Strategic giving (also called proactive grant-making) is the act of financial giving with clear and focused goals that are defined by a set of strategies for how the organization is to accomplish those goals. The funder thus drives the agenda rather than the grantees, although it is best practice to include grantees in the creation of the goals and strategies. As a philanthropist, you are likely to know what your preferred causes are and your intentions to make a difference in a specific area, it is the mechanism through which you perform this giving that requires scrutinization and strategic thought. As such, philanthropists can organize and strategically give through four stages: investigating and identifying an organization; structuring the giving; monitoring the process; and evaluating the program.
1. Investigating and Identifying an Organization:
Most philanthropists are already aware of a certain number of organizations working in the areas that interest them or that they are already supporting. In order to achieve the greatest impact possible, one must find the organizations best suited to helping givers achieve their philanthropic goals. Typically, there are four common ways to find such organizations:
Soliciting requests for proposals (RFPs) from interested organizations.
The process of researching organizations, often referred to as due diligence, serves as an opportunity to gain substantial knowledge about the organization, its leadership, financials and strategy. This is done in an effort to ensure that the philanthropist has enough information to make the right investment decision. When considering identified organizations, there are aspects of the organization that should be considered.
It is important that the philanthropist tailor his/her due diligence to the specific causes and impact they wish to see. The aim is to ensure that through this due diligence, the philanthropist will be able to identify an organization that is well positioned to carry out the proposed goals with the investment that will be made
2. Structuring the Giving
Once the selection process of a grantee organization is complete, the next step is to determine the structure of the grant. The duration, amount, and conditions of the grant should be declared at the beginning of the donor-donee relationship in order to ensure
clarity. As the grantee, donors may decide to fund a particular project or the organization as a whole, the amount they wish to offer, their level of involvement and, how they wish to see the money used and the frequency of engagement and reporting. Typically, the grantee will provide a ‘Statement of Need’, detailing the purpose of the grant request and what kind of resources are needed to achieve this goal. This statement should declare how much is needed and if it is a one-off payment or disbursements are required over time. It is important to ensure that relevant and timely data and financial information is provided by the prospective grantee to support their needs/request and the philanthropist has to engage in his/her own research to verify them before proceeding any further. Once the structure of the grant has been accepted by both parties, a formal contract is signed between the parties and the work begins.
3. Monitoring the Process
Monitoring entails paying close attention to what is being done to ensure that the project is on track according to the pre-agreed terms and impact targets. As such, it is important that there is a clear set of explicit principles to guide monitoring, evaluation, and learning practices across the grantee organization or and/or across the program. These principles or evaluation frameworks should be based on the concept of testing the core strategy of the program and should be planned out very early in the strategy development of the program. Outcomes should be matched to targets. Indicators and monitoring efforts should be streamlined and kept simple so that they can be effectively communicated. Periodic updates should be provided by grantee organizations to donors. These updates, done either in person, through email or phone call, should cover the progress, issues, achievements against pre-set milestones, and plans to complete the project and achieve impact.
4. Evaluating the Program
Evaluation is looking back at what has been done and extracting valuable knowledge from the experience. Depending on the size and complexity of the intervention, it may be suitable to use third-party evaluators to ensure objectivity. It is important to recognise that failure to meet the intended goals does not mean the grant has been wasted. As the monitoring goes beyond a financial audit, there are opportunities to use the information gathered and share the lessons learnt for others to build upon.
When a grant has reached the close date, it is up to the donor to decide whether to renew the grant, or to exit. Each option has its specific process, and is linked to the purpose of the first grant in the first place. The renewal investigation should be similar to the original investigation but will focus more on the progress and updates since the prior grant and an evaluation of the case for another round of funding. Depending on the project, renewal investigations can sometimes be faster and simpler than the initial investigation.
The aim of monitoring and evaluation is to ensure that if your goals are not met, lessons are learnt as to why it did not happen. The knowledge and lessons gained should be used to institute new practices and procedures to ensure that data and evaluation findings are consistently used for adaptive management and further knowledge sharing.
Measuring Impact and Communicating Change
Measuring impact of any program or cause is extremely important. At the most fundamental level, philanthropists want their grantees to be accountable. Moreover, the process of measuring program impact, reveals insights and knowledge that can be leveraged for future investments and further development. There are several methods to measuring impact within philanthropic landscape with the most common being evaluation assessments, Return on Investments (ROIs) and systems thinking.
Evaluation: Evaluation is the most established method of assessing results in the development sector as it helps the philanthropist, the organization and other stakeholders gather information on whether or not an intervention has worked and the reason behind the results. Types of evaluations include goals vs. outcomes, process evaluation, experimental design, and cluster evaluation.
Return on Investment (ROI): The ROI approach is very appealing to philanthropists who believe that measurement is a critical goal and of the upmost importance. ROI creates an environment for the production of blueprints that can be replicated by many donors and organizations in the development field. However, one disadvantage of this method is that it may not always use a long enough time period when assessing impact. Also, many complex issues philanthropy aims to solve simply does not have enough information available to be able to create the equations and formulas that provide reliable and actionable answers. Therefore, ROI calculations often rely on a series of assumptions.
Systems Thinking: It begins at the broadest level of a multifaceted problem and attempts to identify all the major underlying factors. It then assesses which interventions offer the greatest potential for changing the whole system. Whatever method is adopted when attempting to measure impact, it is vital that philanthropists hinge their expectations on their context in which the interventions are being implementing order to gain realistic and factual results from the evaluation process. The difficulty of measuring effectiveness and impact can be one of the greatest frustrations that many philanthropists face. However, it is critical for sustained philanthropic engagement. “One of the hallmarks of thoughtful philanthropy is the co-development of a generous gift alongside a well-designed assessment plan”.
Strategic giving within philanthropy is a powerful and effective way of executing your personal philanthropic goals using evidence-based mechanisms and structures. Philanthropy is not a linear journey and there are several ways to ensure that your giving is strategic, particularly when an institutional foundation is not incorporated. What is essential is that there is a clear plan from the outset with goals and measurement frameworks that will accurately analyse the impact the financial commitment is making. The results of monitoring & evaluation exercises are critical in order to learn from and utilize in order to make better-informed decisions about the resources available in the future.