Complying with burdensome reporting requirements can sap nonprofits of time and energy, making them less effective. How can corporate grantmakers get the data they need and still help ease the burden?
Funding isn’t the only thing that can be in short supply at a nonprofit. When you’re pursuing your mission, time and energy are just as important. Every minute you spend on unproductive tasks reduces your effectiveness. Most corporate funders want nothing more than for their nonprofit partners to create the most impact they can. Yet many of those funders are inadvertently creating barriers to effectiveness with cumbersome reporting requirements. Is your process distracting your grantees from their purpose? Is there a way to keep them from drowning in that sea of paperwork?
There are over 71,000 grantmaking organizations with assets of more than $550.6 billion operating in the United States. Their methods for reporting include combinations of spreadsheets, email, faxes, and more – a surefire recipe for inefficiency and frustration. A Rand Corporation case study illustrates this best: one nonprofit spent 11% of its budget and 44% of its time complying with funder requests.
Two big areas eating time and productivity
What are the culprits? They’re concentrated in two main areas:
1. Administrative: Grantseekers are asked to create and send multiple proposal copies and accompanying materials. They have to copy, collate, and even hole-punch each one. Many foundations still want proposals submitted by mail. Then there’s the need for copies of the IRS Letter of Determination and other due-diligence information, a requirement even if the grantseeker was previously funded.
2. Evaluative: The funder wants to measure impact. It requires the grantee to conduct an evaluation. That evaluation doesn’t align with the grantee’s own reporting. The grantee has to create a new set of books for each grant. There’s even more when it comes to demonstrating impact. Grantees may also be asked to submit testimonials and speak on panels. The cumulative result? Impact assessment requires unfamiliar tools and processes. It eats into a grantee’s time and resources and there’s no benefit at all to the grantee.
Building Relationships Without Sacrificing Compliance
All this paperwork and reporting creates an unproductive relationship between grantmakers and their recipients. Grantees are left to feel that foundations do not trust them. The burdens of reporting are their evidence. Grantmakers use reporting information to check compliance and, in this post-9/11 world, must ensure they’re not funding organizations affiliated with terrorist groups. Grantmakers play it safe at the recommendation of their legal and financial advisors, which often means calling for redundant and unnecessary documentation from grantseekers. Compliance is compulsory.
There is, however, a way to lighten the load on nonprofits while still meeting your reporting requirements. Here are some tips to help everyone get what they need.
Grants management software
Take it online: It’s a time-saver for everyone. It gives grantseekers access to online information, applying, and reporting. Grantmakers spend less time sending information in the mail. Grant management software can poll tax status information. Grantees can store their financial, board, and historical information online. They can also retrieve past proposals and reports.
Application and reporting: A move in this direction is most positive change of all. It may not be possible for a totally unified solution, however most regional funders, could move toward a single set of application and reporting standards.
Centralized data repositories: These databases of basic information would save grantees from having to submit again and again to different grantmakers. Allowing the repositories to be sharable would be even more helpful. The data most often needed is:
- Financial data
- Organizational history
- IRS verification forms.
Grantmakers can already find this online using resources such as GuideStar’s Charity Check, IRS Publication 78, or the IRS Business Master File.
Many companies find they can take simple steps to simplify the process and move toward collaboration. For example, some Versaic clients let returning applicants duplicate the redundant portions of their applications to streamline this process.
2. Reduce the burden
The most impactful way funders can lessen the burden on grantees is to minimize reporting requirements. Scrutinize the process and streamline it. Are multiple copies of applications and reporting documents really necessary? Do foundations truly have to translate their budget to match yours? Innovative grantmakers are breaking up the application process into smaller pieces. If an applicant successfully fulfills the requirements of one step, they’re invited to move to the next. It’s a huge time-saver for both sides.
Investing in Impact
Each minute and dollar grantseekers or grantees spend to get or administer a grant impacts their mission-based activities. Every solution you put in place to reduce reporting challenges strengthens the impact of your grant. Everybody wins. It’s an investment in your investment.
Good grants management software alleviates the burden from your grantees. To learn more about how Versaic can help you solve your biggest reporting challenges and increase your impact, watch this video.