Thriving Together: How Funders Can Drive Sustainable Impact Through Grantee Well-Being

Just as the roots of a tree nourish its branches, providing essential sustenance that allows it to grow and flourish, funders play a pivotal role in supporting nonprofit organizations. Without strong roots, a tree withers and fails to reach its potential. Similarly, without robust support from funders, many nonprofits would struggle to fulfill their missions and extend their positive impact on communities.

As a grantmaker, you know your grantees face immense pressures, often operating with limited resources and high expectations. The challenge becomes even more daunting when their work is compounded by external factors such as economic fluctuations, policy changes, climate events, and outdated technical infrastructure.

Recognizing the critical role of nonprofits in building strong, resilient communities, many funders are stepping up to address the well-being of those who drive these missions forward. But there is still a lot of work to be done.

Here are examples of how funding organizations are supporting the well-being of their grantees, as well as the hurdles grantmakers can face when implementing these programs.

The Challenge

The nonprofit sector is the backbone of strong communities. It plays an essential role in providing critical services and resources to the most vulnerable among us. As demand for the sector increases, nonprofit workers are called on to do more with fewer and fewer resources.

For example, while nonprofits are one of the largest employers in the U.S., the sector is nearly one million jobs short of pre-COVID-19 pandemic levels. And about one in five nonprofit employees struggle financially to make ends meet and take care of their families while dedicating their lives to support others.

But there comes a breaking point where passion for the work dwindles under the pressure of doing more and more with less and less. As the health and well-being of workers decline, the mission suffers. I experienced this firsthand working in the nonprofit and government sectors. I had many moments when I was on the edge of burnout doing my part to move the mission forward. At my lowest point, I was severely depressed, the heaviest I’d ever been in my life, and feeling like a failure even though I was burning the candle at both ends. No matter how long, hard, or smart I worked, there was never enough time or resources to get it all done.

Unfortunately, my experience is not unique. Across the sector, burnout and its consequences are widespread. According to the Well-being Project, changemakers experience high levels of burnout, stress, depression, chronic illness, and weak personal relationships.

In addition to resource constraints, climate events, artificial intelligence, and political and economic shifts are fundamentally reshaping how nonprofits go about the work of creating a better world. And more than ever, it’s essential that grantmakers recognize and address the well-being challenges faced by those dedicated to making the world a better place.

The Role of Funders in Addressing Nonprofit Burnout

There is growing recognition that the nonprofit sector is experiencing a crisis of burnout, persistent understaffing, and uncompetitive compensation. Given these challenges, what’s the appropriate role of funders in addressing burnout in the sector? Based on the interviews with a cross-section of nonprofit leaders and funders, here are a few ways funders are becoming part of the solution.

1. Recognize Grantee Well-Being as Central to Mission Success

Funders see grantee well-being not as a secondary or optional concern but as essential to the success of their mission and broader social change goals. As one funder noted, “We’re conscientious of the well-being of nonprofit leaders because they are an essential catalyst for the type of long-term social change that we’re supporting our community to arrive at. Their wellness is the outcome we’re responsible for.”

2. Listen and Respond to Grantee Needs

One way to mitigate the biggest stressors among many grantees is to view the grantee as a partner. Grantmakers who are addressing these issues see their grantees as more than a means to an end for funder priorities.

The McGregor Fund’s Director of Learning & Reporting, Vanessa Samuelson, puts it this way, “Our grant partners and their communities hold the vision, wisdom, and know-how to move towards our collective aspirations for a more just world. Philanthropy misses out on so much when we don’t listen, learn, and follow their lead. Even when that’s our intention, our practices of extractive, time-consuming, unnecessary grant applications, reports, meetings, and inflexible grant awards achieve the opposite. Let’s examine our practices through the experiences of our grant partners and hold ourselves responsible for doing better by them.”

There’s growing awareness of different approaches to the funder-grantee relationship that are more human or grantee-centered. These include models such as deferential philanthropy where there is an acknowledgement of the power dynamics at play in the traditional funder-grantee relationship. This approach flips the accountability paradigm so funders answer (or are deferential to) to their grant partners rather than expecting them to be accountable (deferential) to funders. Similarly, trust-based philanthropy centers building trusting relationships where grantees feel safe sharing their challenges and grantee feedback is used to inform funding strategies and practices that better align with grantee and community needs.

3. Adopt Flexible Funding Models

Funding uncertainty, navigating the wide range of funder applications, and reporting requirements, and the frequency of needing to (re-)apply for funds are also significant sources of stress for grantees. When funders incorporate flexible funding models—such as multi-year funding and providing resources for operations—into their programs, it alleviates a good portion of the stress.

Multi-Year Funding: Funding approaches such as providing multi-year grants help reduce uncertainty and free up staff to focus on implementation as opposed to grants management. One grantee noted, “I’m a big fan of multiple-year grants. You know you can do this for 12 months, but what if you have 36 months to do the work without the requirement of reapplying again? It’s a lot less anxiety and it’s more aligned with how we achieve impact for the populations we serve. The more flexibility we have the more impact we can have for the communities we serve.”

Funding Operations: Increasing general operating funding support is another approach that goes a long way toward reducing the administrative burden on grantees and enabling organizations to provide competitive compensation and attract and retain talented staff. Funders trust their grantees to employ available funds in service of the mission without micromanagement, lowering stress and anxiety.

4. Directly Fund Well-Being

Beyond program specific or general operating support, funders and grantees also recognize the benefit of directly funding well-being. Here are some examples of how funders have provided this support to their grantees.

Well-Being Stipends: Funders like the Blue Cross and Blue Shield of North Carolina Foundation provide flexible one-time $10K well-being grants for organizations to use as they see fit. The foundation encourages grantees to define their own priorities based on their staff’s needs. For instance, grantees were asked to consult with staff to determine the best use of the funds, allowing for creative and responsive approaches to well-being.

One organization used the grant to bring their staff together as a team for the first time since the pandemic, fostering trust and collaboration. Other examples include funds being allocated to individual staff members in the form of stipends to support their personal well-being or facilitating culturally relevant or community-driven healing practices to address the specific needs of their staff.

Though relatively small, the foundation’s funding often initiated broader conversations inside organizations at the leadership and board level about how to create more intentional approaches to staff well-being beyond a one-time initiative, including changing culture through internal policies and practices, which will have a lasting impact.

Sabbaticals: Some grantmakers funded sabbaticals for staff to take extended time away from work to rest and recharge. The McGregor Fund’s Eugene A. Miller Fellowship program is one example. The fellowship honors outstanding, experienced leaders of nonprofit organizations in metropolitan Detroit, supporting them in taking time away from their day-to-day responsibilities. Fellows take a self-designed sabbatical to rejuvenate themselves.

These approaches don’t solve the problem at once, but they are a starting place tomeet organizations and people where they are. There’s no one-size-fits-all approach. The key is to tune into what grantees need and leverage available funds and influence to be a part of the solution. In the case of the Blue Cross and Blue Shield of North Carolina Foundation, there was a desire to provide even more funding, but that wasn’t possible. So, they asked: what can we do right now with the resources and influence we do have and build from there? By adopting a learning mindset, they were able to create incremental change that is having a direct benefit to nonprofit staff now.

5. Advocate Within the Funding Community

Beyond financial contributions, many funders are leveraging their influence to:

• Organize and advocate for well-being-focused funding practices among peer funders.
• Encourage and facilitate conversations about the systemic issues contributing to burnout and collaborate on sector-wide solutions.
• Support field-wide research and policy efforts that aim to make the nonprofit sector more sustainable for its workforce. Funders institutionalize practices that encourage rest, recognizing that a rested team is more effective in delivering long-term impact.

Funders have a unique opportunity to leverage their resources and voice to support a culture shift away from business as usual to a culture of well-being that fuels sustained social impacts for generations to come. This shift includes leveraging their funding power and voice to create new approaches to philanthropy that center grantees and recognize their value beyond advancing top-down philanthropic priorities. And to prioritize their well-being and thriving as part of the infrastructure for sustained social impact.

Barriers to Funding Well-Being

Despite growing recognition of the importance of the well-being of nonprofit leaders to achieve sustained social impact, there are a number of barriers funders and grantees may encounter when trying to integrate well-being into funding strategies.

1. Institutional Culture and Norms

Many foundations operate within deeply ingrained systems of traditional philanthropy that can be resistant to change. It can be difficult not to lean primarily on prioritizing quantitative outcomes and data over relational, trust-based approaches. Many of these practices are rooted in white supremacy and capitalist frameworks that make it challenging to adopt more human-centered, equitable approaches.

Some funders may not recognize how their own practices, such as rigid grant reporting requirements or short grant cycles, contribute to grantee burnout. Shifting power to grantees and adopting trust-based philanthropy requires funders to relinquish some control, which can be uncomfortable.

2. Funder Staff and Board Representation

The staff and boards for many funders have limited diversity or lived experience in the nonprofit sector, so they may not understand or prioritize well-being as a funding focus. Without that first-hand experience, it can be hard to understand what it’s like to walk in the shoes of grantees. Traditional philanthropic practices often perpetuate inequities, especially for organizations led by underrepresented groups. One former grantee noted that there’s a pattern of questioning the competence and capacity of leaders of color while funding “too-big-fail” organizations that are less effective.

3. Measurement and Evaluation

Traditional metrics of success, such as program outputs, overshadow the intangible but critical impact of staff well-being. Funders may struggle to quantify the benefits of well-being investments, making it harder to justify these initiatives to boards and other stakeholders.

4. Limited Resources

Small or understaffed foundations may lack the resources to deeply engage with grantees on well-being initiatives. Because of resource constraints, funders also may be resistant to funding external well-being consultants although they lack the internal expertise to address issues like burnout or to design well-being programs effectively.

5. Sustainability Concerns

Initiatives like sabbatical programs or one-time grants for well-being are often viewed as temporary fixes, rather than addressing systemic issues like pay equity or workload. Some funders may be reluctant to commit to sustained operational support or multi-year grants due to budgetary or philosophical differences in funding approaches.

6. Trust Gap

Grantees might hesitate to share their struggles or needs out of fear of being seen as weak, incapable, or that if they complain, they could put much-needed funding at risk. Funders may struggle to build the relationships necessary for open dialogue about well-being.

Creating a Culture Shift

While many funders are taking important steps towards integrating well-being into their strategies, it’s clear that these efforts must become part of a larger cultural shift. Funders that have started prioritizing grantee well-being are setting the stage for a more sustainable and impactful nonprofit sector through flexible funding, trust-based philanthropy, and multi-year grants.

However, to truly foster a culture of well-being across the sector, it’s imperative for all funding organizations to recognize and address the systemic barriers that exist within traditional philanthropic frameworks. This means moving beyond the metrics of success that prioritize short-term results over long-term sustainability and embracing approaches that are relational, equitable, and human-centered.

Fostering diversity within funder staff and boards, reducing bureaucratic burdens, and committing to sustained operational support are critical steps in this evolution. Equally important is building trust with grantees, encouraging open dialogue, and recognizing the intrinsic value of well-being initiatives, even when they are challenging to quantify.

Ultimately, creating a culture of well-being in the nonprofit sector requires a collective commitment from funders to leverage their resources and influence to champion this shift. By doing so, they can help ensure that the organizations they support are not only surviving but thriving, leading to more effective and enduring social impact for generations to come.

Interested in learning more ideas on how to prioritize well-being for your grantees through your programs and funding opportunities? Check our webinar, Beyond the Check: Enhancing Grantee Well-Being for Lasting Social Impact, for more examples from other funders and nonprofit organizations.