Good Grantor; Bad Grantor
Good grantor asks the entrepreneur “what impact metric is the most important in your business and is cost effective to measure?” Bad Grantor gives a laundry list of 5-20 impact metrics they want measured, regardless of how useful they are or costly to measure.
Good grantor has a short application form to quickly evaluate if there is a fit with the enterprise. Bad grantor asks the entrepreneur to write down a 20 page business plan as the first round of an application before they can talk to the grantor. SNV CRAFT and GIF do this well.
Good grantor knows the entrepreneur is extremely busy and on the verge of mental breakdown and burnout and respects the entrepreneurs time even by paying the entrepreneur if they are late to a meeting. Bad Grantor thinks they are more important than the entrepreneur and shows up to meetings when they are ready. A16z (a VC) does this well.
Bad Grantor believes that seeing an entrepreneur would make their decision biased and tries to avoid meeting the entrepreneur. Good Grantor knows that human connection is one of the most important things and that trying to remove bias in this way causes more harm than good.
Bad Grantor lets the entrepreneur know if they are awarded funding 6 to 18 months later, when the funding is likely no longer relevant to the entrepreneur’s goals. Good Grantor knows the best entrepreneurs are in high demand. IF they don’t fund them someone else will and they move fast.
Bad Grantor is okay with procedural delays like waiting to get a check signed for 2 months. Good Grantor knows that a 2 month delay could put an entrepreneur out of business and fights to push finance approvals through.
Bad Grantor thinks that sending $1m in funding 2 years later is still worth $1m. Good Grantor knows time is money, with a discount rate in startups around 40%, $1m two years late is only worth $360,000. Saying they gave $1m would be a lie.
Bad grantor gives an entrepreneur 1 time slot option to present their business to the board. Good Grantor finds time in the entrepreneur’s busy schedule for the board to come to the startup’s office.
Bad Grantor doesn’t allow project management costs to be included. Good Grantor requests that at least 10% of the budget be for overhead to avoid burnout and ensure the sustainability of the project.
Bad Grantor has an application deadline. Good Grantor has rolling application deadline to be ready for entrepreneurs when they need the money. DOEN does this well.
Bad Grantor believes that micromanaging a company to come up with innovative ideas is the solution. Less innovation means more micromanagement is needed. Good Grantor knows that any team capable of coming up with meaningful innovation will be exceptional. And Exceptional people don’t work well with micromanaging. Gates Foundation does this well.
Bad Grantor is a bean counter. Good Grantor is a sounding board to bounce innovative ideas off of.
Bad Grantor goes home at 4:45. Good Granor goes home when their portfolio companies don’t need them anymore.
Bad Grantor communicates through an info@ email address. Good Grantor gives their personal email and whatsapp to their portfolio CEOs.
Bad Grantor has an opaque application process. Good Grantor is transparent about the application process. USAID GDA does this well.
Bad Grantor says “I know you asked for $1m but what can you do with $200,000?” Good Grantor asks “what would happen if the budget could be increased?”
Bad Grantor has bureaucracy creep until a $1m grant requires $1.1m of paperwork. Good grantor has one metric.
Bad Grantor won’t reinvest because they don’t want organizations to be “dependent.” Good Grantor has a fund set aside to increase the funding of their most successful investments. Gates Foundation and SBIR do this well.