How do I decide whether or not to continue funding?

January 15, 2016

How do I decide whether or not to continue funding?

"Sustaining" refers to the decisions you will need to make once you have supported a grantee for the agreed-upon term. You will need to decide whether to renew your grant, to exit (but provide some sort of transitional support), or to exit without providing support.

Decision Options

Renew grant

  • At end of term, renew funding for grantee for another period.
  • Considerations: Grant should be explicit about expectations for the next period and have updated expected outputs and outcomes (See "Structuring" page).

Exit with support

  • Provide money/assistance for grantee to build capacity.
  • Solicit new funding or help grantee identify new funders.
  • Broker merger/acquisition, transfer program, or spin off as a new entity.
  • Provide money to intermediary to re-grant in program area.
  • Considerations: If you are exiting due to the organizations's inability to meet milestones, ask "How might we enable/facilitate/encourage better performance going forward?"

Exit grant

  • At end of term, do not renew grant/discontinue initiative.
  • Considerations: This option is generally appropriate for purely project-based grants (e.g., grant for a specific research topic).

The latter two choices require careful transition management, the set of behaviors or activities a foundation undertakes when exiting a program or initiative area.

Careful transition management is critical because:

  • Program area entrances and exits are signature moments—they embody a funder’s values and can create long-lasting effects.

  • It takes time to wind down current grantees and ramp up new program areas, so transitions are typically in the public eye for two to three years.

  • You have an opportunity to set grantees up for success and maintain goodwill throughout the process.

  • Your management of the transition process will affect your future grantee relationships and your ability to influence others going forward.

For more on managing the end of a funding relationship, see "The Effective Exit: Managing the End of a Funding Relationship" (GrantCraft).

Key Issues to Consider When Transitioning Out

1. Grantee relationships

You will need to close down individual grantee relationships that do not align with the new strategy in a thoughtful, responsible manner.

  • Honor all current commitments.
  • Create individual transition plans that provide an appropriate level of grant dollars and other assistance to help grantees transition to new funding.
    - Provide as much lead time as possible.
    - For some, provide transition grants, which typically last two to three years, decline over time, and support core activities (meaning they are not restricted to certain programs).
    - Consider providing other types of aid, as well as dollars, to key grantees.

2. Communications

Let all stakeholders know about the coming changes.

  • Explain strategic changes to all key stakeholders in a planned sequence.
  • Ensure communications with grantees are clear, direct, and timely.
    - Communicate as personally, clearly, and early as possible what program areas and granting relationships will not continue.
    - Plan in advance so that communications can begin immediately after the decision is official.
    - Be open, honest, and direct.
    - Provide early and frequent notice.

3. Resource allocation

Over-allocate resources to ensure sufficient attention and care is dedicated to transitions even if you are simultaneously ramping up a new foundation strategy.

  • Managing transitions responsibly takes significant financial resources over time (two to three years on average).
  • Devoting enough money to transitioning ensures that grantees can continue their work and will build your foundation’s reputation. 
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