nonprofit development

Managing Risk for Equitable Grant Making with Melanie Brown, DeAnna Hoskins, and Aleesha Taylor

Over the next two weeks at the Non-Profit Build Up, we will be exploring the context and common concerns on “Managing Risk for Equitable Grant Making”. This week’s episode is part one of a two-part panel discussion originally recorded at the PEAK 2022 Conference. Moderated by Build Up’s CEO, A. Nicole Campbell and in conversation with Bill and Melinda Gates Foundation’s Deputy Director, Melanie Brown, JustLeadershipUSA’s President and CEO DeAnna Hoskins, and Herald Advisor’s Principal, Aleesha Taylor. This presentation was originally recorded in March 2022. This is a two-part series.

Nic, Melanie, DeAnna, and Aleesha dive into the practice of progressive grantmaking, the inequities that traditional grantmaking have on the marginalized communities it aims to serve, and how to align the definition of risk with an organization’s appetite for risk. You won’t want to miss it.

Listen to the podcasts here:

Part 1:

Part 2:


Read the podcast transcription below:

Part One

-Upbeat Intro Music-

Nic Campbell: You’re listening to the Nonprofit Build Up Podcast. I’m your host, Nic Campbell. I want to support movements that can interrupt cycles of injustice and inequity and shift power towards vulnerable and marginalized communities. I’ve spent years working in and with non-profits and philanthropies and I know how important infrastructure is to outcomes. On this show, we’ll talk about how to build capacity to transform the way you and your organization work.

Stef Wong: Hi, everyone. It’s Stef. Buildup’s Executive Portfolio Liaison. This week on the Nonprofit Build Up is part one of a two-part panel discussion originally recorded at the PEAK2022 Conference. Moderated by Build Up’s CEO, A. Nicole Campbell and in conversation with Bill & Melinda Gates Foundation’s Deputy Director, Melanie Brown, JustLeadershipUSA’s President and CEO, DeAnna Hoskins and Herald Advisor’s Principal, Aleesha Taylor. This presentation was originally recorded in March 2022.

Stef Wong: In this episode, Nic, Melanie, DeAnna and Aleesha dive into the practice of progressive grantmaking, discuss the inequalities that traditional grantmaking have on the marginalized communities it aims to serve, and how to align the definition of risk with an organization’s appetite for risk. You won’t want to miss it. With that, here is part one of managing risk for equitable grantmaking.

Claire: Hi, everyone again, and welcome. Now, I’m pleased to turn it over to our speakers for the managing risk for equitable grantmaking session. Over to you all.

Nic Campbell: Thanks so much, Claire. Hello, everyone. My name is Nic Campbell, and I am the Founder and CEO of the Build Up Companies. We work only with brave non-profits and philanthropies to strengthen their organizational infrastructure, so that they are best placed to do their work. For our clients, that means interrupting cycles of inequity and injustice.

Nic Campbell: That’s why I’m so excited to have this conversation today. This discussion is about being brave, calling out practices and perspectives and sharing the thought leadership of black women who often stand in the vanguard of social justice in the sector, both domestically and internationally, to ultimately inform how the entire sector should come to this work.

Nic Campbell: During our conversation today, we will explore what it means to both work and award funding in a way that doesn’t contribute to, or perpetuate harmful practices and power dynamics of the same inequitable system in which we operate when working with vulnerable communities. We’ll also focus on the relationship between risk and decision-making, risk and equity and risk and inclusion, and how risk ultimately informs, support and can even derail equitable grantmaking.

Nic Campbell: My colleague, Stephanie, is also joining us from Build Up. She will be monitoring the chat and be able to get to all the questions that you might have, so that we can make sure that we address them during our key list.

Nic Campbell: Could each of you take a minute or two and introduce yourself and the focus of your work, given the context of our conversation today, which is about managing risk, and equitable grantmaking? Aleesha, I’ll start with you.

Aleesha Taylor: Good afternoon, and I’m excited to join you today. I’m Dr. Aleesha Taylor, Principal of Herald Advisors. My academic background is in international educational development, and my focus is on education policy and systems that enable governments to provide education to even their most marginalized communities. I spent 10 years as a grant maker with the Open Society Foundations. In 2016 when I transitioned, I was the deputy director of their global education program.

Aleesha Taylor: For the past five years, I’ve been working independently at Herald Advisors, partnering with leaders and organizations and supporting them to thrive within the intersections of education, international development and philanthropy.

Nic Campbell: Thanks so much, Aleesha. DeAnna.

DeAnna Hoskins: Yes. Good afternoon. I’m grateful to be here. My name is DeAnna Hoskins. I’m the President/CEO of JustLeadershipUSA. We’re the only national organization that has been founded by and operated by formerly incarcerated individuals. We invest in their leadership by educating, elevating and empowering their voices to change their communities, or addressing the policies that continue to oppress and marginalize them.

DeAnna Hoskins: I came to this work through way of working the increasing levels of government from state to local and federal government and engagement. I realized that the leaders we were missing from the conversation were those directly impacted by the issues we were trying to address. My focus is on bringing that expertise to those tables of policy change.

Nic Campbell: Thanks, DeAnna. And Melanie.

Melanie Brown: Thank you, Nic. It is a pleasure to be here with you, DeAnna and Aleesha. Hi, everyone. I am Melanie Brown. I am Deputy Director at the Bill & Melinda Gates Foundation. I sit on the foundation’s North America team, which is focused on the foundation’s investments in the United States and Canada.

Melanie Brown: I lead a team focused on public engagement. We are responsible for managing the relationships, constituency relationships that are influential to our strategies and our strategies being successful. That includes safe communities and business sector and also communities of color. I believe I said this, but if not, I’ll say again, I’ve been at Gates for about seven years. Prior to that, I was at the Heinz Endowments for eight years. I’ve been in this field of philanthropy for 15 years, as a black woman Grantmaker, managing risk and internally and externally, and moving money to communities of color. Just really excited to have this conversation today.

Nic Campbell: Well, thank you all so much. You can understand why I was very excited about this panel and having this conversation, particularly given the perspectives that each of our panelists bring. My first question is that the relationship between bias and risk inherently informs a Grantmaker’s efforts in capacity building and support of organizations.

Nic Campbell: Now, we talk a lot about risk, but there doesn’t seem to be a shared definition of risk within the sector that we’ve all adopted. How do each of you define risk?

DeAnna Hoskins: I can start from there. Thank you for that question, Nic. I think this came up, because one of my concerns, from a philanthropy perspective, even when applications are denied, or you’re working with philanthropy, that risk of they evaluate each application on is never publicly shared. If you’re a small, non-profit, black-led organization, you never know what gaps in your organizational structure, what gaps in your capacity you need to feel to become a viable grantee of that fund, that grant maker.

DeAnna Hoskins: With that, I internally can look at my operations and how my development team is, how we’re being responsible stewards of the funding granted to us to carry out our mission. Also, always struggling to identify what are the risks, or things that the philanthropist, or the Grantmaker that I’m applying to was looking for, there’s no transparency there. Even when they say they’re investing in capacity building, what is defined as capacity building to them may be totally different as where I’m looking at capacity building of strengthening organizational processes, and expanding the organization and grow where they may be looking at something totally different.

DeAnna Hoskins: Because there’s no transparency, there’s no clear meaning. We struggle with that in the equitable. But you have larger organizations who may not be having the impact to infiltrate the communities we’re actually trying to engage with. Because they have this huge structure, they’ve been around for 60 years, it’s assumed that they are less risky than the newer organizations who are under 10-years-old.

Aleesha Taylor: For me, I define the risk as, or understand it as just simply the level of comfort that an organization, or a funder may have. I think it’s also important to recognize that at a definitional term, it really is obscure. That risk can be identified as, well understood as what Levi Strauss referred to as a floating signifier. Meaning, that there’s no agreed upon meaning and essentially means – inherently means different things to different people. I see it as an opportunity, or even a requirement really, for organizations to stop and define it. What does it mean, and what does it even refer to?

Aleesha Taylor: Also, to understand what or who is being put at risk? Do we understand if the organizations understand risk in terms of reputation, resources, physical safety, impact, or even emotional security of grantees? Also, who is impacted by risk? Just the funder? To what extent do we consider the risk to grantee partners? As DeAnna was saying, the critical piece there is for organizations to clarify and be transparent around their unique understanding and approach to risk.

Melanie Brown: I’ll just add, I mean, I agree with much that has been said. What I think of and I don’t think that funders do a good job of explaining this to grantees is that when I’m looking at making an investment, I’m also thinking about, is this investment going to allow me and therefore, the foundation to achieve its goals? Is it a risk to us meeting what we are being told we need to achieve in order to reach our goals, or to stay in alignment with our broader priorities?

Melanie Brown: It’s not always just about that individual partner, but how does this partner fit within a portfolio of investments that I’m trying to move in order to achieve a goal? I agree with DeAnna that it is very obscure, and it is very difficult to understand when a foundation says that you’re risky. At the same time, foundations should be willing to make risky investments. If we’re not making risky investments and making some mistakes, then we’re actually not doing our job. It is that balance of comfort, but it’s also a willingness to understand that you may have some outliers.

Melanie Brown: I always think of my work as a target. I have some partners who are on the bull’s eye of that target. Maybe those are ones that are a little bit safer, for whatever criteria I may use per se. Then I have some that are in the outer rings of that target. It doesn’t mean that they’re not good investments. It could mean that I’m testing some things out, but I’m willing to take a risk. I’m trying to see, is this something that could eventually go into that bullseye?

Melanie Brown: Then sometimes not everything has to fit into that bullseye, because that’s not how change happens with just one strategy. It is a combination of things. Then, the last thing I’ll say is just I often ask myself, what is the risk of not investing in a partner? I think, DeAnna, that you really hit on this. As I said, I lead our work foundation’s engagement with communities of color in the US. What does it risk if we don’t invest in those organizations? If we don’t invest in them at the same level, and over the same amount of time, we are other investments, our white-led organizations.

Melanie Brown: I just wanted to add that nuance that there is often a risk that if we look at these organizations, some of them who’ve been around for 60 years, and they’re not having impact with communities of color, the risk is actually to keep investing in them. That is the risk. Not to move funding to a new organization, or a person of color-led organization.

Nic Campbell: No, I really appreciate all of your definitions and the way you are looking at risk. From even what you just shared, you’re talking about risk being the level of comfort that a Grantmaker might have. There’s the risk of not investing and what happens if you don’t. Then really, that taking a step back and looking at the grant as a part of a portfolio of grants and within your grant making a single, how does that fit? Does it fit? And raising those questions.

Nic Campbell: I’m going to ask a follow-up question to what you all just shared. Do you think that black-led organizations are more impacted by how risk is perceived, defined or not defined at all? Do you actually think that the lack of definition that exists throughout the sector, particularly within grant making organizations is deliberate?

Melanie Brown: I would say yes, and then not have to expand on my answer. Yes, I do. Philanthropy is intentionally obscure. It’s not just for black-led organizations. Philanthropy doesn’t want you to know how we do what we do. Pushing for transparency in a sector that does not want to be transparent, historically has not – We’ve certainly seen some changes in that more recently, is a challenge in and of itself.

Melanie Brown: I think, if you look at anything in our society, where black-led, people of color is put at a disadvantage, we see that having some entropy as well. I think that we don’t define risk. One, I don’t think we could define risk. I don’t think there’s one definition for risk for every – That would be a blanket for the sector, but do think every institution could be better at thinking about risk. I have to believe that it’s intentional, even if it’s not intended to be harmful. I think, it’s intended to be a little bit close to the chest, to protect ourselves. I welcome a challenge to that.

DeAnna Hoskins: No, I totally agree that when I look at the risk of funders, and I’m a person who’s known to be very authentic, and just speak my voice. I look at situations that are happening now. I’ll take MacKenzie Scott. I love what she’s doing, actually disseminating it, but no one knows how to get on her radar. When you look at the organizations that she is investing in, you know there’s a team of researchers that are just investing and looking at people organizations from the outside, and not really even having conversation with operations, what is the impact?

DeAnna Hoskins: When you look at that, you look at okay, do I need to increase my social media presence? Do I need to be a nationally attached organization with chapters in 50 states? Do I need to be the black-led organization ran by formerly incarcerated individuals that’s attached to celebrities? Those different things that is actually being highlighted, when the true passion and the work lies within the impact that we’re having and the people were touching in the communities we’re empowering. Nobody knows. Nobody knows, even if it’s a secret anonymous ballot, how do you put who you are, so that they can identify these organizations that aren’t attached to celebrities, these organizations that don’t have chapters in every state, such as the Boys and Girls Club, or Planned Parenthood, that are actually have any impact?

DeAnna Hoskins: When I say, is it intentional, I think it is. Now, let me say something that I wanted to follow up on when she said, it’s risky not to invest in other organizations. Because here’s the thing, if we’re really going to change and our investments is around changing and making the world better in some way, we have to be willing to try something different. Sometimes trying something different is the innovation and the thinking outside the box, but it’s really hard to get philanthropy to move in that direction and take those chances when you don’t have those major celebrity connections, or you’re not in 50 different states.

DeAnna Hoskins: Do I think it’s additional? I think it is. While they’ll pick up some black-led organizations, or formerly incarcerated, you then look who they’re attached to. The one philanthropy doesn’t want to be the first one. Once one takes a chance, everyone else will follow, because it actually looks safe and we won’t be the only ones called out if it doesn’t work out.

Aleesha Taylor: Just to add to that, briefly, I think in addition to transparency around funders’ appetite for risk to build on what something that Melanie pointed out, I think there’s a lack of transparency around the actual goals and intentions of some organizations, and a need for transparency and clarity around that. Just to know, is an organization a funder seeking to create more diverse organizations, or diverse leadership in a sector? Is it to get more refugees in schools?

Aleesha Taylor: Some funders, their goal is to be perhaps, develop a reputation of being the riskiest, or being the largest and most prominent philanthropy that’s moving the needle on a particular issue. I think, understanding that broad goal and then finding the appetite, identifying the appetite for risk was in that framework.

Nic Campbell: What I’m hearing from you all is this idea that it’s intentional. There’s not a lot of transparency, and that’s deliberate. Then you are also struggling with this idea of what is actually the stated goal of the program, of the work, of the organization? I’m thinking about, how do we start to shift risk frameworks? I missed all of what you just shared, lack of transparency, it’s really deliberate. This lack of definition of risk is also very deliberate. How can we shift risk frameworks within Grantmakers, particularly in the context of capacity building? Given that we struggle with all of the things that you just called out? We’re also struggling with this idea of how do we invest in organizations? Do we focus on deliverables? Do we focus on outcomes? Do we focus on impact, which is building on what Aleesha just shared? How do you start to shift risk frameworks within Grantmakers, given the context in which we’re operating? Melanie, I’d love to get your thoughts on that.

Melanie Brown: I’d love to hear from one of my fellow panelists. I will admit to nothing sure. I’m not sure how we shift it. Individual crashes, yes. I think as institutions, it’s a lot more difficult. I don’t mean to not contribute, but I don’t want to fumble around in an answer. DeAnna and Aleesha has something much more brilliant to share.

Aleesha Taylor: Oh, no. Well, actually, it is brilliant, because I’m going to pick up on something that DeAnna has said. I’ll pick up on her brilliance. I think, one of the ways we can start to shift risk frameworks is really, perhaps by interrogating the grant-making of organizations. Looking into, for example, the example that Deanna held up around MacKenzie Scott, using this just as an example, and really tracing the types of organizations that funds are going to and really asking the question and assessing like, “Is this actually a risky investment when investments are channeled towards organizations with higher profile, celebrity connections, international and international networks?”

Aleesha Taylor: Who is favored and who is left out and asking those questions? Then looking at what, again, the goal that funders want to contribute to, or achieve and looking at and comparing their investments to their decisions around investments to the organizations, or a broader understanding of organizations that are on the ground and doing the work that they say that they want to invest in, and to see is there some space between that. Again, it’s almost forcing additional transparency.

DeAnna Hoskins: I’ll follow up to what Aleesha said. To even go deeper than that, I always question when funders say, “This is what we want to do with our money.” Versus, what is the mission you came to the work to create this foundation? Was it identifying the injustices that you see in a community, the injustices, or the disparities that you see? Are you perpetrating disparities in even your grantmaking while you’re saying your funding is going to disrupt disparities, right?

DeAnna Hoskins: I shy away from finding opportunities to say, this is what we want you to do with our funding. Because what you want me to do, because you don’t have close proximity to the problem, you’ve just read some research, may not be applicable in practice. Is there a way for funders to say, “This is our mission to disrupt the disparities that we see, the injustices?” But we’re going to support organizations that have close proximity to those issues, to help provide the solution and we’re not going to tell them how to drive the solution. We’re going to support their proposed solutions in that manner.

DeAnna Hoskins: I don’t know if that makes sense, because what happens, you typically go after funding, ad if you’re a small shop like us, while we’re national, if you’re a small shop like us, when I first took over JustLeadership in 2018, and coming from federal government managing the second chance portfolio, I felt like an octopus. Because I felt as if for sustainability of the organization, because most organizations or businesses fail within the first five years. As a new nonprofit, launched international attention, we were just grabbing funding. What that resulted in is me doing a different report for every funder, because I didn’t feel it was aligned to the mission of what this funding was supporting.

DeAnna Hoskins: We’ve been able to strategize, come up with a strategic plan, that any funding that comes into this organization is going to support and align with our mission to educate, elevate and empower the most marginalized individuals in those communities. Whether that’s through training, whether that’s through communications, whether that’s through actually working with Congress to address the policies, helping them build campaigns. I now have a strategic plan. No matter what funding we get, I can write a report that demonstrates our impact, our strategies, where we’ve been able to touch people, instead of actually building a development team that was more of donor management around the reporting, because we had to do all these different reports, because every funder expected me to do something different.

DeAnna Hoskins: What that has caused me to do, let’s be honest, I don’t have as much funding, because I’ve aligned and transparent with our mission. These are the funders that we actually go after and work with, who allow us the space to be who we are, who allow us the space to be authentic, but also, who allow us the space to invest in communities the way we have aligned with our mission, instead of telling us what to do. Which to me, sometimes take me off mission.

DeAnna Hoskins: As a small shop, I have probably have to hire a team to manage that grant for two years. After two years, I’m perpetrating what I’m trying to disrupt. Because now I’m laying people off, because that program no longer have funding. If you support us as an organization, we can build our capacity around sustainability, because we’re aligned and driven.

Aleesha Taylor: I think, that’s another critical piece that DeAnna brings up. I think, we often think about risks at the decision-making point of the funder, and don’t consider the risks to the organization after funding is dispersed. Then also, more importantly, after funders decide to perhaps shift and make a decision, when no longer funding education, or we’re no longer funding a particular issue and what risks have you exposed that grantee to after you have supported their organizations, or their programs as opposed to the organization.

Melanie Brown: Just something I was going to – that just came to mind, DeAnna, as you were speaking is a question of, I don’t think I even asked enough in engaging with partners, but what can we do together? I think that sense of not I’m giving you money to achieve our goals, or that it’s just a sense of like, okay, well, it’s charity. I’m just giving you money. But it’s like, we can strategically come together. We need each other.

Melanie Brown: Now he’s trying to say that, that I can’t do my job without really good organizations who can execute on the work. We know that really good organizations who can execute me the resources to do it. That shift in power dynamic about approaching these issues is something that we can achieve together that we need each other is something that I think more funders need to do.

Melanie Brown: Then, that also led me to think of when I heard you talking about the different reports and reporting sectors and timelines is that we can work together more. We say this all the time. We always say we can collaborate, and we can we can work better together. It really is something that just hasn’t happened enough. To your earlier point, DeAnna, around foundations are often afraid to be the first, if you’re partnering, then you don’t have to be the first. You’re doing something together. It is like you said, Aleesha, where eventually your foundation says, “We’re not doing education anymore.” You’re not dropping the ball on these organizations. They have other opportunities to still receive funding.

Melanie Brown: I don’t think there’s a role for funders to vouch for the organizations that they invest in. There’s a responsibility for funders not to just say, “Oh, here’s your grant.” But to introduce you. Maybe you’re not as out there. Maybe you don’t have a celebrity connected to you, which to me is always a red flag, by the way. Any org that has a celebrity attached to it, I’m like, “I don’t know about that.”

Melanie Brown: But then I can be the person to vouch for you, right? It’s not just about our dollars vouching for you. It’s actually me taking the time to talk to other funders about your work, even if I’m not able to invest in. Maybe I say, this is a great organization. It’s not aligned to our work, but I think it’s aligned to your work to make a connection. Can I do that for you. I think that we can do that more as funders.

DeAnna Hoskins: I really appreciate that, Melanie, because I do think looking at it as a partnership, and not just a giving of funding. I’m going to hold you accountable. This is a partnership. In reality, the mission of the foundation should align with the mission of the organization, so that would be a partnership to actually address some change. Also, another thing we have to be strategically aware of is nothing in the world is going to change in one or two years. This is a conversation I’ve been having with funders.

DeAnna Hoskins: I have to, as a black-led organization say, do I take your generous gift over 24 months, and knowing after 24 months, this generosity is going to leave, versus going with a funder who gives me a smaller gift, but gives me five years runway? As those impacts, because as an executive director or president, what I find myself, I never can leave the organization, because I’m always in fundraiser mode. I’m always in fundraising mode. I have 15 people, families who depend on me raising funds for the next year, that the stress that is on me to still show up publicly on panels, to still show up as the face of this organization. After 5:00 when everybody else goes home, I’m strategizing on what relationships and doors I need to open, because there are 15 families making sure I can raise the funds for next year, because I’m losing 2.5 million in two year grants that’s getting ready to drop off.

DeAnna Hoskins: Even if funders look at how do we wean people off? If I give you a million a year, and we’re changing our direction, we don’t drop you. I think Melanie said, we don’t drop you. How do we wean you off? Because so you can start to replace. But we’re introducing you to other funders as well, because our portfolio, our name is not as big as a Goodwill, or Salvation Army, but our impact smashes theirs of being in marginalized communities than you can ever think about.

DeAnna Hoskins: What are we really looking at? How do we define that partnership is very important, because we have to make real decisions? Sometimes that can cause us harm. As a organization, if you really want us to have a presence and have an impact, how do we stay on that trajectory when we’re always in fundraising mode, because funders are only allocating funding for one or two years, but change doesn’t happen in that short amount of time.

Nic Campbell: Right. What I’ve heard from each of you is talking about this increased partnership that’s needed between our among funders, I’m thinking about risk management, which is this idea that risk doesn’t just end after you ask the question on the application. It’s also about what happens post-award and throughout the grant as well. Then listening really intently to your grantees, to your organizations that you’re funding and saying, you’re closest to the problem, and likely the solution. Where can we leverage your expertise? How can we support that?

Nic Campbell: What a lot of this then comes down to is accountability. How do you make sure that funders are doing exactly what we just described, or creating an environment that we just described? When we think about accountability, who holds folks accountable? Who was making sure that these Grantmakers are actually doing what we just talked about? That they are funding in the way that we’re talking about? Aleesha, you said something that really stuck with me, which was, we need to interrogate their grant-making. Who’s doing the interrogation?

DeAnna Hoskins: That’s dangerous to be in. It is. Are there certain Grantmakers I can have that conversation with? Honestly, yes. Because we built a relationship, right? Is there fear of backlash and the power dynamics? There is, and I’ll share one. When I first took over this organization, there was a huge funder that supported campaigns that were going on through this organization. As I was coming in, looking at shifting, they wanted me to make certain hiring decisions.

DeAnna Hoskins: One, they didn’t believe in my leadership, as an African-American woman, not from New York, and never had touched feet and Close Rikers, how was I going to lead the Close Rikers Campaign? I immediately had the conversation that they didn’t understand leadership, because leadership is not about me. Leadership is about me empowering other people who have been impacted to lead that campaign, which we successfully did.

DeAnna Hoskins: Two, she demanded I make a hiring decision in leadership that I was not willing to make. In terms, let me know that if I didn’t, that she would not be supporting this organization moving forward. I had to be okay with that. It was a huge amount of funding that we lost. What I realized that I was giving up was my voice and authentically who I was. The conversation switched. I remember returning the current funding we had, because I was determined, you couldn’t talk to me like that. You weren’t going to belittle me like that.

DeAnna Hoskins: What that resulted in was her going to other funders, character assassinating me. Thankfully, I had relationships with other funders who knew my integrity of working in the federal government, managing 85-million-dollar federal grants, work in state and local, that she was not able to have the impact. I thought about the power dynamic of that position she was in, because I wouldn’t leave the power, or do what she wanted me to do, which was not in the best interest of the organization, because she didn’t have close proximity, and didn’t understand leadership.

DeAnna Hoskins: I always go back to that. Even today, when I’m in funder spaces, she shows up. She’s there. We speak. We’re cordial. Even in my organization, I will not submit an application to that funder for supporting funding, and she’s huge in the criminal justice realm. Because of the power dynamics that she shifted on me, one, I know she’s not going to approve it. Two, I have to maintain my integrity. Because if I have to lose my voice, I no longer need to be in this seat of leadership that I’m in.

Aleesha Taylor: I think, it’s really critical for to answer your question, Nic, and to build on what DeAnna has said for – Your question made me reflect also on my role in the field, and how oftentimes, when I’m contacted either to sit on panels, or to do some strategic work, a common thread that I tend to get is that, “Well, Aleesha, we need you in the room, because you’re able to speak the truth to funders.”

Aleesha Taylor: I think, there’s a responsibility for those of us who don’t have the restrictions and the constraints of getting our funding cut to our organizations to actually step up and play a larger role in calling out and exposing those power dynamics. Actually, it’s horrible, that DeAnna would have to – just the fact that she has to remain cordial to someone who really tried that character assassination, and also attempt to diminish the work of her organization in the field. Calling out that specific issue, and I think it’s a reflection of the lack of accountability that we have towards that we place on funders.

Aleesha Taylor: That risk and accountability is always just placed, put at the feet, or laid at the feet of the grantee partners that are doing the work. In some ways, I also see that as a call to action for some of us, depending on our positions in the field.

Melanie Brown: I would just say, I agree. I mean, I think, Aleesha, you set in a really interesting in between space where you can be that advocate, or that person that speaks truth to power. I think, philanthropy needs to have a reckoning. I mean, I can’t very well think that people should be called out for one thing over here and then think – but don’t call out funders. We’re trying our best. No, these power dynamics that are in play or in philanthropy and are in so many other things. My belief is as hard as I know that it is is that it should be called out. It should be a conversation that if we are committed to making the world better, whatever that means for different organizations and for different philanthropies, then we can’t somehow think that we are immune to critique, that we are above critique, that we are not ourselves perpetuating many of the issues that we say we are committed to achieving.

Melanie Brown: I try to build relationships with my grantees where they feel they can come to me, but who’s to say I don’t have blind spots? Who’s to say that, that there still aren’t things that I’m doing, that I need to be more aware of? I think, there’s moments when it makes sense to call out. There’s moments where we call people in, and we try to – It sounds like in your situation, DeAnna, calling in was probably not going to work.

Melanie Brown: Let me also just say, that is absolutely horrible and that is disgusting. That is someone who would probably behave like that in whatever profession they were in. Not to take anything off of the responsibility as a funder, but that sounds like someone who has their own issues and hasn’t done their own personal work. A funder who is advising you on, or even forcing you on hiring decisions, in 15 years, I have never done that. I don’t understand why someone feels they have the right to do that. You were right not to accept those dollars. I do think that the balance of calling in and calling out is what is needed.

Nic Campbell: What I’m hearing from you all is that if you’re in the room, and you’re a stakeholder in this entire grant-making process, think about the role that you’re playing. When you’re seeing behaviors, practices, policies, that are not in-line with equitable grant-making focus, to call it out. Particularly when you are sitting in “the power seat,” or you are in that power part of the equation.

Melanie Brown: Can I add one thing, Nic, that when I was early in my – starting in philanthropy, I had a colleague say to me that I have to be willing to risk my privilege as a funder to do what’s right in the sector. I’m in the room in a way that my grantees aren’t. If I hear the way that we’re talking about people of color-led organizations, or the way that we’re talking about an organization in particular, and I know that it’s wrong, I have to be willing to risk my privilege as a program officer, as a director, as a whatever I am inside that institution to say, that’s not right. I challenge other funders to do the same.

Stef Wong: That concludes part one of this series. Next week, Nic, Melanie, DeAnna and Aleesha will go in more depth regarding equitable grant-making. Additionally, if you’re interested in partnering with a law firm that leverages a global network of experienced attorneys with decades of legal training and practical experience, and focuses on social impact organizations to serve as an outsourced general counsel and thought partner, then schedule a discovery call with the Campbell Law Firm today. 

Stef Wong: The Campbell Law Firm works with brave non-profits, philanthropists, ultra-high net worth individuals and movements, offering high-touch counsel to social impact entrepreneurs and organizations around the world. We would love to hear more about your brave mission to change the world.

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Nic Campbell: Thank you for listening to this episode of Nonprofit Build Up. To access the show notes, additional resources and information on how you can work with us, please visit our website at buildupadvisory.com. We invite you to listen again next week as we share another episode about scaling impact by building infrastructure and capacity in the non-profit sector. Keep building bravely.

Part Two

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Nic Campbell: You’re listening to the Nonprofit Build Up podcast. And I’m your host, Nic Campbell. I want to support movements that can interrupt cycles of injustice and inequity and shift power towards vulnerable and marginalized communities. I’ve spent years working in and with nonprofits and philanthropies, and I know how important infrastructure is to outcomes. On this show, we’ll talk about how to build capacity to transform the way you and your organization work. 

Stef Wong: Hi, everyone. It’s Steph, Build Up’s Executive Portfolio Liaison. This week on the Nonprofit Build Up is part two of a two-part panel discussion originally recorded at the PEAK 2022 Conference.

Stef Wong: Moderated by Build Up CEO, A. Nicole Campbell, and in conversation with Bill and Melinda Gates Foundation’s Deputy Director, Melanie Brown; JustLeadershipUSA’s President and CEO, DeAnna Hoskins; and Herald Advisor’s principal, Aleesha Taylor. 

Stef Wong: This presentation was originally recorded in March 2022. You can jump back to part 1 of the conversation to learn more about managing risk for equitable grant making. But with that, let’s dive into the second part of Nic, Melanie, DeAnna and Aleesha’s discussion where they dive into the practice of progressive grant making, the inequities that traditional grant making has on marginalized communities funders’ aim to serve, and how to align grant making with an organization’s appetite for risk. You won’t want to miss it. 

Nic Campbell: I really like that framing, Melanie. And you know we’ve talked about funders, the role that they can play and how we can hold funders accountable to make sure that we are in this equitable grantmaking space. And I want to make sure that we focus on grantee practices as we think about grant making as a whole. What do grantees need to wrestle with when it comes to risk? And what does reframing of risk look like for grantee organizations? DeAnna, I would love to get your thoughts on those questions. 

DeAnna Hoskins: One, I think grantee organizations have to take a look internally. I actually look at internal processes to ensure that safety nets are in place. And I guess this is my – People say my PTSD are coming from government, because I just believe you have to be good stewards of the money entrusted in you. So, what are the processes and procedures you have in place? 

DeAnna Hoskins: One, to physically be held accountable. But two, that you’re not even wearing your staff out that Just is going to be an opportunity to build your staff and build the capacity of the organization. That even when this funding goes, that’s going to be sustainable, right? 

DeAnna Hoskins: So, one of the things that I do within the organization that I had to do to minimize risk was I couldn’t be the only decision maker in the organization. I realized structures, our titles, are there because we’re in a capitalist world. And they need to know somebody’s running the ship. But in decision making or funding opportunities, we collectively do it as a team. And sometimes I get outvoted because my team is actually delivering it. They’re actually doing the work. And I have to be mindful of the harm I’m causing them by chasing funding, right? 

DeAnna Hoskins: But I also think we have to be honest with ourselves. Am I, one, operationally prepared to go after five million dollars? Two, do I have the capacity to deliver on what I’m saying I’m going to deliver on in this proposal? And then three, what is my potential sustainability plan if I get this and I expand my organization, I do these things, what are my potential sustainability plans to keep it on that I keep my staff on? That I’m able to have a team. I’m not just chasing funding and hiring people, firing people. But then two, what does that sustainability look like, right? And for me, again, you could tell I’m a storyteller. I’ll share that, for me, being bold, we have this this culture in our organization that we’re going to boldly call out what it is. 

DeAnna Hoskins: So, while we address criminal justice issue, we’re boldly calling out the racial disparities and equalities in the various systems that filter into criminal justice. Because if I stay talking about criminal justice as the only problem, criminal justice ain’t going to be sexy in seven years with funders, right? Funders are going to go somewhere else. 

DeAnna Hoskins: But the one thing, no matter if it’s education, reproductive rights, criminal justice, mental health, substance abuse, it’s always a racial disparity to it. And if you follow it, through the end results of those failed systems, that systemic poverty and all those things, always fall into the criminal justice system, right? 

DeAnna Hoskins: So, in order not to bury ourselves and be limited to funding and then everybody’s going after the same money, we’re trying to change a system that has created racial disparities in economics, reproductive rights, education, mental health, access to all these things. 

DeAnna Hoskins: So, as an organization I had to strategically look, “How do I sustain this organization while still meeting our overall mission of disrupting the oppressive and marginalizing policies that are actually having the impact on the communities we’re trying to empower?” 

DeAnna Hoskins: So, it was like turning a ship in the middle of the ocean without anyone on board feeling the turn? Without anyone on board filling the turn. And then you’re here, you have this strategic plan. And just so happened what was happening in the world at the time unfortunately aligned with what you were saying. So, when everyone was saying, “We don’t know what you’re talking about. Why you’re doing that?” George Floyd happened. Breonna Taylor happened, right? COVID happened. And now everyone’s like, “Oh my God! We get it.” No. We’ve been screaming this, and that’s because you didn’t have close proximity to the problem like we did is why we were screaming it before the world noticed it. But you have to be bold enough to stand in your own lane and own that lane. 

Nic Campbell: No. I really appreciate just your response, DeAnna. Because what it what it signals to me is that we need to think about preparedness. We need to do this introspective look into capacity. And I really like this focus on sustainability planning. That you’re not just taking in funds for the moment, but you’re looking in the go forward. What do we need to actually be able to stand up for the long term? And I really appreciate all of that framework. We’re thinking particularly about grantee organizations. 

Nic Campbell: We also talk a lot about this term cultural competence, right? Sure, this is not the first time that many of us have heard that. But we talk a lot about cultural competence within the sector. And I’d love to hear how you all think about cultural competence, particularly as we’re talking about equitable grantmaking and we’re trying to center equity in our work. What role can cultural competence play in grantmaking strategy and implementation? 

Nic Campbell: Again, listening to all of your responses. So far, we’ve talked about listening. We’ve talked about accountability. How to work collaboratively? How does cultural competence come into play when we’re thinking about strategy and implementation?

Aleesha Taylor: I think with cultural competence, it’s about the importance of understanding the dynamics within the communities being served and really knowing if and when multiple sets of norms and rules are in play and the dynamics between them. And it gets directly to also what DeAnna was talking about around partnering. The importance of partnering with individuals who are closest to the problem. And understanding also cultural competence within communities. But then also cultural competence within our organizations, within the funding organizations and how the different dynamics play together. And so, I think the first step is just having an appreciation for overlapping interest. And understanding how power and power dynamics impact them. 

Melanie Brown: Yeah, I would agree. And I think for me, a lot of it is being able to show up in my work as my full self, as my full intersectional self, and allowing that to be an asset. And not something that has to be diminished in order to make a good investment. And so, I think it’s not far from what you’re saying, Aleesha, is being able to say like, “I do understand some of these dynamics in these communities. And some of them maybe I don’t understand because it might connect to my black identity, but it may not have connected to my class identity,” for example. 

Melanie Brown: And so, Just being funders is not being philantropoids as I like to say, right? Like, we are people and bringing that full personal self to the work. And I’ll add, at the Gates Foundation, a lot of our work is – The majority of our work is global. And so, even though we focus – My team focuses on relationships in the US. It is relationships that allow us to do our work in the US and across the world on issues around global health and global development. And so, humility is required, right? To act with the cultural competence is a respect that your culture, your ways of working, of knowing, of being are not the only ways. And so, that is when I think of cultural confidence. 

Melanie Brown: And I initially have like a knee-jerk reaction to that label, because it does become like another way of just saying, “This is how we should be treating people, right?” And so, we should need a label for it. We should value the perspectives of folks who are different than us. But that’s something that I always start with. 

Melanie Brown: And I always look, I will say – And this is related to managing risk, is I’m thinking about values and skills. And so, cultural competence is not solely focused on the skills or the way that we think about skills and executing, but also the values that people bring to their work. And balancing that as being equal to someone’s ability to do it is what are the values that are coming from these communities or these constituencies that are just as important to the work that we’re trying to do as what might be a focus on another cultural way of knowing, or doing, or being. 

DeAnna Hoskins: I’ll just follow up in total agreeance, but also being willing to be culturally competent is to be self-aware. That I need more than one opinion at the table. So, when we start talking about having a cultural awareness of different things, we do technical assistance with federal government entities who are implementing re-entry initiatives across the country. And when grantees struggle with recruitment or retaining participants who are leaving incarceration, moving to their community, they kind of reach out to us as formerly incarcerated people and say, “What can we do?” 

DeAnna Hoskins: And I immediately know, if this is a tribal grantee, working with a tribal population, DeAnna is not the person that acts on how to do recruitment, right? DeAnna reaches out to another leader who has a native American background who’s that’s their culture. There are certain things that we will never be able to tap into that taps into a person. But self-awareness of knowing just because I’m in the power seat to make the decision, I don’t have the knowledge culturally to actually have the impact that’s intended. 

DeAnna Hoskins: And I think it goes back to Melanie’s talking about humbleness and knowing when to step back that this is not my lane. Just because I’m the one who’s in charge of the project or in charge of this portfolio, I need. So, I wonder when organizations or funders say we’ve created a DEI task force, right? And then I look at the task force and I’ll be like, “Well, who are they culturally for the change to actually do something?” Because just because you’re actually making a task force to say you’re addressing that, are you truly having representation of the various cultures of the constituencies that you’re trying to impact at that table? And it goes to what Melanie said, just because I’m an African-American person at that table, can I put aside my class privilege to actually have the impact, of my black impact, that is happening in the marginalized communities? 

DeAnna Hoskins: Even having the ability to separate it even if I, within a race, identify, I may have obtained other privileges that I can no longer connect to. So, I have to be self-aware to put that on the table to say, “DeAnna, you’ve broken through glass ceilings of careers and different things. That’s on the table. Go back to the impoverished community from where you were with. And how is this policy, or this impact, or process going to impact those most marginalized who have not yet to obtain that?”

DeAnna Hoskins: So, self-aware. But also, just not how we give our grants. Do we go deep enough within organizations to look internally within their own HR hiring policies and different things of that nature that actually perpetrate the same disparities and cultural impact that they’re saying they’re trying to have outward? Are they doing it internally? Because I believe you can’t sustain it outwardly if you haven’t changed your culture and adaptation internally.

Nic Campbell: It makes me just think about the different ways in which you can lead, right? So, when we think about cultural competence, it’s this idea that you just don’t always have to be at the forefront knowing everything. I’m being that person. But it’s actually knowing when to take a step back and saying, “Someone else should lead this conversation. And I will be supporting that leadership.” So, everything that you all shared makes me think about how do we re-envision leadership in many of these contexts in which we find ourselves? 

Nic Campbell: And something you said, Deanna, was about how do you look internally, right? We start that evaluation process. And it should happen first internally. And then we start to look at what are the impacts of our work and our grantmaking? And so, I would love us to just talk and highlight a little bit about evaluation of work and impact just to hear from you all on how do you develop a shared understanding of risk within your organization? Where neither its application of risk, of this definition, or the definition itself perpetuates systemic racism in grantmaking and promotes equitable evaluation. 

Nic Campbell: So, we’ve talked about all of this to this point where we’re saying, “How can we continue to be self-aware enough to realize when we are not stepping into those same harmful practices and protocols that we’re trying to fight against?” So, how do you develop that shared understanding of risk to actually get us to the point where we are not perpetuating harm? 

DeAnna Hoskins: Nic, are you asking from an organizational standpoint? For me, just in this work, I’ve always, whether hired by the Board of County Commissioners, the governor, whatever the work that we were supposed to do externally, I would always look internally to see are we even doing it? And I could not be a voice for organization externally about practices and procedures that we weren’t following internally. 

DeAnna Hoskins: My current position, we’re promoting that formerly incarcerated directly impacted people need to be in positions of leadership making decisions. But I was the only person formerly incarcerated in leadership. So, I had to immediately change that and address that, that I had to walk the walk that I was talking to authentically own it, to have the credibility. But that was, if I truly believe that people who have close proximity to the issue should be in leadership in decision making at those policy tables, I had to actually replicate that internally because I believe in that, right? 

DeAnna Hoskins: So, it shows where the organizations are. I always say I look at an organization and they say this is what we’re doing for the most marginalized communities in African-American communities. Then I look at your whole executive team and leadership in your board of directors and there’s not one African-American on there. You’re just actually saying it. Because you internally have not ingested that to say, “This is what we believe in. And this is how we operate because we’re going to role model.” 

DeAnna Hoskins: Part of leadership, we teach principles of leadership. And the main principle of leadership is modeling the way. Don’t tell me what you want to do. Show me what you are actually saying you want to do because it will perpetrate out. And that’s a huge component of leadership even when I look at opportunities of advancement for myself. And people say this is what we do and what we want to do. And then I look inside internally and you don’t replicate what you’re saying. So, I think that, for organizations, we have to internally digest. If we’re asking people to be fair and equitable, are we internally fair and equitable to our team that we’re building as well? 

Aleesha Taylor: I think, and also, to build on that beyond the representation amongst decision makers and leadership is looking at, even if you have a diverse table, who has power and who has voice? And who feels supported enough to take risks and present perhaps risky portfolios? 

Aleesha Taylor: I think one thing I’m going to start suggesting to some of my clients is to, first of all, study the facial expressions that we saw this week with Judge Ketanji Brown Jackson and study them and look around your tables during board meetings and portfolio reviews. And if you see them, just note that perhaps your organization has a problem and needs to take a step back. 

Aleesha Taylor: So, I think, again, it’s really that focused attention on power and voice really. And who is able to really speak freely once they are at what we hope to be as a diverse decision-making table? And speak freely without repercussion. 

Melanie Brown: Yeah, I’ll just build on that just to say one thing as a leader and as a newer leader, someone who’s just recently within the last year taking on a leadership position, is giving my team permission to fail. And so, sometimes I don’t fully see the vision, I will admit. But to say like, “Okay, let’s try it. Let’s see.” And that being okay to do something that’s a little bit more risky. Something that is challenging the norms within our organization or within the sector. And let’s see if it works. Let’s try it. 

Nic Campbell: I love it all. So, I completely agree. And again, this theme of leadership. Giving folks permission to fail when we’re thinking about how do we start this evaluation process? And making sure that it’s starting internally before we then move externally.

Melanie Brown: And let me say something, DeAnna, to your point if you’re not able to walk the walk or talk the talk. Then don’t be out in front, right? If you know something is a direction that you should be going into – And I say this all the time. Like, funders and grantees are partners. And often, I have in the past used my funders to push my organization towards a direction. And so, sometimes you’re right. We may not be doing the work internally that we need to be doing. But I can move money into this organization who is and begin to show that we could be going in this direction. But then I shouldn’t come to you and say, “Oh, DeAnna, I’ve already figured it out,” right? I need to then understand to be behind you and to let you lead the way until my organization is ready. 

Nic Campbell: So, we wanted to also save some time for some Q&A. And we already have some questions that have come in. And so, I would encourage you to continue to submit questions in the chat and we’ll see if we can get to them during this conversation. So, the first question, and this is to any of you. And it’s, “Can you address the line between the technical assistance that’s offered by a funder and that kind of prescriptive dictation of how funds should actually be spent?” We see this come up a lot. I would love to get some thoughts. 

DeAnna Hoskins: I hate to keep going first. But I think it’s the clear definition of what is technical assistance, right? Because it can take on many facets of it. And I think Melanie talked about one. One of the technical assistants can be simply I need the introduction to other funders or relationships that you have around the work we’re doing. But then you get into a technical assistance of, “This is how you should be running your program. This is how you should be hiring your structure and different things of that nature.” 

DeAnna Hoskins: I think identifying what technical assistance look like, or is it technical assistance, or is it simply support? We’re here to support you. If you find yourself struggling with carrying out some of the objectives of the grant. Maybe the technical assistance of support is actually moving your grant date. Giving you an extension of time, right? That you don’t feel overwhelmed because you had to ramp up to actually get to the deliverables of the grant. Or in the middle of the grant, the technical assistance can be the flexibility of working with you to put in a budget modification or a scope of work modification. Because once you got into it, what you outlined to implement, the community had another direction and priority that you need to address and support with getting to the overall goal. 

DeAnna Hoskins: So, what is technical assistance? I think it’s kind of like risk. It’s not a broad topic. Philanthropy comes at it as we’re going to hold your hand around finances, operations or programmatic issues where it simply may be supporting you to actually move the needle. Because sometimes when you write the grant was the issue. But when you get to the community, the community may have identified another priority. So, I think transparency and clarity on is it technical assistance that guides you? Or is the support that supports you? 

Aleesha Taylor: I think it’s also important for funders to think about technical assistance beyond the program or project deliverables and to think about what additional support might, as DeAnna was saying, the organization need around perhaps around institutional development? Perhaps it can be about board strengthening or strengthening their governance systems and things things that will support the organization to be stronger after technical assistance that enables the organization to be stronger after the grant period. I think, again, like it’s about reframing our understanding of technical assistance. 

Melanie Brown: And I’ll just say quickly about the line when it goes too far, is I wonder if that’s a call-in, call-out moment for an executive director to say to the funder, “I appreciate the assistance. But this is actually not where we need the help.” And to have that be a conversation between what feels like overstep on part of the funder. Or just quite frankly, missing the mark, right? Of just not being able to see the organization in the same light they do. 

Melanie Brown: I will never see and understand an organization better than any of the grantees that run it because I’m not thinking about it day to day. It’s not my organization. It’s not what I do. And so, how can you use that example where there is that line being crossed to say, “This technical assistance is not helping. This is not where we are right now. And how can we work together to get some clarity on that and to get to a place that achieves what you need to achieve, funder, but is also beneficial to our organization?” 

Nic Campbell: Right, that reframe of, “How are we actually supporting you? How are we continuing to invest in your sustainability?” 

Nic Campbell: So, another question is, have any of you done work around assessing risk tolerance with the board, with the organization, with the organization’s leadership or their staff? And if you have, have you seen a disconnect where the board might want to be riskier but the staff wants to move a little bit cautiously? Or vice versa? And what have you done in that situation? 

DeAnna Hoskins: That’s scary. And I’ll say it’s scary because, as a President, CEO, not only am I running an organization to have an impact driven around the mission. I’m actually running a business. And sometimes those are making business decisions and your board may be focused on the mission and not understand investments, right? Stabilization of the organization. Why are we moving in that direction? 

DeAnna Hoskins: I think one of the biggest for me was I came into an organization that had a founding board. And so, we know founding boards support the founder more so and get aligned with the mission. As we were pivoting, we had people who struggled. Why are we pivoting? This is not – And literally, I had to go search and find the founding documents that talked about, “I’m not driving us away from my mission. I’m just trying to get us aligned with our mission,” right? 

DeAnna Hoskins: But because what threw us into the natural spotlight was so opposite, it literally became the tail wagging the dog versus the dog wagging the tail of the organization. But that was bringing the board along. But then I had staff who literally came on for the actual other things of the organization and not the founding principles, the mission, and had no understanding why we were going there. And I had a huge turnover. But I had to plan for that because I knew it was coming. 

DeAnna Hoskins: As a leadership position, I was transparent. I prepared for the huge turnover. But I also prepared for the huge turnover to actually work with the staff that I knew was going to be a part of the reduction in force and give them options of other job assignments that aligned with the mission and still was in line with what they did. And of course, people were not there. 

DeAnna Hoskins: So, I was struggling. And at one time I thought, “I’m going to be the only person in this organization with a laptop. I’m going to have to start from scratch.” But it was understanding the business model of it. And I was faced between staff who was not okay with the change in the pivot or the risk. And then I was a risk to the funders, because funders had got behind this national theme, and here I was pivoting this shift. 

DeAnna Hoskins: But as a leader and understanding of non-profit management, that mission drift happens. And if you don’t stay in line with your mission, you’re going to find yourself all over the place. And staying focused on that, we’ve survived it. But it was. I lost some funder relationships. I’ve lost a couple of board members. And I’ve lost over 50% of the staff when we were doing that pivot. We’ve built back up since then aligned with the mission. But that was a scary time, because I had to look from a personal career objective. Am I killing my career by being willing to take this risk and moving everyone in the organization along from the board, the funders and the staff in this direction to get in line? Turned out to be the right decision. But it was a really stressful scary time. 

Nic Campbell: Thanks for sharing that, DeAnna. And I think in terms of the time, I know we just have a five or so more minutes. And I want to make sure I ask a question that sort of can tie up all of what we’ve talked through today. And so, based on everything that we’ve discussed and we’ve talked through practices, tools, mindsets as well, right? That shift that has to happen even individually when you are a grant maker within a grantmaking organization. What do you all think is the next step for grant makers to legitimately support the storytelling of historically marginalized communities in such a way that strengthens both grantee capacity as well as the communities in which those grantees operate? 

Nic Campbell: So, it’s a big question. But we’ve had a big conversation. So, I would love to get your thoughts on how we move forward from here. 

Aleesha Taylor: I think, briefly, one of the key things is just to embrace the messiness of narratives and storytelling. And to really recognize that change is not linear. And I think we fundamentally understand that. But then we still want these sort of neat and linear strategies and stories that are tied with a bow. And so, I think a first step is just understanding that we move through paradoxes. And stories just aren’t neat and linear. 

Melanie Brown: I would say a return to – I don’t know if it’s a return. But truth-telling. I think we have to be honest with ourselves that the stories that we’ve been telling are not the full stories and they’re not the only stories. And in a world where truth is in question – I forget the phrase that was used by the last administration. But there was some phrase that that was used about something. It’s like not a true – There’s some in between truth and a lie. 

Melanie Brown: And we can’t even just blame it on the last administration. We’ve been down this path. There’s been a long history especially – Of course, in the world, especially in this country, of people lying about how things have gotten to the place where they are. And so, I think a return to truth. And one way to do that is through stories. 

Melanie Brown: I will just give a shout out to an organization that I love, which is Pop Culture Collaborative. I think the way that they are tapping into pop culture to reframe those narratives. If you’re not familiar with them, I encourage everyone to take a look. But I think that’s what’s needed for philanthropy, is a reckoning with the stories that we have told ourselves and how we’ve allowed those stories. Because some of them are done with really good intentions, right? 

Melanie Brown: I mean, I’m not saying that it’s always negative. That we tell ourselves these stories about who people are, and what they need, and how they don’t know what’s best for them and for their communities. And so, all of that needs to change. And I don’t want to change that. I don’t need to look at a chart and a graph to know that that needs to change. And I think what will change hearts and minds is the stories that we amplify with the stories that we allow to also infiltrate our thinking and our work. 

DeAnna Hoskins: I’ll just follow up that I concur with everything Melanie says something really powerful, that stories change hearts and minds. People change policies based on humanizing the issues. But also knowing the stories, tell the story that – From my perspective of the world, that people committed violent crimes, people formerly incarcerated are not hindered by advancing and becoming productive members of society. But we’ve kept that so secret only to the nonprofit narrative to raise funds, but not actually to storytelling to actually change and actually humanize the issues around the individuals we’re addressing, right? 

DeAnna Hoskins: And we continue to allow – Melanie said something very important, and it made me think of where we are in this country. That even in spite of knowing truth-telling has to be centered, there are still people fighting for certain populations of knowing the true history, right? And I just believe that if you don’t understand where a person has been or what the process has been, you can’t make adequate changes that actually undoes that injustice. So, storytelling has to be centered. But the space has to welcome it as well. Instead of charts and graphs, as Melanie said, how do [inaudible 00:32:10] from the theory of change? That people change? Communities are changing? Because that is actually the deliverable and the impact we’re actually finding to do in this work.

Nic Campbell: Yeah. And I think I think what you each have shared, these are really the principles around equitable grantmaking at the end of the day, right? This idea that change is not going to be linear. It’s about how do you step in and really manage any sort of risk that might come up. 

Nic Campbell: As Aleesha said, embrace the messiness. And then truth-telling. There needs to be this reckoning for philanthropy to make sure that we are accountable for the things that we say we’re going to do and how we’re going to do it. And then finally, DeAnna, your point about just centering. Humans human-centered work at the end of the day. 

Nic Campbell: And for everyone who joined us, this conversation should not end here. The question now is how do we take forward what we heard here to change our own personal behavior as grant makers transform organizational behavior, and the culture of grant making organizations and institutions, and continue to build bravely. 

Nic Campbell: I want to say my immense thanks to our panelists, our wonderful panelists, Aleesha, Melanie and DeAnna for such powerful sharing of your own experiences and your expertise. And I want to thank all of you who joined us for your time and your engagement. 

Stef Wong: And that completes this two-part series of managing risk for equitable grantmaking. As we wrap up, if you are interested in partnering with a law firm that leverages a global network of experienced attorneys with decades of legal training and practical experience and focuses on social impact organizations to serve as an outsourced general counsel and thought partner, then schedule a discovery call with the Campbell Law Firm today.

Stef Wong: The Campbell Law firm works with brave non-profits, philanthropists, ultra-high-net-worth individuals and movements offering high-touch counsel to social impact entrepreneurs and organizations around the world. We would love to hear more about your brave mission to change the world. 

Nic Campbell: Thank you for listening to this episode of Nonprofit Build Up. To access the show notes, additional resources and information on how you can work with us, please visit our website at buildupadvisory.com. We invite you to listen again next week as we share another episode about scaling impact by building infrastructure and capacity in the nonprofit sector. Keep building bravely.

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Cross-Border Grantmaking: Due Diligence and Legal Considerations for Global Grantmaking with A. Nicole Campbell

Over the next two weeks at the Non-Profit Build Up, we will be exploring the context and common concerns on “Cross-Border Grantmaking: Due Diligence and Legal Considerations for Global Grantmaking”. This week’s episode is part one of a two-part information-packed session led by Build Up’s CEO (and Rockefeller Philanthropy Advisors’ General Counsel), A. Nicole Campbell, and moderated by RPA’s Senior Vice President and Corporate Secretary, Renee Karibi-Whyte. This presentation was originally recorded in April 2022. This is a two part series.

Nic provides an overview of the global giving landscape; reviews definitions and descriptions of expenditure responsibility and equivalency determination, which are concepts that arise frequently within cross-border grant making; and reminds us about compliance considerations to keep in mind when making international grants. You won’t want to miss it.

Listen to the podcasts here:

Part 1:

Part 2:


Read the podcast transcription below:

Part One

-Upbeat Intro Music-

Nic Campbell: You’re listening to the Nonprofit Build Up podcast, and I’m your host, Nic Campbell. I want to support movements that can interrupt cycles of injustice and inequity, and shift power towards vulnerable and marginalized communities. I’ve spent years working in and with nonprofits and philanthropies, and I know how important infrastructure is to outcomes. On this show, we’ll talk about how to build capacity to transform the way you and your organization work.

Stef Wong: Hi, everyone. It’s Stef, Build Up’s Executive Portfolio Liaison. This week on the Nonprofit Build Up, we are bringing part one of a two-part informative session led by Build Up’s CEO and Rockefeller Philanthropy Advisors’ (RPA) General Counsel, A. Nicole Campbell, and moderated by RPA’s Senior Vice President and Corporate Secretary, Renee Karibi-Whyte.

Stef Wong: This presentation was originally recorded as a webinar in April 2022. It is the first part of a two part series. The Campbell Law Firm serves as outsourced general counsel to brave nonprofits and philanthropies, and RPA is one of our brave clients. RPA is a nonprofit organization that currently advises and manages more than 400 million in annual giving by individuals, families, corporations, and foundations, whose mission is to help donors create thoughtful, effective philanthropy throughout the world.

Stef Wong: Nic provides an overview of the global giving landscape, reviews definitions and descriptions of expenditure responsibility, and equivalency determination, which are concepts that arise frequently within cross border grantmaking, and reminds us about compliance considerations to keep in mind when making international grants. You won’t want to miss it. With that, here’s part one of cross border grantmaking, due diligence and legal considerations for global grantmaking.

Renee Karibi-Whyte: Hello, everyone. Welcome to today’s webinar. We’re excited that you’re here. This is the third in a series of legal webinars that we’re doing to help donors create thoughtful and effective philanthropy in line with RPA’s mission. We have today, as we had with the other webinars, and you can go to the next slide, RPA’s General Counsel, Nic Campbell. She advises on the work of RPA, which includes a considerable amount of cross border work, both for our sponsored projects and the clients and partners we advise and manage their philanthropy.

Renee Karibi-Whyte: Most recently, before coming to RPA, Nic was the Senior Director of Operations and Foundation Counsel for Dalio Philanthropies. Before that, she was the Deputy General Counsel of the Open Society Foundations, and there she provided strategic legal governance and operational advice to the global network of over 35 charitable organizations and foundations created by George Soros.

Renee Karibi-Whyte: Nic is very well-versed in this topic. So I’m excited to have this discussion with her today.In addition to working as RPA’s General Counsel, Nic is also the Founder of Build Up Advisory Group, which specializes in strengthening organizational infrastructure for philanthropies and nonprofits more generally. So as I mentioned earlier, this is the third in this series of webinars. The first two were values-based contracting for grant makers and navigating grants that support advocacy to C3 and C4 organizations. The links to those prior webinars are in this deck that we’re going to send out after the webinar completes.

Renee Karibi-Whyte: So for today’s discussion, as with all the previous webinars, we’re really focused on helping to lay the groundwork to give people an understanding of the framework for this. So we’re going to really get deep and give you a lot of insight around the framework. We’re going to have lots of opportunities for questions throughout. I wanted to thank all of you for providing great questions when you registered because we did have probably the most questions we’ve ever had on this topic for any webinar we’ve ever done.

Renee Karibi-Whyte: We’re going to get into expenditure responsibility and equivalency determinations. We’re going to talk a little bit about how these items change, depending on who you’re giving to. We’re going to cover fiscal sponsors versus fiscal agents, sanctions considerations. Then we have some hypotheticals, where you’ll get a chance to show your knowledge. Again, we’ll have some time for questions at the end, and questions are always welcome throughout, and I’ll ask them as I can during the discussion.

Renee Karibi-Whyte: Just first off, you can go to the next slide. Just to kind of set the framework a little bit, based on some recent studies, the foundation in the United States have given over $48 billion outside of the US, based on their most recent information I could find. That compares to about five billion from the United Kingdom, three billion from Canada, three billion from Germany, and one billion from the Netherlands. So the United States is a huge source around the globe of cross border grants.

Renee Karibi-Whyte: At the same time, and this is why it’s so important to talk about those intermediaries, because only 12% of those international grant dollars and, again, this information isn’t 100% current, it’s around about 2018 is latest information I could find, 12% of that goes directly to the organizations, and 88% of that amount goes through organizations that are acting as intermediaries. Well, that’s made cross border giving so difficult and so challenging, is the closing space for giving, with so many countries introducing regulations that limit foreign funds for the philanthropies.

Renee Karibi-Whyte: With kind of laying the groundwork, Nic, can you just start talking about what are the influences on global grantmaking? What are the things that people should be concerned about generally?

Nic Campbell: Yeah, sure. Thanks, Renee. So when we think about what influences global grantmaking, there are certain elements that we wanted to pull out. The first are US legal requirements, and we’ll be talking through those today. So we mean the tax code, IRS regulations, sanctions. So OFAC, for example, and FCPA. We also have to think about what are the restrictions or requirements within the country where the grantee might be located. So we have to understand the role that the governments play within grant awards. It’s not just private foundation to grantee and country. It’s also what’s the role of the government within that transaction?

Nic Campbell: Relatedly, we also have to consider the local landscape. What is happening on the ground, so to speak? Are we immediately post-conflict? Is there a war that’s happening within the country? What other practical considerations do we need to keep in mind? Then finally, we always have to think about the overall goal and purpose of the grants. What is the programmatic reason that we’re making this grant, and does it fit? Or how can we make it fit with all of the other pieces that we talked through? So the legal requirements, the restrictions within country, and the local landscape.

Renee Karibi-Whyte: So we’re going to talk about the legal framework first.

Nic Campbell: That’s right. So to pull that out a little bit more, when we talk about charitable organizations, we mean public charities and private foundations within the United States. Charitable organizations have one requirement. They have to use their funding for charitable purposes. That is going to be really important because every grant that you make, you have to ensure that the funding is being used for charitable purposes. This is why we’re asking due diligence questions. This is why we’re asking for reporting. This is why the application is in place to ensure that funding is being used for charitable purposes.

Nic Campbell: As I mentioned, there’s public charities and private foundations. What’s the difference between the two? Public charities receive funding from the general public, right? So the majority of their funding, a significant portion of their funding is coming from the general public or from the government. Private foundations, on the other hand, usually have a single source of support. So we mean like one family, a group of family members, one corporation, for example.

Nic Campbell: When you’re a private foundation, you’re making a grant to a non-US public charity. Under the tax code, there’s only two ways that you can make that grant without that grant award being seen as a taxable expenditure, meaning that you would be taxed on that grant award otherwise. The first is through something called expenditure responsibility that we’ll talk about in more detail. Then the second is equivalency determination that we’ll also talk through.

Renee Karibi-Whyte: How does a public charity giving a grant overseas change that discussion? Does a public charity that gives a grant overseas fall into the same bucket as the private foundation giving a grant overseas?

Nic Campbell: So the rules that I just talked through are only for private foundations, which means that public charities do not have those requirements. Still, when you were working with public charities that do a lot of cross border giving, you’ll see that they’re also exercising expenditure responsibility. The beauty, though, is that they have a lot more flexibility. They can determine when they can require pre-grant inquiry, for example, as we’re looking at these requirements under expenditure responsibility or just some other requirements within ER. They can say, “We don’t want to exercise that part of ER right now.” But private foundations do not have that ability.

Nic Campbell: When we’re talking about expenditure responsibility, what is it? It’s a federally mandated procedure that a private foundation, not a public charity, must follow for any grant management organization that is not a US public charity. So that means that a private foundation cannot say, “Well, we don’t want to exercise expenditure responsibility. It’s required by the IRS.” We’ll see the exception to that, which is the equivalency determination. But otherwise, you have to be an expenditure responsibility.What does it require? One, a pre-grant inquiry, which is pretty much what you’re doing when you’re asking for applications, information. You’re doing your diligence. You essentially want to be reassured that you are awarding funds to an organization that can complete the charitable purposes of the grant. That is what your pre-grant inquiry should be getting you to, that place of comfort.

Nic Campbell: The second is that you need a grant agreement. So some foundations may not have grant agreements when they’re awarding funds to public charities, for example. But in ER, you must use a grant agreement. You also have a requirement that there has to be separate accounting for grant funds. It doesn’t mean that you have to open up a separate bank account for these funds, but it doesn’t mean that you have to have a way to account. You, the grantee, has to have a way to account for the grant funds that it has received. So this is usually done through the books, right? We have fund accounting that’s happening there.

Nic Campbell: Then you also need annual grant reports from the grantee until all funds are expended. This is usually where you’ll see questions coming in about exponential responsibility. Like what if it’s a de minimis amount? Do we still have to provide report? Yes. The answer is yes. There is no exception for de minimis amounts. You have to have the grantee continue to report until all funds are expended or the funds are returned.

Nic Campbell: On the foundation side, there is an annual reporting requirement until the funds are fully expended to the IRS, to essentially tell the IRS what the grant was for, how much funds have been expended to date, and has there been any sort of diversion of those funds. Usually, in ER, we want to see project support. General support is very tricky because you have to understand this concept of you’re making a grant to an organization that is not deemed charitable, that’s not been deemed charitable by the IRS. So to give this sort of unrestricted pot of money to that organization would be problematic from the IRS rules and regulations. We really want to see project support grants, and we can get flexible in that, and we’ll talk about that. But you want to see a budget that’s really tying to the line items within that project.

Nic Campbell: Then finally, re-granting. Anytime you have ER in play, you make a grant to an organization that then will re-grant to other organizations. That second set of granting also takes on ER, right? So that means that all of the things that we just talked through have to be present in the grant agreements and in the grant relationship between that grantee and the sub grantees. So you do have to ask that question of do you, the sub grantees, have the ability to comply with ER.

Nic Campbell: Ultimately, all sorts of penalties, anything that’s coming out of ER or not compliance with ER, will happen to the foundation, not the non-US organization. So ultimately, the foundation does have a responsibility to ask questions and make sure that ER can be followed.

Renee Karibi-Whyte: So how extensive does the report need to be on how the grant funds are spent?

Nic Campbell: The report doesn’t have to be that extensive. You really have to just talk about how have you been spending the funds to date? How much funds are left over or remaining? Has there been any diversion? Have you used the funds for a purpose, other than what was intended, right? So it’s really the kind of report that you would see in the non-ER context, the kind of programmatic report that you’d want from your grantees anyway.

Renee Karibi-Whyte: Okay. Then the other question from a participant, if there are funds left over, can those funds be reapplied to the organization for another use?

Nic Campbell: It could be, but you have to make sure that the use is papered, right? So that means that there is an amendment that has been done to the grant agreement, and you sort of go through that ER process again, but realizing that you don’t have to do another pre-grant inquiry because it’s the same organization. But if you’re applying for a different purpose, you still want to have that comfort as the funder that this grantee can satisfy the new purposes of the grant, so the repurposing that’s happening. So you can do it, but it has to be documented.
If you contrast that with something that’s happening with a public charity, if the public charity has grant funds that are leftover, you don’t necessarily need an amendment. Now, I do think it’s good practice to have an amendment in place. But you do have that flexibility to say, “Well, it’s only $200 of a million dollar grant.” You can just hold on to the 200 and use it for your charitable purposes, right? In ER, you just don’t have that flexibility.

Renee Karibi-Whyte: Okay. Then we spoke a little bit about the reporting requirements being not that heavy. What are the financial reporting requirements? Are there specifics that are required?

Nic Campbell: No. It’s really just budget to actuals again. So basically, what was budgeted? What was actually spent? Have you actually been spending it in accordance with the budget and the proposed activities? So there’s nothing special that comes out of a report for ER, except that you do want to make sure – I think it is good practice to have someone, a representative, an officer of that organization that sign off and saying there have been no diversion of funds through whatever grant period or reporting period that you’re dealing with. But nothing in addition to what you have in a standard financial report.

Renee Karibi-Whyte: Okay, thanks. Let’s move on to equivalency determination.

Nic Campbell: Of course. So we talked about expenditure responsibility, and we also said that the other way that a foundation committee grant to a non-US organization and non-US public charity is through requirements determination. So I’ll just flag here that ER also comes into play when you’re making a grant within the United States. So if you’re making a grant to an organization that is just not a US public charity, but it’s operating within the United States, you have to exercise ER.

Nic Campbell: Equivalency determination only comes into play when you’re dealing with an organization that has not been organized or incorporated within the United States. So you are basically making a good faith determination that the organization is a US public charity equivalent, right? Financial responsibility, you don’t have to comply with those rules. You’re now saying, “Listen, if this organization were formed in the United States, it would be the equivalent of a US public charity,” right? So what does that require? It means that you have to make sure that that organization is actually functioning like a US public charity. So you have to make sure that it has requirements within its governing documents, that it will only use funds a particular way, in the same way that the US public charity is required to use those funds.

Nic Campbell: If you remember back to one of the initial slides, we said charitable organizations must always make expenditures that are charitable. That’s the same requirement here. We want to make sure that the governing documents are saying every time this organization has an expenditure, it’s for charitable purpose. You also want to think about equivalency determination when you are thinking about investing in the organization itself, as opposed to a specific project. So you want to take a step back and say, “Can I actually provide a general support grant to this organization? Would I want to provide a general support grant, a more flexible funding to this organization?”

Nic Campbell: That’s when you also want to think about equivalency determination. Remember that with ER, you’re in that project support space. Now, you can get flexible, but you really do have to have this budget to actuals type of conversation when you’re in the ER space. You don’t need to have that kind of conversation. There are some safe harbors that you can apply in the equivalency determination or the ED space.

Nic Campbell: What does an ideal candidate for an ED look like? One, charitable organization, as we mentioned. We’d like to see that organizations have been in existence for five years or more. This does not mean that you can’t find startups, right? So I’ve also seen this applied in a way that limits funding for startup organizations, and that’s not true. It’s just that with five years or more in existence, you have actual financial information to go from. With startups, now you’re doing projections, right?

Nic Campbell: You want to make sure that this is a long-term relationship. Equivalency determinations, although they’re not something that you can do in a day or so probably, they do take a couple of weeks for the grantee to gather all that information. So if you’re going to put in this amount of effort, you want to make sure that it’s a long-term relationship, as opposed to a one-time kind of grant that you’re making. You will also want to make sure that this organization receives a large amount of its support from the general public. Remember that when you’re talking about public charities, the thing that makes them public charities is that they’re receiving a substantial amount of their support from the general public. You want to see that here as well.

Nic Campbell: Some sticking points that I always like to point out for ED candidates are, one, when they’re sharing documents about governance, how they’re operating, all these things that are going to establish with your charitable organization, their documents must be translated to English. So you want to think about, okay, do we have to pay those expenses? Should we pay those expenses? How will the organization basically comply with this ED process? You cannot have an organization that engages in political campaign activity, just like a public charity cannot. You do need financial information, right? So if you have an organization that’s doing amazing work, but they just don’t have those financial projections or financial information, they’re not going to be ideal when it comes to determination candidates.

Renee Karibi-Whyte: Can you speak to roughly, in your experience, the comparison of how often equivalency determination is used versus ER?

Nic Campbell: I would say that it’s more about the kind of grant that you want to make. So if you want to make a general support grant, if you want to make a multi-year support grant, you start to think about equivalency determination because you’re stepping into that long-term relationship. Maybe you’re awarding grant funding for activities that, otherwise, you’d have to be carving out into a project. So maybe the organization engages in some lobbying, for example. Maybe they’re making grants to individuals, and you want to support those activities without being pulled into the foundation’s activities itself. So you can get out of ER and do ED that way. So it’s usually more about the kind of award and funding you want to provide.

Renee Karibi-Whyte: What are the chances that an ED will be challenged or interrogated? What kind of documentation should you keep too in the event that that happens?

Nic Campbell:  So there’s a third-party source, at least one that does equivalency determinations, and it’s nice in the sense that there’s a sort of database of organizations that have EDs. So you can kind of go to that database now and say, “Does this organization have an ED?” If it does, you pay a reduced fee, and you can rely on that equivalency determination. If not, you can submit that organization to do the equivalency determination that way. So you don’t see a lot of challenges. I would say over the course of my career, I have not yet seen it challenged. You want to make sure, though, that you are collecting all of the information that we flagged. That database, that third party resource that I talked about, they understand all of these ED requirements. So the governing documents, the affidavits that you have to collect, the determination that you have to make. All of those things are documented and placed into that database, so you can rely on it. So I haven’t yet seen challenges to it. But if there is a challenge, you definitely want to make sure you have that information to say, “I made a good faith determination based on the information I had.”

Renee Karibi-Whyte: If there is a challenge, who would be the challenger? Would it be the IRS? Would it be – Who would be the organization?

Nic Campbell: I think it would be the IRS maybe in an audit. So if an audit comes up, or someone says, “We think –” And audits can be sort of launched with any reason or by any – Or be prompted by several reasons. So if someone just writes to the IRS and says, “We think they’re making improper grants,” they being the foundation, then the IRS could decide to initiate an examination or an audit and review the grants that were made internationally by that foundation.

Renee Karibi-Whyte: Do you have the name of that third-party database? There’s a question about that.

Nic Campbell: Yes. It’s NGOsource.

Renee Karibi-Whyte: Okay. Thanks. So we will include it in the slides that we send out. Now, I know we’re going to move into individuals. We have a question on the factors to consider for individual grantmaking. So we’re going to move right into that.

Nic Campbell: Yes. So why are we talking about grants to individuals? We’re really focused on cross border giving. Well, two reasons. The first is that individuals play a really critical role in the international landscape. So particularly when you’re getting into local context and in country, and you’re thinking about marginalized communities, there are a lot of community leaders that I think can play a really critical role in this space. So ignoring grants to individuals or the roles that individuals can play I think really does impact cross border grantmaking.

Nic Campbell: The second is even when you’re making a grant to an organization, you still have to think about, okay, is this actually a grant to individual, even though I’ve made a grant to the organization itself? I’ll talk through why. So let me just start by saying private foundations cannot make grants to individuals for travel study or similar purposes. When they talk about similar purposes, they’re talking about scholarships, fellowships, internships, right? Unless they receive pre-approval from the IRS, right? So unless you have that written pre-approval or that pre-approval from the IRS, you really cannot, as a foundation, make those grants.

Nic Campbell: There is an exception that says, “Look. If you don’t hear from us in 45 days of submission, you can sort of move forward until you hear from us officially, and you can act as though you can make grants to individuals.” So you really do need that pre-approval in order to make grants individuals as a private foundation. Public charities don’t have that same kind of restriction. So when we talk about grants to individuals, we’re not talking about service arrangements. We’re not talking about employees. We’re talking about grants for scholarships, fellowships, that kind of thing.

Nic Campbell: So when you make a grant to an organization, in the expenditure responsibility context, for example, and that organization says, “We’re now going to make scholarship awards. We’re going to issue a couple of fellowships,” that has to follow the grants to individual rules for private foundations. So you might say, “Well, wait a minute, Nic. Like what if the foundation just makes the grant to that organization, has no role in selecting those individuals, doesn’t do anything around that process, and that organization then makes it grants to individuals? Are we still in grant individual territory?” The answer is yes when you’re in expenditure responsibility.

Nic Campbell: So what does that mean? It means that if the private foundation itself cannot make those kinds of awards, you can’t then fund an organization to go off and make those awards in your stead, right? So when you’re in an expenditure responsibility situation, you do have to ask yourself, is the foundation able to make grants to individuals? If the answer is no, then the organization itself cannot then make the grants individual. If the foundation can, then you want to make sure that the organization is following the procedures laid out for the grant’s individual programs of the foundation. So you still have to ask lots of questions. How are you selecting folks? How are you making sure that they are actually compliant with the terms of the fellowship, those kinds of questions?

Nic Campbell: So then you might now be saying, “Wait a minute, Nic. Anytime I make a grant organization, I just have to ask these questions.” There are some exceptions to that. When you’re funding intermediary organizations because there’s a lot of foundations that do this, you can still get away from these grants to individuals characterization, right. So the first is if you’re making a grant to a public charity, you can actually play a limited role in the selection. You can give recommendations. You can even participate in the selection process, as long as the public charity itself is seen as leading the selection, leading the process, and the decision is the public charities. It will be seen as a grant to an organization and will not be transformed into any sort of grant individual. You have to make sure that the foundation this ability or things like that.

Nic Campbell: Now, you can start to see. Well, now I understand like if an organization that is not a US public charity, wants to make grants to individuals, maybe I don’t do ER, and I can consider whether or not they are a candidate for equivalency determination. Why? Because now you’re saying you’re just like a public charity. When you have that a US public charity equivalency, again, you can even play a limited role in the selection. You can participate in the way that you can’t. Or you can just do the same sort of grant where your hands off, not involved, and it’s not going to be seen as a grant to an individual. That’s one of the ways you can start to think about equivalency determination, exponential responsibility, and is it appropriate.

Nic Campbell: Similarly, when you’re engaged with governmental agencies, you can even have even more control within that process, and it will still be seen as a grant to organization. With other organizations, you want it to be made complete independent of the foundation itself.

Renee Karibi-Whyte: When you think about the level of control for government agencies, is there a 50% mark, like more control than the other organization? Can you kind of go into a little bit more about that?

Nic Campbell: As you probably can guess from the IRS, they’re not giving these bright line tests. From what I’ve seen over the years, you can actually – Let’s say you have a selection committee of seven. You could likely have four foundation representatives on that committee and still have it be seen as the grant being made to the governmental agency. Now, in practice, does that happen? Likely not. I think foundations tend to take that place of we still want to sit in a role of decision making, maybe alongside the governmental agency. But we don’t necessarily want to “control it,” right? So I’ve usually seen that over the years, but there’s no bright line test coming from the IRS.

Renee Karibi-Whyte: If you had that four person of seven people panel on the public charity, that would be too many.

Nic Campbell: That would be controlled. Another thing you want to think about is not only just the numbers but the veto rights, right? So let’s say you’re not sitting on the selection committee at all, but you still have the ability to veto a decision. That is a tremendous amount of control that you also want to think about, and it’s not permissible.

Renee Karibi-Whyte: There’s a lot of conversation right now about power dynamics between grantees and grantors. Sometimes, even if there is no explicit control, there’s a perception of control. How do you suggest that foundations overcome that when they’re in this position?

Nic Campbell: It’s a really good question, right? It’s something that comes up a lot. I’ve definitely had the question of, well, let’s say we’re not on the selection committee, and the founder of the foundation actually just wants to be in the room, sitting off to the side while the selection is being played, is occurring or taking place. To that, I always require like what is the purpose of that? If you were trusting your grantee to do the work, are they asking you to participate? If so, why? I’m just really trying to understand like why am I in the room? Why am I playing a part in this process? Is it actually furthering the charitable purpose of the grant? Is it getting us closer to our goal? Or is it me sort of stepping in and inappropriately exercising power within this dynamic?

Nic Campbell: I think those are the kinds of questions you have to ask yourself before you say, well, we’re just doing it because we’re partnering, right? I think you do have to ask yourself the question that – I always bring this up that, yes, there is the legal things that you can do. So legally, yes, you can take three spaces of that selection committee, for example, in the seven-person selection committee, but why? Like why are you doing it? I still think you have to ask those questions, like why do you want to do it.

Nic Campbell: Particularly, when you’re operating internationally, you do get into this space of optics, in particular. Making optics are very important. If you’re trying to give the control to the grantee and you say, “Look, we trust you. We want you to work the way you want to work,” why are you sitting on the selection committee, right? Just ask those questions. Not to say that you can’t, but think about, okay, well, we’re putting three people on because without the three, we couldn’t do A, B, and C. If you’re not able to point to those things concretely, then I don’t think you should be sitting on the selection committee, and that’s outside of the legal consideration.

Renee Karibi-Whyte: Can you give an example of a structure for getting grant funds to individuals abroad?

Nic Campbell: Yeah. One, you can work with a public charity. So I’ll talk through a few. One, if you’re a foundation, you can work with an intermediary, right? So we just talked about having this public charity that plays a role, and maybe they’re the ones that then can engage in a selection of individuals and providing funding to individuals. You can recommend, right? You can say we would love it if these grants went to these individuals, but it’s completely up to you, public charity, who you decide to award these funds to.

Nic Campbell: Another is to – If you’re making grants individuals, and you have a real grants to individuals program sort of happening, resurfacing, you might want to think about do we just go to the IRS and get this pre-approval, because now you can make grants in the ER context. You can make grants directly if you have that capacity. So you can make grants in those ways. You can use an intermediary, or you can do it directly. I think if you are at the point where you are making a substantial amount of awards to individuals through intermediaries, think about your own capacity, of course.

Nic Campbell: But then also think about like is this a place where we should now go out and get our own pre approval from the IRS because what it does is it allows you to then step into this ER space with non-US public charities and make those kinds of awards, ensuring that the awards line up with the kind of approval that you’d receive from the IRS.

Renee Karibi-Whyte: So what happens if you end up altering your program? So once you receive approval from the IRS, how do you determine if any alterations that you make will make it differ significantly from those described in your original request?

Nic Campbell: When you go off and request this pre-approval, you’re going to describe a program. Sometimes, you do have a specific program in mind. But you’re going to describe a program that is broad enough to capture sort of permutations of variations on that program. But specific enough to clearly say this is what we’re proposing to do. So that’s the kind of application that we like to put forward for foundations when they’re going to the IRS.

Nic Campbell: Now, just move forward, programs evolve, right? We want them to. We want them to be reflective of the environment in which they’re operating. So if you want to change the program, again, you will have built in the flexibility initially to say, “We don’t necessarily need to go back to the IRS and get pre-approval.” If you’re doing a significant change, like you have now eliminated a selection committee when you said that this was really critical to the process, or you’re doing something that is really substantially changing the program itself, or it may be who you’re awarding funds to, that kind of thing, then you do have to go back to the IRS and receive your pre-approval and just forms for that. It’s a pretty straightforward process when you go back and you get that approval from the IRS.

Stef Wong: That concludes part one of this series. Next week, Nic will continue to share her insights about cross border grantmaking. Additionally, if you’re interested in partnering with a law firm that leverages a global network of experienced attorneys with decades of legal training and practical experience and focuses on social impact organizations to serve as an outsourced general counsel and thought partner, then schedule a discovery call with the Campbell Law Firm today.

Stef Wong: The Campbell Law Firm works with brave nonprofits, philanthropists, ultra high-net-worth individuals and movements, offering high-touch counsel to social impact entrepreneurs and organizations around the world. We would love to hear more about your brave mission to change the world.

-Upbeat Outro Music-

Nic Campbell: Thank you for listening to this episode of Nonprofit Build Up. To access the show notes, additional resources, and information on how you can work with us, please visit our website at buildupadvisory.com. We invite you to listen again next week as we share another episode about scaling impact by building infrastructure and capacity in the nonprofit sector. Keep building bravely.

Part Two

-Upbeat Intro Music-

Nic Campbell: You’re listening to the Nonprofit Build Up podcast, and I’m your host, Nic Campbell. I want to support movements that can interrupt cycles of injustice and inequity, and shift power towards vulnerable and marginalized communities. I’ve spent years working in and with nonprofits and philanthropies, and I know how important infrastructure is to outcomes. On this show, we’ll talk about how to build capacity to transform the way you and your organization work.

Stef Wong: Hi, everyone. It’s Stef, Build Up’s Executive Portfolio Liaison. This week on the Nonprofit Build Up, we are recasting part two of a two-part informative session led by Build Up’s CEO and Rockefeller Philanthropy Advisors’ (RPA) General Counsel, A. Nicole Campbell, and moderated by RPA’s Senior Vice President and Corporate Secretary, Renee Karibi-Whyte. 

Stef Wong: This presentation was originally recorded as a webinar in April, 2022. The Campbell Law Firm serves as outsourced general counsel to brave nonprofits and philanthropies, and RPA is one of our brave clients. You can jump back to part one of the conversation to learn more about cross-border grantmaking, due diligence, and legal considerations for global grantmaking. 

Stef Wong: But with that, let’s dive into the discussion where Nic provides an overview of the global giving landscape, reviews definitions and descriptions of expenditure responsibility and equivalency determination, which are concepts that arise frequently within cross-border grantmaking, and remind us about compliance considerations to keep in mind when making international grants.

Renee Karibi-Whyte: We’re going to talk a little bit more about, aside from individuals, how what you’re giving to makes a difference. 

Nic Campbell: Yes. So as you can imagine, as we talk through, you have to ask these questions. Who are you giving to, right? Who’s actually receiving the funds? If you’re giving it to a US public charity, then you have a lot of options, right? This is why you will see foundation say, “We only made grant awards to US public charities.” Why? Because you can do general support. You can do project support. You have safe harbors for organizations that are engaged in lobbying, and you can still make a project support grant to them, same thing with general support. So there’s a lot of things that you can do in that context. 

Nic Campbell: I don’t think that that’s the only way that you can engage in cross-border giving, nor should it be, because there’s a lot of other vehicles out there. Individuals, as we talked about, if you’re going to make a grant to an individual, you have to follow special rules, right? Get that pre-approval if you’re making it directly. You have to make sure that your selection process is objective and nondiscriminatory. So the IRS is making you say, “I, the foundation, award grants to individuals. I am not perpetuating some harm within this system, right? I am making sure that my selection process is objective and nondiscriminatory in goodness of the charitable purpose of the grant.”

Nic Campbell: When you’re making awards or providing awards to intermediaries like fiscal sponsors and fiscal agents, then you have to determine when you’re dealing with which, right? So fiscal sponsors need to have discretion over the funds. They need to have – Usually, you see the board having a vote over whether or not they can accept a project as a fiscally sponsored project or leadership. Somebody needs to approve that these funds can be deployed as proposed. So as a result, if you have a US public charity as a fiscal sponsor, you can work with that intermediary and make grants to individuals, make grants to other organizations, and still have that grant be treated as an organizational grant. 

Nic Campbell: Fiscal agents are a little bit different. But sometimes, they play a role when you’re in the international space because sometimes you’re dealing with organizations or individuals that may not have bank accounts, right? So someone maybe on behalf of that group will say, “You can use our bank account. You can pay the funds into the bank account. Then we will transfer it over to the ultimate grantee.” Of course, in that situation, you want to make sure there’s protections written in that the fiscal agent will actually transfer the funds as promised. But that’s another way that you might say, “Look, this is how we have to get funds to these organizations and individuals in country.” 

Nic Campbell: Then the last is what we’ve been talking through, a non-US public charity, right? Like how do you actually provide awards to organizations that are not US public charities? We’ve talked about equivalency determinations. We talked about expenditure responsibility. So you have to think about who you’re actually providing awards to because it has implications. That’s why we wanted to talk to this structure because before you can get into like, “Here’s what we want to do. Here’s how we want to give it,” know who you’re giving it to and understand like the legal structure in which it serves.

Renee Karibi-Whyte: We talked a little bit about designating funds for a particular purpose, and I know there’s something about earmarking that you wanted to cover. 

Nic Campbell: Yes. This comes up. We talk about fiscal agent, right? But it’ll come up generally. We talked about it, again, when we talked about control with individuals and selection process. So earmarking is when you set aside funds to support specific activities. The first question should be, “Well, Nic, isn’t that grantmaking,” right? Like when we make project support grants, aren’t we earmarking? Yes, you are. The question, though, is what are you earmarking it for?

Nic Campbell: That is what your diligence should be getting at. This is why you’re asking those questions in your application. This is why you’re getting reporting, to ensure that air marking is done appropriately. So we have grant agreements that talk about safeguards. You might even have language that says, “We are not earmarking these funds for any other purpose than the purpose intended.” You’ll see foundations have that kind of language, and this is why. What are the implications? Are we granting, right? 

Nic Campbell: You talked about like, look, if you’re expenditure responsibility and you’re sort of like bypassing this US public charity, for example, if you’re making a grant to a US public charity, earmarking for the ultimate grantee that’s not a US public charity, you’re not pushing yourself into expenditure responsibility, when you should have been staying in that grant to a US public charity, right? If you’re earmarking improper activities, you could be earmarking funds for lobbying, which private foundations cannot support, and similarly for political campaign activity. 

Renee Karibi-Whyte: We went into fiscal sponsor versus fiscal agent, where there’s an additional detail you wanted to discuss here as well. 

Nic Campbell: Yes. So I will just flag that it is very important to understand the difference between fiscal sponsors and fiscal agents. As we talked about, fiscal sponsors have the control. They have the discretion to use the funds in a particular way, and fiscal agents do not. Why does that matter? Because it’s earmarking. So if you’re using an organization that claims to be a fiscal sponsor. But you, the foundation, do not review a fiscal sponsorship agreement between the fiscal sponsor and the project that basically says, “We have full control and discretion to use the funds as intended.” You could be in an earmarking situation. You might be giving to a fiscal agent without knowing it, right?

Nic Campbell: You want to make sure that you know when you’re engaging with a fiscal sponsor or a fiscal agent, and the fiscal sponsor has the control and discretion. So review the fiscal sponsorship agreement as a private foundation. It’s a private foundation. If you were making a grant to an organization or some project that has a fiscal sponsor at a minimum, review the fiscal sponsorship agreement between the fiscal sponsor and that project because you want to make sure that it’s supportive of the fact that fiscal sponsor has discretion and control. 

Nic Campbell: Usually, we see fiscal sponsors as US public charities because, again, private foundations making that grant to the US public charities makes it a lot more straightforward for the grantmaking, even if the grant funds are then further deployed. On the fiscal agent side, again, this is usually seen when you want someone to provide a bank account. This is earmarking, right? So you are essentially saying, “I am giving a grant to this non-US public charity. I am just using this fiscal agent because that’s where the funds will be paid into.” So this grant, you need to think about expenditure responsibility in that example because you have earmarked the grant to the ultimate organization. 

Nic Campbell: The fiscal agent, if they do this a lot, they’re not going to sign on to any sort of agreement that looks like a grant agreement with the fiscal sponsor, between the foundation and the fiscal sponsor. They’re going to say, “The only thing I’m promising is that I will take the funds from you, and I will send the funds to the intended grantee.” So you have to think about expenditure responsibility here, and the one thing I’ll pull out is that I would strongly encourage using a grant agreement, regardless of the amount. So if it’s $500, and you usually make grants of a million or 500,000 and up, use a grant agreement because it very clearly spells out the responsibilities and obligations of each of the parties. 

Renee Karibi-Whyte: Thanks, Nic. Let’s turn to sanctions and how to prevent corruption. 

Nic Campbell: Yes. It’s a very interesting topic, right? What I want to do here is just highlight it in that pointing out that as a US person, foundations, public charities, we have to think about sanctions, right? We have to think about how our funds are being used, and are we in compliance with the various sanctions, rules, and laws that are within the United States. 

Nic Campbell: So you’ll see here we pull out a quote. Essentially, don’t think that because you’re doing good work, you are pulled out of this conversation, right? So you will see that bolded language that says we have a responsibility to do all we can to shut down the funding channels of terrorism, which is are you ensuring that your charitable funds are not being used to further any sort of terrorist activities as defined under US law. 

Nic Campbell: There are a couple that we wanted to just highlight because they tend to come up a lot. So the first is, you’ve probably heard of it, OFAC, right? This is coming out of the Office of Foreign Assets Control. Essentially, it’s when the US Treasury Department has put in regulations to ensure that organizations, US persons, do not do business with terrorist organizations or individuals. You’ve heard of this OFAC as specially designated nationals list. If you’re on that list, you cannot engage in those kinds of activities with individuals on that list. 

Nic Campbell: There are also countries that OFAC has sort of determined to be sanction countries or countries that are aren’t sanctioned, but they might be in a region where there are a lot of specially designated nationals. So you have to take certain precautions. It affects all US persons. One thing I’ll say here is if you are a US person with affiliates or branches in other countries, don’t think that just because, well, they’re a separate entity under that particular country and so they’re not a US person, they’re not subject to OFAC. 

Nic Campbell: OFAC also considers are you controlled by a US person, such that you are a US person for purposes of OFAC. That then impacts the kinds of questions you ask in diligence, applications, those kinds of things. So you want to be clear on who is actually subject to OFAC, and is my diligence getting at the kinds of things that I want to make sure that are not triggering OFAC. The last piece I’ll say about OFAC is we want to make sure that we are taking a tailored approach to OFAC. So sometimes, you will see language in grant agreements that are a page – I mean, sometimes a page long of OFAC provisions, of all the things that a grantee has to comply with. People just kind of move on and sign the agreement. 

Nic Campbell: But the question is what is sitting in your diligence? What are the questions that you’re asking to actually make sure that this grant is not triggering any sort of OFAC penalties or situations? Ask questions during the application process and make sure that the reporting, you’re monitoring that as well. So it’s not just you put it into the grant agreement and forget about it, but you have to make sure that you are asking the right questions as well. 

Renee Karibi-Whyte: The FCPA, of course, has some sway here as well. 

Nic Campbell: Yes. So the other piece that we wanted to talk about is the FCPA, and this is when you pay or offer something of value with corrupt intent to a foreign government official or political party official, right? So you’re trying to do that so that you can maybe get a license, get a permit, get some improper advantage, right? This is language taken out of the statute. 

Nic Campbell: One, it applies to us persons, nonprofit organizations as well. Think about agents that you might be using. So if you’re dealing with intermediaries outside of the United States, think about their actions because you can be held liable under FCPA for those actions, and other anti-bribery laws apply in other jurisdictions, not just FCPA, right? So as you step into other countries, as we talked about at the top of this, you have to think about the rules or regulations, the laws that are also in that country as well. 

Nic Campbell: This is just FCPA to say that, and sometimes it’s not just always, “Hey, if I give you $50, will you do ABC.” It could be inviting a government official to an event that you’re having, a private event that you’re having. Thinking about will that trigger – That invitation, will that trigger FCPA? Sometimes, you do have to have those conversations. So whenever you have a government official involved, raise your hand and say, “Okay, is this a situation that might have implications under FCPA?” 

Nic Campbell: One of the things we wanted to point out here is how do you work in conflict and post-conflict settings? I think in 2022, this conversation is about being immediately post-conflict. Are you not immediately post-conflict? Or are you in conflict? Because at this point, there aren’t many countries, I can say, that they are not post-conflict, right? So these are more programmatic ways of how you approach it, right? Do your research. Be prepared to take risks. Understand the local context, Support the folks on the ground. You will see that all of these tips, the reason we call this out here is that you cannot have a conversation about cross-border grantmaking, particularly from the legal perspective, if you are not considering the programmatic perspective as well. 

Nic Campbell: These things have to work together so that you can say this is how we approach cross-border grantmaking, and all of the pieces that you’re seeing here from a programmatic perspective also apply in the legal context as well. So if you’re working with your attorneys, they’re going to ask you questions, right? Like have you ever been in this country before? Who have you spoken to? Are you aware of any local laws that might have implications? They’re going to ask these questions of local counsel, if they’re engaging them, of you, your partners, if you’ve worked there before. 

Nic Campbell: Just another reminder that we have to make sure that we’re not separating these conversations and having programmatic conversations on the one hand, and then saying, “Okay, we’re done here. Let’s go talk to legal. We’re done here. Let’s go talk to the compliance team.”

Renee Karibi-Whyte: Okay. Now, we get to move into some hypotheticals.

Nic Campbell: With all of what we’ve talked about now, you should have the tools to step into these hypos. So the first is foundation makes a grant to World Alive. It’s a non-US nonprofit organization, working in public health throughout Sub-Saharan Africa. World Alive’s proposal indicated World Alive would like to make the following grants. One to two individuals for a public health fellowship to a local partner organization working on groundbreaking research, so we’ve got some free granting there, and to fund public health projects in Zimbabwe. 

Nic Campbell: So you have a poll question that’s coming up, and the question is should foundation make the grant to World Alive? Yes, using ER. Yes, using ED. No, the grantee wants to fund two fellowships. Or, no, the grantee wants to fund work in Zimbabwe. 

Renee Karibi-Whyte: Let’s see what kind of answers we have. 

Nic Campbell: Okay. So I’m seeing about 56% saying yes using ER, 19% saying yes using ED, a few folks saying, “No, the grantee wants to fund two fellowships.” No one said no because of the work in Zimbabwe. So how did we come out? These are all actual examples taken from work that’s been done over the years. So here, you could make an ER grant to World Alive. But let’s think about what the funds will be used for. We’ve got public health fellowships, and we’ve got grants to individuals. So the question is can this foundation actually make grants to individuals. 

Nic Campbell: You have re-granting, again, to a local partner organization that’s working on groundbreaking research. So you’re now stepping into another level of ER with that second grant. Another question is can this local partner organization actually comply with ER requirements, and then to fund public health projects in Zimbabwe? Now, to sort of raise a hand around OFAC and no one selected that. Zimbabwe has a flag, I would say, from OFAC, but it’s not currently on the list. 

Nic Campbell: So the way that we have made the grant is through equivalency determination, right? Saying that World Alive as a non-US nonprofit organization was actually eligible for an ED. As a result, when you make that EDI, you could provide general support, grant to that organization. Then they will be able to provide these other grants that are listed without the additional ER monitoring.

Renee Karibi-Whyte: Great. Let’s move on to the second hypothetical.

Nic Campbell: Okay. The second is foundation makes a grant to Better World. It’s a US public charity focusing on criminal justice reform, specifically the school to prison pipeline throughout the global south. This grant includes the foundation working with Better World to make a project support grant to ABC Learn, a school in Belize. The foundation controlled the selection process there. The foundation is also working with Better World to support reform efforts in Cuba. Foundation’s diligence focuses on Better World’s efforts to ensure programmatic success. 

Nic Campbell: So the question is – Two questions here. The first is does the foundation’s grant to Better World require the foundation to exercise ER? No, foundation made a grant to Better World, and it’s a US public charity, so ER required. No, because there was a selection process for ABC Learn. Yes, the work will be done throughout the global south. As a result, you need ER. Or, yes, the foundation earmarked the grant to ABC Learn. The second question is about the diligence. The question is, was foundation’s diligence comprehensive based on what we see here? 

Nic Campbell: We have a majority of folks saying no. The foundation made a grant a better world. It’s a US public charity, so no ER. Just one person that’s still saying, no, there was a selection process for ABC Learn. So that’s why we don’t need ER. Yes, because the work is going to be done throughout the global south. A few folks saying, yes, the foundation earmarked the grant to ABC Learn. All right, so we’ll take that question first. 

Nic Campbell: Here, yes, Better World is a US public charity. Ordinarily, we would not have to exercise ER because we’re making that grant. But if you look in that first bullet, we said that the foundation controlled the selection process for ABC Learn, right? So that grant that was going to ABC Learn, the foundation came in, controlled the selection process, and essentially earmarked that grant to ABC Learn. Because ABC Learn is not a US public charity, we’re now in expenditure responsibility because the foundation has earmarked the grant to ABC Learn. 

Nic Campbell: Was the foundation’s diligence comprehensive? We have a sort of mix of yes, no, and I don’t know. All right, the majority of folks is saying no. I would agree with the no and say when we’ve seen that second bullet, that the foundation is doing work to support reform efforts in Cuba, and that their diligence focused on Better World’s efforts to ensure programmatic success. Are we also thinking about diligence in terms of what is happening on the ground in Cuba? What about OFAC? Cuba has been on the list, off the list. Do they need a license? 

Nic Campbell: There’s a lot of questions that would come up in that context. So let’s say at this point no because the diligence only focused on programmatic success. 

Renee Karibi-Whyte: Okay. That brings us to the last hypothetical for today. 

Nic Campbell: Okay, hypo three. Foundation seeks to make a grant to TeachersFirst to provide mentoring and school-based support to new teachers in rural districts in Botswana. Although this grant is a third grant foundation has made, and it is confident that TeachersFirst energetic leadership can deliver, foundation has continued concerns about the overall strength of the organization. So the question here is should foundation make the project support grant to TeachersFirst to support new teachers? 

Nic Campbell: Currently, that’s the kind of grant that it wants to make, this project support grant to support the teachers. Yes, foundation is confident TeachersFirst leadership can deliver. No, foundation will be making an expenditure responsibility grant. Yes, foundation has considered organizational impact and capacity building. No, foundation should also consider organizational impact and capacity building. 

Renee Karibi-Whyte: I think we have a lot of people who are unsure of answers. So even if you’re not confident in your answer, go ahead and guess, and let’s pull up the results. 

Nic Campbell: I think everyone can see the polling results, and I’ll just look for the majority. So the majority of folks said, no, foundation should also consider organizational impact and capacity building. I would agree with that. I think here, what we’re trying to talk about is at what point do we stop making these project support grants to an organization and think holistically about how we invest in the organization to consider as capacity building and its organizational impact as well. 

Nic Campbell: There’s ways, as we’ve talked about, that we can do now, if we want to make this kind of general support grant to TeachersFirst. So we can think about equivalency determination, for example. There’s a lot of ways that we can do it if we are in the international context.

Renee Karibi-Whyte: Great. So with time getting a little short, let’s wrap it up with some best practices.

Nic Campbell: Yes. So we just wanted to highlight some points here from what we’ve been talking through. The first is conduct only enough diligence to give you confidence that the grantee can perform the charitable purposes of the grant. You might say, “Well, Nic, yes, of course, that’s what we want to do. That’s what we aim to do.” But that means looking at every question that you were asking as part of your application process to ensure that each question leads you to say, okay, yes, this means that the grantee can perform under the grant itself, right? If you have questions that are just being asked, just because they’ve historically been asked, you might want to think about, okay, do we actually need those questions? 

Nic Campbell: The next is to consider to whom the grant has been made, for what purpose, and where the grant funds will be used to ensure that your grant award serves as a resource to the grantee. So we talked about who’s actually receiving the grant that has implications around structure. Why is the grant being provided? Where will the grant funds be used? All of those things then inform how will I, the foundation team, serves as a resource to the grantee? So, yes, I’m providing funding, but how am I actually providing a resource and a support to the grantee organization?

Nic Campbell: Ensure that your diligence procedures are not antithetical to your organization’s values. So you might be saying out loud, “We are inclusive. We are risk takers. We are innovative.” When you look at your diligence procedures, they are clunky. They’re asking questions that are not needed. Or they’re making you exclude a large group of folks from your grantmaking process. So make sure that your diligence procedures are supportive of your organizational values. 

Nic Campbell: The next is to examine the role of intermediary organizations structurally, programmatically, and within the local context. We’ve talked about this. Make sure that you know when you need a fiscal sponsor, a fiscal agent. When you are working with a fiscal sponsor, that they understand the local context and can appreciate it and can engage with partners on the ground. 

Nic Campbell: Underscore flexibility, equity, impact, and partnership throughout your grantmaking, domestically and internationally. This is the way you should be showing up. Every grant award that you make should be trying to get at these things. That happens, yes, within the United States, but it doesn’t disappear because now you’re engaged in cross-border giving. It should still be present then too. 

Nic Campbell: Engage with local council and partners before funding in a new geography. If you are stepping into a new country and you’re working in a new space, yes, you talk to folks on the ground, partners to make sure like you understand what’s happening. But you also want to understand what’s happening legally, what’s happening within the governments. So engaging local counsel as you start to explore within that region is also critically important. 

Nic Campbell: Understand the defined risk within your organization and grantmaking. If we start to talk about taking risks or things are too risky, we need to understand and have a shared definition of risks throughout the organization. That impacts your grantmaking as well. Then finally, remain equity-centered. At the end of the day, we want to talk through these legal structures because that gives you the tools and the vehicles to do your work. But it should all be centered around equity and how are we making sure that those who have been historically excluded from the conversation are now able to participate and problem solve for their own communities. 

Renee Karibi-Whyte: Thanks for those practical tips, Nic. We have a couple of questions that I want to get to in a little bit of time left. There was some question around using DAFs for cross-border grantmaking. Are there special concerns or considerations for DAFs? 

Nic Campbell: With DAFs, it’s a really good question because DAFs then take on – They have the same expenditure responsibility requirements that probably foundations have. So donor- advised funds, DAFs, they are public charities. But when we start to get into grants to non-US public charities, they have the same expenditure responsibility requirements that we talked through for private foundations. So what you’ll see with DAFs is it does vary from DAF to DAF. 

Nic Campbell: Exponential responsibility, as we know, you can still make these grants. But it requires some more diligence, reporting, things like that. So many DAFs will not engage in international grantmaking. So you want to make sure that the DAFs that you’re engaging with or working with will actually do that kind of grantmaking, but they’re not prohibited from engaging in grantmaking.

Renee Karibi-Whyte: Okay. The last question that I have right now is about the reporting requirements based on fiscal years and grant period timing.

Nic Campbell: It’s a really good question. I think practically what happens is foundations tend to use it based on their own calendar year or fiscal year. The regulations talk about the fiscal year of the grantee themselves. But usually, what you’ll see is calendar year for the most part and having reports within like three months of the close of the calendar year before it. But you do have some flexibility there. 

Nic Campbell: Essentially, what you want is that when you, the foundation, are reporting on the grant’s activities, you are in a position to say, okay, based on the grant period and the grant term, I can honestly say that there has been no diversion, or here’s how much money has been spent. So you want that information.

Stef Wong: As we wrap up, if you’re interested in partnering with a law firm that leverages a global network of experienced attorneys with decades of legal training and practical experience, and focuses on social impact organizations to serve as an outsourced general counsel and thought partner, then schedule a discovery call with the Campbell Law Firm today. 

Stef Wong: The Campbell Law Firm works with brave nonprofits, philanthropists, ultra high-net-worth individuals and movements, offering high-touch counsel to social impact entrepreneurs and organizations around the world. We would love to hear more about your brave mission to change the world.

Stef Wong: That completes this two-part series on cross-border grantmaking, due diligence, and legal considerations for global grantmaking.

-Upbeat Outro Music-

Nic Campbell: Thank you for listening to this episode of Nonprofit Build Up. To access the show notes, additional resources, and information on how you can work with us, please visit our website at buildupadvisory.com. We invite you to listen again next week, as we share another episode about scaling impact by building infrastructure and capacity in the nonprofit sector. Keep building bravely.

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