Risk in Philanthropy: Funders Don’t Ask & Non-Profits Don’t Tell (2015 Survey Report)
The world is unpredictable. No amount of planning can prevent unscripted events from causing disruption. In the non-profit sector, organizations are often working with vulnerable populations in the poorest locations of the world, where unpredictability is a constant. Non-profit leaders and donors all have stories about a project that was disrupted for the most minor reason, such as firewood that was not cut correctly for the experimental cook stove, or for a more serious event, such as civil unrest. Either way, when the unexpected occurs, additional resources (i.e., contingency funding) are often necessary to correct or manage the situation.
In 2015, Open Road Alliance conducted a 400-respondent survey designed to look at the frequency of need for contingency funding as reported by Funders and Grantees. The survey was designed to explore the following questions about risk and contingency funding:
Frequency: How often do projects need contingency funding?
Donor Response: How often are projects granted additional contingency funds?
Capacity: What policies and procedures are in place to deal with contingencies?
Consequences: What are the consequences of unfunded requests for the project and for the Funder-Grantee relationship?
The survey results demonstrate that project disruptions do occur and contingency funding is needed in approximately 1 out of 5 projects. In addition to setting a baseline for the necessity for contingency funding, the results of this survey offer both good news and bad news about the state of risk in philanthropy.