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The imperative of good governance in funder-grantee partnerships

Anne Emmett,

anneemmetIn development funding practice and in the world of non-profit organisations (NPOs), strong partnerships between funders and grantee partners are essential for achieving shared goals and driving positive social impact.

A successful partnership is rooted in the acknowledgment of mutual benefits and responsibilities. The funder, driven by a specific mandate, requires the grantee’s assistance to achieve its objectives and report on activities. Likewise, the grantee relies on funds and in-kind support from the funder to fulfill its mission and bring about positive change.

The success of these partnerships hinges on a mutual understanding of reciprocity and the adoption of an inclusive, cooperative approach rather than top-down power dynamics. While donors possess more financial power, they should approach their engagements

with an understanding of the grantees’ needs, context and challenges. It is crucial to build trust and communicate effectively to avoid an adversarial atmosphere that serves nobody’s interests. It is the responsibility of both parties to build mutual trust.

Tailoring governance to different NPOs

Both donors and grantees must prioritise governance as a key element in the equation. Governance plays a critical role in the success and sustainability of NPOs. However, there is no one-size-fits-all approach.

For larger NPOs, with relatively strong institutional capacity, a corporate governance model may be more suitable, but smaller organisations may find such an approach intimidating. It is essential for donors to demystify governance and recognise that community- based organisations may operate differently, relying on committees rather than Boards, for example. These can operate without typical formal governance processes in place but with other viable and contextually appropriate accountability mechanisms.

Donors should help build capacity and assist organisations in understanding governance requirements while respecting their unique structures. It is not a case of instilling fear from a position of power, but rather reminding grantees of their legal, regulatory and ethical responsibilities and growing their understanding of these.

Encouraging accountable governance

Donors should explain why certain systems and information, such as regular meetings and minutes, are important. Demonstrating the link between good governance, funding and organisational impact can help grantees appreciate its importance.

As part of my own engagement with grantees on behalf of donors, I have found that when there are legal agreements put in place with organisations, it can be helpful to include clauses that aid a process of strengthening governance. These need not be harsh or onerous: One can use wording such as proposing that a grantee should consider reviewing its governance practice e.g. regarding the regularity of Board meetings, the recording of minutes, the Board member appointment process, Board composition and roles etc.

Some NPOs find this process helpful in thinking through their governance status and are open to further engagement and guidance.

In the assessment process, asking whether an organisation has a Board Charter might be the first time this is heard of. My experience has been that after thoughtful explanation, some organisations recognise the potential value of having one and might start the journey of developing one suitable to their organisation’s needs.

Engaging grantees in conversations about governance, and using real-life examples to illustrate its significance, is useful to circle back to the applicability of concepts and practice in their own context.

It is also helpful to point out that we are navigating a world that is increasingly using evidence-based practice to demonstrate what we have and have not done, how, etc., and that such sources of evidence can be varied and context-specific – as proof of due process and accountability.

Response from NPOs

As greater understanding grows of the importance
of evidence-keeping in whatever form this might take, and governance, I have seen a willingness to apply these practices. Some organisations are not interested in the details of governance, but others appreciate why questions are being asked by funders.

Given the current South African landscape, there is awareness of the negative impact of corruption, and Boards have a desire to do the right thing in the best interests of the organisation. In the long run, they see the benefits of good governance when more donors come on board (or continue funding) knowing that governance capacity and methods are in place. Mostly, the decision- making and evidence-keeping processes are understood to be necessary for the organisation’s sustainability.

Naturally, questions about systems and governance can also provoke a feeling of being overwhelmed. Many NPOs lack capacity and systems, whether they are small or large organisations, and governance concepts can appear intimidating to both. It is going to take time for knowledge and systems to be implemented equally across the sector.

We need to engage carefully. When we talk about professionalising the non-profit sector, it’s about guiding people to do the right thing, rather than being draconian. We don’t want to take away the mission- and passion-driven nature of these organisations.

Finally, terms like governance, systemisation, sustainability and professionalisation should be
seen as living terms. As donors we need to keep our fingers on the pulse, stay abreast of developments in the external environment, and interrogate prevailing norms and theories. These are strategic concepts and, rather than imposing rigid structures, donors should support grantees appropriately.

By fostering reciprocal relationships and understanding the diverse needs of NPOs, donors can empower grantee partners to grow good governance, and to thrive while maintaining their mission-driven passion. Offering support, such as sharing knowledge and best practices, can empower NPOs to grow and thrive. 

This article was first published in Inyathelo's 2023 Annual Report.



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