If you have $100 to give, do you give it to one organization or divide it among five?  Do you give it all at once or over time? Recently, I have noticed a trend among many of my clients in the number of organizations they support and the amounts they provide in financial support.  Each year, many donors seem to be supporting a very large number of organizations resulting in relatively small grants to each organization. This sometimes referred to as confetti philanthropy, because it sprinkles support around the sector to a wide range of organizations. I have seen this kind of grantmaking among many of my clients regardless of the size of their assets and the total amount they are looking to give away.

The problem is that this strategy puts a strain on both the donor and the non-profits they are trying to support.  For the donor, they are responsible for managing a large number of grants and the corresponding relationships, which results in a significant administrative burden to the donor.  Many of my clients give annually, so each year they must sift through yet another pile of grant requests, often for organizations they already know and have supported, and they must go through an additional decision making process adding yet again to their own administrative burden. They must also then mange on-going relationships with a large number of organizations.

The non-profit organizations also carry a heavy administrative burden due to this system of grant making.  They are forced to spend significant resources applying for grants each year and cultivating relationships with a large number of donors. It also creates an unpredictable revenue environment for a non-profit, who may find it hard to plan more than a year in advance because the next year’s funding is unknown. Finally a small grant on its own is helpful, but larger grants allow non-profits to grain some economies of scale around that grant.  Consider this:  it’s hard to hire an FTE with $20K but with $80K an organization might actually be able to hire an employee to fulfill a specific role.   Confetti grant-making is highly inefficient for the non-profit, ultimately taking away from their programming focus because they must spend time chasing after a large number of relatively small grants from many different donors.

The system is efficient for no one, but it can be–there are some simple fixes.  First donors can easily look at their grantmaking and choose to focus on the strategic organizations that are most aligned with their personal goals. Without a doubt, it can be hard to choose just a few, but the pay-off in efficiency is worth it.  Instead of supporting nine organizations a donor might only support three.  This streamlining allows donors to make larger grants to each prioritized organization and reduce the number of organizational relationships the donors must manage.  It also allows the organizations they support to accomplish more substantial projects and tasks.   In addition, donors can think about giving grants over a longer time horizon than a year; perhaps committing to giving over a three-year period.  This reduces the administrative burden on the donor as well as to the non-profit and provides the space for the non-profit to think more long term. These simple changes in the way donors grant money can have a profound impact on creating efficiencies both for the donor and for the sector more broadly, and ultimately, it leads to more of the social change everyone wants to see.