Making the Most of Every Dollar – best practices in grantmaking
United Way of the Midlands (UWM) has a rich history of stewardship, with over a century of experience in distributing funds to address the evolving needs of the community. As a trusted entity, UWM has always prioritized community voice and best practices in its grantmaking processes. However, the dynamic landscape of philanthropy, exacerbated by the challenges posed by COVID-19, and our commitment to continuous improvement, drove us to evaluate our grantmaking practices with consideration to trends in the sector, feedback from agencies and our local culture of partnership.
The impact of COVID-19 prompted significant shifts in funding approaches, with nearly 80% of funders adjusting their strategies. In addition to virtual work, 50% increased payouts to meet the rising community need. Additionally, funders provided increased flexibility in the application process, use of funds and reporting. In a time of great uncertainty, many funders drew upon strong, transparent relationships with their grantees – grounded in mutual respect and trust. This goes beyond the application phase into regular check-ins and feedback sessions. An increase in trust-based philanthropy fosters open communication and empowers organizations to address their unique needs, ultimately leading to more effective and sustainable impact.
UWM has a rich history of dialogue and partnership among funded nonprofits. In 2023 we launched a survey to identify where UWM excels as a funding partner, and where we can improve our relationship with the programs we support – it’s part of our commitment to fostering a collaboration across our circle of support. “UWM is unique because they are a very approachable partner”, said one agency CEO. “They take an interest in helping partner agencies grow to meet their potential.” In total, 47 partners participated across UWM’s complete portfolio.
In fact, 92% of our funded partners said they feel UWM is truly invested in their success. “UWM is very receptive to the constantly changing needs of the community,” said another CEO. “They trust organizations as to what is important and assist accordingly."
Many organizations noted the scope of the application and reporting requirements of UWM exceed many other funders – and in some cases is disproportionate to award amounts. While philanthropic organizations operate with a board of directors, many do not have 40,000 donors or stakeholders relying on their stewardship. United Way has an obligation to our donors to perform due diligence, and ensure we fund the programs our community needs. We also strive to be exceptional partners – asking for what we need and providing resources and flexibility to assist where possible.
In addition to increased trust and partnership, best practices in grantmaking include offering multi-year funding and reducing restrictions on use of funds. Funders also stress making the application process as clear and transparent as possible, eliminating unnecessary or repetitive questions and communicating funding priorities. Drop down menus, selections and word counts can help avoid vague responses and streamline the application.
Funders are also becoming more flexible in the types of materials that may be uploaded to support the case for funding. This includes space for additional supporting documentation, videos or reports, as well as financial information. Funders may offer budget templates, but many times this creates a burden on agencies to rearrange their budget to fit the unique funder categories. Instead, many funders are beginning to accept the program’s internal budget – eliminating an extra step and providing the agency with a chance to share about their program from their perspective.
Addressing social and economic disparities continues to be a trend for grant makers, not just United Way. Questions focused on populations served and representation are becoming more common. Our research further shows that funders are sharing more about funding priorities and amounts. Grant guidelines often include information about a grant range – and the application process should align with the size of the grant. By setting these expectations up front, the process helps to filter out unfit applicants. However, in some cases a short Letter of Intent (LOI) can be helpful in determining alignment. LOIs also prevent nonprofits from spending excessive time on an application when they are unlikely to be funded.
To manage the expected surge in applicants, we introduced a Letter of Intent (LOI) and Due Diligence process. This serves a dual purpose: to gauge the volume of incoming applications and to ensure alignment with our community investment goals. The LOI allows potential grantees to express initial interest, while the Due Diligence process provides a structured framework for conversation, creating space for applicants to share clarifications and ask questions. The LOI and application will be managed through our new grant management system, WizeHive. We have already received positive feedback on these updates. Additionally, UWM instituted a minimum investment of $25,000. This update promotes investing for impact; no maximum was set to allow UWM to invest significantly in exceptional community programs. In line with volunteer feedback, we also revised how some of the application questions are asked to avoid vague responses and to better understand service to and representation of target populations – for instance, using drop downs or fill ins. These additions aim to enhance the review process, foster transparency and address the increased demand for community support in the coming cycle.
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Click HereSources:
Arizona State University Center for Philanthropy and Nonprofit Innovation: What grantmaking practices should foundations adopt to best support nonprofit organizations?, 2021.
Blue Cross Blue Shield of Minnesota Foundation: Effective Grantmaking Practices that Support Nonprofit Sustainability
Center for Effective Philanthropy: Foundations Respond to Crisis, 2021
Good Grants: The Impact of Covid-19 on Grantmaking Practices
Good Grants: Due diligence for grant makers, 2023
National Committee for Responsive Philanthropy: Good Grantmaking Practices
Submittable: How to Attract and Select the Right Grantees, 2023.
The Putnam Guide: 5 Best Practices of Extraordinary Grantmakers, 2017
Trust Based Philanthropy Project: Building Trust Through Regular Check-Ins
Trust Based Philanthropy Project: The 6 Grantmaking Practices of Trust-Based Philanthropy