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The Effective Exit: Managing the End of a Funding Relationship

December 1, 2007

In grantmaking, is there such a thing as the good goodbye? Yes, say contributors to this guide, who have found ways to plan for exits upfront, clarify expectations with grantee organizations, and overcome the tensions that so often arise. Learn how to use the end of a funding relationship to boost a grantee's capacity, find new sources of support, and even multiply the value of the foundation's investment.HighlightsExit strategies used by four grantmakersLearning from spend down foundationsWhen you're the one who's exitingBreaking the ice with new fundersWhat's in the Guide?Exiting Is Normal: Saying goodbye to grantees is an inescapable part of the grantmaker's role. To do it well, our contributors told us, it's important to think upfront about an exit scenario that advances the aims of the grantee, the foundation, and the larger field. Put the exit on the table from the start, they said, and keep it there as a predictable phase in the funding relationship.Communicating Clearly with Grantees: For a grantee, the exit of a funder is always bad news, even when it's planned in advance. A grantmaker can set a positive tone by communicating consistently -- over the course of the grant and as the end approaches. When everyone at the foundation sends the same message, that's even better.Strengthening Grantees' Organizational Capacity: Grantmakers often find themselves thinking hard about the future of a grantee organization as an exit approaches, especially if the grantee is relatively new, small, or unstable. Here are some ways to help: talk regularly with grantees about their organizational capacity, suggest using consultants for business planning and other services, and provide grants to pay for those services.Helping Grantees Find New Funding: Ah, the bottom line. What grantees really want and need is help with fundraising. A matching or challenge grant can work well in the right situation, grantmakers said. Yet even without special funding, there are simple, powerful things you can do to put your grantees in touch with new funding prospects on a regular basis.Maximizing the Impact of the Grant: An exit can be an occasion to look back on what was accomplished, distill lessons, and disseminate what was learned. To let grantees do those things, some funders offer special support through transition or tie-off grants. Grantmakers' own efforts to strengthen the field can also extend the value of a foundation's investment.Special Cases: When the Exit Isn't Normal: And then there's the exit where thinking upfront just doesn't apply: the exit where something goes seriously wrong or the funder's own situation changes dramatically. These are the cases that test a grantmaker's poise, acumen, and ingenuity.

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