Emergencies never wait for a convenient time. Maya Winkelstein, executive director of the donor advised fund Open Road Alliance, believes funders should support nonprofits in the day-to-day, and also help them respond to the unexpected. Too often, funders are limited by a structure that allows them to be supportive but not responsive, she says. It’s well past time to reinvent that model.
“The way most grantmaking is structured, funders dole out money in December, and nonprofits have to wait an entire year to get more. When things go wrong in April or August, there’s no way for nonprofits to quickly access capital to solve the problem,” explains Winkelstein. She has worked with Open Road Alliance since 2012, when Colorado-based philanthropist and psychologist Laurie Michaels founded the fund.
The goal is for donors to one day include contingency and risk management in grants as standard operating procedure, the way they do monitoring and evaluation.
Open Road’s model is based on speed and financial leverage. There are no deadlines, and applications are accepted on a rolling basis. The fund makes charitable grants as well as recoverable ones—both designed to help nonprofits overcome a discrete unexpected roadblock or seize an unexpected opportunity. Recoverable grants function like loans and are repaid to Open Road after a set period.
Winkelstein projects the organization will be on track to award more money in recoverable grants than charitable ones next year.
“We’ve seen a greater demand for loans than charitable grants, which may seem counterintuitive, but actually makes sense when you think it through. A basic rule of economics is you need to access capital at specific moments to grow. Sometimes that moment doesn’t coincide with grant cycles, so a bridge loan can cover the gap and allow an organization to seize the moment. Moreover, a recoverable grant allows grantees to build their credit history, which serves them much better in the long term.”
In addition to its charitable and recoverable grants, Open Road Alliance launched The Unexpected Fund, a 1:1 matching fund to encourage other donors to fund unforeseen obstacles during a project’s implementation. The goal is for donors to one day include contingency and risk management in grants as standard operating procedure, the way they do monitoring and evaluation.
For funders and grantees to straight talk about risk, there has to be trust and transparency. Open Road takes a customer-service approach to make the application process one of thoughtful reflection rather than a hurdle to jump. The “application” is largely a conversation to discover what information is missing and determine if a relationship is a good fit for both sides, says Winkelstein.
For funders and grantees to straight talk about risk, there has to be trust and transparency.
“One of our grantees, Splash, does clean water sanitation in India and China, and we were talking through a problem they were facing. Because we’re generalists—we’re not experts in any one focus area or geography—we ask a lot of questions. We finally got to a point where the grantee said, ‘We need to get off the phone because we can’t give you answers.’ The conversation forced them to rethink and revise their strategy. That wouldn’t have happened with a traditional paper-application process.”
With its demand-led model, Open Road serves a range of grantees instead of focusing on a few predetermined issue areas—something that makes the fund stand out in the philanthropic market. Most applicants come through referrals. Winkelstein and her team use an investment lens instead of a charity one to analyze their work and facilitate impact.
“We don’t have ideas of how to solve the problems of the world—poverty or cancer or education reform—and, if we did, they probably wouldn’t be as good as ideas from people who have spent 20, 30, 40 years on the ground doing that work,” says Winkelstein. “What we do have is money. So where is that money needed now?”