Grant making is a careful and calculated process that consists of a series of steps with the purpose of supporting a cause which aims to deliver social and beneficial impact.
The grant making process can be complex, requiring caution and mindfulness. The cycle consists of three phases – pre-award, award and post-award, each with specific requirements that must be completed by both the grant maker and the potential grantee. Within these phases, aspects such as criteria definition, analysis, assessment and ranking, selection, communication, monitoring and evaluation, and return measurement are fundamental to successful grant making. While requirements and timelines for each phase may vary by organization, the image below provides general guidance on the grant making cycle as well as best practices. For more information on each phase, click the image.
Grantmaking in Practice
Case Study: The Rockefeller Foundation Demand Driven Training (DDT)
Recognizing the challenge of youth unemployment, and particularly in Africa, the Rockefeller Foundation launched its Digital Jobs Africa (DJA) initiative in 2013. DJA’s goal was to influence systemic change, bringing together the demand and supply sides of the labor market to significantly increase employment opportunities for high potential but disadvantaged youth. Thus, the foundation called for proposals for the Demand Driven Training (DDT), a program that would foster skills development initiatives that are customized to respond directly to the specific requirements of a job role, for an employer or a group of employers, and lead to placement in employment or self-employment. Demand-Driven programs develop and prepare youth for specific job roles.
Through a Call for Proposal application process, Making Cents International was awarded the grant of $649,742 to implement this program, ensuring that it is applicable across all sectors because it seeks to develop a strong link between formal training and actual industry requirements. It is a methodology, a systemic approach to linking skills to demand. Since the start of the initiative, more than 150, 000 youth have been trained, with more than 45,000 successfully placed in jobs.
Upon completion of the grant, the Rockefeller Foundation and Making Cents International launched the Demand-Driven Training (DDT) Toolkit, which brings together lessons learned from the work done with grantees and partners under DJA since the beginning, on how to better link youth with jobs, with both them and their employers reaping optimally.
Making Cents International created the toolkit by collecting information through a literature review, and site visits with five leading South African DDT providers, and five leading global DDT organizations operating in various markets. It also input by development investors such as Accenture, JP Morgan Chase, the MasterCard Foundation, Prudential, and USAID among others. Eight public and private South African technical and vocation education and training organizations also provided important background and context to their own.
DDT is a proven model that shows significant results in transitioning disadvantaged youth to sustainable livelihoods.
The Legal Implication Of Giving
The legal implication of giving is largely tied to tax laws. In the United States, grant makers are often given a tax exemption known as 501 (c) 3 status. This tax exemption comes with stipulations, one of which being that grant making resources cannot be used for lobbying purposes to influence legislation. Similarly, in Canada, under the Income Tax Act, registered charities (grant makers) can only use their resources for their own activities or to registered grantees, which are for the most part exclusively Canadian. For non-Canadian grantees, the funding organization must have direction and control of the resources allocated, failure of
this may lead to a 105% penalty on the amount transferred and/or revoking of charitable status.
Grant making efforts can sometimes be impacted by sanctions and government policies. Grant makers within the European Union for example are required to follow strict regulations where funds are directed to grantees in countries facing sanctions. Similarly, the reverse situation applies in some countries. For example, In Algeria, organizations are not allowed to receive donations from foreign grant makers without prior approval from the government.
Lastly, grant makers must strive to address the topic of governance thoroughly. Given that most grant makers particularly philanthropies are solely accountable to their Board of trustees (versus shareholders, donors, tax payers etc.), strong efforts must be made to ensure that potential conflicts of interest are addressed well in advance of grants being awarded. Conflict of interest can come in the form of a grant makers staff, board members or their relatives benefiting financially from a grant.
In conclusion, grants provide the means to transfer money, technical assistance, and expertise to partners, organizations and stakeholders in exchange for their contributions to set objectives and goals. In seeking the recipient organization to work with grant making organizations are expected to go through a competitive process as highlighted above and but intro consideration the legal implications as well as the roles of stakeholders and methods for managing communication.