Does Your Process Cost The Sector Too Much Money?  Dr. Streamline explores a Sector Cost Audit Tool

Let’s say you’re a funder that cares about a particular community or wants to address a specific issue. You might accept proposals in a responsive grantmaking program or in response to a more issue-specific open Request for Proposals. Let’s say you require a five or ten page proposal with a budget template and perhaps some attachments – audited financials, letters of support, logic model… etc. And then, let’s say that you get 100 applicants and fund 10% or 20% of the proposals you receive.

As I’ve written before (see “It’s Always a Good Time to Right Size” and “What’s In It For Us?”), streamlining reduces nonprofit time devoted to applying for funding so that more time and energy go toward mission-based work. An important component of streamlining is filtering, so that only nonprofits with a good chance of receiving funding spend time completing full applications.

Consider this: even if your process cuts into a grantee’s net grant, at least they get something at the end of the day.  What about the organizations that complete your full process, but don’t get a dime? Even though you have decided not to fund these organizations, you still wish them well and want to do them no harm, right?

Dr. Streamline’s favorite new toy is a sector cost-audit developed by Good Done Great, a technology group that specializes in helping funders develop cloud-based grants management, application, corporate social responsibility, and scholarship management solutions. Good Done Great is a B Corporation, which means that they are committed to having a positive social impact. The sector cost-audit tool – currently in Beta form as a downloadable Excel form – allows a funder to calculate the likely cost of its application and reporting process to the sector – not just to an individual grantee. This allows you to make informed decisions about how to structure your grant application process, based on data about its impact.  Take a look and let us know about your experience!

INTERVIEW: I chatted with Earl Bridges, Good Done Great’s President, to hear more about the organization’s plans for this tool.

Dr. Streamline: As I recall, Good Done Great had invited me to present to your staff about Project Streamline and the Practices that Matter research. After our conversation, you went home and cooked up this powerful little tool.  Tell me more about its genesis.

Earl Bridges: Most of our clients are foundations who are active grantmakers.  In an ideal world, these foundations would have the best pool of qualified applicants possible.  They would then be able to choose from the applicants who would have the greatest impact if funded. Better quality applicants, better outcomes. However, in many instances the grant application process is complex or time-consuming.  This results in two problems.  First, some qualified applicants will simply choose not to apply.  And second, many applicants will do a ton of work but won’t get funding. So the tool was meant to provide a tangible way to tell a foundation how streamlined their application and reporting process truly is, so that they can make a decision about whether the cost to the sector is acceptable to them.

Dr. Streamline:  Why is it important to you – in your business of providing grantmaking software to funders – to get people thinking about the sector-cost of their practices?

Earl Bridges:  Administrative costs are a reality for all organizations, but they have little or no value to the outcomes that we all hope to achieve.  At Good Done Great, our goal is effective philanthropy.  We want as many dollars as possible going to programs that will make a difference in the world. When foundations realize how streamlining their process can have a direct impact on outcomes, they tend to look for their own efficiencies. Also, this type of tool can be used by nonprofits that are applying for funds as a decision-making tool.  If the cost to apply does not meet a minimum return on their effort, or is less-desirable than some other form of fund-raising, they would be better served to apply their efforts elsewhere.

Dr. Streamline:  Have you tested this tool with funders?  What did you learn, and what was the reaction?

Earl Bridges: The results of the tool were shocking to them.  Many funders simply have never realized how much effort is wasted in their current process.  This highlights areas in need of significant improvements. We are starting to incorporate this tool in our consulting engagements to show a baseline to our clients’ current process.  Then, from this baseline, we work with them to decrease these real costs, while still getting the data, and reporting required to make decisions on where funding should go.

Dr. Streamline:  Do you encounter any consistent blind spots – things that funders just don’t see or consider – in your clients as they move to online systems?

Earl Bridges:  Many granters still look at applicants in as a homogenous pool of “nonprofits”, and require them to answer questions that aren’t relevant to their programs.  For example, a funder may ask “how many people will be served,” which may not applicable to environmental programs.  Or they require applicants to break down their program expenses in a canned “pro-forma” grid.  This requires each nonprofit to spend a lot of time reworking their chart of accounts or cost centers to match what the funder is looking for.  This results in a lot of rework, and often are just guesses by the nonprofit’s financial staff.  A better way to consider the merits of one program versus another is to allow for the nonprofits to tell their story in their own words.  This fosters new ideas and imaginative solutions.

Dr. Streamline.  Well, I’d certainly agree with that!  What advice do you have for a funder that is considering moving their grantmaking online?

Earl Bridges: We suggest the funder look for a system that will allow them to be flexible in their application process, rather than dictating rigid requirements for applicants.  Also, understand that your current application process should evolve over time.  It should become more efficient and effective each new grant round.  So choose a technology partner that values a long-term relationship, and is able to help your team become better.  When the system is flexible enough to allow for innovative grant-making practices, and the relationship is a true partnership, then real progress can be made in this sector.

Earl is the enthusiastic co-founder of Good Done Great, and 4Good.org. He is passionate about introducing disruptive products and solutions which have a social purpose and can make a measurable impact.


Dr. Streamline

Dr. Streamline is also known as Jessica Bearman. She, along with her colleague Streamlining Surgeon Alice Cottingham, and a cohort of Streamlining Interns, are available to answer all of your streamlining questions. Together, they diagnose the good, the bad, and the mystifying, and prescribe cures for your streamlining woes.If you have a question about your own grantmaking process, or one that you’ve encountered, please write to Dr. Streamline at drstreamline@peakgrantmaking.org for a useful (and possibly entertaining) Rx.