Understanding Philanthropy’s Drag Coefficient for Effective Grantmaking

The moment a grant leaves a foundation’s account, it is gone. There is no equity position. No convertible note. No return on capital. Philanthropy is not venture capital with a mission statement. It is money set on fire in the hope that the heat does something useful.

Yet the sector behaves as though the money might come back. Foundations impose layers of process—applications, budgets, logic models, quarterly reports, site visits, final evaluations—as if these rituals of control could somehow unspend the money if things go wrong. They can’t.

What they can do is consume a staggering share of the resources they were meant to deploy. This is philanthropy's drag coefficient, and it is a measurable coefficient. Yet nobody’s measuring it.

Philanthropy's Drag Coefficient: The Appointment

Imagine you’re sick—not dying but struggling enough that you need help, demonstrating philanthropy's drag coefficient. You go to the doctor. But before you can be seen, you’re told: “Write your own diagnosis. Research the treatment options. Propose a course of care. Justify it against peer-reviewed literature. Submit it to an authorization panel that meets quarterly. Wait four to six months for a decision. If approved, you’ll receive 80 percent of the treatment you requested, minus the cost of the paperwork you completed to apply. Then you’ll need to file reports proving the treatment worked in a format the insurer designed and no one else uses. If you’re managing care from multiple providers, each one has a different form and a different reporting cycle.”

That’s a grant cycle, and philanthropy's drag coefficient.

Every nonprofit leader knows this. It’s just another Tuesday for them. It’s the $50,000 foundation grant that required a 25-page proposal, a site visit, a board resolution, two rounds of questions, a revised budget in 12-point Times New Roman, quarterly narrative reports, and a final evaluation—all administered by a staff of three who are also running the programs the grant is supposed to fund, demonstrating philanthropy's drag coefficient.