How to grapple with undue funder influence: Recommendations from a workshop (Part II)
At Rightscon 2023, practitioners provided recommendations for mitigating the negative influence of funders on nonprofits.
Credit: Parradee Kietsirikul / iStock
With our digital and physical environments increasingly intertwined, what happens online reverberates offline. Consequently, the ability to exercise and defend human rights is increasingly shaped by the decisions of information intermediaries.
Nonprofits representing civil society, together with governments, companies, academics, and technical experts, play a key role in the multistakeholder system of global internet governance. This system seeks to make advances in policy and technology through consensus. Such consensus, in practice, ensures interoperability across the different networks that constitute the global internet, even amid decentralized innovation and growth. The legitimacy (and sustainability) of this model requires that each actor in the multistakeholder system act autonomously to represent the interest of stakeholders. If funding patterns can sway nonprofits’ agendas to advance the interests of their funders (typically governments and companies) at the expense of the communities nonprofits seek to represent, the multistakeholder system will fail.
We asked 30 people participating in a digital rights conference (RightsCon) to share their recommendations for nonprofits to achieve positive relationships with their funders that respect autonomy, independence, and accountability. What follows is a synthesis of the recommendations that surfaced throughout the workshop.
Advancing nonprofit autonomy
Autonomy ensures that nonprofits can make mission-based decisions without feeling pressured by funders. Communication mechanisms and the funding vehicles involved play a part.
Communication can create opportunities for funders to overstep grantees’ boundaries. For example, several participants argued that micro-management by funders often leads to reduced control over the project by its leads on the ground, but cutting down on project check-ins might mitigate this issue. Nonprofits could ask funders if they are open to receiving general reporting from organizations, like an annual report, instead of program-specific reporting. Creating guidelines on boundaries can also help secure autonomy, ensuring that expectations regarding future funding opportunities do not influence grantee behavior.
Participants encouraged nonprofits to be comfortable asking funders for more overhead to enable better sustainability for team members. They also suggested finding local community resources for project maintenance and sustainability; consequently, nonprofits could shift their reporting decisions from fund/program staff to community leaders.
Overall, participants agreed that communication is key and that nurturing a space where honest conversations can take place will ultimately strengthen funder–grantee relationships.
Dependency entails the risk that unilateral decisions by funders might inadvertently change grantee actions. Independence, then, is key to nonprofits’ resilience in pursuing their mission. Participants discussed specific connections between independence and resilience: first, cash flow and good management; second, mitigating risk by increasing the number and variety of funders.
A major recommendation was for more core funding to support an organization’s ability to administer resources. Funders could also provide organizational capacity-building such as workshops and training programs to strengthen the administrative abilities of leadership and staff; these areas are rarely the focus of grants or the core interest of the leadership team. A related proposal was for funders to provide direct staff support on administrative and technical aspects, a suggestion that not all participants agreed upon due to its potential negative impacts on long-term independence and autonomy. Similarly, some argued that using installment payments instead of lump-sum amounts could help ease administrative burdens, while others saw this as a potential limitation to organizational flexibility.
The other key issue was ensuring a steady stream of funds to provide stability in the context of constant change. Participants argued that this required increasing not only the number but also the variety of funders, as each funder might eventually face different constraints that could then reverberate onto the grantees (e.g., economic downturns in the case of companies, leadership changes in the case of large foundations and governments). Some argued for varied funding models that could incorporate the sale of products and services as well as grassroots support, albeit with careful consideration of how this might impact costs and administrative needs. Funders could provide resources to better explore the feasibility of diversification.
One participant also argued that funds should be allocated to a coalition or network that would determine the best use of resources while being responsible for reporting back to funders. Some stressed the need to increase the influx of funds available to grantees. Funders also could play an important role by advocating for the nonprofit, bolstering its reputation and credibility, and helping to build networks that could support its mission and provide access to additional resources. Some participants had trialed some of these strategies with success, while others had yet to but were excited by the prospect.
Developing positive mechanisms of accountability to funders
Accountability involves the need to explain one’s actions to others. Achieving a degree of accountability to funders that does not feel like undue influence and leaves both parties satisfied is one of the key challenges of the nonprofit model. Thus, mutual trust must be built alongside processes to ensure its strong foundation.
Building a trusting relationship can be difficult. Grantees may feel that different funders have distinct expectations. One successful approach discussed by a participant involved facilitating regular and open discussions among different funders, providing a platform for constructive dialogue about the organization’s activities so that different funders could understand the many perspectives involved. Difficulties building trust can be exacerbated by cultural boundaries or a lack of understanding (perceived or real) of the local context by funders.
One participant suggested that in early phases, it could be useful to partner with a registered Western nonprofit that might better understand the challenges of the local context, help validate projects, and mediate between the organization and donor until there is a relationship of trust. A similar proposal involved establishing in-country validation teams to oversee organizations and projects. However, some mentioned that introducing an intermediary between the nonprofit and the funder without a clearly defined role, such as reporting or follow-up on questions, can also undermine accountability efforts.
Reporting, when appropriately structured, can be a valuable tool to ensure that trust is well established. Nonprofits benefit when reporting templates are flexible enough to allow them to use their own standards and communicate the full breadth of their work, without spending too much time deciphering what exactly is expected of them. Relatedly, ensuring that the frequency of reporting remains reasonable is key to avoiding excessive burdens on the grantees or the perception of undue influence. One participant argued that developing a common infrastructure for information sharing was key and that platforms such as Guidestar, which offers public reports and transparency ratings for US 501(c)3 organizations, contribute to accountability and trust.
Additionally, reciprocal accountability is key. By holding funders responsible to social movements and the wider communities they represent, ensuring that donor standards align with local contexts rather than imposing global policies, nonprofits can foster more meaningful engagement and ensure that funders become more aligned with the agenda over time.
Reshaping the relationship between grantees and funders will require a combination of these strategies tailored to the specific needs and circumstances of each organization. Notably, any failure to achieve progress on these issues can undermine the legitimacy of the multistakeholder model of internet governance and interoperability across global information systems. By engaging in open dialogue about these challenges, nonprofits can maintain their integrity, forge stronger relationships with their funders, and reassert their allegiance to the communities they represent.
We thank the workshop participants for their contributions.
Juan Ortiz Freuler is an affiliate at the Berkman Klein Center for Internet and Society at Harvard, a PhD student at the Annenberg School of Communication (USC), and a co-initiator of the Non-Aligned Tech Movement.
Ana Brandusescu is a PhD candidate at McGill University researching the scale of public and private governance of AI pertaining to two significant factors: political power and privatization. She is a member of the <A+> Alliance for Inclusive Algorithms.
Will Orr is a PhD student at the Annenberg School of Communication (USC) anda Visiting Fellow at the School of Regulation and Global Governance (RegNet) at the Australian National University.