Five Ways Funders Can Use Consultants to Move Beyond Grantmaking

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From impact investments to advocacy campaigns to launching new organizations and more — foundations are looking for new ways to deliver impact outside traditional grantmaking. Consultants to philanthropy can provide great value when foundations wish to broaden their work and their core competencies. In their Foundation Review article, “Going Beyond Grantmaking: Using External Help to Extend a Foundation’s Core Competencies and Increase its Impact,” authors Gwen Walden, Lauren Marra, and Katrina Briddell of Arabella Advisors highlight five ways in which consultants can deliver value for foundations that want to stretch their wings.

Augment Strategic Planning and Help Build Buy-In

Making an impact investment, collaborating on an advocacy campaign, or incubating a project requires extensive planning, not to mention significant time and resources that could go to other work. Before engaging in such efforts, funders need to pick and choose among approaches, establish a clear vision, and do the planning work. They also need to develop a compelling case for making investments that may entail more risk than do ordinary grants.

During planning, the right consultant can often provide a needed external perspective, helping funders sort through competing priorities, develop visions and strategies, and plan for seeding and scaling investments. Foundations can use them to conduct research and analysis, help assess risks versus potential rewards, and even facilitate board and other stakeholder buy-in and decision-making by delivering information, guidance, and structure to the planning process.

Capitalize on Issue Expertise, Technical Acumen, and Implementation Experience

Before taking on a new approach to making social change, funders should ask whether they have:

  • sufficient issue-area expertise to make strategic decisions,
  • familiarity with the mechanics of the proposed approach, and
  • sufficient capacity and the right leaders to bring the idea from inception to implementation.

If and when foundations lack the requisite internal capacity in any of these areas, they may wish to turn to consultants for support. For example, foundations may wish to use consultants with issue-area expertise to help acclimate themselves to a new landscape, learn about its key players, and identify gaps to address based on the field’s needs and their own internal strengths and weaknesses. Just as important, consultants with deep technical expertise are often well positioned to help funders better understand an investment vehicle or the ins and outs of a collaboration or advocacy approach. Foundations can use them to shorten learning curves and benefit from established practices that others have tested.

Build Cross-Sector Connections and Function as Third-Party Facilitators

Foundations now widely acknowledge that public policy, business actors, and other stakeholders are often critical to achieving long-term, systemic change. Because consultants’ work often entails building cross-sector connections and networks among multiple practitioners in a field, funders can frequently use them as bridges and conveners, building connections and gaining perspectives through them. Often, consultants can help facilitate communication between and among funders and other stakeholders and even translate between actors with shared goals who come from different sectors. Consultants can also function effectively as neutral facilitators and coordinators, enabling foundations and other stakeholders whose interests may align only imperfectly to cooperate on matters that matter to all.

Capitalize on Tools and Vehicles That Lower Risks and Costs and Increase Speed to Market

Going beyond grantmaking sometimes involves employing tools and vehicles that foundations may not have at the ready. In such cases, funders can extend their own capacities by employing consultants with legal, financial, or other technical expertise. Such expert consultants can help them identify and think through the vehicles and platforms that are most appropriate to implement, given the foundation’s needs and impact goals. For example, funders may want to use a 501(c)(3) intermediary organization or a full-service fiscal sponsor to incubate new charitable initiatives, or partner with other funders and use an intermediary as the platform for hosting a donor collaborative or managing a pooled donor fund. They might even want to explore other social enterprise structures, including the flexible purpose corporation, the benefit corporation, or the L3C. In each case, experienced intermediaries and service providers can help.

Gather and Deliver Objective Feedback

Like everyone engaged in solving complex social problems, funders can often benefit from the perspectives of external stakeholders, including issue-area and technical experts, grantees and their beneficiaries, and policymakers. In many cases, consultants are better positioned than are foundations themselves to gather honest feedback from other stakeholders, evaluate the foundation’s work, benchmark it against the efforts of others in the field, and identify insights that may be replicable. Notably, such work is often even more important in relation to innovative efforts that go beyond grantmaking than it is with more established programs that may have tried-and-true feedback loops in place. Foundations can use consultants as their eyes and ears in efforts that operate outside the normal grant-report cycle, and in which candor and quick adaptation carry a particularly high premium.

Foundations that want to leverage more than one of the five areas listed above may need to find more than one consultant or firm, depending on the expertise and experience required. For examples and case studies about foundations that used consultants to move beyond grantmaking, download the full article.

 

This post was adapted from “Going Beyond Grantmaking: Using External Help to Extend a Foundation’s Core Competencies and Increase its Impact,” written by Gwen Walden, M.A., Lauren Marra, M.P.P., and Katrina Briddell, M.T.S. of Arabella Advisors. This article appeared in first-ever edition of The Foundation Review dedicated to philanthropy consulting (vol. 7, Iss. 1). Click here for this article and other open access articles from this edition.

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