Your Grants Are the Floor, Not the Ceiling

The more I have been working with grantmakers the more I have come to value the impact they can have outside of their direct grantmaking. Indeed I now think that it is non-trivial in almost all cases and in some cases even the larger part of a good grantmaker’s impact.

By non-grantmaking impact I am looking at everything outside of money that moves directly through that foundation and results in a grant. Let’s pick on the Gates Foundation as a good public example. Yes they have given tons directly to key issues but there are also lots of non-grantmaking impacts they have had in many ways there direct grantmaking is the floor of there impact. Let’s look at three examples.

1. GAVI

2. The Giving Pledge

3. Seal of approval of having been funded by X

GAVI is pretty great, one of the largest vaccination entities in the world. Gates was instrumental in creating it and only put in about 12% of its lifetime funding. This gives huge leverage on a fund that has now moved over $60 billion dollars to effective areas. This effort took a lot more than the initial grant with considerable legwork put into promoting it and building it up. This would not have been viable for a passive foundation to do and created far more impact than the direct grantmaking would suggest.

The Giving Pledge is even less direct, creating a funding community that has gotten hundreds of pledges from people collectively pledging at least $300 billion. The cost of running the Giving Pledge is tiny but the impact it had on the conversion of philanthropic giving was large and ongoing.

The most abstract example is the benefit of getting a “Gates-funded” stamp for a charity. Many NGOs speak of this as being a useful signal to governments and private capital alike, even if the cheque size is relatively modest. This impact can be more important to many than the funding itself.

These three examples are just the tip of the iceberg. A foundation leader can shape the incentives of the charities in its ecosystem by what it puts out publicly, can encourage other funders in the space to donate more or better, and can create outcomes that would be impossible for a non-funder to do. And yet most funders are fairly passive in their approaches, mostly utilising the direct impact of their grantmaking. However many of the best foundation leaders I have seen are experts at using this softer power to build out an ecosystem rather than being the best direct grantmaker or researcher in the field.

Overall I think this indirect impact aspect can make the job of being a grantmaker even more promising than a simple estimate would suggest.

P.S. I am running a closed hiring round for an ED of a new foundation, application deadline May 15. If you think this could be an impactful role for you and you liked this blog post, that is a good sign you should apply!