Open Road Alliance is launching The Unexpected Fund (TUF): a minimum $6 million, three-year matching fund for donors. TUF is designed to encourage other funders to integrate contingency and risk mitigation strategies formally into their operations. Open Road is offering matching grants to other funders of up to $100,000 for pre-existing projects facing an unexpected roadblock. Only funders can apply.
The Unexpected Fund provides an incentive and impetus for mainstreaming the practice of risk management and contingency funding throughout the sector. In addition to serving as one of several long-term levers to mainstream contingency and risk management practices, the Unexpected Fund will accomplish the following objectives in the near term:
1. Funding: TUF will unleash a minimum of $6 million for contingency funding purposes a financing need that is sorely lacking in the philanthropic market;
2. Practice: TUF will acclimate funders to the idea of allocating funds and establishing contingency policies and/or protocols as a natural part of the philanthropic cycle;
3. Evidence: TUF will amass a portfolio of case studies, testimonials, and data on how funders can and do address contingencies;
4. Community: TUF provides a platform to gradually build of a network of funders engaging in this arena; and
5. Impact: TUF will allow 100 projects to overcome unforeseen circumstances that would otherwise reduce impact and/or leave opportunity on the table.
How does it work?
When an existing grantee runs into an unexpected roadblock, the original project donor can nominate that grantee to receive funds. TUF will provide up to a one for one match of nominating donor resources, with a maximum matching grant of $100,000.
As part of the process, TUF will ask partner funders to: Provide two brief written testimonials at the beginning and end of the grant period. TUF will provide guiding questions pertaining to risk and contingency for both testimonials. Submissions will support ORA research and data collection, and will not be made available for public use without partner consent (with or without attribution); Share with Open Road its due diligence materials undertaken to make the grant (the original grant and the deal with TUF); and Participate in future surveys that can help Open Road track donor attitudes and actions pertaining to contingency and risk.
All TUF grant applications should adhere to the following core eligibility criteria. Eligible proposals must meet all four criteria: Mid-Implementation; Unexpected; Discrete; Donor co-funding.
Roadblocks and obstacles dont wait for grant cycles. As such, applications to TUF will be accepted on a rolling basis. The application process is streamlined to go from initial conversation to approval within two six weeks with the following four steps:
1. Initial Conversation: The process begins with an initial conversation with the Funder and either the Fund Director or Portfolio Manager, to walk through the current unexpected situation.
2. Two-Page Application: Next, Open Road invites the Funder to apply for matching funding. Much of the information will already be contained in the Funders original materials.
3. Final Call: Once the application is submitted, Open Road will schedule another call to give feedback on the application and answer any outstanding issues for the grant and of the Funders operations
4. Final Decision: The Open Road team will then confer internally and make a decision on whether to approve the funding request within one week of the second Funder conversation.
As the volume of grants will be demand-driven, there is no specific allocation of the $6 million fund year-to-year. Given historical data, Open Road anticipates deploying up to $1 million in Year One, $2.5 million in Year Two, and $2.5 million in Year Three. While matching grants are capped at $100,000, Open Road expects the average grant size to fall between $50,000 - $75,000 for a total of approximately 100 grants over the lifetime of the Fund.
Building Evidence and Community
As TUF builds a portfolio over time, TUF will amass a portfolio of case studies, testimonials, and data on how funders can and do address contingencies; and serve as a platform to gradually build a national network of funders engaging in this arena.
To foster these objectives, Open Road will collect quantitative and qualitative data from co-funders and non-profits as part of the application process. Aggregate data and analysis will be made available to the public on an annual basis.
Open Road will also release case studies and testimonials on a quarterly basis beginning in Q3 of 2015. This and other evidence will be available on an open-source basis via the Open Road Website and shared directly with all funders who partner with in the initiative. Through collection and analysis of this data, Open Road looks forward to identifying and sharing best practices in Q3 of Year 2 and again upon completion of the Fund.
The world is unpredictable. No amount of planning can prevent unscripted events from causing disruption. However, the philanthropic financial market is not structured to deal with the unexpected.
Most traditional grantmaking programs have inflexible, restrictive, slow, and unwieldy procedures for releasing funds. Many do not provide funds outside of their fixed grant cycles at all. These practices leave grantmakers unprepared to help non-profits who need funds quickly to manage contingencies.
The result? Many projects stall or stop completely. Alternatively, the implementing NGO pushes forward on insufficient resources or diverts other allocated funds to the detriment of efficiency, effectiveness, and ultimately impact. The funders who invested in the project at the outset forfeit their social return alongside the non-profits and beneficiaries who may suffer even more severely.
In a community of philanthropists seeking to maximize impact through deploying capital, this structure is a poor investment proposition, and one that we can change.
Yet, before we can change we need to acknowledge. Even more concerning than this status quo of an inflexible and inadequate finance structure is the reality that risk is not even being discussed among funders. In philanthropy, RISK is a four-letter word.
NGOs go to volatile areas, because thats where the need is greatest. They're intrepid in the face of hardship, danger, and discomfort. But, confronted with a potential donor, theyre terrified to mention risk. Why? Because NGOs know that most donors are looking for a sure thing; a project thats perfectly planned to the last detail and the last penny; executed flawlessly without glitches or delays. This is unrealistic.