April 19, 2012

Donors, Grantees, and the Problem of Leaky Pipes

By: The Bridgespan Group

By Alison Powell

What do leaky pipes have to do with philanthropy? Sadly—a lot, according to Tom Tierney, co-founder of Bridgespan and co-author of the book Give Smart: Philanthropy That Gets Results. In part two of Tierney’s recent interview with the Association of Small Foundations’ president, Henry Berman, the two discuss, among other things, the relationship that donors have with the nonprofits they fund, and how such relationships can fall into a “trap.”
  But how does plumbing fit in? According to Tierney, “the linkage between the donor and the grantee—it’s like two pipes that come together; most of the time, the joint leaks because the pipes aren’t perfectly aligned.” So to further the analogy, the donor puts in 100 "gallons," but by the time that resource flows through the nonprofit to the ultimate beneficiary only 75 gallons remain. In other words, "there's waste in the interface between the donor and the grantee—waste that could often be avoided," says Tierney. The result? Money that has the potential to drive great results for society doesn’t meet its full potential.

The truth is that the donor and grantee relationship is complicated. "It's hard to get right," says Tierney. But there are solutions. Tierney offers three imperatives to help solve the problem of the donor-grantee trap. First, “resource it right.” This means making sure you are identifying what resources grantees need to be truly successful against your expectations. Second, Tierney advises donors to “pursue partnership.” All too often, he says, donors feel that simply donating money earns them the title of “partner.” In reality, true partnerships are marked by shared goals—are you and your grantee really trying to achieve the same thing?—and a productive working relationship. Aligned goals and a productive working relationship can likely only be attained over time, with candid conversations that allow for “give and take.” Finally, Tierney recommends that donors and grantees seek to “get better together.” This requires collaborating to learn what is and what isn’t working.

Tierney’s ideas are further fleshed out in the article "The Donor-Grantee Trap," which he co-authored with Bridgespan partner Richard Steele.

Alison Powell is Bridgespan’s Philanthropy Knowledge Manager. Follow her on Twitter @abp615.

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