How multi-year funding can maximise grantmaking outcomes

Multi-year funding has arrived in the philanthropy scene as a way for grantmakers to maximise positive impact by emphasising financial support over multiple years, thereby providing a vital safety net that allows grantees to focus on improving their projects and services.

Take, for example, the MacKenzie Scott grants which offer unrestricted multi-year funding to nonprofits. Such long-term funding aided Echoing Green, a nonprofit that finds and supports budding social entrepreneurs, in deepening its impact and establishing a $75 million racial equity fund. This feat wouldn’t have been possible with a short-term grant.

Likewise, the Ford Foundation restructured its approach to grantmaking with the BUILD initiative, providing five-year general operating grants. This shift allowed the recipients to improve their capacity and focus on long-term planning.

The meaningful change that grantmakers and grantees want requires time and stability. Multi-year grants are the elixir that helps nonprofits grow deeper and make sustainable progress.

Here, we unpack five ways a multi-year funding agreement can support grant recipients and help funding organisations maximise their grantmaking outcomes.

5 Benefits of multi-year funding for charities

1. Improved grantee stability and empowerment

The multi-year funding framework allows nonprofits to commit resources to improving their processes. Stable funding reduces uncertainty in turbulent times and gives grant recipients the agility to continue operations without compromising their standards.

With long-term grants, nonprofits can:

• Hire and retain skilled personnel
• Invest in staff development and technology upgrade
• Engage in strategic planning
• Establish governance structures

Receiving multi-year funding also empowers nonprofits to amp up their fundraising efforts. They can double down on creating business models that ensure extended financial independence.

2. Stronger funder-grantee partnership

Multi-year funding is a hallmark of trust-based philanthropy—a grantmaking model that views funders and grantees as equal partners.

Long-term grants are a declaration of trust by the funder in the grantee’s ability to solve pressing issues over time. They’re also a demonstration of the funder’s commitment to the overall growth of the grant recipient. This reduces the power imbalance that plagues funder-grantee relationships in traditional philanthropy.

Multi-year funding fosters transparency, open communication and close collaboration between funding organisations and their recipients. It also facilitates a deeper partnership which allows grant recipients to leverage other forms of support from the funders.

Improved funder-grantee relationships guarantee maximised grantmaking outcomes through the alignment of both parties and holistic support.

3. Reduced administrative burden

Nonprofits spend a lot of time applying for new grants annually; they’re under pressure to raise new grants to replace expiring ones. The application for new grants involves much paperwork. Also, the new grants require reporting to keep the funders updated.

Multi-year funding saves nonprofits from having to desperately apply for more grants. This alleviates the paperwork that such grant applications demand. Also, with multi-year grants, funders typically focus on higher-level impact assessments that require less reporting—another feature and perk of trust-based philanthropy.

This can reduce the administrative tasks involved and allow nonprofits to give greater focus to their programs.

4. Sustainable impact

Grant recipients can focus on making a transformative impact that aligns with their mission and the actual community needs.

Receiving multi-year grants rightly positions nonprofits to gather evidence and identify the root causes of issues that plague their community. Dealing with those root causes also requires sustained effort.

Long-term funding gives grantees the time and resources to mobilise their communities, form strong alliances and engage in advocacy to effectively tackle the issues from their foundations. This can help them achieve lasting reforms.

It also gives them time to track progress and accurately measure the impact of their efforts over an extended period.

5. Opportunity for innovation and experimentation

Grantees that receive long-term grants enjoy valuable learning opportunities. Multi-year funding gives them room to establish learning frameworks over time and figure out what works. Nonprofits can also exchange insight with their funding organisations, helping them make informed decisions and effectively evolve their programs.

Without the pressure to deliver instant results, grant recipients can explore emerging opportunities. They can test new approaches to their goals, learn from any mistakes and trim their strategies to perfection.

Just as a tree doesn’t bear fruit in a season, meaningful change requires patient investment. Multi-year grants maximise grantmaking outcomes by helping nonprofits shift their focus from superficial success and survival to real progress and sustainable solutions. It ensures grantee stability, strengthens relationships and empowers nonprofits to focus on systemic solutions.

By offering your grantees multi-year funding, you commit to their growth and improve the opportunity for meaningful and sustainable change.