Let’s Talk about Risk, Philanthropy

By Caitlin Stanton, Director of Partnerships

It’s time to come clean about something.

In philanthropy, we really love to talk about progress and social innovation. About forward movement and impact achievement, about tipping points and levers that catapult change. With logic models like Rube Goldberg machines for the production of equality and prosperity. In this version of our story, risk is hardly mentioned, people never burn out, and projects never falter.

BaiAliIt is not simply that we avoid discussing the vulnerabilities in our logic models as if they were a really embarrassing date we had when we were twenty-two. It is that the specific nature of challenging, disruptive events can be un-anticipatable. When something goes wrong, too often we think – “we must have funded the wrong group, the wrong strategy” – and too rarely do we think – “these failures and disruptions are an inevitable part of the process, how do we better prepare for them, learn from them, and mitigate their negative impacts?”

Important new research from the Open Road Alliance suggests that philanthropy needs more, and more honest, conversations about risk. Their findings, based on surveys of 200 nonprofits and 200 funders, reveal that risks are real and vulnerabilities are common. Yet, too often they are not discussed, and too rarely is critical contingency funding available to help grantees get projects back on track. Open Road’s findings suggest that funders should anticipate that 1 in 5 of their grantees will face an unforeseen, disruptive event that requires contingency funding during any given grant year.

This resonates at Urgent Action Fund, where we provide rapidly available contingency grants to grassroots women’s and LGBTQI equality organizations when they face unanticipated threats or opportunities. What also resonates with us are Open Road’s findings that reveal a de facto “don’t ask, don’t tell” culture around these issues within philanthropy.

Open Road’s research reveals that 76% of funders don’t have conversations with their grantees about what might go wrong and that most believe grantees will feel comfortable discussing any crises with them. However, most grantees report that they hesitate to talk with their funders about a crisis for fear of losing future grants.

At Urgent Action Fund, we hear from organizations in crisis situations that range from the upsetting to the life-threatening: when someone has thrown a grenade through their office window; when their Director was arrested for leading a protest; when a new government regulation is causing them unexpected and crippling fines. And, they sometimes tell us, “we can’t talk to our funders about this, please keep this confidential.” Particularly for organizations working on issues that may already be perceived as transgressive or edgy, it is not simply a fear of losing their own funding but a fear that the funder will come to see a particular country as “too unstable”, or a particular issue as “too risky.” They fear the loss of their own grants, but moreover, that others will lose their funding too.

Contingency grants, delivered in a timely manner, can mitigate a threat or get a stopped project up and running again. Even small amounts of contingency funding can be helpful. Urgent Action Fund has found that upwards of 85% of our grantees are able to return to and continue their efforts because of the financial support provided during that moment of crisis.

The consequence of not having access to contingency funding during a crisis is high. While 2/3 of funders surveyed by Open Road believed that their grantee would find alternative sources of funding in a crisis, only 1/3 of grantees reported being able to find such support. As a result, 16% of grantees that had experienced an unforeseen crisis reported having to completely shut down major programs and another 55% reported delays or reduced scope of impact.

Open Road’s research comes at a time when civil society, particularly internationally but also within the United States, is facing a host of challenges collectively referred to as the “closing space.” This panoply of more restrictive laws for nonprofits, less tolerance of civic dialogue and dissent, and greater stigma for activists will undoubtedly increase risks and vulnerabilities for grantees. More robust and frequent conversations about these risks are in short order. Greater access to contingency funding, particularly for grassroots grantees unlikely to have reserve funds, is also incredibly important.

In philanthropy, we have talked a lot about wanting more innovation. Rarely have we talked honestly about innovation’s twin — risk. Now is the time to have that conversation. With apologies to the inimitable Salt-N-Pepa: Let’s talk about risk. About all the good things and all the bad things that could be.