The Freedom Fund is a Humentum member
We talk a lot about the beginnings of donor-grantee relationships, but the endings do not always receive the same level of attention. This may be because, while new partnerships come with excitement, donor exits can be shrouded in tension and guilt.
At the Freedom Fund, provide grants and institutional strengthening support to grassroots organizations doing anti-slavery work in the Global South. We are committed to building long-term relationships with our partners, and our ultimate goal is to support them to shift systems of exploitation.
However, even with long-term support, we sometimes reach a point where phasing down or ending an investment makes the most sense. As a collaborative fund, we are charged with making the most impactful use of limited resources and are constrained by the funds we can raise. We know the detrimental effects donor exits can have on organizations, especially those working in unstable contexts and on under-resourced issues. When we don’t exit thoughtfully, we risk reversing some of the impact of the work and harming the organizations and communities we aim to support.
Learning from experience
From 2015 to 2020, the Freedom Fund supported NGOs addressing the commercial sexual exploitation of children in Kathmandu, Nepal. We decided to phase down our funding after research that we commissioned found that the scale of the problem had diminished significantly compared with earlier estimates, likely due, at least in part, to our grantees’ successful advocacy efforts with the government. We informed partners over a year in advance and provided phase-out grants and non-financial transition support.
This was our first time closing a grant-making program, and we learned a lot. Although we prioritized communication and took steps to convey how seriously we took our decision, some, perhaps inevitably, expressed concern about their future operations.
These reflections led us to think about exits more rigorously. We developed principles that have now guided us in closing programs in India and Thailand and in developing new programs.
Planting seeds
Exit planning starts before we launch a grant-making program. We try to give partners clarity about the potential length of the partnership and proactively embed institution-building into our strategy.
One way to do this is by strengthening organizations and coalitions. For instance, investment in internal systems and staffing, in addition to project funding, allows grantees to scale and sustain their work. All our grants include support for organizational resilience. We also bring technical assistance when appropriate, encourage systems change approaches, proactively bring stakeholders together to foster collaboration, and fund efforts to help others adopt effective interventions.
We aim to ensure that grantees can sustain their essential work without significant disruption by the time a program ends. For this reason, our grants rarely constitute more than 30% of an organization’s annual budget.
Deciding when to exit
We have found it helpful to establish exit criteria that reflect why we would phase down an intervention. The Freedom Fund looks for the following milestones before deciding to exit:
- There has been a significant reduction in the prevalence of modern slavery in the target geography.
- There has been a step-change in the strength and sustainability of civil society, including in organizational infrastructure, collaboration, and financial stability.
- There has been a significant change in the practices of government or business — or the policy and regulatory environment — such that a key part of the system underpinning modern slavery has shifted.
- We have identified well-evidenced intervention models that are known to be successful at scale or have the potential to be scaled.
- We see a growth in investment and interest from other funders to support this work.
Unfortunately, exits are not always planned or voluntary, such as in situations of emergency or government restriction. When the continuation of funding isn’t possible, we try to exit as smoothly as possible and help partners identify other sources of funding.
Preparation
While each situation is different, our exit strategy helps us to close programs in a manner that aligns with our values and minimizes harm to partners and communities. Our principles include setting a realistic timeframe and engaging with grantee partners and community members during the process.
We then create a detailed plan, considering the scale of funding, relationships with and between partners, and capacity building and fundraising support needed to smooth the transition. We set a timeline that integrates with our budget (e.g., providing unrestricted ‘sunset’ grants in the final year). We aim to give at least one year of notice to partners, and longer whenever possible, and communicate about the reasons for exit, what the process will look like and how to provide input. This is also a chance to work together to identify areas for additional support, such as branding or proposal writing.
We assist partners with fundraising through trainings, donor introductions, and funding for development staff or consultants. In India, we contracted filmmakers to create short films that some partners can use to promote their work. In Thailand, we helped a partner organization running a migrant worker network to supplement its income by setting up a system for collecting membership fees.
During and after exit
Throughout the exit process, we try to be flexible and honest about mistakes. We seek feedback so that we can improve the grantee experience.
If we have developed a long-term, trust-based relationship with a partner, we hope our relationship can take on a new dimension as we champion their work in other ways. We are developing new methods to share funding and learning opportunities with former grantees. Some have received grants through our other portfolios or participated in our leadership program.
Share your practices
Transparency is crucial to responsible exits, providing clarity to grantees and encouraging donors to grow. In this spirit, the Freedom Fund shares our exit principles and other learnings through Funding Frontline Impact, an online donor resource. We hope others will join us in sharing how they approach this tricky but important part of the grant-making process.
Humentum’s Operationalizing Flexible Funding Working Group: If you’re eager to shape the future of the sector and understand how your organization can be a catalyst for change, this is the space for you. Find out more.