adaptation along the way.
The City of Asheville took advantage of the unusual flexibility that came with funds from the 2021 American Rescue Plan Act to implement a better approach.
First, recipients were asked to “take their budgets up a level” to make it possible to pivot without amending the contract.
Second, the City shifted from a command-and-control mindset to a partnership one grounded in respect for the expertise and dedication of the people actually doing the work. Accountability is maintained through regular communication and collaboration in problem-solving.
I help organizations think about how to use data to improve results for themselves and their communities. To learn more about what I do and how we can work together visit DeepWeave.com.
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