As foundations strive to make meaningful change in support of their missions, understanding what leads to philanthropic impact is crucial. In the 2023 Foundation Operations and Management Report, foundations named insufficient grantmaking impact as one of their top challenges. In this blog, I’ll discuss a few factors that drive impact, as well as strategies for increasing it.

Factors That Drive Impact

Upon deeper analysis, we identified several key factors that influenced how foundations assessed their impact in the community. These factors included:

1. Focused Grantmaking: Foundations that had highly focused grantmaking reported a higher level of impact compared to foundations with unfocused or loosely focused grantmaking strategies. This suggests that a strategic and targeted approach to grantmaking can amplify impact.

2. Incorporating Racial Equity: Foundations that said racial equity was highly relevant to their mission tended to report a higher level of impact compared to foundations that said racial equity was not relevant or only somewhat relevant to their mission. This highlights the importance of incorporating a racial equity lens in foundation work to achieve meaningful and lasting impact.

Strategies for Increasing Impact

Contrary to popular belief, the size of a foundation (in assets and staff) does not entirely determine its impact. What’s more, foundations of any size can implement strategies to increase their impact. Members responding to the survey emphasized many aspects of Catalytic Leadership in Philanthropy (CLIP). Some of the strategies highlighted by funders include:

Having a Focus

Foundations with a tightly focused approach to their grantmaking reported higher impact. A funder said, “Our impact is high because our focus is very tight.” Several funders cited lack of focus as a reason for limited impact. Having a focus lets foundations direct their resources in targeted areas to achieve greater impact.

Embracing Equity

Embracing equity is a powerful strategy for driving impact. For some, this could mean incorporating equity into the foundation’s convening approach to help train nonprofits around equity topics. One foundation said it hosts a network of nonprofits in the area to support capacity-building, networking, civic engagement, and equity work. All of this adds value to their grant funding.

Providing Long-Term, Flexible Funding

Achieving impact and creating lasting change often requires sustained efforts over time. Providing long-term, flexible, and supportive funding through general operating support and multiyear grants can help foundations and grantees achieve their goals.

Going Beyond the Grant

Foundations can leverage their position and reputation to convene grantees and stakeholders and foster collaboration between nonprofits and government agencies. This goes beyond traditional grantmaking and includes activities such as facilitation, partnerships, and community engagement.

Read the full article about impact strategies for funders by Brendan McCormick at Exponent Philanthropy.