Philanthropy has done much to tackle injustice and inequality, seeking to improve the lives of those affected by layers of structural disadvantage. However, philanthropy is by its nature unequal, with philanthropic giving often drawing from wealth accrued through unequal labour and power structures. Funders are also increasingly examining the sources of their wealth, which can often be traced back to historical injustices and exploitation, which helped create the very problems philanthropy now seeks to solve.

The power dynamics in grantmaking are often imbalanced. Diverse, equitable, and inclusive grantmaking is therefore about who makes the decisions, where we get our evidence, and who is missing from the conversation.

We at NPC have not been as strong on these issues as we could have, both internally and in the advice we give to clients and the sector. We are working to change that. If grantmaking is not diverse, equitable, or inclusive we risk perpetuating a system which favours those with the most wealth and power. With society reeling from the dual impact of the Covid-19 pandemic and the cost-of-living crisis, it’s more important than ever that funding gets to those who need it most, in particular the most marginalised in our society.

What does DEI mean to you?

The first step is to get your own house in order. If you have staff and trustees, how diverse are they and how do you recruit them? Are all your ‘essential criteria’ actually essential? How do you score for less typical sources of experience?

How inclusive is your culture, and how well do you know your history? Talking about the history of grantmaking can be uncomfortable, but it is crucial if we are to challenge these structures.

How do you decide your goals?

How well do you understand the issues you are trying to address? Do you draw on a range of lived and learnt experiences to understand what people need? Whether you give responsive, targeted, or strategic funding, embedding DEI into your overall approach can lead to better decisions about who you give to, the size and frequency of grants, your attitude to risk, and the nature of the work you fund.

Who makes the decisions?

A diverse funding panel with different lived and learnt experiences will likely better understand the communities you work with. You could co-opt community representatives or experts onto committees and seek additional expertise when considering applications relating to specific communities.

You could also consider alternative forms of decision-making to address power dynamics, such as participatory grant-making or open philanthropy. Or you could use intermediaries to make some of your grants. Always be transparent about who is making the decisions and how.

Opening up your process

Nobody should be excluded by an inaccessible process. The cost of an unsuccessful application can be prohibitive, so look at where you could provide pro bono support or assist with translation. Be clear how long grant decisions take and consider how to speed up the process. Smaller organisations are likely to have less time for form filling, as they may lack a dedicated fundraiser.

It’s helpful to have a range of application options and to be open to multiple sources of evidence. Alternatives to a written application include interviews, discussions, or videos. Ask potential grantees how they would prefer to consume and submit information.

Consider offering a supported application process to help organisations communicate their work in ways funders can understand. It can help to give constructive and useful feedback to unsuccessful applicants – and ask for feedback too! This obviously costs money, which means less money for giving, but if those gifts achieve more impact it’s a good investment to make.

To better understand who is applying and the communities they work with, you can collect appropriate and proportionate DEI data at application stage. Remember that smaller organisations are less likely to be able to collect comprehensive data, so be flexible.

A new approach to risk

Inclusive due diligence may be where you can have the biggest impact. Due diligence tends to be framed around financial risk, but what about the mission risk of not giving to those who need and deserve your funding but might not yet have robust financial systems?

Organisations led by and for marginalised communities are more likely to be underfunded. This could sometimes mean they are spread thinner and may need to make difficult decisions between prioritising delivery and, for example, strengthening governance or producing a written strategy. If you have a clear sense of who you want to reach, you can adapt your due diligence to recognise structural disadvantages – especially when giving to organisations that may be the only ones who can address an issue.

It can help to create space for charities to express their goals and plans in their own way. By co-designing your processes and materials, you can increase the chances of marginalised groups applying for and getting funding. If useful you could also offer support with a written strategy or theory of change as part of your grant.

Your questions should be accessible, appropriate, and free from jargon. Consider what stage an applicant is at. You could ask for the latest set of management accounts instead of annual, or theory of change models which are still in development. Financial templates can help applicants understand what’s expected, although take care not to create more work if applicants already have their own.

Applying for money costs money, so be proportionate to the grant. It’s right to ask about impact and data, but you should be comfortable taking on more risk with some grants, and therefore not asking for as much information.

Building trust

Inclusive grantmaking can be helped by strong, mutually beneficial, and trusting partnerships with your grantees. This includes offering long-term, unrestricted funding where possible and being clear about your commitments and whether you’re likely to renew. Have a plan for what happens when the grant ends and be open about this to allow grantees plenty of time to plan.

Support your grantees to develop their capacity, skills, and resources, such as through dedicated funding, advice, bespoke services, or communities of practice. Be aware of power dynamics and watch out that grantees don’t feel obliged to take up an offer even if it’s not useful.

In any funder-grantee relationship, it should be grant-makers taking on the bulk of the risk, not grantees. This includes time and resources, so look for how you can take pressure off grantees rather than add to it.

Hold yourself accountable to grantees by communicating the purpose of and processes around due diligence. Keep the same contact person wherever possible to maintain trusting relationships, and if you do have to make a changeover do so with care and transparency.

Ask for feedback from grantees as well as giving it yourselves. This helps you both to learn what you can do better.

At NPC, we’ve been trying to incorporate DEI principles into our work with funder clients. We’re still on a journey, but we’re publishing what we’re learning on thinkNPC.org. Organisations led by and for marginalised communities have historically been underfunded. Unless we change our grantmaking practices, they are likely to remain underfunded, and civil society will lose out.

For more, visit thinknpc.org.

Sarah Denselow is part of NPC’s Research and Consulting team as a Principal for Effective Philanthropy, supporting foundations and philanthropists to increase their impact.