Top Five Ways Funders Are Using Standards for Excellence in Grant Making

By: Amy Coates Madsen, Director, Standards for Excellence Institute®, Maryland Nonprofits

As a foundation executive, you have a multitude of nonprofits vying for your support. You must decide where your investments will have the greatest impact. What if you could be certain that grant applicants are operating in an upright, accountable, and ethical way?

Funders are committed to ensuring each project they fund is successful, achieving anticipated impacts proposed in the associated grant application. However, each day we read articles about distressed nonprofits ceasing their operations. Nonprofits are shutting their doors for many reasons, including conflicts of interest, a lack of fundraising, ineffective boards, or other improprieties. 

You, as a foundation executive, can eliminate uncertainty of whether the nonprofits you support are operating in an upright, accountable and ethical manner. There is a way for you to know if applicants have appropriate internal controls in place, have a comprehensive advocacy policy, and do all they can to avoid conflicts of interest.

The Standards for Excellence Institute helps nonprofits live by the Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector, a set of 67 standards for good nonprofit governance and management. The Standards for Excellence Institute offers a host of high-quality educational materials and training programs to help nonprofits achieve and embrace these leading standards. Organizations demonstrate to funders (and everyone else!) that they live by these high standards by participating in the Institute’s accreditation and recognition programs. Nonprofits that earn the Seal of Excellence can display it prominently and it also becomes part of their GuideStar profiles.

Funders and foundation executives across the country are implementing these five steps to ensure the success of their grant applicants.

1.) Providing support to nonprofits interested in Standards for Excellence training or accreditation.

The Community Foundation of Northeast Alabama (CFNEA) offers training and coaching for organizations interested in being accredited by the Standards for Excellence Institute®, and sets aside additional funding available exclusively for Standards accredited organizations.

“It is imperative that not-for-profits of all sizes be effective, efficient, credible and transparent as they strive to meet critical community needs,” says Jennifer S. Maddox, President and CEO of the Community Foundation of Northeast Alabama. “We believe not-for-profit organizations are our partners in achieving the mission of the Community Foundation of Northeast Alabama. The Standards for Excellence® accreditation gives us confidence in the grants we make.”

2.) Asking if an organization has earned the Seal of Excellence as part of the proposal or grant application process.

In Annapolis, the Community Foundation of Anne Arundel County has added a question about Standards for Excellence achievement to its grant applications. Melissa Curtin, Executive Director, stated, “Our confidence in an organization's focus on efficiency, effectiveness, integrity and transparency is increased significantly when an organization has earned the Seal."  

3.) Awarding extra points or extra credit in the review process for organizations that have earned the Seal of Excellence.

Prince George’s County Department of Social Services (PGDSS) is awarding extra points to organizations that receive the Standards. Additionally, the Prince George’s County Department of Housing and Community Development requests the list of Standards for Excellence accredited and recognized groups when they are undertaking their grants review process.

4.) Sponsoring cohorts of grantees to get consulting support to meet the Standards.

Kaiser Permanente of the Mid-Atlantic States is sponsoring a cohort of organizations in Baltimore to strengthen their governance and management capacity and earn the Seal of Excellence, combined with leadership development and peer learning.  T. Rowe Price Foundation is also sponsoring a cohort of organizations West Baltimore to strengthen their capacity, in part, utilizing the Standards for Excellence. 

5.) Referring nonprofits to the Standards resources such as the self-assessment, financial policies, or board composition analysis. 

The Standards for Excellence program offers a variety of resources to help nonprofits fulfill their missions effectively. For example, members of the Standards for Excellence Institute can access a wide array of model and sample policies, templates and governance and management tools so that they can live by the tenets of the Standards for Excellence. When nonprofits implement these resources, foundation executives can ensure that organizations are using best practices. Foundations can support nonprofit grantees efforts to access these materials by underwriting their membership in the Institute or in one of the Institute’s licensed replication partners.  

The tenets of the Standards for Excellence are implemented across the country in organizations of various missions, budget sizes, and target populations.   In May 2017, Leadership Roundtable with involvement of the Standards for Excellence Institute, held a two-day Standards training program for representatives of the Archdiocese of Indianapolis. Standards for Excellence resources are circulated in events such as these, ensuring that organizations of all interests are aware of best practices and procedures that should be followed.

It’s time to take a simple step toward eliminating some of your uncertainty about potential grantees. Begin asking applicants about their participation in the Standards for Excellence program.

Adapted from blogs originally posted on Peak Grantmaking and The Association of Baltimore Area Grantmakers in 2017.

About the Author
Amy Coates Madsen is the Director of the Standards for Excellence Institute, a national initiative to promote the highest standards of ethics and accountability in nonprofit governance, management, and operations, and to facilitate adherence to standards by all organizations. The Standards for Excellence Institute is a program of the Maryland Association of Nonprofit Organizations where Amy has served for more than twenty-two years.