Building an Ethical Foundation for your Funder Relationship By AGS Staff

While there are legal requirements for nonprofit organizations around transparency and disclosure of financial information, there can also be some grey areas where ethical decisions aren’t as clear. For instance, it can be tempting to apply for and accept funding anywhere you can get it. But what if you serve clients who are struggling with substance use, and a potential funder is known for contributing to the opioid crisis? If accepting money means you are straying from your mission, or if you have any doubt about the morality of doing business with a certain corporation, it may not be worth the financial benefit. Your goal should be to build funder relationships that you can stand behind and feel good about. Here, we are going to explore a few other ethical dilemmas you may run across when building relationships with funders.

The first step in funder relations is finding the right funder match. You have to first do your research and decide as an organization what criteria you will follow in identifying a good funder match. You need to ask not only if your missions are aligned but also whether a funder’s priorities truly match your need. Identify your funding gaps, whether they are particular programs, staff costs, or capital expenses, and focus on funders whose guidelines and requirements align with that need. While it can be tempting to apply for every funder whose priorities even remotely resemble your services, you don’t want to end up with money you can’t use. And more importantly, those funds could go to an organization that is better aligned with that funder’s focus. There are plenty of options out there that truly match what you do and need.

Once you’ve identified the best funding matches, it’s time to start building a relationship. While some funders may be located across the country, most local funders are more than happy to meet with you and learn about your organization. Go to the funder’s website and look up the name and contact info of the program officer who oversees the grant you are interested in. You can then shoot over an email or pick up the phone and talk with that officer about your organization’s services and needs. Take some time to prepare the email or prepare yourself before the phone call so you can clearly but SUCCINCTLY describe your organization’s mission and what problem you address, and briefly describe the funding needs you have. If the funder only supports capital projects, focus on the renovation or building costs you have (and we know you have them because you’ve already decided the funder is generally a good match). Focus on what will appeal to them, but do not exaggerate your need or bend over backward to fit into their box – this is where your ethics could be tested. You are truly inquiring to find out if you are indeed a good match, not bending the truth to convince them that you are. Ask them if they think it would be worth applying and what guidance they would share to be successful. Answer any of their questions honestly – trust me, funders know that organizations aren’t perfect, and they will appreciate you being truthful from the start.

And now that you and a funder have learned more about each other and have begun building a relationship, it’s time to apply for funding! Just as in your discussion, your application needs to be transparent and accurate. Follow the guidance the program officer shared and give an honest description of what you do, your past outcomes, and current/future needs. The needs section of the proposal can get a little tricky. For instance, what if you are requesting funds for an employment program, but your community’s unemployment rate is actually very low? In these situations, you can pick and choose which data you include, but we recommend including the data even if it isn’t that compelling. Then, you can follow up with the context needed to show that funding is still necessary. For instance, you can say, “While our community has a relatively low unemployment rate, X% of jobs are minimum wage and do not pay enough to cover the costs of basic needs in our area.” Of course, you should only say that IF it’s true! It is better to get out in front of the funder’s potential hesitancy and address it directly. (Learn more on this by reading Don’t Just Write It, Cite It: Ethical Research in Grant Writing by Leah Hyman, GPC) You can do the same with outcomes. While you may have only served 10 people in a particular program last year, X% of them moved into permanent housing. You can strengthen the narrative while still being transparent.

Next step – you’re funded! Yay, you got the money! The end…right? Not even close. Being awarded funding is truly just the start of your relationship with that funder. Now it’s time to show them you are worthy. It is in this phase where organizations can start sliding down a slippery slope of ethically questionable behavior. You have a big check, and you know how to use it! You MUST spend the money as you said you would. Hopefully, you have appropriate accounting processes in place to help rein in that temptation. And you will likely have to report on how you used that money and how it impacted your target population. Make sure the finances are tracked properly, communicate with your program staff so they understand how much they can spend on particular needs, and make sure you immediately put your outcomes tracking in place if it isn’t there already. You don’t want to have to backtrack, or worse, estimate numbers when reporting time comes (red flag in the ethics department!). If you have the system in place from the start, you can ensure your reporting is accurate. Again, if the outcomes don’t look how you’d hoped they would at the end of the grant cycle, funders are generally understanding as long as you can explain the challenges that arose to impact those numbers.

While you ARE competing for funding and sustaining your organization is of the utmost importance to you, the way to truly care for your organization and those it serves is to commit to an ethical way of operating. In this way, you will build trusting relationships with funders who will continue to support you, and those you serve can also trust you to be a professional and reliable organization.

GPCI Competency #8: Knowledge of methods and strategies that cultivate and maintain relationships between fund-seeking and recipient organizations and funders

3. Identify methods of relationship cultivation, communication, recognition, and stewardship that might appeal to specific funders


Additional blogs in our Ethics series:
What if You Have Too Much of a Good Thing? by AGS Staff
Let’s Go Shopping! Ethics in Procurement, Part 1 by Whitney Gray, MA, GPC
Let’s Go Shopping! Ethics in Procurement, Part II by Whitney Gray, MA, GPC
Don’t Just Write It, Cite It: Ethical Research in Grant Writing by Leah Hyman, GPC