Across the philanthropic sector, foundations are rethinking how they engage with the communities they serve. Rather than operating at a distance through traditional grantmaking alone, many grant makers are exploring new ways to strengthen relationships with nonprofits and the communities they support. Two emerging trends highlight this shift: new systems that evaluate how foundations make grants and a growing movement to create community gathering spaces—often called “third spaces”—where funders, nonprofits and the community can connect more directly.

A New Way to Measure Grantmaking Practices

One of the most significant developments in philanthropy is a new effort to evaluate how foundations structure their grants and support nonprofit partners.

For years, nonprofit leaders have called for foundations to provide more flexible funding. Many have urged grant makers to move away from tightly restricted project grants and instead offer general operating support, multi-year funding and greater autonomy for nonprofits to determine how best to allocate resources.

A new evaluation framework seeks to highlight which foundations are adopting these practices. The Sustainable Grantmaking Benchmark, developed by the Schott Foundation for Public Education, ranks foundations based on factors such as the percentage of general operating support they provide and the extent to which they offer multi-year grants.

The system was developed by Schott Foundation president John Jackson and is modeled after the LEED rating system used to measure energy efficiency in buildings. Foundations receive bronze, silver, gold or—in exceptional cases—platinum designations depending on their grantmaking practices.

The goal of the ranking system is not to criticize foundations but to encourage improvement through transparency and positive reinforcement. Jackson hopes the ratings will spark important discussions among foundation boards and leadership teams about how they support nonprofit partners.

The benchmark evaluates foundations on several key factors Sustainable Grantmaking Benchmark - Schott Foundation, including:

• Bronze (20-39 points) Mostly traditional grantmaking while implementing several sustainable grantmaking practices

• Silver (40-59 points) Increasing use of multi-year and flexible support

• Gold (60-79 points) Strong portfolio of unrestricted/multi-year support and some durable practices (endowments, program related investments (PRIs), funding 501(c)(4)s)

• Platinum (80-100 points) Redefining funder–grantee relationships with heavy emphasis on multi-year/unrestricted funding, endowment grants, PRIs and multi-entity structures

Seven foundations participated in the first round of rankings, including the California Endowment, the California Wellness Foundation, the Communities for Just Schools Fund, the Grove Foundation, the Robert Wood Johnson Foundation, the Schott Foundation for Public Education and the Woods Fund Chicago.

Of the participating organizations, four received gold ratings, two earned silver and two—including Schott itself—received bronze.

The benchmark was developed in partnership with the nonprofit consulting group PTKO and with guidance from organizations including Asian Americans/Pacific Islanders in Philanthropy, Bridgespan Group, Grantmakers for Effective Organizations, and the National Center for Family Philanthropy.

Foundations Are Creating Community “Third Spaces”

At the same time foundations are rethinking how they fund nonprofits, many are also reconsidering how and where they engage with communities.

Some grant makers are literally planting roots in the neighborhoods they serve. A notable example is the Cleveland Foundation, which now operates a nightclub, restaurant and brewery called Sixty6. The venue opened in Cleveland’s Hough neighborhood, an area that has experienced numerous revitalization efforts since race riots occurred there in 1966.

Another example closer to home is the Triangle Community Foundation, whose offices are located at The Frontier in Research Triangle Park, North Carolina. The space houses nonprofit organizations and businesses within the emerging HUB neighborhood, creating opportunities for collaboration and connection.

These initiatives reflect a growing trend among foundations to create “third spaces” – community gathering places that exist outside of home and work (How Third Places Contribute to Thriving Communities | Urban Institute). These environments provide opportunities for residents, nonprofit leaders and funders to interact informally, share ideas and build relationships.

Sometimes these spaces take the form of coffee shops, kitchens or event venues. In other cases, they include meeting rooms, conference facilities or collaborative workspaces where community members can come together to discuss priorities and develop solutions.

Other philanthropic organizations are also experimenting with ways to bring communities closer into their work. The Robert Wood Johnson Foundation has invited grantees to serve on its board, ensuring nonprofit perspectives help shape strategic decisions. The Spark Fund involves community members directly in the grant-selection process. Meanwhile, the Kresge Foundation has announced plans to relocate its headquarters from suburban Detroit into a neighborhood where it has already invested heavily in community development.

The Future of Community Centered Philanthropy

Taken together, these developments reflect a broader evolution in philanthropy. Foundations are not only reconsidering how they fund nonprofits—through more flexible and sustainable grantmaking practices—but also where and how they connect with the communities they aim to serve.

From new systems that evaluate grantmaking practices to community gathering spaces that foster collaboration, the philanthropic sector is exploring ways to reduce the distance between funders and nonprofits. The result may be a more responsive, transparent and community-centered approach to philanthropy.

Sources

Daniels, Alex. “New System Rates Grant Makers on Measures Important to Nonprofits” and “Some Grant Makers Are Laying Down Roots in Communities They Serve.” Chronicle of Philanthropy.

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