The Dangers Of Grant Dependency

Grants are wonderful.

Grants can put aside the whole “money problem” that every socially minded organisation worries about, allowing them to focus on creating positive change.

It’s not “free money” as such; there are strings, conditions and acquittals, which do take up a portion of your time. It makes sense, if you’ve promised a grantor that you’ll deliver a certain result, they’re entirely justified in checking up on how your progress is going.

Grants can kickstart an organisation, but won’t sustain an organisation. That’s not the fault of philanthropists either, there’s a growing push for grant recipients to become financially independent.

This is driven by the concept of leverage; there’s something attractive about making one grant early on that sparks a self-sustaining enterprise, which will not need future handouts in order to survive. This principle is known as Catalytic Granting (one grant catalyses a whole enterprise) and is quickly becoming the norm.

In my work, I often assist groups who haven’t made the leap to financial independence, who are therefore in a scary situation.

It started out so well; maybe they had three consecutive grants, or were funded by the state government.

But then comes the inevitable change; their grant applications aren’t successful, benefactors move on, or there’s a change in government policy and they no longer tick all the boxes.

In all of these scenarios, the organisation is usually doing the best work or the most work that they’ve ever done. They’re seeing results! Making a difference! And yet… are now going out of business…

This is what scares me about grants. Grants are wonderful, building a dependency on future grants is diabolical. The unlikely truth is, if you want to make more social impact, you need to be able to fund yourself. You can still receive grants, but you’re no longer losing sleep over them.

“But Isaac” you are saying, “We can’t make money. The nature of what we do just CAN’T ever be self sustaining”

I do sometimes work with groups who are like this. If this is you, you’re not excused from the push towards financial sustainability.

If you rely on donors, then your job is to get really good at acquiring, entertaining, motivating and retaining donors. You need to be an expert on how new people first find you, what appeals to them, how they make decisions and what pushes their buttons.

This is what will keep you alive, this is what will ensure you always have a surplus. The skills involved in creating a social enterprise still apply, even if your customer doesn’t technically buy a physical product.

“Nope, you’re wrong. We have a great philanthropist behind us and that will never change!”

I hope you’re right. However, the trend is going one way – philanthropists love the leverage story, as do investors. Government funding is drying up, moving from Aid to Trade, as they say. Things like the NDIS put your future in the hands of your customer, not your funder. Now is the time to get good at running a more commercial style of operation.

One that can compete.

One that can evolve.

One that will endure.