Topic 13 of 15 · Grantmaking and capacity-building funding
Funding nonprofit capacity building: trust-based and unrestricted grantmaking
Free guides for foundations on capacity building grants, trust-based philanthropy and unrestricted funding for nonprofits.
- 13 resources
- 13 free
- 1 tool or template
- 4 sub-topics
Funders shape how strong their grantees can become. Restricted, short grants with low overhead rates keep organisations fragile, however good the programmes look.
This shelf is for foundations and other funders. It covers how to fund capacity building, why flexible and trust-based funding works, how to end a funding relationship well and how to share decisions with the communities you fund.
You need this shelf if
- Your grantees keep asking for core funding
- You want to support capacity building and aren't sure what works
- You're planning to exit a portfolio or a country
- Your board wants to try participatory grantmaking
Key questions for leaders
- Are you funding the organisation, or only its projects? Pay-What-It-Takes Philanthropy →
- How much of your giving is multi-year and unrestricted? Making the case for unrestricted funding →
- Who decides what capacity a grantee builds: you or them? Strengthening Nonprofit Capacity: Core Concepts in Capacity Building →
- How much paperwork do you ask for, and do you use all of it? Open and Trusting Grant-making commitments →
- How would your grantees rate you, and would they tell you honestly? Trust-Based Philanthropy Self-Assessment Tool →
- How will you end funding relationships responsibly? The Effective Exit: Managing the End of a Funding Relationship →
What's on the shelf
13.1 Funding capacity building
- 13.1C168
Strengthening Nonprofit Capacity: Core Concepts in Capacity Building
A primer for grantmakers on supporting grantee capacity. It defines nonprofit effectiveness, capacity and capacity building, and covers trust between funders and grantees, links to funder strategy, grantee and funder readiness, and 5 types of support from unrestricted grants to collective capacity building. It sets out 3 principles: contextual, continuous and collective. Each section ends with questions for grantmakers, and a final section covers measuring impact.
Start hereClassicKey manual or guideFree - 13.1C167
Capacity Building 3.0: How to Strengthen the Social Ecosystem
A paper that proposes a new way to talk about capacity building, drawing on TCC Group's 35 years of designing and evaluating capacity-building work. It has 4 sections: core concepts and definitions of capacity and capacity building; who needs to build capacity; how the idea of capacity has changed, leading to an organisational actualisation framework; and newer methods used in effective capacity building. Funders and consultants use it to frame their approach.
ClassicResearch and evidenceFree - 13.1C169
Longitudinal evaluation of BUILD
The final report of an evaluation of the Ford Foundation's BUILD initiative, which gave grantees flexible multi-year funding and capacity support. It covers 289 grantee partners from the 2016 to 2019 cohorts, using a survey with 110 responses, 27 interviews, 4 focus groups and document review. Findings show BUILD helped impact and resilience, a second grant consolidated gains, and grantees need clear, timely word on future funding.
EmergingResearch and evidenceFree
13.2 Core, flexible and trust-based funding
- 13.2C174
Open and Trusting Grant-making commitments
A set of 8 commitments for UK funders who want to make grant-making more open and trusting. Funders commit to be clear, ask only what is needed, accept risk, decide quickly, share openly, give flexible funding, communicate purposefully and keep reporting proportionate. The commitments grew out of the COVID-19 response, and funders sign up publicly. Charities and funders use them to check grant practice.
Start hereCurrentKey online resourceFree - 13.2C170
General Operating Support: Action Guide (executive summary)
The executive summary of GEO's 2007 action guide for grantmakers on general operating support. It covers what operating support is, why it matters, how to make it work and how to keep accountability. Foundation staff use it to decide when and how to give unrestricted grants. The full guide is not online.
ClassicShort readFree - 13.2C171
Pay-What-It-Takes Philanthropy
An article that argues funders should pay the real costs of the work they fund, in place of the common 15 percent cap on overhead. The Bridgespan authors show that indirect costs at 20 high-performing nonprofits ranged from 21 to 89 percent of direct costs, with a median of 40 percent. They describe the starvation cycle, show how cost structures differ by type of nonprofit, and propose reimbursing costs by segment.
ClassicShort readFree with sign-up - 13.2C172
Breaking the Starvation Cycle
A research report on whether international funders cover the administration costs of national NGOs. It draws on 81 NGOs in 10 countries and financial data from 286 restricted funding agreements with 92 funders. It finds no group of funders paid a full and fair share. Half the NGOs had 21 days or less of unrestricted reserves. It recommends full cost cover, funding for reserves and cost recovery skills, and better data on cost coverage.
CurrentResearch and evidenceFree - 13.2C173
Making the case for unrestricted funding
A short briefing that brings together IVAR's research on unrestricted funding. It is written for foundation staff and board members who want to consider unrestricted funding and argue for it inside their organisation and with peers. It finds that the preference for restricted funding rests on familiarity and lacks evidence, accepts that restricted grants sometimes fit, and sets out the value unrestricted funding brings to charities and funders.
CurrentShort readFree - 13.2C176
Trust-Based Philanthropy Self-Assessment Tool
A self-assessment that helps a grantmaking organisation reflect on how far it has put trust-based philanthropy into practice. It covers 4 areas: culture, structures, leadership and grantmaking practices. Each section gives reflective prompts on how trust shows up and where practice needs work. It is available as an online interactive tool and a fillable PDF. Foundation teams use it to plan changes.
CurrentTool or templateFree
13.3 Grantee relationships and responsible exits
- 13.3C177
The Effective Exit: Managing the End of a Funding Relationship
A practical guide for grantmakers on ending a funding relationship well. 6 sections cover why exits are normal, communicating clearly with grantees, strengthening grantees' organisational capacity, helping them find new funding, getting the most from the final grant, and exits that are not routine. It includes exit strategies from 4 grantmakers and a sample Healthy Nonprofit Checklist from the New York Foundation.
Start hereClassicKey manual or guideFree - 13.3C178
When Shift Happens: Navigating Toward a Framework for Responsible Philanthropic Exits
A journal article that sets out a framework for responsible exits when a foundation stops funding a field or grantee. Learning leaders from the Skillman Foundation, the California Health Care Foundation and the Pew Charitable Trusts drew on literature, focus groups, interviews with foundation staff and nonprofit leaders, and their own experience. The result is 7 core elements meant to keep a field resilient after funding ends.
EmergingResearch and evidenceFree
13.4 Shifting power
- 13.4C179
Deciding Together: Shifting Power and Resources Through Participatory Grantmaking
A guide to participatory grantmaking, where funders share funding decisions with the communities they serve. It explains why and how funders around the world do this, drawing on input from participatory grantmakers. It covers models, challenges, lessons learned and good practice for inclusive grantmaking. Funders use it to design a participatory process or to explain the approach to boards and staff.
Start hereClassicKey manual or guideFree - 13.4C180
Time to Decolonise Aid: Insights and lessons from a global consultation
A report on how structural racism keeps power in the Global North across humanitarian, development and peacebuilding work. It presents findings from a 3-day online consultation in November 2020 with 158 activists, practitioners, academics, journalists and decision-makers, who left over 350 comments. It sets out recommendations for donors, INGOs and others. The report is available in 15 languages.
CurrentResearch and evidenceFree
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