Bridgespan and Ford Foundation Unveil New “Grantmaking Pyramid” to Reframe Funder/Grantee Conversations

06/27/2017 | 1 min |

Summary

A recent survey showing that half of nonprofit organizations suffer from persistent deficits and scarce reserves underscores need for new approach
BOSTON, MA—June 27, 2017—The Bridgespan Group and The Ford Foundation today unveiled a new “Grantmaking Pyramid” aimed at building strong, resilient nonprofit organizations that can achieve results. According to Bridgespan Partner Michael Etzel, the “Pyramid” offers a systematic approach to helping organizations be successful.
 
A Bridgespan survey of 300 grantees that account for a third of the combined spending of the top US foundations revealed that: more than half suffer from frequent or chronic budget deficits; 40 percent have fewer than three months of operating reserves; and, 10 percent showed no reserves—making that group technically insolvent. According Etzel, who co-authored the article that shares these results, “Given the prominence of the nonprofits we looked at, the results came as a surprise. Something is deeply wrong when a system so consistently leaves nonprofits struggling and we want to help change that.”
 
Co-authored by Hilary Pennington, Vice President, Education, Creativity, and Free Expression at the Ford Foundation, the article asserts that investment in organizational capacity and financial resilience provides a crucial foundation for nonprofits to advance their missions but that funders and grantees too often neglect to focus there. According to Pennington, “Ford believes that its grantees must be equipped to play the long game, which means doing more to strengthen their core capabilities and financial health, not just fund programs.” In fact, the Ford Foundation has made the “Grantmaking Pyramid” the centerpiece of its new BUILD Initiative, a $1 billion investment over five years to strengthen the resilience and effectiveness of key grantees. 
 
The “Pyramid” illustrates a sequential hierarchy of needs:
  • Nonprofits need to build strong foundational capabilities to cover actual costs of core functions such as technology, rent, staff development, and other capabilities specific to their service and business model
  • Nonprofits need organizational resilience based on financial health, which implies accumulating unrestricted net asset balances
  • Nonprofits need to deliver effective programs, a springboard for scaling and sustaining impact
“By focusing attention on an organization’s foundational and financial needs, the Pyramid aims to prompt a discussion that leads to making investments in the right order,” said Etzel.
 
“We are encouraged that for our first batch of BUILD grant recipients, the “Grantmaking Pyramid” is having the desired effect,” said Pennington.
 
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About The Bridgespan Group
The Bridgespan Group (www.bridgespan.org) is a global nonprofit organization that collaborates with mission-driven organizations and philanthropists to break cycles of poverty and dramatically improve the quality of life for those in need. Our services include strategy consulting, leadership development, philanthropy advising, and developing and sharing practical insights.
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