Much has been written about Mackenzie Scott’s approach to her philanthropy: mobilising large amounts of money with no formal structure and giving grants with no strings attached. Scott started out with a proactive approach where she used philanthropy advisors to identify organisations to support. Now she has added a responsive approach, setting up a website, Yield, as a vehicle to accept applications. Both methods - proactive and responsive - have pros and cons for both the fund-seeker as well as the fund-giver.
Proactive – the advantages
A proactive approach, which goes out looking for organisations to fund, places the burden of effort on the side of the fund-giver. It involves what the trust-based philanthropy project calls ‘do your homework’ which means using all the publicly available information to find organisations that fit the mission. This can also include asking and listening to recommendations from other funders, practitioners and communities. Because the workload is in the funder’s control, it is more manageable and predictable than responding to uncertain levels of requests. It saves a lot of effort
on the fund-seeker’s side as there is no need to search for funding pots or write applications.
Proactive - the disadvantages
Being proactive also has downsides. It gives an advantage to those organisations which have a profile and an up-to-date and active online presence. So, it can miss groups doing good work who are ‘under the radar’ and operating without a communications budget. It can also favour those who have a very clear mission such as supporting people with dementia. It is harder to spot those community-based organisations that address a whole range of needs (including helping people with dementia). Doing away with applications removes the ability of fund-seekers to set out their case directly. Decisions are made on historic or current information in the public domain rather than finding out directly about future plans and there is limited opportunity to gain the full story.
To mitigate these downsides, fund-givers need to be aware of the limits to their networks and knowledge and work hard to find the smaller, lower profile groups. Once they have identified a potential fit, they can add visits or meetings to their process in order to learn more about an organisation and start building a relationship. They can also set up a mechanism for groups who think they are a strong fit with the funder’s published priorities to use to get in touch directly.
Responsive – the advantages
The alternative method is to be responsive, to set out the funding criteria and ask organisations to submit an application which sets out what they need and why. Hopefully this open approach means that funders hear from all the groups working in their priority area. Receiving many applications is a useful way to compare similar organisations and select the strongest. In theory it gives more control to the applicant to decide whether or not it is worth their time applying and to convey their request in their own words.
Responsive – the disadvantages
In practice it does not always feel that the fund-seeker is free to provide the information they want as they are fitting their response into set questions and word counts. Success rates can be notoriously low as requests outweigh the funds available and so much effort is wasted – on both sides – in writing and assessing many requests that will not be funded. The competitive nature of this approach advantages those organisations with the resources to pay for skilled bid writers. The understandable desire to reduce the volume of applications can lead funders to adopt poor practice. For example, the first come first served approach where funds close to applications after a certain number of applications are received which disadvantages smaller groups who do not have the capacity to submit a bid quickly.
Responsive funders can reduce the downsides by designing processes that are as simple and accessible as possible and by publishing their criteria and success rates. A good place to start is IVAR’s guidance on open and trusting practices “that make life easier for those they fund”.
So which is best: proactive or responsive? Being proactive makes sense where there is a narrow focus and responsive approaches work well where a funder has a broad remit. For funder-givers, it is a case of starting with the strategy and deciding which will best help you to achieve your mission. And then acknowledging that whichever you chose has downsides and doing your best to mitigate these – making sure you cast your net wide when seeking out good partners, or making it as easy as possible to apply.