May 2, 2022

Grantmaking Trends in 2022 and Beyond

Each spring, I find it enjoyable to reflect on the previous year’s accomplishments and the challenges faced in grantseeking. For me, this usually includes calculating proposals funded, declined, and still pending, as well as total funds earned, Return on Investment, types of grants written (e.g., federal, corporate, private/family, community foundation, United Way), and other odds and ends in terms of number crunching. In doing this, I watch for patterns and trends in the quantitative data to teach me more about pursuing grants from just one angle; this tends to be most helpful when considering and/or consulting on whether it might be worth it to pursue a particular funding opportunity.

I also consider the non-numeric trends that are emerging (or are picking up steam) in the field of philanthropy, as this helps me prepare for the year ahead and teaches me to be a better grant writer by anticipating what funders might be thinking about. I ask myself questions such as “What are some new questions or data points being asked of us?” and “Are funders asking for attachments they haven’t commonly asked for before?” and “What are things I’ve been reading and conversations I’m hearing about funders and new initiatives they’re pursuing that is changing how grantmaking is happening?”

The pandemic threw everyone in the field of philanthropy for a loop – particularly in grant writing and grant management – by suddenly changing a lot of the standards in order to pivot and accommodate brand new circumstances. As we begin to recover from the impacts of COVID, it is an especially interesting time to ask ourselves about what grantmaking and grantseeking is going to look like in 2022 and beyond – not just this year, but the next three to five years!

So, I reviewed grant applications from 2021 and reflected on what I’ve been reading in some interesting reports recently released (see links below), and I even polled the gals in the office, who have a combined 150 years of grant writing experience! While not everyone’s experiences this year have been the same, here are the seven trends (in no particular order) I’m going to be mindful of and monitor over the next few years:

#1 – Diversity, Equity, and Inclusion (DEI)

While many would argue (with good reason) that this is not a new “trend,” but a movement that people have been advocating for over generations, I have included it because funders have begun asking deeper and more probing questions since the past few years of political and social protests (and the resulting national conversations in the media). More and more funders are increasing demands for accountability, data, and reporting requirements to demonstrate that DEI is placed appropriately in the work of community organizations. Funders are looking for indicators that true systemic and systematic changes are being facilitated by the organizations who should be leading change. Even federal applications have begun changing, with presidential directives, including Executive Order #13985 (Advancing Racial Equity and Support for Underserved Communities through the Federal Government) issuing guidance and priorities to focus on equity, access, and inclusivity.

Here are some questions I have seen on grant applications in the past year for general funding opportunities:

  • “How is your organization dismantling systems of oppression?”
  • “What experience enables your leadership to represent the population you serve?”
  • “How will you identify and engage peers and allies that share your organization’s vision as well as represent the communities you serve?”
  • “How do the communities you serve directly inform the focus of what you propose to implement in the coming year? How does your organization respond to and support leadership within these communities?”
  • “We understand that organizations are at different stages of the learning journey around equity and racial justice. How would you characterize your current space? What resources/learnings could you share and/or what resources do you need to continue your journey?”
  • “Socially transformative work is not a solo endeavor. What role does the work described serve in contributing to more just, inclusive, and equitable communities?”
  • “How does the work uniquely challenge conventional approaches to create significant, long-term systemic change?”

If the organization that you represent doesn’t have thoughtful responses to these and similar questions as those listed above, now is the time to sit down with senior management, relevant staff, the target beneficiaries, and other community stakeholders to consider how your organization will ensure you have diversely experienced representation and thought leaders in every conversation, improve inclusiveness and accessibility (particularly for those who are frequently marginalized and forgotten), and how your organization will continue to strive towards equity in all things. Diversity, equity, and inclusion are critical topics and, for that reason, these questions and conversations will not be disappearing from grantmaking anytime soon. In the study “Foundations Respond to Crisis: Lasting Change?” released in November 2021 by The Center for Effective Philanthropy, one of the key findings included:

Even as they acknowledge they have much yet to do, most foundation leaders say that racial equity is a more explicit consideration in how they conduct their work, and many are modifying their practices as a result. This includes changing how they identify applicants, providing more funding to organizations supporting Black and Latino communities, listening more intensively to grantees, funding systems change, and collaborating.

#2 – Economic Recovery, Growth, and Development

Not surprisingly, economic recovery, economic development, and economic growth at both the personal and community levels have also been growing in importance to funders. According to a survey conducted by Exponent Philanthropy and PEAK Grantmaking as reported in “COVID-19: Have Funders Changed Their Approach & What Will Stick?”, more than half of funders (53%) changed their funding to directly impact individuals economically affected by COVID-19 and 41% of responding funders indicated that they were now funding nonprofit organizations outside of their typical funding portfolio. In response to the pandemic, many funders (temporarily) shifted their funding priorities to providing for basic needs, such as food, clothing, shelter, and/or safety – and economic recovery measures, such as fostering entrepreneurialism and job growth. Even if your organization does not generally provide programs or services that have direct economic impacts, many applications today are asking organizations to relate how their mission, program, and/or services will help communities recover and rebuild from the pandemic and become more economically self-sufficient. This shift has caused some nonprofit organizations (e.g., arts and culture, youth development, family capacity) to change how they are framing their narrative to address how their services and programs have an economic impact.

#3 – Social Media Platforms

 

It was inevitable… and we’ve been anticipating this for the past five to ten years, but this past year grantseekers really began seeing this trend emerge. Foundations – particularly corporate and community foundations – want to know about, see, and even be a part of organizations’ online and social media content. Questions are moving past the fields of simply asking for your organization’s website or even Facebook, Twitter, LinkedIn, Pinterest, YouTube, and/or Instagram links. And while you certainly shouldn’t panic if your organization hasn’t fully embarked on its journey with one or more social media platforms, it is time for you to consider your audience – and which space might be best to connect with clients, volunteers, and donors while simultaneously providing space for acknowledging the financial support your organization has received from funders. Grantmakers are increasingly asking for social and digital media components to applications, whether that’s telling your story to their grant reviewers with a video on YouTube (or uploaded directly into the grants portal) or writing sample social media content of 280 characters or less to demonstrate how you’ll highlight the funder with your organization’s social media posts.

For a variety of reasons, whether to reach individual donors or to celebrate funding partners, it is time to consider how your organization is using various social media networks to tell your story and broaden its reach. Funders such as community foundations and the United Way fundraise through the community and the more you can celebrate and bring positive press to them through social media, the more you are creating a “win-win” situation for both of you; corporate foundations are also generally deeply appreciative of uplifting word-of-mouth advertising about their good deeds in the community, as well. (Pro-Tip: Always consult the foundation and/or your grant agreement for proper branding and verbiage for acknowledgments and joint posts!)

#4 – General Operating Grants

 

FINALLY!!! This is a change that grantseekers have been asking for since the dawn of grantmaking (or at least it feels like it)! This paradigm shift in funders may be one of the few boons to arise from the pandemic. In 2020, The Council on Foundations issued “A Call to Action: Philanthropy’s Commitment During COVID-19,” wherein 806 organizations have since signed the pledge to (among other actions): “Loosen or eliminate the restrictions on current grants. This can include: converting project-based grants to unrestricted support…” and “Make new grants as unrestricted as possible, so nonprofit partners have maximum flexibility to respond to this crisis.” In the aforementioned “Foundations Respond to Crisis: Lasting Change?” report, The Center for Effective Philanthropy also shared that more than 61% of responding funders indicated that they were providing more unrestricted operating support grants than before the pandemic. The pandemic has encouraged funders to support organizations in their missions and give them discretion as to how to best utilize funding. At least 65% of the funders who increased the number of general operating grants they awarded indicated that they intended to continue awarding unrestricted grant dollars at this new, higher level after the pandemic is contained – and an additional 25% of the funders are still considering this option. Only 10% of the funders responding indicated that they would not continue this practice and would revert to issuing programmatic, capacity, and/or capital grants, per their pre-pandemic approach.

#5 – Multi-Year Commitments

The Center for Effective Philanthropy report also revealed an interesting and unexpected trend, explaining first: “Prior to the pandemic, general operating support (GOS) had been essentially flat at about 20 percent of total foundation grants. Despite increasingly favorable attitudes toward multi-year general operating support, these grants remained rarer still.” However, since the pandemic, over a quarter of funders (27%) answered that they had been awarding more multi-year support grants – including multi-year unrestricted (general operating) support. This is another step in a positive direction as far as most grantseekers are concerned, especially after the tumultuous past two years of financial instability, uncertain community partnerships as organizations resume services similar to those before the pandemic, and while many organizations are considering how to carefully plan and navigate finances after most of their reserves have been depleted. Among those 27% of funders, at least 68% intend to continue their increased level of multi-year commitment awards and 31% are still considering it (only 1% of funders said they would not continue multi-year commitments).

#6 – Fiscal Sponsorships and Fiscal Agents

 

The past two years have been a time of pivoting, reinventing, and, in some cases, creating wholly new responses to our communities’ needs and opportunities for growth and change. Since it can take up to five years to both establish eligibility and the independent financial acumen that is trustworthy enough to earn a grant award (i.e., establishing a 501(c)(3) nonprofit organization through the IRS and up to three years of audits), many grantmakers are now allowing new initiatives and applications from nascent organizations with fiscal agents or independent projects through fiscal sponsorships. It is difficult to quantify this, as there is no central agency through which fiscal agents or fiscal sponsorships must be registered, but it should be noted that it was much more difficult just a few years ago to find opportunities like this.

For a great article on the difference between fiscal sponsorships and fiscal agents, check out CharityLawyer’s March 2022 article, “Nonprofit Jargon Buster: Fiscal Sponsorship vs. Fiscal Agency.”

#7 – Decentralized Finance Foundations (Cryptocurrency Grants)

Admittedly, much like the role of cryptocurrency in our global economy, this is the riskiest and most uncertain of these predictions about emerging trends – and not everyone is going to agree on this. However, Decentralized Finance (DeFi) foundations are included here because grantseekers are already seeing hundreds of grant opportunities emerging from cryptocurrency communities, such as GitCoin and The Giving Block (including its “Crypto Giving Tuesday”). At present, nearly all cryptocurrency grants are available to an extremely narrow field within grantmaking. Most cryptocurrency grants are only available to individuals and groups who have projects to develop or advance the use of cryptocurrency through concept papers (“White Papers”), application development, integrated cryptocurrency use, and other DeFi-related initiatives…BUT, this is how many philanthropic initiatives got their start! For example, community foundations and microlending programs started as small communities coming together with a very focused interest, pooling their funds, and choosing beneficiaries to receive funding awards for the greater good of the community. While these specialized communities of cryptocurrency-supporting investors are currently focused on a more insular level at advancing the use of cryptocurrency, there are already stirrings in these same communities about how Decentralized Finance can play greater roles in philanthropy; the basic premise of DeFi is that no one owns or controls it, rather it functions through automated blockchains and individual cryptocurrency investors making collective decisions.

A lot can happen over the next few years as the U.S. and other countries consider regulations to govern this sector, but it is worth noting this undercurrent now and watching how it develops over the next couple of years. Of course, to receive a cryptocurrency grant, organizations will need the internal controls and approval to accept this resource, but with hundreds of nonprofit organizations around the world announcing their participation in accepting cryptocurrency, such as the American Cancer Society, Catholic Charities, Alzheimer’s Association, UNICEF, Susan G. Komen, Feeding America, and the Albuquerque Community Foundation, we expect that this will be a conversation your organization will likely be having soon.

 

Contact: Tonia Brown, Resource Development Officer II, Tonia@thegrantplantnm.com

 

 

 

 

Sources:

Buteau, Ellie, et al. “Foundations Respond to Crisis: Lasting Change?” The Center for Effective Philanthropy. November 2021.

https://cep.org/portfolio/foundations-respond-to-crisis-lasting-change/

“The 2021 State of Grantseeking Report.” GrantStation. 2021.

https://grantstation.com/sites/default/files/2021-05/The_2021_State_of_Grantseeking_Report.pdf

“COVID-19: Have Funders Changed Their Approach & What Will Stick?” Exponent Philanthropy and PEAK Grantmaking. 2021.

https://peakgrantmaking.org/wp-content/uploads/Exponent-PEAK_COVID-19_Report_2020.pdf


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