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Harvard Business Review: How Philanthropists Can Diversify Their Grantmaking Portfolios

Harvard Business Review recently published a column by Jonathan Schreiber, Cedars-Sinai’s vice president of Community Engagement, and Erin Jackson-Ward, director of the Community Benefit Giving Office, about diversifying philanthropic grants to maximize their impact.

Diversification, a strategy used to balance investment portfolio risks, also applies to grantmaking, Schreiber and Jackson-Ward wrote in Harvard Business Review. It allows donors to support newer, more innovative organizations while hedging their bets with nonprofits focused on traditional methods of serving the community.

Grant-making during the pandemic has favored safer projects, neglecting innovation. This made sense for grants from Cedars-Sinai’s Community Benefit Giving Office because, at the start of the pandemic, when many lost their jobs, support organizations needed to fulfill basic necessities during a challenging time.

As communities return to a more normal environment, however, funders should shift their funding mixes to address new realities, needs and opportunities, wrote Schreiber and Jackson-Ward. They highlighted the categories of investments that grant-makers should target:

  • Operations—These low-risk opportunities, such as fundraising efforts via direct mail campaigns and events, might seem mundane, but they’re essential to operations.
  • Growth—These efforts target the improvement or expansion of services that help organizations establish sustainability models and deepen their community support.  
  • Risk—These opportunities to change a field or solve a major societal problem might sound intimidating, but they’re accessible for funders of any size and scale and critically important.

Because grantmaking diversification works in a variety of areas (medical research, social services, education, the arts) funders can choose a strategy that aligns with their vision and also supports grantee goals.

Click here to read the complete article from Harvard Business Review.