If Only One in Ten Foundations Provides Multi-Year Grants, What Are the Other Nine Doing?

posted on: November 14, 2012

By Kevin Laskowski

Image courtesy of jscreationzs / FreeDigitalPhotos.net

I should have been excited by The Foundation Center’s Reporting Commitment (press release) as a breakthrough for philanthropic transparency and accountability. With 15 foundations signed on so far, it is such a breakthrough, but upon release, I was just excited that the new grants data include “grant duration.”

Using Foundation Center data, NCRP’s latest The State of Multi-Year Funding found that only one-tenth of sampled funders reported some multi-year grantmaking. By contrast, at least three-quarters (78 percent) of sampled funders reported some general operating support from 2008-2010 (see The State of General Operating Support). Among those that report multi-year giving, such giving is substantial: 41 percent of those foundations that report multi-year giving reported giving at least half of their grant dollars as multi-year grants. However, 90 percent of sampled foundations either do not provide multi-year grants or do not report them.

That’s a significant, easily remediable gap in our philanthropic knowledge. Our figures for multi-year giving are captured only for foundations that provided full authorized grant amounts and grant durations either publicly or directly to the Foundation Center. The question remains: if only one in ten foundations is reporting multi-year grants, what are the other nine doing?

We don’t know for sure, but we have a pretty good idea.

It’s possible – though unlikely – that vast amounts of multi-year giving are escaping notice. Reported multi-year giving never comprised more than 28 percent of total grant dollars or 6 percent of grants authorized for the years analyzed. Among foundations that did report multi-year giving, though, it has comprised as much as three-quarters (75 percent) of total giving and 29 percent of grants authorized. If all funders accurately reported grant duration, there seems to be ample room for these figures to improve. But what do we then make of what our members and other nonprofit associations have long maintained about how hard it is to obtain a guarantee of multi-year support?

It’s more likely that “continuous support grants” are still the order of the day. These grants are annually renewed by the same grantee but require a new application process. Bradford Smith, president of The Foundation Center, has written, “Between 2008 and 2010, some 1.1 million grants tracked in Foundation Directory Online went to 128,000 recipients. In other words, the number of new organizations entering the funding portfolio of a foundation is far less than the number of grantees who are renewed year after year.”

“Foundations are more faithful than you may think,” he says, which is of some comfort to nonprofits hoping for renewal.

There are no guarantees, however, and that’s part of the problem with continuous support.

It’s a problem that’s compounded when foundations can hide behind incomplete data, data that are always good enough to praise but never robust enough to hold funders’ feet to the fire. Whatever you think of multi-year giving, or the appropriateness of it given the causes and communities you care about, it’s worth your time and effort to account for those decisions. A field-wide commitment to timely, complete reporting can do much to improve the field.

It’s time for foundations to get serious about multi-year grantmaking—and about reporting it. The Reporting Commitment is definitely 15 steps in the right direction. Here’s hoping for more.

Kevin Laskowski is research and policy associate at the National Committee for Responsive Philanthropy (NCRP). He frequently blogs about trends, accountability and effective practices in philanthropy. He’s a walrus. Goo goo g’joob.