When foundations implement a new funding strategy, they need to make sure they have nimble grant management software that can support them through the change. For instance, many advocates are arguing that multi-year funding deserves greater consideration from philanthropic organizations. Maintaining grantee records throughout an elongated grantmaking period could prove to be a challenge to organizations that don’t have proper grant management tools.

In an article for Philanthropy News Digest, Sandy Edwards, associate director at the Jim Joseph Foundation discussed the benefits of multiyear grantmaking for funders and grantees. Depending on your organization’s goals for grantmaking, expanding beyond just one year could be a strategic way to meet your mission. For the Jim Joseph Foundation, it has proven to be a vital strategy, according to Edwards.

Close to 95 percent of the $270 million in grants from the foundation have been multi-year grants. In addition, 84 percent were awarded over a period of three years or more. Providing funding over a longer period gives grantmakers and grantees a greater chance to get to know one another, which means foundations have a greater opportunity to develop an understanding of the nonprofit organization’s needs. The ongoing reporting also enables the foundation to achieve better grant management. As foundations enter into longer-term relationships with nonprofit organizations, they can learn more about the environment they are funding and strengthen their overall goals.

Multiyear grantmaking is declining

Despite the benefits of this approach, multiyear grantmaking is becoming less popular, as a survey from National Committee for Responsive Philanthropy reported. After peaking in 2008, the amount of multiyear grants has decreased from about $7 billion to less than $5 billion in 2010. It’s also important to note that the Bill and Melinda Gates Foundation accounted for 6 percent of all multiyear grants funded between 2004 and 2010. When this foundation is eliminated from the statistics, the decline appears even steeper.

There is no wrong approach to funding grants, but depending on the nonprofit organizations affected by your grantmaking activities, it may be wise to consider multi-year grantmaking as an option. To do so, foundations may need to first consider the processes by which they administer grants. If you’re still using databases or spreadsheets, a change in grantmaking approach could be a good opportunity to upgrade systems for process improvement.

Cloud-based, scalable grant management software like CommunityForce’s enables foundations to stay organized throughout the proposal review and fund delivery process.