Funder exits are inevitable – whether as a result of a foundation’s strategic realignment, shift in priority countries, budget cuts, poor portfolio performance, or, in the worst case scenario, opaque top-down decisions. No surprise then that funders, and especially program staff, suffer some uncertainty about how to exit. Certainly, within our funder collaborative – the Transparency and Accountability Initiative – there is repeat demand to discuss exits before they occur.
This demand reflects a desire to create responsible and supportive processes for exiting, and that impulse is a good one. While government donors are accountable to taxpayers, private funders are essentially accountable to no one but themselves despite the dependency of grantee partners. As Luminate grantee research confirmed, “It is not only a financial, but also an emotional matter to lose the support of [a funder], and one that can be seen to reflect inherent power imbalances in the funder-grantee relationship.” All the more reason to be thoughtful and transparent about exit decision-making.
While there are some useful resources to draw upon, such as those produced by Hewlett Foundation and Grantcraft, exiting is not a well codified area. Having a trusted space to discuss the dynamics has frankly helped our members (in our case, those funding transparency and accountability programming worldwide) immensely. Based on our learning, we offer five key considerations for funders.
1. Exit strategy
Exits are hard on everyone, but good planning and execution on the part of the funder can help. Part of the exit may be designed in-house – for example the general parameters a foundation will use to exit (time, budget, institutional communications) – but the strategy itself is best developed at the program level with the active participation of grantee partners.
In general, our members have found it is best to speak to grantees early and often about an impending exit. To maintain trust, it is crucial that grantees be informed directly and personally before a funder makes a public announcement.
3. Adaptable support
Even if a funder has an exit strategy in place, there still needs to be room for flexibility and responsiveness. As one TAI member Program Director put it, “Grantees do not need another workshop or training, but they do want something tailored to help make changes [in response to a funder exit] as necessary.” Empowering program officers with their day-to-day grantee relationships is valuable – they are better positioned to note and be responsive to grantee needs.
4. Engagement of other funders
In the context of a funder collaborative, it has been fascinating to see the funder-to-funder dynamics surrounding exits. One clear takeaway is communication once again becomes paramount. Other funders in the same field or geographical area appreciate being told of a pending exit early so that they can anticipate field needs. Exit conversations become much more real when discussed among funders with overlapping portfolios and co-grantees. A complex situation arises when the exiting donor provided grantee income used to secure matching funds from other funders. Funders that require matching grants might consider providing a grace period after their partner donor’s exit.
5. Documenting and learning
Funder exits at times may be uncomfortable for all concerned, but it is important to document and learn as we go. No exit will play out in exactly the same way. Data points are needed to guide future exits. A grantee exit survey, combined with the program officer’s personal reflections and “exit interviews,” are good feedback mechanisms. Several TAI members attest to the value of commissioning evaluations of the program or portfolio being shuttered.
Read the full article about funder exits by Sharon Bissell, Richard Christel, and Michael Jarvis at The Center for Effective Philanthropy.