There have been many changes in grant making and management over the last few years, not only in the allocation of grants but also, the flexibility that grantees have in using them. New ways of funding continue to emerge such as the use of cryptocurrency, among other technological developments. This article provides an overview of several trends we can expect to see increasing over the coming year.
Increased Flexibility
Grantees have more flexibility in how they use their funds than ever before thanks to an increase in general operating grants. This trend emerged as a result of the pandemic, with priorities shifting to economic recovery and the flexibility required in order for that to happen.
A survey by Exponent Philanthropy and PEAK Grantmaking revealed that 53% of funders changed their approach in order to directly impact individuals affected by the crisis, (which tends to happen during a recession) and 41% said they were funding non-profit organisations outside their usual portfolio. Many organisations intend to continue this approach, with the minority stating they will return to programmatic grants.
Funders have also been making changes to active grants. Exponent Philanthropy sent out surveys to their partners in order to gather information about changes needed to their active grants due to the impact of COVID-19.
Their Texas-based partner, Urban Harvest, needed to set up drive-through versions of their farmers’ markets due to the pandemic, and changes to their active funding made this possible. As the world continues to experience economic instability, this type of flexibility is likely to continue for some time (in addition to more flexible reporting requirements).
Increased Funding
Funders are increasing their giving levels due to inflation, including the awarding of multi-year support grants. Since the pandemic, 27% of funders have been awarding such grants, of which, 68% intend to continue. Others are planning to increase their giving through one-off higher payments and ongoing baseline increases. Doing so will help to relieve the discord between whether to pay support staff more or invest more in programmes.
Cryptocurrency Grants
Cryptocurrency grants have been on the rise in both business and philanthropic applications. Current opportunities include Ethereum grants for open-source development, as provided by ConsenSys Grants. This organisation funds projects in areas such as “core infrastructure, social impact, improved developer tooling and UX, security, and access to education.”
While the application of cryptocurrency grants is currently narrow, it is gaining traction along with the more widespread use of digital currencies on the whole. More organisations are accepting payments and donations in the form of cryptocurrencies and various research confirms their overall increased use, with some studies predicting that by 2030, there could be one billion crypto users.
Organisations will need to develop strategies for managing the risks that result from the volatility of cryptocurrencies. There are advantages of holding the funds in their digital form, such as transparency regarding spending (potentially reducing the administrative burden of reporting), and easier and cheaper international transactions. However, converting crypto to cash straight away is often the preferred option, and is often necessary.
Nobody knows whether 2023 will be the year in which cryptocurrency grants truly kick-off, but the signs point to growth in this area in the near future.
Diversity, Equity, and Inclusion
This is not a new trend, but we can expect to see it continue to be a focus in the upcoming year. Funders are requiring proof that grantees are implementing DEI practises, and regulatory changes in some regions are helping to make a difference in this area. As a result, more organisations are reviewing their policies in order to increase their chances of securing funds.
Technology Trends
The grant management software market is expected to have had a CAGR of 12.0% between 2020-2027, with NGOs, CSR activities, university research projects and Small-Medium Enterprises contributing significantly, as well as the use of Artificial Intelligence and cloud technology within these systems.
Increased Automation
Automated grant management processes are becoming increasingly popular as they make the grant application process more efficient and cost-effective, helping grant managers streamline their workflow and reduce costs associated with manual data entry.
Increased Software Adoption by SMEs
The adoption of grant management software solutions in Small and Medium Enterprises (SMEs) is increasing, helping these organisations to improve operations and reduce costs. Due to an increase in the number of SMEs in developing countries, there is an increase in the adoption of the technology in those regions.
Increased Reliance on Data for Decision Making
Data analysis will play an increasingly important role in grant management as organisations look to leverage data to make more informed, and more objective decisions. As a result, grant managers will need to become familiar with data-driven decision tools and analytics software.
Analytics helps in many areas. Aside from overall efficiency, it makes it easier to demonstrate the use of funds, prevent funding bias, and build a clear picture of how grants are benefiting communities, developing greater trust between all parties.
Summary
A few key trends that emerged as a result of the pandemic are likely to continue into 2023 and beyond. These include greater flexibility with trust-based funding, as well as an increase in the funds awarded due to inflation.
Cryptocurrency grants are growing in prominence alongside the overall increased adoption of digital currencies, and DEI remains an important focus. Finally, more organisations are seeing the benefits of automating their processes and making data-driven decisions.
Our cloud based grant management system lets you manage your entire grant lifecycle with ease. To find out more about how it can help your organisation, contact us today.
