Philanthropic funders of all stripes like to talk about innovation. But in reality, traditional funding models and restrictive grant requirements often leave little room for truly innovative thinking. Instead of fostering groundbreaking ideas, these constraints can stifle the creative potential that drives social change. But it’s possible to shift this paradigm. And it starts with funders rethinking their role.
Look at an organization like Lever for Change. They’re rewriting the script on how grantmaking should work, encouraging nonprofits to dream big and proposing ambitious, long-term solutions to challenges facing society.
This strategy acknowledges a crucial truth: those who work closest with communities know best what those communities need. And, when given the freedom and resources, they can generate transformative ideas as well as the strategies to put them into practice.
The issue with typical funding cycles
The conventional year-after-year cycles of grant-making often is a barrier to achieving meaningful impact. The industry-prevalent “confetti-style” funding structure typically involves short-term, scattered support rather than a focused, long-term investment strategy.
With this approach, donors prefer to watch and wait, observing what nonprofits do with funding each year before allocating more.
But this merely perpetuates a cycle of ineffective philanthropy, where nonprofits are conditioned to constantly seek and secure funding, rather than focusing on deepening their impact year after year.
John Brothers, president of the T. Rowe Foundation, criticizes this model of grantmaking and challenges donors to think of philanthropy as a long-term investment just like any other strategic or business investment.
This shift in perspective could encourage funders to treat nonprofit organizations as long-term partners, investing in their growth and impact over a sustained period.
Kristen Molyneaux, vice president of program strategy and learning at Lever for Change, notes that the average grant size is $50,000 over an 18-month period of time. This limitation presents a philanthropic paradox: Donors want to do big things, but big things can’t happen on a restricted timeline and budget.
“It’s very difficult for organizations to have impact when they are on an 18-month grant cycle, fundraising every few months because they need to cover their expenses,” said Molyneaux. “And if organizations are kept in that cycle, it’s really difficult for them to make change in the world. You can’t solve homelessness with $50,000 and 18 months. It’s just not possible.”
The scale of societal problems and the resources required to tackle them demand a more substantial, long-term financial commitment from funders than is currently available to most nonprofits. Plus, the everpresent pressure to secure the next grant can divert attention from developing innovative solutions and aiming for long-term outcomes.
The takeaway is clear: for nonprofits to realize their full potential in driving social change, the funding paradigm must shift. Moving away from short-term, fragmented funding towards a model that emphasizes sustained investment and partnership can empower organizations to think bigger, act boldly, and measure their impact more meaningfully.
Let communities identify their problems—and prescribe solutions
Too often funders think it’s their job to define a community’s problems. But community members know what issues they face better than anyone. They should be the ones who identify the problems they want to solve, as well as the solutions.
Lever for Change runs grantmaking challenges to identify and fund promising solutions to critical issues. They award millions of dollars to address complex, large-scale social problems. But they don’t define what those problems are—they leave that to the communities themselves. .
Molyneaux emphasizes that donors and funders shouldn’t have their perspective dominate the conversation. Instead, the process should center the voices, experiences, and vision of the grantees.
“We don’t want to prescribe the problem. We don’t want to prescribe the solution. You tell us what those problems are. You define the problem in the way that it is important to you and your community, not how we define it as,” Molyneaux says.
Because Lever for Change gives big-dollar grants, the organizations they support are able to take a step back, pick their heads out of the weeds, and really think about the impact they want to have years down the line, not months. Not as defined by an external donor and their specific agenda or strategy, but by the nonprofit’s own vision and mission.
And repeatedly, throughout dozens of Lever for Change challenges, Molyneaux hears participants often say it’s the first time they’ve had the chance to advocate for themselves, to define the problems as they see them in their communities, and propose solutions that resonate with their unique understanding.
“What we saw were organizations kind of taking a step back and saying, ‘Nobody’s really asked us to do that before. We’re so used to philanthropy telling us exactly what they’re looking for and then us having to fit into that box. This is a completely different experience,’” says Molyneaux. “For us, that was both eye opening and exciting. And it kind of showed us an opportunity to shift the power dynamics between organizations and donors, and say, ‘You tell us. We shouldn’t be prescribing the problem and solution. You know better, you’re the ones out there doing the hard work every day. So, you tell us what that should look like.’”
Shifting power dynamics allows communities to bring their unique worldview into their work, as exemplified in the experience of Native Women Lead and New Mexico Community Capital. These two organizations teamed up for Lever for Change’s “Equality Can’t Wait Challenge” and won $10 million for their proposal, “The Future is Indigenous Women.”
In a departure from traditional linear logic models often used in funding proposals, these groups chose to present their plan as a water cycle—a nonlinear, natural process involving rain, evaporation, and other elements. This approach was more than just a creative twist; it was a profound reflection of their worldview and cultural upbringing as Native women.
“In finance, we hear, ‘What’s the pipeline?’ But we were like, ‘No, pipelines are actually very harmful in Indigenous communities. What would a healthy waterway look like?’” said Jamie Gloshay, co-founder and co-director of Native Women Lead.
The water cycle model went further to identify “ripple effects”—outcomes and long-term impacts of their work, such as agency, healing, safety, sovereignty, and economic empowerment, which are all interconnected. It represented a way of working that was in harmony with nature, mirroring Indigenous systems thinking.
Allowing for new perspectives and non-traditional presentation styles in funding applications can lead to innovative, impactful solutions. With the time and resources to develop a proposal that truly reflected their perspective, representatives from the Native community were able to present a compelling and genuine narrative that made both cultural and financial sense.
See grantees as more than their needs
It’s crucial for funders to move away from defining grantees based solely on their needs. It’s time to recognize them as sources of strength, brilliance, and potential. It’s a shift in focus from what people have endured and what they need now, to what they can achieve.
Raul Bortello, co-executive director of Communities United, describes his nonprofit as a community-based organization that is survivor-led. All of its staff, board of directors, and constituents identify as survivors of trauma that directly result from systemic racism.
“When we describe survivor-led, it means really looking at the narratives of harm that have come to you, but that in itself is not the end of the road.” says Raul. “Our mission is to focus on what we call our ‘Healing through Justice’ model, which is a really transformative approach to youth and community-led healing.”
This model looks ahead to the future, focusing efforts on developing the next generation of young leaders who can lead the charge to create more just systems and policies that can end cycles of harm. From dismantling the school-to-prison pipeline to transforming healthcare systems and immigration law reform, young leaders from Communities United’s programs are survivors of injustices that use their backgrounds to create a more just future for all.
The traditional financial system of funding is limited, leaving no room for empathy and forward-thinking approaches. As Steve Wanta, president and CEO of JUST Community, explains, conventional banking focuses too heavily on credit and past choices to influence decision-making. “Show me your past, and I will say ‘no’ to your future,” as Wanta puts it, is precisely the mindset that needs changing.
In contrast, JUST’s approach of providing small loans to ambitious disadvantaged folks shows the power of believing in people’s potential, shifting the loan process from hypercritical to trust-based.
“You can give people that have nothing money and you get it back,” Wanta says, pointing to the 5,000 small loans JUST dispersed last year. “We would love for other people to start thinking about how they can get to ‘yes’ without the baggage of people’s past.”
For grantmakers, look for ways to shift your focus from what a community needs to what strengths and values already exist within that community. Then build your programs around that. By doing so, you empower grantees to bring their full selves to the work and restore their agency in the process.
Consider a planning grant
The Lever for Change’s challenges prove that providing resources for strategic planning can be a game-changer for nonprofits. These grants give organizations the much-needed space and support to think big, refine their proposals, and lay a solid groundwork for future progress.
Planning grants can empower nonprofits to develop more ambitious, long-term strategies than they customarily don’t have the freedom to envision. These grants provide not just funding, but also access to consulting support, room to ask questions, and opportunities for networking with funding partners.
Most nonprofits never have sizable enough resources to think about a 10-year vision, since funding usually works in one- to three-year cycles. So for Communities United, the planning grant—and room to think big that accompanied it—completely redefined their work.
“What it allowed us to do is to really rethink and reimagine how we were structuring and operating ourselves, so that we could really hold on to that longer term strategic vision and make sure that all the work that we were doing day-to-day and month-by-month was really lining up with that,” said Jennifer Arwade, co-executive director of Communities United. “And it relieved some of the pressure of some of those really short-term deliverables that you have to meet that sometimes get in the way of what you’re trying to achieve over the longer term.”
Wanta from JUST, another recipient of a Lever for Change planning grant, echoes the sentiment that room to plan helped expand their thinking around long-term impact.
“It gave us a space to dream big where we could roll up our sleeves and help in the way we’re normally accustomed to,” said Wanta. “We got together as a team and said, ‘What would better look like?‘ — not just a little bit better but ‘significantly change lives and realize dreams’ better.”
What the JUST team realized through the planning process was the most impactful outcome they could focus on for their clients would be access to buying a house—something that couldn’t be achieved through the nonprofit’s small loans or educational programs. Their clients didn’t need education; they needed money. So JUST dreamt big, imagining a future where they could distribute larger loans to help make home ownership a reality for members of their community.
“It gave us permission as an organization to dream—and dream big,” said Wanta. “And that has set us on a course to actually take steps towards that dream, even though we didn’t win.”
Authenticity is the key to lasting change
Your grant application process should invite people to authentically share their lived experiences and aspirations for the future. It should be more than just applying for funds; ask people how they would change lives if given the chance.
The goal is to understand the applicant holistically, without burdening them with too much bureaucratic paperwork and invasive questions. Oftentimes, for grantees, the grant application process can feel like taking an exam, with “right” and “wrong” answers—when instead it should feel like an honest, open conversation.
When nonprofits apply for Lever for Change challenges, Molyneaux advises, “Don’t try to constantly assume what the donor wants to see.” As she notes, often, donors aren’t looking for a particular perspective; they want to see authenticity.
“Being your authentic self, telling us that journey you want to go on, and, at the end of the day, what your vision for a better future is gonna look like—that’s going to be the most compelling thing that you can do,” says Molyneaux.
As a donor, what that means is leaving room for that authenticity, and making it clear that you’re not looking for a particular answer on your applications. Show interest in understanding your applicants’ past, present, and future, and you’ll receive more compelling and inspiring applications that provide a clearer understanding of who you’re supporting.
By giving applicants the space to share who they are authentically, instead of trying to fit a particular mold, you could even create opportunities for them to clarify what they really want in the long term. When you provide freedom to introspect and strategize, grant applications can help organizations find their voice, greater clarity in their vision, and more effective, focused plans for change.
Communities United won the Racial Equity 2030 Challenge, but Raul Botello says even if they didn’t, he felt the process would have made the organization stronger anyway. Simply going through such a sincere, open-minded, and supportive proposal process placed the nonprofit on a new trajectory.
“We still would have used our proposal we created as our roadway,” says Botello. “Regardless of what happened, we were going to somehow figure out how to make all that work happen. There are so many outcomes that come out of this challenge that go beyond the transactional between a funder and a grantee.
“Obviously, the funding is incredible. But it’s the processes that they lay out in that structure that we benefited from.”
Relationships make innovation possible
In philanthropy, innovation doesn’t happen without strong relationships. Funders and grantees must develop partnerships built on honesty, transparency, and mutual respect.
Often the funder-grantee relationship starts with the grant application. The right grant management software helps you support bold solutions by streamlining the work, making collaboration easy, and giving everyone a way to share their unique perspective.
For more thoughts on how philanthropy can support big ideas, make sure to check out our podcast, Impact Audio.
Hsing is a content marketer and ex-journalist who writes about tech, DEI, and remote work. Beyond the screen, she enjoys building custom mechanical keyboards and playing with her dog. You can find more of her work at hsingtseng.com.