Grantors are Increasing Technical Assistance and Capacity Building

The COVID-19 pandemic has brought about swift changes to America’s nonprofit sector, and arguably none so great as the swift digital transformation of traditional operations. With organizations having to quickly pivot to move their processes online, there’s never been a greater focus on technology and giving. Philanthropy itself has made quick pivots in response to the needs of nonprofit organizations and increasingly, have taken notice of the critical value technology and capacity-building support  brings to the nonprofit sector.

Dalberg Advisors, in partnership with the Council on Foundations and Philanthropy California, recently published a study on how the US philanthropic sector is responding to the “multiple, compounding, and ongoing crises in the US” in 2020. Major changemakers in the sector profiled in this report include the Silicon Valley Community Foundation, the Weingart Foundation, Alliance Healthcare Foundation, and the Jerome Foundation. While the results exposed both the overt and underlying shifts in the industry, one dramatic shift was the increased focus on technology. The national study of top 250 foundations found that 30 percent are moving to offer support “beyond the check,” including technical assistance. 

A Focus on Technology and Inclusion

This shift, however, is part of a greater dynamic in the changing landscape. The pandemic was not the only crisis in 2020; racial injustice that sparked momentum in the Black Lives Matter movement last year also played a part in the changes that the study respondents reported happening in their organizations. 11 percent of respondents reported that racial equity is now a key or primary focus of their work following the crises compared to at the beginning of the year. Another 52 percent stated they are actively considering new internal processes, including Diversity, Equity, and Inclusion (DEI). 

To enact these new processes and resources to address the challenges our nation is facing, nonprofits need help. It only makes sense that grantors, in turn, and upping their support. 87 percent of respondents reported making adjustments to operations for grantees, mostly by loosening restrictions on existing grants (74 percent). Technical assistance grants are part of the “additional support” being offered to propel grantees forward. Large foundations were especially likely to make changes for current grantees, with 43 percent reporting increased technical assistance for grantees. One large foundation leader stated that these changes “allowed us to streamline processes that will make a difference into the future.”

Major Shifts in the Non-Profit Landscape

Other insights from the Dalberg report are broken into three major categories: resources, priorities, and internal operations. The key takeaways demonstrated the extensiveness of the effects of the 2020 crises on the future of the nonprofit sector: 

Shifts in Resources

• Increased giving: 60 percent of respondents increased giving beyond planned 2020 levels, with an average increase of ~17 percent. Changes in giving were primarily driven by increases in payout.

• More mission-related investments: 67 percent initiated or expanded mission-related investments when making changes to endowment management practices.

Shifts in Priorities

• Focus on COVID-19: Respondents directed about a quarter of 2020 distributions to COVID-19.

• Prioritizing economic recovery: Instead of focusing on healthcare services, respondents prioritized funding for broader economic recovery, including community-building, as part of a racial equity focus.

• More flexible grantmaking: Over 85 percent of respondents were adopting flexible grantmaking practices for existing grantees.

The results of this study reveal a telling sign of what to come in 2021, but we are undoubtedly still in it for the long-haul. Nonprofits are in the unique position of being able to directly impact those most affected by these crises, and technology is a powerful resource in helping them scale impact. While a 30 percent increase in technical assistance from grantors is a great milestone, it’s our hope that this is only the beginning of a more expansive digital transformation in the sector.