Lessons from Grantmakers on Working with Startups

  • Don't fund a start-up unless it's really needed. Many contributors questioned what they see as a basic premise of many start-up organizations: that there aren't enough nonprofit organizations out there already. "It's quite the opposite," said one. "There are too many organizations as it is."
  • New organizations need three key elements to thrive: good leadership, a strong model, and a real market for their work. If those are present, an organization will probably succeed in solving its other problems. Without them, the contributions of a funder — expertise, technical assistance, money, and other kinds of support — might not tip the balance toward success.
  • Reaching the point of sustainability often takes more time than anyone anticipates. Grant makers told story after story of organizations that needed more time to get organized, achieve stability, and move confidently toward independence than originally planned. The economic downturn that began in 2000 exacerbated that tendency. According to our sources, many funders have been responding by offering core support for longer periods, often for five or six years or more.
  • Intangible forms of support make a bigger difference to start-up grantees than to grantees from established organizations. Confidence, collegiality, informal advice, and professional connections are just a few of the things a concerned funder can offer a new executive director who's trying to bring coherence to a new organization, a new staff, and a new board.
  • The tension between giving enough help and micro-managing a new organization can be a tricky one to handle, both personally and professionally. Many grant makers said they found it painful to step away from an organization in which they had invested enormous amounts of time, worry, and commitment. It was helpful, they said, to remind themselves repeatedly that the organization's independence was the real goal of their work, and to act and plan accordingly.
  • Funder policies about board service usually reflect deeply held principles about the ethics of the funder-grantee relationship and the long-term interests of both parties. In practice, however, there may be good reasons to alter those policies in particular cases — to serve on a particular board even though your organization urges against it, or to refuse board service even when it's allowed. The main thing, our contributors urge, is to decide thoughtfully and to recognize that you have a special responsibility to help both board and management succeed.

Takeaways are critical, bite-sized resources either excerpted from our guides or written by Candid Learning for Funders using the guide's research data or themes post-publication. Attribution is given if the takeaway is a quotation.

This takeaway was derived from Working with Start-Ups.