When should a foundation start thinking of moving from two to three? Most relations between funder and recipient are of course binary, involving two parties. But sometimes a funder might provide resources to a recipient in between the funder and another recipient. The awkward term “intermediary” is often used in these circumstances where a funder might grant to an organization which can perform diverse tasks for both the funder and an ultimate recipient: regranting, fiscal sponsorship, capacity building, platforming, fund pooling, advocacy… the list goes on.
There are many examples of intermediaries in Canada across a range of purposes. Community foundations, united ways and donor-advised fund foundations help funders by passing funds through to recipients. Organizations such as Community Foundations of Canada and MakeWay create fiscal sponsorships and capacity building platforms. The King Baudouin Foundation Canada helps donors by funding cross-border projects. Government funders also use intermediaries frequently to select recipients and distribute funds. Community Foundations Canada, United Way Canada and the Red Cross were intermediaries for the federal Community Services Recovery Fund. Another federal fund, the Investment Readiness Program, partnered with multiple nonprofit organizations as intermediaries to convene, educate and pass through funds to social purpose organizations.
There are collective or pooled funding intermediaries such as the Clean Economy Fund. There are backbone organizations such as Vibrant Communities Canada. Regional networks such as the Ontario Nonprofit Network and national groups such as Philanthropic Foundations Canada, Environment Funders Canada and Imagine Canada have also been around for years as intermediaries to convene, educate, advocate for and sometimes directly fund the charitable sector. More recently, as philanthropy in Canada has begun to focus more on racial injustice, inequality and systemic barriers, new intermediaries such as the Indigenous Peoples Resilience Fund and the Foundation for Black Communities have been launched to represent and to support Black and Indigenous organizations and communities directly.
Many charitable funders in Canada have used intermediaries as a channel to grant to non-charities. The recent changes to the Income Tax Act now provide more flexibility for charitable funders to grant directly to non-charities. But it is unlikely that the role of intermediaries will lessen in importance because of the many ways in which they can offer services that go beyond the act of re-granting. Indeed, the change in the law may provoke more foundations to ask themselves about how they can use intermediaries to grant to organizations in communities where there are few charities but where they know there is more social and systemic injustice.
Given the importance of intermediaries in philanthropy it is surprising that not more has been written about this relationship. How do you choose when and who to fund? What are the complexities involved in moving from a single relationship to multiple relationships? A topical new report Working with Intermediaries Strategically has been released by the Robert Wood Johnson Foundation, authored by Cynthia Gibson and Maria Mottola, philanthropy consultants. This report offers a new perspective and a valuable approach for Canadian foundations who might want to consider why and then how they might want to include intermediaries in their granting.
The authors reframe the question by broadening the lens from what funders want to what intermediaries and others in a community might want too. In other words, they suggest that funders should think of working with intermediaries not just in transactional but in relational terms, depending on what both the funder and the intermediary want to accomplish. They point out that “the term intermediary is itself being questioned, with some preferring the word partners to imply that the foundation and the intermediary have similar goals, intentions, and strategies and are working together to achieve them…This conceptualization sees each partner as having assets and resources as well as needs and affirms that naming and exploring these reciprocal relationships will lead to better structures and outcomes for our common mission-focused work. “
Specifically, say Gibson and Mottola, “funders need to take a more holistic view of not only what they need but also what organizations, networks, movements, and fields need to achieve their goals and then working as partners with grantees to determine how intermediaries can help do that.” Their report is based on interviews with both funders and intermediaries, from whom they quote extensively, so that much of what they have to say is drawn from experience. One respondent clearly summarizes the broader relational perspective brought by Gibson and Mottola: “funders need to start by thinking about the intersections between the issues they want to address, which will determine the kind of groups and networks to consider. Who is active in that intersection? Is it important that they have a racial justice lens? Who can we partner with? Who are other funders supporting? Where’s the energy in the donor community? Basically, what does the space or ecosystem look like as a whole and where are there gaps and opportunities to strengthen it?”
A practical contribution offered by Gibson and Mottola is a tool for funders to use in considering whether to work with a partner. The tool starts from the traditional premise of identifying a purpose for which the funder believes it needs an intermediary. This could be tactical, strategic or relational. This is already a helpful distinction to make. The tool then prompts the funder to think about questions aimed at encouraging deeper analysis about the why behind the presumed function of the intermediary. These questions will be immensely helpful to provide a deeper and more reflective conversation by foundation staff or board members as they think about when and why to seek out a third party in their philanthropy. Intermediary partners are an important component of the philanthropic ecosystem. A thoughtful approach to “third” party granting should be part of an effective philanthropic strategy.