Guide to Investing in Grantee Talent

Part 1: Theory

What’s the Problem?

There is a long-standing deficit of foundation investment in nonprofit professionals. A leading indicator of this problem is that 1 percent or less of foundation grant dollars have been deployed for staff development in grantee organizations over the last 20 years. Because of this, many nonprofits do not cultivate the budgetary resources, incentives, or knowledge and skills needed to invest in their leaders and employees. Indeed, one major funder recently found that 77 percent of nonprofits that applied for their grants had allocated less than 1 percent of their own budgets to staff development. This investment deficit erodes the effectiveness of nonprofits and, therefore, those who support their work.

Someone Else’s Problem

Historically, funders have regarded the staff development needs of nonprofits as something their grantees must support through other sources. When a funder takes this stance, a classic “free-rider” problem develops: the funder makes no investment, but that same funder benefits from the improved performance created when another funder does. When most funders abdicate this responsibility, nonprofits have no place to turn for talent-investments. Thus, the sector-wide talent-investment deficit persists. The signals are received loud and clear by nonprofit boards, executives and fundraisers. The negative incentive accounts for the lack of talent development resources and commitments in nonprofit budgets and behaviors.

Lack of Ownership by Grantees

When funders address the need for leadership and staff development, they tend to structure these investments as programs (such as fellowships, recognition awards, or trainings). But these programs are external to nonprofits, and have no impact on internal operations. Expensive and limited to small groups of already established leaders, these programs tend to be created and managed by the funder or an intermediary of the funder’s choosing. While these approaches can create significant value for participating nonprofit leaders as well as polish to the foundation’s brand, they are not parts of grants or resources managed or controlled by grantees. Thus, nonprofits have no opportunity to internalize and build talent development into their budgets, operations, skill sets, managerial behaviors, and organizational cultures. Ultimately, the dynamic limits the impact and endurance of the programs that foundations run.

A Failure to Integrate at Foundations

Foundation leadership development programs for grantees tend to be disconnected from a foundation’s core grantmaking. They are generally seen as one of many capacity building efforts, and only indirectly connected to program work. On the other side of the desk, grantee staff who participate often value these opportunities more than other foundation resources, particularly when staff developmental resources are scarce within or around their organizations.

It’s clear that many funders view talent-investments as icing on the cake. If funders are serious about helping grantees achieve their missions, they must make investing in grantee talent a primary ingredient in their work. Put simply: Bake It In!

Reflection Questions

1. What are my attitudes about nonprofit professionals and the value of their work?
2. How do decision makers at my foundation (board, primary executive, etc.) view the staff development needs of our grantees? Is the topic ever discussed in key conversations or meetings? How is it prioritized?
3. If it is unclear how decision makers at my foundation view the issue, how could I find out?
4. Is my foundation acting as a talent-investment free-rider? (Here’s an indicator: when important human-capital issues arise in our grantees, such as executive transitions, are we the first or last funder to respond? Do we believe that is some other funder’s problem?)
5. What do I know about the people-systems at the grantee organizations that are most important to our foundation (i.e. the “anchor” or “mission critical” grantees)? Please refer to Fund the People’s Glossary of Terms for complete definitions.

The Big Shift

Baking It In

The approach we propose is to “bake it into” the work of foundations—to make talent-investing an integral part of how you and your colleagues think about and implement your strategies, grantmaking, and other activities essential to accomplishing your mission.

Incorporating talent-investment into your ongoing work will likely be less publicly visible than a branded leadership development program. But as a strategy, it has been shown to create significant value for grantees and funders: changing entire organizations and impacting more staff members over a longer period. (See our forthcoming return on investment guide for more on the evidence from the field.)

Baking it in enables your foundation to demonstrate your respect for the dignity and value of the work done by your colleagues working in grantee organizations and the nonprofit sector. And it affirms talent-investment as a best practice in deploying foundation resources. Rather than a superficial flourish, talent-investing becomes a primary ingredient in your grantmaking. It is the yeast that allows your mission to rise.

The idea of baking it in does not call for additional resources on top of your existing grant budget. Yet, it enables you to redeploy or reshape the funds you already include in talent-investments, so they can best support the overall goals of your grantmaking.

Through the Lens of Talent

To move talent-investments to the center of your work requires a shift in perspective. Baking it in means we use a “talent lens” to understand and support grantees and causes.

Too often, those in the funding community acts as though a magical “program machine” transforms your grant dollars into services for the public good—with robots, not people, directing the process.

The reality is that our nonprofit people are our programs.

Foundation dollars cannot create goods and services without the nonprofit professionals who bring the vision, ideas, community knowledge, skills, time, and energy to the creation, execution, improvement, and maintenance of nonprofit work.

The logic of the talent lens assumes that when organizations have the incentives and resources to invest heavily in their staff, these investments yield excellent performance. That effectiveness in turn increases the impact of the organization and its programs. These results attract more great investments and people to the organization, which makes it more sustainable. This improved endurance and stability then enables the organization to invest more in its people, creating a virtuous cycle of talent development.

When we step back and see this reality, it becomes crystal clear that when grantmakers ignore the developmental needs of nonprofit people, they endanger the substantive goals of their grants and their grantees.

By using a talent lens, and adopting talent-investment as a best practice in grantmaking, you can help your grantees to advance their performance, impact, and sustainability. This will enable your grants and your foundation to be more efficient and effective in reaching your stated aims. In a very practical way, you can help create a rising tide of support for nonprofit leadership and performance.

Reflection Questions

1. Do we have a talent lens at our foundation?
2. Where in my portfolio or in the foundation’s overall grantmaking strategy are the easiest/ most obvious/most fruitful opportunities for baking in talent-investments?
3. At my foundation, who would be the natural allies of the baking-it-in concept? Who would need to be convinced? Who would resist?
4. What would it take to integrate this strategy into our work and that of our grantees? What resources would I need to make a compelling case at my foundation?

Part 2: Practice

In Part I, we introduced the concepts of baking it in and the talent lens. Now we turn to putting these theories into practice. In Part II, we offer practical guidance to help you implement talent-investing in your grantmaking. In this section, we explore the following topics:

• If you are going to collaborate more closely with grantees to craft talent-investments that are appropriate and effective for them, how should you think about the focus of these interventions and who drives the change?
• If talent-investing is more than leadership development, what does it entail?
• If you are going to make talent-investment a primary ingredient in your work, how will you manifest it in grant strategy, in the grantmaking process, in individual grants, and in grantee organizations?

Defining Focus & Driver of Change

There are two overlapping questions that should be answered while considering how to structure your investments in grantee talent.

• Who or what is the subject or target of the intervention? Will you intervene at the individual, (CEO, c-suite, emerging leader, etc.), organizational, network, cluster of organizations, systemic level, etc.? What is the thinking behind your answer?
• Who gets to drive the problem analysis, objectives, content and format of the intervention? Is it driven by the funder, staff at the grantee organization, or someone else?

In our experience, foundation investments tend to intervene at the individual level, usually with grantee CEOs and usually in a cross-grantee network format. The driver tends to be the funder defining the problem and solution. There is a wide spectrum of opportunities beyond these approaches that are worthy of exploration. We examine these issues more closely in Who Drives Change?

What is Included in Talent-Investing?

In the quotation at the beginning of this guide, Jim Canales refers to leadership development. “Talent-investment,” the term Fund the People primarily uses, has less sizzle. But we use it intentionally because it values all nonprofit professionals, not just those who funders tend to think of as leaders (those in positions of authority and visibility). The talent framework is meant to bring a more equitable approach, acknowledging and respecting the important contributions of all parts of the workforce.

Our typology, which continues to evolve, offers 10 distinct categories of nonprofit talent development that funders should consider as they learn about and invest in people and people-systems in grantee organizations. These categories span from a focus on individual people to a focus on people systems (see definition in Glossary of Terms section).

Talent-Investment Menu

1. Leadership Development: Developing personal and professional purpose, vision, self-awareness, and ability to motivate others, communicate, and collaborate 
2. Career Development: Empowering staff to clarify and build toward long-term professional goals within and beyond current role and organization.
3. Professional Development: Building knowledge, skills, and managerial ability to work effectively.
4. Personal Sustainability: Enabling employees to develop balanced approach to work, manage workload and stress, avoid burnout, and build endurance.
5. Human Capital Planning: Preparation for building the organizational chart, skill sets, and staffing needed to achieve strategic plans and mission-related goals and objectives.
6. Management Ability: Establish the knowledge and skills to implement high-engagement management practices throughout the organization, ensuring feedback loops.
7. Compensation & Personnel Policies: Ensuring liveable and competitive salaries and benefits, and creating effective and equitable employment policies and practices (i.e. incentivizing employee saving, education, sabbaticals, severance, etc.).
8. H.R. Infrastructure: Establishing basic and strategic human resource staffing functions.
9. The 3 R’s of the Talent Lifecycle (Recruitment, Retention, Retirement): Developing procedures for intentional employee recruitment (awareness building, campus outreach, paid internships, colleague networks, etc.), retention (internal career paths, professional growth and promotion, leadership cultivation, etc.) and retirement (executive transition plans, staff alumni engagement).
10. Organizational Culture: Intentionally nurturing a workplace environment that encourages and enables healthy employee morale, self-motivation and self-discipline, loyalty, leadership at all levels, engagement, inclusion, and productivity.

These categories can be placed along a continuum from investments in individual nonprofit workers/leaders to investments in organizational and field systems that support nonprofit people (see the chart on next page).

For a stand-alone version of this menu, please see our Talent-Investment Menu.

Talent-Investment Focus Continuum

Reflection Questions

1. Are there programs our foundation has created or managed to support grantee staff development? If yes, what are the objectives, operating assumptions, and practical components of these activities?
2. How does our foundation’s present or past investments in grantee staff fit into these 10 spheres?
3. How do these spheres overlap with my career and workplace experience? With my perspective on the field of organizations I support?
4. Based on my perception of our grantees, in which of these categories do they excel, and in which do they find challenges (think of specific grantees here)?

Five Ways to Bake It In

There are many ways to integrate talent-investment into your foundation’s work. In this section, we discuss the five major approaches. These are not mutually exclusive, but complimentary. They are not necessarily linear – there are examples of foundations starting from each of these. However, there is a logic to the order that can be useful for layering and sequencing one upon the previous approach. Here’s a summary of what we’ll cover. You can bake it in:

1. Foundation Strategy: Helping top foundation leadership to establish talent-investing as a pillar that supports the mission, strategies, goals, and programs of the foundation.
2. Grantmaking Processes: Signaling clear interest, identifying opportunities, and negotiating ideas for talent-investment leading up to making a grant.
3. Individual Grants: Structuring talent-investment objectives, activities, and resources within any type of grant.
4. Within Grantees: Empowering nonprofits to build internal staff development systems so that they can support their current and future team members.
5. Around Grantees: Ensuring that the ecosystem in which grantee organizations operate offers them an array of robust external staff-development resources.

1. Strategy

To ensure your foundation is positioned to best serve its mission, grantees, and community, consider establishing talent-investment as one of your core strategies. Think of it as a supporting strategy – an approach that enables your foundation (and your grantees) to implement other substantive strategies.

Here’s an example: The Evelyn and Walter Haas, Jr. Fund cares about the rights of immigrants, LGBTQ, and young people. They fund grantees to engage in strategies like policy advocacy and grassroots organizing to advance these issues. And on top of this, the Haas Jr. Fund has established leadership as a pillar of their work equal to and supportive of their program goals. Through this work, they offer their immigration, LGBTQ, and education grantees a variety of talent-investments. As they state on their website, “It takes strong, capable leaders to change policies and systems and to do the hard work of advancing rights… Investing in leadership development makes a big difference; stronger leaders catalyze lasting and transformational change and get better results.” Read more about Haas Jr. Fund’s talent investments in our field story.

How we pursue social change and impact may determine whether we achieve the change we seek. When foundations focus exclusively on the ends they seek, and overlook the means through which organizations work toward these ends, these funders undermine both the means and ends.

Establishing talent as a strategic priority for a foundation may no doubt be challenging. Some foundation executives give up before they start, assuming their board members will never understand. That is the wrong approach. The more you can have one-on-one conversations with board members to gauge their perspective and questions, the better off you will be. Use these conversations to identify nascent champions as well as potential barriers. Board members may surprise you. It is important to create a bridge between this issue and the personal or professional experiences and perspectives of your governance team. For example:

• Board members with business experience may be able to make the connection between the benefits of good human capital management practices in for-profits with the benefits of those practices in the nonprofit sector.
• Board members with nonprofit work experience will certainly understand. Lift up their voices as champions within your board.
• Board members with academic or legal experience may not have as much familiarity with these ideas, but are likely able to make the connection between how staff are treated in universities and laws firms, and intuit that nonprofit professionals are more likely to thrive with the support of talent-investments.
• Board members with emotional connections to prominent leaders of grantee organizations will easily see how people are the key variable that enables organizations to thrive. This insight can be extended beyond charismatic executives to whole staff teams.

Here are some key resources you might circulate to your board or adapt:

• We developed our list of Top Reasons to Invest in Nonprofit Talent: Performance, Impact, and Sustainability to help you prepare your arguments
• Circulate blog posts from foundation CEOs Jim Canales What is a Leadership Funder? and Ira Hirschfield Investing in Leadership to Accelerate Philanthropic Impact published by the Stanford Social Innovation Review blog as part of their Talent Matters series
• Circulate the essay “The Case for Investing in Nonprofit Talent” written by Fund the People’s Rusty Stahl and Exponent Philanthropy’s Hanh Le and published in April 2016 on Exponent Philanthropy’s PhilanthroFiles blog
• Our Stories from the Field Series provides narratives and facts that can help build a compelling case based on the experiences of other foundations that have benefited from investing in nonprofit talent
• Use our Funder Discussion Guide to explore the issue internally with your colleagues
• Visit our section on foundation-commissioned evaluations that offer information on the ROI of talent-investments.

To make the case effectively, you may need to debunk myths that cause resistance among your board members. There are misperceptions floating around at foundations in the attitudes and practices that we’ve all inherited. These ideas often include:

• Overhead: a concept that has no basis in law or accounting and no shared definition, tends to define talent development as an administrative expense to be avoided
• Voluntarism: the outdated notion that even the most sophisticated and complex nonprofits are or should be run by volunteers and do-gooders who do not need to be adequately compensated
• Undeserving: nonprofit professionals are not good enough to work in business so they landed by default in nonprofits, and are not deserving of investment
• Dependency: if we allow our funds to be used toward increased salaries, then grantees will be overly-dependent on us

Begin gathering the ammunition you need to dismantle these ideas and offer compelling alternatives. Here are some key resources:

• Use our tool on Funder Myths and Realities about investing in the nonprofit workforce.
• If you need to address ideas about overhead, circulate the one-page Open Letter to America’s Donors and the back-page with statistics from the “Overhead Myth” campaign by GuideStar, BBB Wise Giving Alliance, and Charity Navigator.

2. Grantmaking Processes

In the previous section, we explored how to make support for grantee talent part of your grantmaking strategy. In this section, we explore how that strategy can be implemented throughout the grantmaking process. We start by examining your role as a grantmaker, then we explore making the case and busting myths, signaling incentives and listening, diagnosing need and designing interventions, investing and learning, and assessing and communicating externally about the value of your talent-investments.

Bake it into Grantmaking Process

Understanding My Role

Talent-investing can be a powerful lever to amplify and increase the impact of foundation and grantee work. Yet, too often this practice is left out of the basic training and studies that donors and grantmakers undergo as they join the philanthropic community or learn their foundation jobs.

In addition to learning how to review grant proposals, nonprofit financials, and other key materials and topics that help you understanding your work and your grantees, you should learn about the role of human capital in advancing organizational performance, impact, and sustainability. And you should develop your own skills in assessing the strengths, weaknesses, opportunities, and threats to the workforce within and across your grantees. (We hope this tool and the rest of our Toolkit are helpful as a starting place.)

Reflection Questions:

1. What investments have your colleagues, mentors, and employers made in you during your career? What keeps you motivated and productive? How do you manage your own workload? As a professional or volunteer, what have been your experiences in the nonprofit workplace?
2. What are the first words or phrases that come to mind when you think of grantee staff members? What are your attitudes and underlying beliefs about the people who work in grantee organizations?
3. In your grantmaking processes, and in the operations of your foundation, do you recognize, discuss, or address the needs of grantee staff members? If so, how? Which staff members get the most attention and which get the least?

Signal Incentives and Listen

One of the main reasons nonprofits do not talk to funders about their staff development needs is fear. They believe they should hide the challenges they face lest they be denied a grant because they are not superheroes. Moreover, they perceive that funders do not value the issue in the same way they value strategy, program design, and financial health. And this is, indeed, often the case.

The onus is on you, then, to impress upon current and prospective grantees that the human capacity of their organization is a matter of concern to your foundation. Moreover, rather than a taboo topic, you must signal that you can be trusted to serve as an ally, advisor, and investor in staff development. You may want to send these signals in both conversation, and in writing, or in both formats.

Addressing staff development goals often means discussing the current lack of investment in the staff. That conversation may uncover sensitive issues of morale, productivity, interpersonal conflict, and others that thrive in unhealthy workplaces. These are extremely delicate issues, especially in the context of power dynamics between grantmakers and grantees. Once you open this conversation and signal your support, it is of utmost importance that you do not punish grantees if they share their staff challenges with you. The onus is on both grantees and funders to proactively address talent development needs. Here are some key resources:

• Use our Discussion Guide for Funder and Nonprofits
• As you design your own discussion or application questions, explore our field story on the Weinberg Foundation
• To ensure the sensitivity of staff development needs and grantor-grantee power dynamics do not halt their talent-investing, The Evelyn & Walter Haas, Jr. Fund has established a “firewall” between grantmakers and consultants who help grantees to diagnose their leadership development needs and then establish plans to meet those needs. Explore our field story on the Haas Jr. Fund.

Diagnose and Design

As you advance case making in your foundation and communicate with grantees, scan the wider landscape to understand the overall deficit of investment in the nonprofit workforce, and how it is playing out in the community you support.

Look at the labor market and the talent issues facing your grantees. The nonprofit workforce and the labor market may vary significantly in scale, demographics, and opportunity in the California area versus Indianapolis versus South Carolina, for example. Or the people systems may look extremely different in higher education institutions versus community organizations. Concurrently, the issues of Baby Boomers reaching retirement age, Generation Xers reaching mid-career, and Millennials exerting an influence on the workforce are all playing out across the nonprofit workforce. But they may manifest differently in different places. In other words, context matters as do these meta-trends.

Here are some key resources:

• Talent Philanthropy: Investing in Nonprofit People to Advance Nonprofit Performance, Rusty Stahl’s article in The Foundation Review
• Less Than We Thought, our Research Brief on the deficit of foundation investments in the nonprofit workforce
• Use our Primary Source Reading List to begin studying the recent ideas and research in the field on issues related to nonprofit talent and investment in the nonprofit workforce
• Use our Resources from the Field section of this Toolkit to identify select providers
• Invite the provider to share their general findings with you, what they learned, and what type of support grantees would like to see from you and other funders

As you learn more about the talent-investment needs and opportunities in your funding area, and what sparks enthusiasm in your foundation, write down what you think the major strengths, weaknesses, opportunities, and threats are to the nonprofit workforce in and surrounding your grantees. Begin drafting a concept for immediate, short-term exploratory grantmaking that can leverage strengths to address weaknesses, and begin to create initial success stories. Then, begin writing a longer-term plan for how your portfolio or foundation can bake talent-investing into the grantmaking process, into individual grants, and into grantees. Use the categories of talent-investing and other resources within this publication to assist you in the process. If you are interested in accessing success stories or designs that could serve as a template, it is worth talking to other talent-investors including those featured in our field stories.

Contact Fund the People and we can connect you with colleagues at foundations that share similar characteristics or who can share their first-hand experiences and expertise. We can also hold funder briefings at your local Regional Association of Grantmakers, provide small-group presentations in-house at your foundation, or invite you to one of our in-person or virtual events.

Invest and Learn

Kickstarting talent-investment practices at your foundation need not be expensive or bureaucratic. Start with simple, modest, short-term exploratory grants to grantees where there is already a stable level of commitment from the foundation and a good amount of trust between you and the grantee’s staff and leadership. Your initial talent-investments do not need to compose 100 percent of a grant, and could look like small supplementary grants, or a portion of dollars earmarked within a larger grant. These initial steps need not include restricted cash per se. Focus on empowering the grantee’s team to deploy your capital for their talent development purposes. The important thing is to test things out, see what the grantees accomplish and learn, and see what you learn. Based on what we’ve learned from funders, this is likely to be a rewarding experience. You can learn more about how to bake talent-investing into individual grants in the next section.

Keep in mind that successfully ensuring a grantee institution can proactively support staff development is a large-scale, long-term, multi-faceted endeavor. It will take multiple strategies and tactics. If you modestly support one tactic – such as coaching, training, staff raises, sabbaticals – it is important to have realistic expectations about the results. Such initial small-scale, short-term exploratory investments are unlikely to yield big structural changes. Your foundation and grantees should expect and enjoy a small, but satisfying, sampling of the return on investment.

Assess and Communicate

We’ve noticed that some funders who are actively investing in grantee talent have not yet documented or shared that work. While you are just at the beginning stages of your journey, it may not make sense to publish your experiences. But if you don’t document from the beginning what you hope to accomplish and the actions you take, it may be more challenging later in the process to assess and communicate what you’ve learned. We encourage you to keep good records from the beginning—about what you hear during the learning processes outlined above, and what you plan and do in your initial grantmaking steps. The more data you gather along the way, the easier it will be when you get to the bigger, more formal stages of grantmaking and formalizing the talent-investment practices within your foundation. This assessment should be both internal and external. Examine how effective you were at advancing talent-investment in your practice. And examine how effective your talent-investments are at contributing to the performance, impact, and sustainability of grantee organizations. If you have an evaluation consultant or an in-house evaluation colleague available to you, it may make sense for you to ask for their advice on developing guidance documents such as a theory of change that can be used later as a reference for evaluation.

3. Individual Grants

Our assumption is that grantmaking is the central function of your foundation. The closer you can integrate talent-investing into grants, the more likely it is to be accepted and sustained by your foundation. Most grants can include some element of support for the people who are doing the work of the grant or the wider team at the grantee organization. Below we walk you through the steps of baking talent-investments into any grant.

Guidelines and Signals

Make sure that descriptions of your funding work discuss your commitment to investing in grantee staff. In written and spoken invitations to apply for grants (such as requests for proposals, website text, emails, conversations), signal the priority you place on your grantees’ staff and people systems. Use the language that feels most organic and appropriate for your foundation and funding area. Ask questions about the human capacity of the organization. These questions will send a clear message to applicants that human capital is a priority to the foundation. In addition, the questions will reveal meaningful information about the strengths, weaknesses, opportunities, and threats facing the staff. They might also give you good ideas for how you can structure the resulting grant in a way that responds appropriately and proactively. Caution: this type of information can be sensitive, and some offline conversations may yield more nuanced information beyond the written word. Be sure to frame your interest not as punitive but as supportive. Be clear in your own practice, and in communicating with applicants, that the foundation will not punish grantees for their talent challenges, but rather help them address these challenges.

Bake It In to Grants: Steps for Embedding Talent Investments into Any Grant

Negotiations and Site Visits

Important dialogue and brainstorming takes place throughout the duration of a grant negotiation—from casual conversations over coffee to formal site visits. Throughout this period, reinforce the priority your foundation places on the people and people systems of the grantee organization.

• Prepare and ask meaningful questions to learn more about the group’s human capital issues (you can use our talent-investment menu as a point of reference for developing questions).
• Where possible, try to learn the perspectives of different people within the organization – executives, board members, emerging professionals, line staff, administrative support, etc. This is sensitive but important, as the executive director does not always know the developmental needs of their most junior team members, or feel they have the incentives to communicate these issues to funders.
• If there is a strategic plan or similar organizational blueprint, investigate if the organization feels it has the staff positions, skills, competencies, or bench strength needed to implement the strategy. What is missing in the human capacity that could unleash the ability to move the work forward with a new level of power?
• Strive to understand the strengths, weaknesses, opportunities, and threats facing the staff team. Be on the lookout for talent-investment opportunities that surface in response to this rare type of conversation with a funder. It may be as simple as enabling the organization to adjust stagnant salaries upward, or as complex as the need for multiple long-term interventions.

Proposal and Budget

Formally and informally—through your guidelines, negotiations, and relationship-building—encourage and invite the prospective grantee to develop one or two meaningful, overarching staff development objectives, optimally written in a way so they support the organizational or programmatic aims described in the rest of their proposal, and to include these in their application for funding.

Note: As you consider crafting your intervention, review Who Drives Change in Talent-Investing? It provides a framework for defining the subject of your intervention (on a continuum of supporting individual to institutional change) and who gets to define what change is needed (on a continuum from grantor to grantee).

If you are considering general operating support, then the talent-investment can be discussed as part of the organization’s overall plans during the grant period.

If the proposed is for program support, the proposed talent-investment should be represented in both the proposal narrative and budget. If your foundation will not accept staff development costs as programmatic, you still have some internal educational work to do. Meanwhile, you might strategize with the grantee to help them blend these costs into their personnel line item(s) or something similar.

If the grant is for capacity building, staff development certainly fits in well in that context, and in some ways provides an important anchor for most other capacity building efforts. Without an effective, well-supported staff, capacity items such as databases, financial systems, computers, or strategic plans cannot or will not be used to their greatest effect. So, talent-investment is both part of capacity building and an enabling factor for all other capacity building efforts.

Note: For more on talent-investment in the context of different types of grantmaking, see Talent-Investing Across All Grant Types

Grant Agreement

Make sure the talent-investment objective(s) are agreed to in writing by both parties in any grant agreement document. The document will serve as the central record of purpose and as the reference point for grant reports and any analysis of grant success. If matters related to talent-investment are documented in equal or higher standing than other programmatic or organizational goals, they are more difficult to ignore or marginalize.

Note: For more about how to structure talent-investments within grant agreements, see our supplemental Talent-Investing Across All Grant Types.

Securing Grant Approval

How does a proposal become a grant? You are likely pitching or presenting your proposed grant action to your board, donors, and/or supervisor to get final approval. Where possible, include in your presentation an explanation of how valuable the proposed talent-investment is to meeting the objectives of the grant and/ or the objectives of your portfolio. Be explicit in linking the talent-investment to the performance, impact, and sustainability of the grant, the funded program, the grantee organization, and/or the staff team and leaders of the organization.

Champion and Monitor

Once the grant is active, it’s your job to serve as a cheerleader and champion both inside your foundation and externally in the field. During this period, you can help the grantee troubleshoot, and identify and get access to substantive resources such as consultants or management support organizations that can help them meet their talent-development objectives. You can also facilitate connections with other funders to leverage additional resources.

In terms of monitoring, it is always helpful to check in with a grantee midway through a grant on progress towards agreed-upon objectives. It is the same with talent-investments. It may be noted that these objectives may be subtler than those that can be easily quantified in the short term. For example, if your grant enables an executive director to access coaching during a one year grant, it may take several months to identify, try a few options, and settle in with a coach. And the results of coaching – like those of therapy or other such processes – may or may not manifest an immediately identifiable change in practice. In that context, it is important to regulate the intensity of monitoring accordingly.

Wrap-up and Learning

Throughout the life of this grant, you and the grantee collaborated to prioritize talent-investment objectives and activities. Grant terms are generally short compared to the time it takes for investments in human capital to bear fruit. Be realistic in your expectations with respect to the scale of the return in a one-year grant term. As you analyze the process and results, consider how you can help the investment continue beyond the life of the grant. Are there ways to communicate internally at your foundation about the successes of the grant and the value created for the foundation, for the grantee organization and for the community you both serve? Are there ways to communicate about the work to the outside world, including other funders? Perhaps publishing a joint blog post with a staff member of the grantee?

As you consider renewal opportunities, can you continue or expand the talent-investment you’ve initiated? This brings continuity and can help ensure the grantee organization has the incentives and capital to continue its commitment to its employees. Can you offer a challenge grant or taper off your investment over multiple years? Ideas like these avoid dependency and create incentives for the grantee to cultivate additional funders to join your investment.

4. Within Grantees

In the previous two sections, we offered step-by-step ideas for how to make talent-investing an integral part of your overall grantmaking process and individual grants. In this section, we look at how you can support grantee leaders to bake talent-investing into their organizations.

In the context of a chronic and pervasive deficit of investment in the nonprofit workforce, nonprofit organizations do not have the incentives, will, skill, or capital to develop the systems they need to support their people. To disrupt this trend, funders should infuse their grant dollars with the incentives and capital that can enable nonprofits to make these investments.

The more grantees are defining the need and the change they want to see, and focusing on building their people systems and not just individual staff members, the more likely that talent-investment will become a central ingredient in their organization’s success. This is a significant way to extend the depth, breadth, and longevity of your investment across time and people. (For more on this, see the Who Drives Change in Talent-Investing?)

Here are some examples of ways that funders can empower nonprofits to bake it in:

 

5. Around Grantees

As important as it is to empower individual grantee organizations to make internal investments in their staff, it is equally important to ensure that nonprofits enjoy a robust external environment that offers the resources needed to ensure that the nonprofit workforce thrives.

We’ve identified the following reasons to invest in a strong nonprofit talent ecosystem:

• The nonprofit workforce goes beyond the walls of any given organization. Talent is always on the move into and across established and new organizations, and out of the sector. We must go where people are, and look beyond an organization’s team at any given moment. Not every nonprofit leader is ensconced in an organization all the time. The war for talent is alive and well in the nonprofit sector, and leaders are traveling around the field faster as the nature of employment and careers changes. To build a deep bench for grantee organizations, we need to build a bench that reaches beyond grantee organizations.
• Networking across organizations is crucial. To perform their jobs with excellence, nonprofit professionals want and need to connect with and learn from colleagues in their issue area, function area, and/or geographic area. Since so many nonprofit professionals have entered the sector by way of mission, rather than extensive education and training, opportunities to learn from peers and mentors beyond their organizations is critical. That is why there is such a demand for associations, educational programs, and other “connective tissue” at the local, regional, and national levels.
• Organizations cannot do all talent-investment internally. Even when nonprofits establish strong people systems, the staff will still need access to external consultants, professional and leadership development programs, and peer networks to enable and supplement those internal supports.
• The ecosystem offers economy of scale. Funders, nonprofits, and providers can all benefit from robust capital flowing to support talent development in the nonprofit ecosystem. Providers can adjust their fees to enable a wider diversity of nonprofits to utilize their services. Nonprofits can tap into many more services at more affordable rates. And funders can help strengthen more nonprofit people, organizations, and causes in an affordable manner now and in the future.

There are three stages to investing in the nonprofit talent development ecosystem. First, learn what talent development resources are available. Second, support nonprofits taking advantage of those existing resources. Third, help fill the gaps with new or expanded resources. Below is more detail on each of these stages.

Learn what talent development resources are available:

• Explore the institutions available within your sphere of influence. If your foundation works within a geographic footprint, look first for providers within your geographic zone. At the local, state or regional level, there may be one or more management support organizations (MSOs) or associations of nonprofits that provide services or act as a hub for nonprofits to access talent-investment services. If your foundation works in the context of issue area(s), look for providers that specialize in your field(s) of work. Most providers are issue agnostic, with clients across the panoply of nonprofit issues, but some have specialties. Some of these support organizations are small and under-capitalized, and can benefit greatly from infusions of new support and energy.
• Explore the informal and formal resources your grantees currently use for coaching, consulting, and/ or training for their staff teams. This exploration could entail one-on-one conversations, online surveys, focus groups, outreach via social media, etc. For more on how funders can scan the landscape, we recommend Scanning the Landscape 2.0: Finding Out What’s Going On in Your Field, a comprehensive guide available free from the Foundation Center’s GrantCraft.org website. Don’t forget to seek out grassroots, alternative, and informal resources that may not already be on the radar of the foundation community. For example, a group of executive directors may have banded together for monthly lunches to learn from and support one another. There may not be a formal organization behind this effort, but it could be a valuable resource to one of your grantees who would benefit from joining their colleagues for lunch.
• Explore what is available beyond your sphere of influence. There may be providers that would be beneficial to the groups you support but that operate outside your sphere of influence, and thus remain unknown and/or inaccessible to your grantees. The best-in-class services that your grantees need and deserve may not currently operate within their operating area. As a funder, you have the leverage, flexibility, and capital to bridge this gap.
• Talk with funders who also fund in your community about what providers or consultants they have worked with. You may find out about resources that are based outside your geographic or issue area but are applicable to the needs of your grantees.

Support nonprofits to take advantage of existing resources.

• Support your grantees to take advantage of existing services. One of the easiest steps you can take is to encourage and enable your grantees (and other nonprofits) to take advantage of the services already available from providers within and/or beyond your sphere of influence, providing as much choice and flexibility as possible. This can be done within grants, through special opportunity or learning funds made available on an as-needed basis, a mini-RFP for existing grantees, etc. It is best done with a respectful combination of proactive and responsive fashion. And these external resources will be most effective for grantees when offered in a context in which organizations are encouraged to prioritize and develop their internal people systems.
• Underwrite providers to make their services available to grantees and other nonprofits in your area. Rather than offering funds to grantees, you can support talent development providers making their services available to grantees. This might be in the form of a contract, grant, retainer, speaking engagements or trainings, or another structure. As you communicate with current and prospective grantees throughout the year, listen for those that could benefit from the resources available from these providers, and then make the connection.
• Help fill the gaps with new or expanded resources.

Help fill the gaps with new or expanded resources.

• Identify gaps in existing services and structures in the overall ecosystem within or beyond your sphere of influence. Document what you believe these holes are, and test your premise in conversation with others in your community, on social media, and elsewhere. Explore why the gap exists:
  • Is there a real need or market for the services you envision?
  • Have previous or current efforts and institutions under performed?
  • Is there political will among funders or others to establish the service?
  • Is there leadership and interest to lead from within the nonprofit sector?
• Find consultants who can work directly with you. If you are looking to directly engage a consultant to support this process or to serve your grantees, a valuable resource for consultants who work directly with and for foundations is the online member directory of the National Network of Consultants to Grantmakers (NNCG).

Summary

In the Five Ways to Bake It In section, we offer practical ideas for seamlessly assimilating talent-investment into your work so that nonprofit people have the support they need to advance organizational performance, impact, and endurance. We explored ways to bake it in to foundation strategy, grantmaking processes, individual grants, within grantees, and around grantees. As you maximize your investment in the nonprofit workforce, we believe it will be highly beneficial to individual nonprofit leaders, grantee organizations, and your foundation.

Challenges and Tensions

What About the Nonprofit Leadership Deficit?

A major assumption about the nonprofit workforce since the early 2000s has been that there are not enough nonprofit leaders, and that nonprofit leaders do not have sufficient skills or knowledge to do their jobs effectively. This narrative came to the fore from the misinterpretation of a report called The Nonprofit Leadership Deficit published in 2006 by The Bridgespan Group. Ten years later, at the close of 2015, Bridgespan authored a new essay clarifying and updating their findings, and reframing the problem as a deficit of investment in nonprofit leaders.

The real problem is that nonprofit organizations lack the incentives, means, and muscles to invest in their people, so the human capital function remains deeply underdeveloped in the nonprofit sector. This is due, at least in part, to the attitudes and behaviors of funders.

Why Don’t Nonprofits Invest in Employees Like Businesses Do?

Businesses have the flexibility to use their liquid assets (such as profits, venture capitalist resources, and shareholder dollars) to invest in training, HR, organizational culture, and other human capital investments.

Nonprofit budgets are cobbled together from funds that are generally restricted by some combination of objective, program area, time, and/or line item. The remedy is not investing in the skills or knowledge of individual nonprofit leaders in positions of authority. Rather, it is making sure there are people systems in place that can build and sustain a practice and culture that supports and develops the entire staff, now and in the future.

Who are “the People”?

When we reference your grantees’ “people”, we primarily refer to the staff. We don’t emphasize the term “leaders” because it often suggests a focus exclusively on executive directors. Clearly, the entire team or workforce makes organizations tick – whether they are executives, middle-management, program or development professionals, administrative or line staff, and interns. Other people contribute their talent to the organization as well: board members, volunteers, consultants, and in the case of associations – members. The combination of these roles will look very different at different nonprofits; some rely almost entirely on volunteers or board members, while others are staff-driven.

The People Paradox

Without a team that has vision and skills, there can be no strategy, and no programs to turn that vision into reality. The slightest change in personnel can bring about massive shifts in vision and capacity. That is the reason so many funders take a “wait and see” approach during executive transitions. Personnel is policy. Culture eats strategy for breakfast – and culture is the aggregated personality traits of the team members. The message here is “the nonprofit workforce is the bedrock of organizational performance.”

Yet, people come and go. The rotation of people through an organization’s doors is natural and healthy—and it enables organizations to endure beyond any given staff member. As the saying goes, the graveyards are full of people the world could not do without.

So, people are the bedrock of organizational performance, but organizations transcend their people and people transcend their organizations. As talent investors, how do we reconcile this paradox?

First, we must abandon the faulty assumption that grantee organizations cannot survive and thrive without their founders, visionary leaders, or the current team. In the modern economy, grantmakers and nonprofit employers would be wise to consider the current trends in careers and the labor market. A place to start is The Alliance: Managing Talent in the Networked Age, a book by Reid Hoffman, co-founder and chairman of LinkedIn. He makes the case that modern employment should be treated as a tour of duty, rather than the linear and lifelong assumptions of the so-called “company man” model.

In this context, it makes sense for grantmakers to invest in the people systems of grantee organizations so they can better support current leadership and staff today, but also support their workforce in the future. In every organization, turnover and change is inevitable over the long term.

New Hoops?

A healthy workplace is at least as important, if not more important, as healthy financials to the performance, impact, and sustainability of grantee organizations. But workplace health is more difficult to figure out than financial health. As a funder, you have the ability, opportunity, and even the duty to explore and understand the state of staff development in grantees. Clearly, this exploration must be executed in a manner that is respectful, sensitive, and ethical.

The deficit of foundation investment in nonprofit professionals is the result of a vicious cycle in which funders don’t offer talent-investments and instead disincentivize discussions of the topic. Nonprofits don’t ask and are incentivized to remain silent.

The Vicious Cycle

Since nonprofits and funders both contribute to this unproductive dynamic, both groups have roles in breaking the cycle and participating in honest conversations.

Of course, nonprofits have a critical role in baking talent-investments into their organizational culture, planning, and fundraising. (You can find “Talking Talent for Nonprofits” here. We encourage you to share it with your grantees and other colleagues.) But given funders’ power to define the rules of engagement, you have a particularly important role.

It is true that some nonprofit executives and boards would prefer to leave things as they are. They may have already established healthy staff development policies and practices. Or they may preside over unhealthy or underdeveloped systems and view changes as expensive, difficult, or disruptive. Some have built business models that rely on under compensating and under developing idealistic staff who are willing to work in these conditions, and they do not see any other way. In these cases, investing in talent may not be productive.

On the other hand, a lack of internal communication about workforce issues may mean the board does not understand the needs of the executive director, or the executive director does not understand the needs of their staff. Pressing needs remain hidden. By contrast, when a funder offers permission and the possibility to change workplace conditions, it can be a game changer: unleashing positive energy, raising morale, and re-engaging grantee leaders in new ways.

Conclusion

In the preceding pages, you’ve explored the ideas and practices of investing in grantee talent as a key part of your successful grantmaking. You came to understand the deficit of investment in the nonprofit workforce, and the ways it dampens nonprofit performance, impact, and sustainability. You read about the way that funding practices can contribute to the deficit, and how baking talent-investment into funding can serve as an antidote to the deficit. You learned about categories of talent-investment and explored five ways to bake it in. And you explored some of the dynamic tensions you may face when you engage in talent-investing.

We hope you found this guide useful, and that you are able to put these ideas into use for your foundation, grantees, and community. Please contact Fund the People if we can be of further assistance as you maximize your investment in the nonprofit workforce.