A while back, a colleague of mine met with the head of a prominent foundation to discuss their approach to working with grantee partners. This particular foundation took a more open-handed approach by providing unrestricted funding to support nonprofits aligned with its mission. The foundation had been investing in a nonprofit that is popular with other funders and the foundation head expressed frustration with how some of those grants have distracted the small organization from its more core priorities in hopes of growing their overall budget.
This nonprofit is what I would call a “donor darling.”
Donor darlings are small nonprofits that get a disproportionate amount of interest from donors for its capability and size, possibly leading to mission drift. Donor darlings are often created as funders work to draft off each other like race cars by connecting with new grantees based on funding relationships already established by peer funders. This approach is not inherently unhealthy, but can certainly create tension between funders and their grantees, between funders of the same grantee, and between grantees working in the same space.
When donor darlings receive outsized amounts of funding compared to peer organizations, it can undermine the quality of work that is delivered to communities. For instance, we knew of an anti-trafficking organization based in Asia that was run by a high-profile woman from a well-connected family. Due to her connections and her ability to present well in English, her organization got the attention of western funding agencies.
The consensus among those familiar with the work of local anti-trafficking organizations was that there were several organizations doing much better work. Those organizations didn’t have the same profile, and as a result, didn’t have the same access to funding. Unfortunately, it wasn’t the organization’s effectiveness and results that were driving funding—it was their connections and media buzz.
There are ways organizations can avoid falling into the trap of accepting more money than they can responsibly handle. For instance, an organization could work at growing its operational bandwidth a bit more closely with increased funding or they could respectfully decline advances by funders so that they can grow at a more sustainable pace. There is certainly risk associated with taking this approach, but I’m confident that sophisticated donors would appreciate that nuance—and may respect the organization even more for being straightforward and transparent about their capabilities.
Similarly, there are several things funders can do to avoid creating unhealthy donor darling situations. Funders could work at providing good organizations with more unrestricted funding or creating negotiating space for organizations to decline or postpone funding conversations for a given period of time without damaging the relationship.
Instead of following the buzz of others or overly relying on funding networks for partner sourcing, donors could invest more time and energy in sourcing new and different partners including using field offices or in-country consultants to broaden the number of viable funding partners to achieve their grantmaking aims. Even undertaking the traditional (and often both messy and time-consuming) RFP process would sometimes unearth new potential partners.
When funders find themselves supporting a potential donor darling, there are ways to ensure the grantee doesn’t become a victim of its own success. Collaboration and coordination takes work, but increased transparency between funders can provide grantees with a stronger support structure—both financially and organizationally. This approach could also be taken a step further to include increased transparency around impact, which would help create a broader accountability structure for grantees. Good examples of this include initiatives undertaken by the Foundation Center that map out where and what funders are granting towards.
Funders can also encourage open communication lines to receive insights and reflections not only from their grantee partners but also from their peer organizations. This can be built into reporting cycles, through more in-person meetings or even through interviews by a trusted third party. While it takes persistence and some navigation of cross-cultural barriers to build trust, partners are often willing to share openly about their hopes and preferences for a funding relationship.
To some extent, donor darlings and the tensions created around them will likely always exist in robust and vibrant funding markets. However, some of these tensions can be alleviated with increased awareness and ownership of the ways that both funders and grant recipients are responsible. If you find that you are stumbling into the problem of an ineffective relationship with a donor darling, we would be happy to help you navigate this problem.