Key principles of grant-making:
- Establish certain general rules or principles that apply to the grants. These principles are typically guided by the donors values and style of philanthropy.
- Another key issue is the strength and credibility of the grantee organization. A way of managing the governance risk and the risk of fraud or maladministration is to only fund organisations that are properly registered with the relevant authorities as nonprofit organisations and that can present audited or externally reviewed financial statements.
- When considering the financial aspects of the grant, many philanthropists prefer to make a contribution to the budget of a project rather than fund 100% of the project, which spreads the risk both for the donor and the donee. (Marched funding)
- There is a trend towards giving bigger and fewer grants. This is efficient from a management perspective both for the donor and the receiving organisation. Quite often donors underestimate the cost of effective programmes and have unrealistic expectations about what can be achieved with a certain amount of money
- Time frame – donors may make the first grant to the organisation as an annual year grant – as a sort of trial run – with a follow up grant of three to five years. For many projects, outcomes can take up to ten years to be visible and donors need to consider whether they are willing to stick with a project “for the long haul”.
- Success of her programmes or projects.