What incentives shape your life as a grantmaker?
“Show me the incentive and I'll show you the outcome." - Charlie Munger, Berkshire Hathaway
Contrary to some unkind rumours in the nonprofit sector, grantmakers are actually human beings. Or at least we all are…for now.
Being human beings, we respond to pressures and temptations from outside us. We might not feel like going out and buying a pack of biscuits, but if someone puts a plate full of chocolate chip cookies down next to us - well - we’re only human.
Economists call these pressures and temptations that shape our behaviours ‘incentives’. And the different incentives that surround different types of working people really affect how they behave.
Sometimes workplace incentives work beautifully, and everyone benefits. But sometimes incentives produce strange and undesirable outcomes, like when surgeons started to avoid operating on really sick people, to keep their success rates up.
Following a recent grantmaker training where this topic came up, we thought it would be interesting to list a few of the more problematic incentives that push and pull on grantmakers.
1 - The incentive to make 'safe' grant decisions
Nobody likes to be blamed or criticised for their decisions. But the lives of grantmakers are unavoidably full of consequential decisions, and whenever a grantmaker recommends a grant, there is a chance that it either doesn't work, or that it backfires specacularly.
In that eventuality it is entirely likely that someone will blame or criticise the grantmaker for making their decision. This lurking presence of potential criticism creates a pressure on grantmakers to fund ‘safer’ grantees who feel less likely to provoke a reprimand.
The upside of this incentive: it’s good that grantmakers feel they might be accountable for their choices.
The downside of this incentive: it drives grantmakers away from making grants to new organisations, organisations run by 'non traditional' applicants, and organisations proposing bold or risky ideas.
2 - The incentive to reduce inbound applications
A tsunami of funding applications or cold-call solicitations is exhausting and stressful for grantmakers to handle, and can waste grantseeker time too - for example if a funder accidentally solicits 150,000 proposals to a single grant programe. So grantmakers always face an incentive to set things up in ways that will reduce the flow of inbound pitches.
The upside of this incentive: it motivates grantmakers to avoid creating absurd situations where there’s a thousand applicants for a single grant, or similar horrors.
The downside of this incentive: tighter criteria for submitting proposals may rule out applicants which are not already known to a funder or who do new, unprecedented work. And the funders may well never know what they missed.
3 - The incentive to ask many, many questions in your application form
We’ve all been there. You’re reading a funding proposal, and eventually you think “Ack - I just can’t be sure about this, because they haven’t included a key fact”. In which case you’ve experienced the incentive that drives people to add new questions to their application forms.
The upside of this incentive: in future you may avoid wasting time going back to an applicant to ask for more information.
The downside of this incentive: you immediately waste lots of time asking grantseekers questions that don't actually help you make a choice, and you end up spending way more time reading each application because they're all soooo long.
4 - The incentive to put the boards needs first
As a grantmaker you most probably work at the pleasure of a board, and they may well have power over your employment or future prospects.
As a consequence when board members say they want you to prioritise doing something, you’ve got a very strong incentive to give them what they want.
The upside of this incentive. The board can potentially see beyond the day to day pressures, and can help to keep you working on the things that matter in the long term, not just what today demands.
The downside of this incentive. You only have a certain number of working hours in a year. If you’re filling those hours with doing work for the benefit of the board, it reduces the time you can spend on directly serving your grantseekers, grantees and peer funders.
These are just four incentives - in writing this we came up with many more. Are there any incentives you think are especially problematic when it comes to shaping grantmaking practice? If so why not write them up on LinkedIn and ping us a link?
