Rules of Philanthropy: Four Questions to Reckon with the Rules of Philanthropy
In the world of philanthropy we have a lot of rules. Rules that often work against equity and inclusion in the funding process.
Stuff like:
You can't be an individual and apply.
You must have 501(c)3 status to apply.
You can't use a fiscal agent to apply.
You can't use the money for marketing.
You can’t use the money for staff.
You can't advocate with the funding.
You can't be a religious organization.
Don't use the money to help old people. Don't use the money to help young people.
You have to be within these 20 counties to receive funding.
You must be invited to apply.
Send 17 copies double sided with 12 font and 1.25 inch margins. NO STAPLES.
Why do funders have rules?
A few rules are part of the IRS requirements to be a Foundation.
For example, 501(c)3 requirements are important to the IRS and therefore to foundations.
Some of these rules are based on donor intent.
For example, a donor may require the funds to support a particular demographic or region. There’s not much wiggle room in most cases.
Many of these rules were generated by the foundations who use them.
Sometimes they’re trying to steer grantees towards the foundation strategy.
Sometimes they’ve been created to make life easier for people who work in foundations or to quench a specific need of a board member..
Reckoning with the rules:
It’s this last category of rules - the ones to make life in the foundation easier - that need some reckoning. We love people who work in foundations (in fact I was one!) but we worry about the rules that are focused on making life easier. Rules that make life easier at foundations might lead to policies that push proposals or organizations away.
What can you do?
We need to have a reckoning with the rules. Let’s pause and consider who the rules serve and if it’s helping to advance our communities and our missions.
Gather a few members of your team and with a list of the rules, ask:
Did the rule come from the IRS?
If not, who does it serve? Us, our grantseekers, our community we aim to serve? Do we really need it?
Did the rule come from the donor?
If not, who does it serve? Us, our grantseekers, our community we aim to serve? Do we really need it?
Was the rule created to support a strategic point of view?
If not, who does it serve? Us, our grantseekers, our community we aim to serve? Do we really need it? Is there a better way to share our strategy than writing a rule around it?
Was the rule designed for fairness? (i.e. everyone must give us X or Y).
If so, are we able to apply the rules in ways that are also inclusive and equitable? Which grantseekers does this rule help or hold back? Do we really need it?
Could any of our rules be creating barriers to apply for Black, Indigenous, and People of Color (BIPOC) led organizations?
If so, how might we change the rules to remove those barriers?
As you sort through these answers, consider if you’d be ready to transparently share the reason behind the rule on your website. It’s a great practice to help grantseekers understand your culture and constraints.
What do you give up when you give up a rule?
You give up some of the ease of letting the rules tell people “no.”
You give up some efficiency in a foundation so that you can save time for a nonprofit.
You give up some of the power of being the people who make the rules.
What do you gain when you give up a rule?
You make room for new ideas, new players, new approaches, and a new chance at impact. Rules serve to exclude and hold back.
What if your rule is holding back the idea, organization or person that will most accelerate your mission?
And these are just the written rules. Unwritten, often relational rules, can create major blind spots for funders when looking for the next great funding opportunity. At See What I Mean we created a product for funders to recognize possible bias in their funding habits created through written and unwritten rules. Deal Breaker, Deal Makers is a great tool to use with your whole team to recognize the ideas, organizations and people you might be missing due to written and unwritten rules. Use the buttons below to view and purchase the Deal Breakers, Deal Makers tool and a Discovery Call with our team to help your organization develop a strategy to Reckon with the Rules.
Author: Stacy Van Gorp, PhD