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How Funders Reduce “Nonprofit Starvation” with Tech Funding & Data Best Practices

ExP blog photo.pngBetween the oft-cited “nonprofit starvation cycle” and a movement to debunk the “Overhead Myth” that holds many in philanthropy back from supporting nonprofit operational expenses, it can feel like the state of nonprofit funding today is grim.

We think that powerful examples of best practices can help turn the tide. So let’s talk about what’s going right. Some leading funders are increasing nonprofit capacity and supporting critical operations in key ways. 

Supporting Technology Infrastructure 

Funders like Tipping Point Community and Robin Hood Foundation see the support of technology infrastructure for their grantees as critical to supporting nonprofit effectiveness and achievement of outcomes. 

“It’s a no-brainer to fund technology for grantees if you’re focused on outcomes,” says Nick Arevalo, Senior Program Officer, Impact and Learning, at Tipping Point Community. “We see technology as an essential tool for direct service organizations’ ability to work better, smarter, and more efficiently in helping people to get out of poverty.” 

These technology projects are diverse, for a diverse set of nonprofit needs. Robin Hood Foundation assists with up to 75 percent of costs for myriad projects from websites to databases to apps for communicating with clients. “The lion’s share of our funded technology projects have to do with how grantees work with data, for example, moving from Excel to a new database,” says Greg Kieser, Technology Strategy Consultant at Robin Hood Foundation. 

Funders are also supporting their grantees in learning how to work with data. We would define this component, like technology infrastructure, as an essential part of modern nonprofit operations. 

Bernadette Sangalang, Program Officer at David and Lucile Packard Foundation, says, “We’ve set aside a small pool of funds to help our grantees with evaluation needs and capacity building. Each of them is different in terms of their capacity to use, collect, and store data. We have our outside evaluator work with them on varied projects, even to be better at evaluative thinking.” 

Reducing Data Burdens 

Not only are some funders better funding core nonprofit infrastructure, they are also streamlining their interactions with grantees to reduce what could be dubbed “communications overhead.” One key way they do this is by removing data burdens on grantees. They deliberately define the data they need from grantees and use it well. This data collection might come in the form of surveys, interviews, or even initial grant applications. 

“If you’re going to ask for the data, make sure you know what you’re using it for,” Arevalo advises. “We want to be sure that when we’re asking grantees to go work with a client, input the data, collect, analyze, and give it back to us, that we’re going to utilize that information. We understand it’s a heavy lift and that they have other things they could be doing with that precious time. It’s also critical to articulate your goal back to the grantee, so they know it’s not just going to sit there after all the work.” 

Not only does Tipping Point Community have conversations based on grantee data on a weekly basis, they also use tools astutely to ease their grantees’ data sharing. Their organizational needs survey is housed in an online form integrated with their CRM (customer relationship management) system. This digital survey integration allows grantees to save and return their forms later, with no need to send emails. As well, the data is entered directly into Tipping Point Community’s system. The foundation is able to log in and quickly find this data, rather than its becoming buried in an inbox or paper file folder. 

Better Understanding Grantee Needs 

These funders are also working more effectively by using data-driven decision making, which helps them stretch the resources they are providing to grantees. 

They use data management systems to analyze grantee data for challenges and opportunities. In doing so, they are able to better understand grantee needs, build stronger relationships, and provide better support. 

“We’re consistently using the data to find out where we can provide more system support to an organization,” Arevalo says. “We look at pain points and areas of potential improvement where we can bring additional resources. Whether that means drawing upon the knowledge of our team, engaging a pro bono partner, or hiring a consultant who is an expert in the field, we use data to help us pinpoint the exact area of grantee infrastructure that needs support.” 

Learn more about the data practices funders are using to support the sector, featuring stories from real grantmakers like Tipping Point, James Irvine Foundation, and Robin Hood Foundation. Download the recent report Data-Driven Funders: In Search of Insights, written by GuideStar and Exponent Partners. 

pamela-fitch-125x175.pngThe preceding is a guest post by Pamela Fitch of Exponent Partners. Pamela brings together deep experience in philanthropy and technology, spanning nearly 20 years. Her roles have combined skills in technology strategy, leadership, strategic program development, and sales consulting. She has also worked for multiple foundations, serving as executive director of Dell Computer Foundation as well as program officer for Prudential Foundation. Mission-based firm Exponent Partners serves nonprofits in three core practice areas of philanthropy, human services, and education. Their solutions on the Salesforce platform help foundations manage grants, constituent data, applications, analytics, organizational outcomes, and more.

Topics: Technology Overhead Myth Grantmaking Funding nonprofit starvation cycle