By Tides January 30, 2025

5 Grantmaking Best Practices To Create Maximum Impact

A woman at a table at an outdoor event shows a man some brochures.

Nuestra Casa, a Victor & Lorraine Honig Initiative grantee partner. The Honig Initiative awards two-year grants, which helps grantees plan ahead.

An equitable future is only possible when power is transferred to historically marginalized communities. You might already be doing that via general grantmaking principles and centering grantees in your RFPs, but there are always ways to go deeper.

Reminder: The most important thing is to take action and do something. You’ve got the resources, and moving them to the communities that need them most — while being open-minded and transparent with those same communities throughout the entire process — creates meaningful change.

But what does building collaborative relationships actually look like? How do you let community partners lead? Are there ways to effect lasting change instead of providing short-term relief? Today, we’ll answer these questions and show you specific tips to transform your grantmaking.

1. Prioritize Multi-Year Funding

Often, funders consistently support the same organizations — but they don’t let the grantees know they can expect that future funding. This is a big missed opportunity. Committing to sustained support provides stability and security to your grantees, allowing them to move past the need to constantly raise funds and instead focus on long-term efforts.

See it in action: The Victor & Lorraine Honig Initiative for Bay Area Social & Economic Justice, a Tides Foundation partner, works to effect social, economic, and environmental change. The Honig Initiative awards two-year grants, which helps grantees plan ahead. The most recent awardee, the Center for Constitutional Rights, will use its multi-year funds to train and upskill emerging social justice lawyers.

2. Provide General Operating Grants

You’ve got a clear idea of the impact you want to have — now don’t underestimate the power of general support funds to make it happen.

General operating grants are more flexible than narrow, project-based grants and allow your grantees to direct monies where they’re needed most. They also enable grantees to be nimble and address unexpected needs that pop up during the grant period.

See it in action: The Better Food Policy Fund (BFPF) is a Tides-managed collective action fund (CAF) providing support for food policy councils to advance regional food system initiatives. BFPF provides general operating grants and leaves decision-making up to each local food policy council.

3. Maximize Your Annual DAF Payout

The average annual donor advised fund (DAF) spend hovers around 22.5% nationally. However, Tides partners with DAFs give nearly twice as much, with a 54% annual payout rate.

Through our Get Off Your Assets campaign, we’ve been advocating for years that donors move more money, more urgently. There is $228.89 billion sitting in DAFs¹ in the United States, and that money is desperately needed for ongoing crises and systemic solutions.

The more money you’re actively granting, the better. We recommend setting a minimum goal of 20% to stay around the average but aim much higher. Hitting those benchmarks every year ensures that you’re contributing toward a more just, fair future for everyone.

See it in action: We have partners so passionate about limiting wealth hoarding that they’ve started their own initiatives. Alan Davis, President of the Leonard and Sophie Davis Fund, is also Founder of Crisis Charitable Commitment, which urges donors to commit to contributing at or above certain minimum levels. Since its inception, the CCC has seen over $1 billion in total giving.

4. Include Community Voices

It’s best practice to involve community leaders as you make funding decisions. Community members bring their unique experiences and perspectives to the table and can positively influence your decisions (and, ultimately, your impact).

Always remember to fairly compensate people for their time and expertise.

See it in action: Trans Justice Funding Project (TJFP) directs money to trans justice efforts in the United States. Community leaders decide all of TJFP’s grantmaking efforts, honoring the overarching goal to resource grassroot organizers and activists as much as possible.

As another example, BFPF also includes community leaders throughout the entire grantmaking process. That means community members design the application itself, give input on how grantees will be selected, and advise on how the fund should operate.

5. Invest in Systemic Change Efforts

Direct relief grantmaking is crucial. However, there’s a balance to strike between responding to the immediate problems we can see and fixing what’s actually causing those problems.

Often, systemic change is done via policy advocacy and movement building efforts. This is where all of the other steps come together. If you’re giving multi-year grants, trusting your grantees to know how to use funds, and having conversations with community leaders, you’ll understand how your grants are making system-level change happen.

See it in action: BFPF supports food policy councils, which are multi-stakeholder groups working on regional policy change. The Honig Initiative also funds a policy advocate position intended to work full-time on systemic change. Finally, TJFP supports the leaders who are in the trenches doing systems change work.

Transformative Giving is a Practice

Creating real change is a practice, meaning you won’t always get it right — but by applying these tips, you’re more likely to create necessary, impactful shifts in the world.

Start where you can make the most impact now, whether that’s awarding a multi-year grant or upping the annual spend of your DAF. Then build from there. Every step you take toward these grantmaking practices is a step to shift power to the people who need it.

When you get off your assets and trust the communities you seek to support, you create the conditions for true transformation. If you’d like to learn more about how Tides can help you manage your grantmaking, reach out to us today.

Amplify Your Impact

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