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Canadian Funders Placing Huge Burdens on Charities

(Oct. 8, 2007) The entire grant/funding process in Canada is becoming increasingly burdensome, time-consuming and complicated, according to a new report by the Toronto-based Wellesley Institute, a nonprofit and nonpartisan research and policy institute.

According to the study, We Can’t Afford To Do Business This Way, the administrative burden being placed on charities “is so heavy and unrelenting, and places so many constraints on their ability to operate, that it is a wonder they can deliver any services at all.”

The study examined 66 grants given to three mid-size community service organizations, each with different funder profiles and annual revenues under $4 million. The 66 grants came from a variety of sources, including all levels of government (federal, provincial and municipal, foundations, corporations and United Way organizations).

The study found that the funding process is “directly at odds” with the reasons why governments and other funders partner with nonprofit organizations to provide programs and services. While people consider charities better in touch with the public, less bureaucratic, more flexible and more efficient, most grant processes work against these strengths and prevent nonprofits from serving their communities most effectively.

Grant Process All-Consuming

The three agencies completed 182, 48 and 94 major funder reports respectively in the year studied, with each funder and/or program having its own reporting requirements and formats. Because of the resources involved in securing and reporting on grants, the agencies tended to push aside other priorities such as strategic planning, staff development and program management.

Some of the specific findings from the report include:

  • More than half of grants (55 percent) provided agencies with little or no flexibility to adjust programs or expenditures. Another 42 percent of grants allowed changes that were pre-approved by the funder, which was often difficult and slow to obtain.
  • Some 55 percent of grant applications were rated difficult or extreme and asked for information the organizations could not reliably know and a level of detail that was not even required for internal management.
  • More than four in 10 grants were seen to have little to no reliability in terms of consistent funding, while only 13 percent of grants were rated as reliable for continuous years.
  • Just 20 percent of the 66 grants in the study were multiyear. Of the multiyear grants, 40 percent could not be renewed and 60 percent required the same level of reporting each year and so did not reduce administrative demands.
  • For 73 percent of the grants, the response time from the moment the proposal was submitted to the time the funder made a decision was four to five months or longer.

The report concludes that while a few funders have exemplary practices that are useful to charities, even the best of them were not sufficient to appreciably overcome the administrative burdens experienced by the agencies. However, the better funding practices demonstrate that funders can design effective and accountable funding processes that support nonprofit organizational capacity and encourage innovative and responsive local service delivery.

To read the full report, visit the Wellesley Institute website.

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