Introduction to Open and Effective Grantmaking

What It Is, Why It Matters

Of its $4.1 trillion dollar fiscal year 2016 budget, the U.S. federal government and its grantmaking agencies will give out billions of dollars in the form of grants to states, localities, and individuals, supporting a dizzying array of activities, from scientific research and economic development to arts, culture, and education.

Unlike contracts — where government gives a business or organization X dollars in exchange for a specific product or service defined in advance — grants generally provide greater flexibility for the recipient to decide how, precisely, to use the funds to advance a particular goal. As the U.S. federal government defines it, “A grant is a way the government funds your ideas and projects to provide public services and stimulate the economy.” When invested well, such grant funding has the power to yield cutting-edge research and innovation, create jobs, deepen the impact that state and local organizations have in their communities, and support smart solutions to hard problems.

Grantmaking, in short, plays a vital role in helping our government, our researchers, and our communities confront 21st-century challenges. Yet we still have a decidedly 20th-century system in place for deciding how we make these billions of dollars of crucial investments. In order to make the most of limited funding — and to help build confidence in the ability of public investments to make a positive difference — it is essential for our government agencies to try more strategic approaches to designing, awarding, and measuring their grantmaking.

That is the sort of change we hope to advance with this publication on innovations in public grantmaking. But, as we will explain in more detail below, we will also need your help to define the contours of a more open, effective paradigm of grantmaking and public problem-solving.

The System We Have Now — and the System We Could Have

In most instances, grantmaking by government agencies follows a familiar lifecycle: the agency describes and publicizes the grant in a public call for proposals; qualifying individuals or entities send in applications; and the agencies select their winners through internal deliberations. Members of the public — including outside experts, past grantees, and service recipients in the community — often have few opportunities to provide input before, during, or after the judging process. After awarding grants, the agencies themselves usually have limited continuing interactions with those they fund.

The current system, to be sure, developed for a number of reasons. In an effort to safeguard the legitimacy and fairness of the grantmaking process, agencies have traditionally conducted grantmaking strictly behind closed doors. From application to judging, most government grantmaking processes have been confidential and at arm’s length. For statutory, regulatory, or even cultural reasons, the grantmaking process in many agencies is characterized by caution rather than by creativity.

But it doesn’t have to be this way. Innovators in government, philanthropy, and private sector companies have begun to experiment with greater transparency and collaboration at all stages of grantmaking. Perhaps counter-intuitively, these innovations in “open grantmaking” have the potential to yield more legitimate and more accountable processes than their closed-door antecedents. These processes, in turn, have the potential to result in more creative strategies for solving problems, and ultimately, more effective outcomes, including greater economic growth.

Encouragingly, the federal government has begun to take note. Since the White House organized a conference on open grantmaking, prizes, and challenges in 2010, experiments in open grantmaking have indeed proliferated. But there has been no systematic policy adoption of these techniques. The global mandate for transparency and open government data, as well as the adoption of alternative funding mechanisms to complement traditional grants and contracts (such as prize-backed challenges), makes the time especially ripe for more systemic change. Our hope is to encourage the broader adoption of open and innovative grantmaking practices, the incorporation of these practices into policy, and a more sustained empirical assessment of their impact.

What This Publication Series Will Cover

Open and effective grantmaking innovations can take many forms, including techniques that:

  • enable broader and more diverse groups of people to participate, with the aim of bringing greater expertise and creativity into the process;
  • mandate more transparency, with the aim of improving accountability; and
  • incorporate greater use of data and evidence, with the aim of evolving the design of the grant and informing future judging decisions.

Often, innovative grantmaking processes will combine more than one technique, such as the use of bottom-up crowdsourcing to engage people in gathering data about what’s working on the ground. Throughout this publication, we will take a closer look at several such categories of open grantmaking innovations, organized chronologically along the lifecycle of the grantmaking process. In our following posts, we will focus on innovations pre-granting, innovations in judging and awarding grant funds, and innovations post-granting.

For each type of innovation, we will explore a selection of examples from across the public, private, and philanthropic sectors, as well as their particular advantages and potential drawbacks. Certainly, not every innovation is appropriate for every agency or every grant. But all grantmaking agencies could benefit by taking a long, hard look at their existing procedures and determining how best to modernize and improve them. This publication will provide practitioners throughout government a menu of options to learn from — and some important issues to consider — as they decide how to do so.

Over the coming weeks, we also hope to include additional posts from practitioners themselves, as well as from our readers!

Why We Need You

As the editors of this publication, our aim is to gather and curate information about open and effective grantmaking innovations, analyze their potential uses, and encourage their adoption where appropriate. On all three counts, we need your help!

  • Information: Are there categories of grantmaking innovations we’ve missed? Examples in the public, private, or philanthropic sectors you think we should know about? Let us know! (To be clear: We are interested in both “positive” case studies and those that demonstrate the obstacles or challenges associated with particular grantmaking innovations.) Feel free to contribute either through an in-line annotation or a full-fledged reply at the bottom of any of the posts. Where you reference outside information, links or references would be greatly appreciated.
  • Analysis: In our posts, we attempt not only to describe open grantmaking innovations, but also to analyze their potential value propositions, their pros and cons, etc. To the extent that you agree or disagree with our analysis, or simply have an additional point to add, we’re all ears! Again, we’d welcome input on our posts either through in-line annotations or longer replies at the bottom. We recognize that that a grantmaking body’s decision to adopt particular innovations must be tailored to the goals, capabilities, and legal frameworks underlying their activities, and your analytical insights will allow us (and them) to more fully understand this sort of decision calculus.
  • Advocacy: We would like for this publication to become the opening salvo in an ongoing conversation both with our readers and with the broader community of grantmaking practitioners and policymakers. If you share our belief that grantmaking innovations hold great potential, ought to be more widely adopted, and need to be studied more thoroughly, please help spread the word by forwarding this publication. We are also interested in any recommendations you might have for future authors — and if you yourself would like to contribute a post, please don’t hesitate to get in touch.

Over the next few posts, we will attempt to sketch out the range and potential impact of open and effective grantmaking innovations at all stages of the process. The first post (available on Monday, January 11th) begins a series of three stories on innovations before the judging/awarding process even begins.

With your help, the conversation we start with this publication could begin building a broader case for putting them into practice throughout our government. After incorporating your input on these posts, we will release this publication in partnership with GrantCraft, a service of Foundation Center.