What Does It Mean to Be a Responsive Steward?

Think about where you find yourself personally and where your organization is on its journey to fully embracing equity-centered, values-driven grantmaking practices. Now, pause and ask yourself: In my position, am I being a responsible or a responsive steward?

Being responsible means you’re focused on protecting your institution’s financial assets and reputation. Being responsive means you’re considering the capacity and needs of the organizations or the communities you want to support and having a certain amount of flexibility in your approach to supporting them. Just because you’re responsive doesn’t mean you’re not being responsible. When you learn something about an applicant that you might deem risky, ask whether there is true risk or whether it is merely perceived. Talk with the applicant and learn about the story behind the situation. You may learn there is nothing to be overly concerned about, and I’d wager that you’ll realize that being a curious grantmaker is essential to being an effective one.

Remember when you started working in philanthropy? What were some of the things you heard from more seasoned colleagues? Speaking for myself, I was told I had to be a responsible steward of the funds donors had entrusted us with. What exactly did that mean? It meant my colleagues and I had to put in place an effective process to help us identify the nonprofits that most closely aligned with the issue areas and organizational requirements and expectations we had in place. Over the years, I found I repeated that statement to myself, to new colleagues, to potential donors, and even to nonprofits. I fully embraced it, though at some point I began to question our processes and requirements as I saw many organizations not receive funding because they didn’t measure up in some way.

The vetting process was rigorous as we knew that, when presenting funding recommendations to our board committee, they would ask us a myriad of questions about the organizations’ sustainability, diversity of leadership, effectiveness of the board, and community impact. Staff placed the bar high because the expectations were that the organizations the foundation funded wouldn’t fail in any way—they’d be sustainable for the long term and have deep community impact. And we heard from both funded and declined organizations that receiving an operating grant was like getting a seal of approval that gave other funders confidence in supporting them.

What I’ve described here likely resonates with you. Perhaps this is the situation at your foundation currently, or perhaps your foundation has operated in this manner in the past and you’re actively shifting away from being responsible guardians of financial assets.

Reimagining practices

We know that our members are committed to equitable grantmaking and to shifting their practices, and that the challenge has often been in shifting away from practices that have been in place for years. Practices like being cautious or risk-averse and having a very thorough vetting process including a deep examination of applicants’ financials. Some have shied away from using technology as fully embracing it may be overwhelming.

To help grantmakers address these practices, PEAK Grantmaking has released a robust set of resources to support our Steward Responsively Principle. Effective grantmakers recognize they must take deliberate and thoughtful actions to address the inequities embedded in their grantmaking practices if they are to truly support those organizations that are most proximate to the greatest community needs.

The action planner, Strategies to Steward Responsively, and accompanying how-to guides walk grantmakers through a process to examine their practices and take actions to shift closer toward equity. Funders can be change agents for responsive stewardship and better center the needs of communities and nonprofits in the grant lifecycle process by taking three actions. Each action step is the subject of an in-depth how-to guide.

Reframe Risk and Rightsize Your Vetting Process: A funder’s perception of what constitutes a risk often results in them investing and reinvesting in the same nonprofits—those with executives and trustees they know, predictable financial statements, and established reputations—at the expense of newer grassroots organizations. A better, more equitable approach to risk management is to reexamine eligibility requirements for funding and clearly communicate expectations. Should a red flag arise when evaluating a potential grant partner, use that as an opportunity to engage with the nonprofit to better understand their context and identify other forms of support you can provide to support their operations.

Recalibrate the Way You Assess Financials: Just as the vetting process design is completely within the funder’s control, so too are the methods a funder uses to assess the financial health of a nonprofit. It is critical for a funder to regularly assess many data points during the application process to identify nice-to-have and need-to-have information to make a funding decision. By extension, a funder needs to create and maintain that delicate balance of continuously maintaining awareness of the nonprofit’s financial health and providing support for the nonprofits areas of need and growth. Here, it’s important to remember that there is no one-size-fits-all measure of financial viability. Rather, funders need to develop the ability to look for a number of indicators of sound financial planning and health, such as bringing in revenue to cover the true cost of doing business, allocating funds to support staff salaries and professional development, and setting aside reserve funds.

Leverage Technology to Drive Equity and Efficiency: Using technology effectively can not only improve operational efficiency, but it can also elevate equity. From the most rudimentary to the most sophisticated grants management systems, technology should be deployed to support data collection, close knowledge gaps, support effective and transparent grantmaking practices, allow funds to be seamlessly moved to communities, and provide grantees a vehicle to share and hear feedback. When technology is strategically deployed to meet these ends, the funder puts grantees on equal footing as true partners in the work.

To learn more about responsive stewardship and what questions to ask to help guide your organization toward more equitable practices, download the Steward Responsively action planner, which is free to all. This action planner is designed to help staff and leaders at funding organizations work through some of the fundamental questions that you will need to address by offering an overview of three action steps to take to evolve your practices. In addition, three how-to guides, which take deep dives into each action step, are also available and are exclusive to PEAK Organization Members and PEAK Consultant Members. And, as always, the PEAK team stands ready to support you and your organization as you refine old practices and adopt new ones. It is always a highlight to work with our members as we collectively shift toward more equitable practices.

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