Small grants

Why would we offer small grants?

• They can have a ripple effect, where a small, local change contributes to bigger changes on a broader scale.
• They can build resilience in the systems that drive social change.
• Local leaders often know what needs to happen to address local issues, but lack the resources to take the necessary action.
• Small-scale groups, remote groups and individuals are often excluded from regular grantmaking programs.
• Small grants can help you connect with groups that may not otherwise cross your path.
• Offering small grants limits the risk associated with any one grant.
• Small grants can be good public relations, reinforcing positive perceptions of your organisation.
• A small grant can be all that a grantee organisation needs to reach a new level of operation, gain some much-needed credibility, or secure further funding from elsewhere.
• A British grantmaker that assessed the impact of its investments found that small grants could make as much of a difference to achieving outcomes as large grants.
• The application process usually involves little, if any, interaction with grantseekers.
• Quick response grants (which are usually small grants) are fast, flexible and responsive, helping to address needs that won't wait for regular funding rounds.
• You can give grantseekers more control over what they do with a small grant. Another British survey of grantseekers found that 48% of them would give up half or more of a grant (in this case a hypothetical $150,000) in order to have more autonomy regarding how they used it.

What would a small grants program look like?

Small grants programs range from light-hearted and fun to the serious business of lending money to the very poor who do not have a credit rating. Here are some examples of how they're set up:

• The Awesome Foundation offers no-strings-attached $1000 grants for innovative projects.
• Trickle Up's micro-grants program offers funding for people living below the "extreme poverty" line of US$1.25 (AU$1.70) a day. These people often have no track record in business and sometimes do not even have a regular address.
• Many grantmakers use local third parties as intermediaries to hand out their small grants - this helps to make sure they are well connected to local communities.
• Grants can start as small as you like. At least one Australian micro-grants program offers funding of $250 to $1000. Another small grants program offers between $500 and $10,000. The definition of "small" is, of course, relative.
• The British government's Grassroots Grants program matched the fundraising targets of local grantmakers. The local grantmakers invested matched donations, and returns were used to fund local community and voluntary groups. This model serves the additional purpose of strengthening the financial sustainability of local funders.
• Grantmakers often direct their small grants at small groups - those with, say, an annual income below $40,000. Again, the definition of small is relative. Your idea of a small organisation might be one with an annual budget of less than $4 million.
• Small grants programs can still support your mission - they don't have to be separate from it.
• A small grants program does not have to be your only offering - it might use up a nominal five per cent of your grantmaking budget, for example.
• Grants to individuals are almost a different case altogether. They usually come in one of three forms: scholarships (capacity building), prizes (rewards) or expenses (helping to get something done). If funding individuals is too difficult for you (and doing so is time and energy intensive - it is difficult to compare individuals) you can still fund collective resources for individuals' use (studios for artists to use, for example).

How do we ensure a small grants program works well?

• Make it accessible - keep the application process simple. Publish a template for grantseekers to use. There are good examples of application forms and guidelines on the City of Stonnington website. Philanthropy Australia has also published templates for small grant applications and acquittals.
• Consider whether you need to put evaluations in place - many grantmakers don't bother with evaluations for their small grants programs.
• You can elect to do in-depth assessments of some randomly selected grants.
• You may like at least to request a short final report from all grantees, with a view to identifying organisations you may like to be involved with longer-term.
• If you do put a review process in place, ensure that it is manageable. Nominate 10% of grants, for example, to check up on. You may not uncover any serious problems but you may identify areas where groups need further support.
• While a small grants program can be a way of providing groups with access to resources outside your usual funding rounds, putting in place regular (albeit frequent) closing dates allows you to process applications in batches, which is a more efficient use of staff time. It also assists with analysis and comparison across ideas and organisations.
• If you're concerned about the higher risk of granting to new organisations, you can elect to grant only to organisations with deductible gift recipient (DGR) status, but in doing so you may - in fact you almost certainly will - rule out some very worthy organisations. Or you can just decide to accept the risk.
• Another risk management strategy is to put some conditions in place. Trickle Up, for example, stipulates that at least 20% of profits from its micro grants businesses be reinvested, and that grantees commit a minimum of 250 hours to their business within the first three months.
• Create a separate funding stream for small grants so small organisations do not have to compete with better-resourced counterparts.
• Ensure your program targets those projects that will support your mission and those that are not suited to regular funding rounds.
• When deciding whether or not to award a grant, you might like to consider the nature of the program, the leveraging opportunities, the governance and leadership of the organisation and the fit with your organisation's strategy.