5 Common Philanthropy Mistakes You Cannot Afford to Make

There are many rules of thumb and lists of best practices out there for grantmakers. Yet, so many grantmakers seem to get caught in ruts of practice and policy that hold them back from achieving the effectiveness and impact they want to deliver. Here are five of the most common mistakes that I’ve seen through my practice, and even seasoned grantmakers make them over and over again:

#1 Cutting yourself off from new ideas

I believe in the power of strategic philanthropy – being focused on your goals and funding the strategies and practices that you believe will lead to the greatest impact. However, many strategic funders take this idea to the extreme and refuse to entertain new ideas, learn about how emerging needs, or identify new opportunities. They slap “We don’t accept unsolicited proposals” all over their website and refuse to share the email address or phone numbers of their program officers, hoping that no one new finds their way in. In their efforts to be focused and strategic, they risk becoming insular and out of touch.

#2 Not taking an honest look at your own grantmaking

If you’ve been disbursing funds to nonprofits for more than a few years, it’s time to step back and take a look at your grantmaking – both the process and the outcome. If you are a philanthropist writing checks from your checkbook, but your assets are growing and you want to have a greater impact, you might consider setting up new systems and getting more organized in your giving, such as starting a foundation or a donor advised fund. Grantmaking foundations should conduct grantseeker surveys to understand how nonprofits experience them, and assess whether their systems and processes need updating (e.g., funding guidelines, application questions, grants management system, decision-making, etc.). When one of my clients, the California HealthCare Foundation, did that they discovered 15 ways to improve communication with their grantees. Additionally, you can review the grants you have made thus far to identify patterns, gaps and opportunities. For example, an increasing number of foundations, such as the Annie E. Casey Foundation, are examining their grants through a lens of race equity and inclusion.

#3 Making the simple complex

Grantmakers often take something that should be relatively simple and straightforward, such as an RFP for hiring consultants or a grant application, and add unnecessary complexity and confusion. I once read a consultant RFP three times and still didn’t understand it – the organization had created such an overly complex system for managing consultants and technical assistance providers that even if I qualified (which I could not figure out), I would never want to work with them. I see this commonly with RFPs and applications for funding. The same question is asked three different ways, and none of the questions get to the heart of the matter. The grantee is left wondering which information he is supposed to use to answer which question, and never feels he has an opportunity to showcase what his organization wants to accomplish.

#4 Having a poverty mentality

I know it sounds counterintuitive. How could a high wealth individual or grantmaking foundation, with millions or billions in assets, have a poverty mentality? It happens all the time. A poverty mentality is a belief that money should not be spent on internal investment unless the need is urgent, opportunities are limited by capacity, improvement is always incremental, we should do more with less, and we don’t deserve the best, fastest, or most efficient path to success. It is based on fear of failure, feelings of guilt, and a misguided belief that maintaining a Spartan operation equates to delivering value for grantees and communities. I see it all the time: local grantmakers that don’t seek the top experts in the US or world to inform their grantmaking; large private foundations that refuse to hire adequate administrative staff, thereby forcing their top talent to waste time scheduling meetings and taking minutes; and donors whose wealth came from savvy business practices, who then hire unqualified bankers or attorneys to manage their new foundations. Instead, funders should adopt an abundance mentality, believing that internal investment is important, opportunities are a reason to grow capacity, advances can be made in leaps and bounds, success can be replicated and improved, we can handle most situations and challenges (or bounce back quickly), and we deserve to make investments in order to realize the greatest outcomes.

# 5 Ignoring communications

After many years of consulting to philanthropy, I am convinced that effective communication is a key ingredient to effective grantmaking. Funders that ignore this are selling themselves and their communities short, and not maximizing their investments. Funders that want to have an impact on systems and policy need to have a clear brand and identity, so that key partners understand and trust them. Funders launching new initiatives, such as one to improve K-12 education across a state or improve mental health services in a city, need to recognize that their initiative will only grow in complexity over time. A comprehensive communications plan can help ensure that internal and external stakeholders are continually informed and engaged. I guarantee you that if funders don’t prioritize communications planning now, they will to pay the price one, five or ten years from now when grantees and partners aren’t coordinated and are unable to stay on the same page, and stakeholders are confused by what the foundation is trying to do. The unfortunate result of that will be that your partners and stakeholders will quickly start losing confidence and the initiative will lose traction.