Feature

Although many in the private philanthropic community do not yet realize it, the philanthropic sector is scheduled for an electronic revolution. Major federal funders such as the National Science Foundation (NSF) and the National Institutes of Health (NIH) are moving inexorably toward all-electronic grantmaking systems. Now is the right time for the private philanthropic community to take advantage of the maturing of the Web and exploit its potential to improve communication with grantees and a wider community and make internal operations more efficient.

While the early innovators and adopters in the private philanthropic sector have reaped the benefits of this technology, and in some cases laid the groundwork for what the federal government is doing, the e-grants technology adoption landscape has a chasm into which the majority of the sector has fallen. According to the Foundation Center (http://fdncenter.org), there are more than 60,000 foundations in the United States. Yet, according to "Trends in Grant Management Software and Services" (May/June 2003, Foundation News & Commentary, www.foundationnews.org/CME/article.cfm?ID=2495), fewer than 2,500 foundations have adopted commercial electronic grantmaking technology. It is difficult to quantify the even smaller number of those foundations that are utilizing the web's technology and services to streamline their grantmaking processes via custom-built systems.

Gerard Brandenstein, associate director of the Camille and Henry Dreyfus Foundation, points out that consideration must be given to an "entire spectrum of assets, staff size, population served and numbers of proposals processed. The savings to a large medical foundation that is processing tens of thousands of proposals and the savings to a small community-based foundation processing tens of proposals is not a linear equation and may not reach the minimum investment required (about $50,000)." Widespread adoption of e-grantmaking will be feasible only with collaborative efforts among philanthropies. Such collaboration will not only reduce individual costs, it will lead to development of shared standards for application submission, financial reports and grant management. Grantees and grantmakers alike will benefit.

Federal Initiatives

The National Science Foundation's FastLane (www.fastlane.nsf.gov) currently receives about 30,000 applications a year. In addition to proposal submission, FastLane's features include managing proposal review, making travel arrangements for review panel participants and tracking the progress of a proposal.

For NIH, the Streamlined Non-competing Award Process (e-SNAP) is now in operation. It provides for submission of noncompeting application data via the web. The initiative is coordinated by NIH's Electronic Research Administration (eRA) Commons (https://commons.era.nih.gov/commons/). In the near future, NIH expects to offer electronic submission for many other grant types (the eRA pilot for competitive applications to NIH opens this fall). In addition, the U.S. Department of Health and Human Services (HHS) has decided that eRA shall be used for research grant administration by all HHS agencies. This includes not only grant application, but also review and management.

Both NSF and NIH are partners in the federal e-grants initiative (http://grants.gov), which is committed to the development of a one-stop electronic grants portal with access to information on all federal grant opportunities and to tools for grant submission. (Grant administration will be at the department or agency level.) Although FastLane and NIH Commons cannot yet share data with each other, the development of such crossagency sharing capability seems an inevitable next step. And expectations among grantseekers will be high for comparable electronic access and data sharing among private funders.

During these tough financial times, grantees and funders alike are looking for ways to "do more with less." As the principal federal grantmaking agencies embrace on-line grant submissions, academic institutions—the major recipients of both federal and private-sector grants—will be increasingly unwilling to maintain multiple distinct electronic and paper-based systems for grant applications.

Private Philanthropy

Development of individual electronic grantmaking systems by each private-sector funder would be wasteful and counterproductive. The result would be the worst of all worlds—a costly multiplicity of incompatible systems. David Garver, formerly the project manager for FastLane, notes that even if individualized online systems are very good, being different is a significant drawback from the point of view of grantee organizations.

The solution is adoption of compatible electronic grantmaking systems, either commercial "off-the-shelf " (OTS) products or custom software, the latter privately developed through a collective endeavor. Many members of the Forum of Regional Associations of Grantmakers already have common applications accepted by interested member grantmakers. They are accessible through the forum's website at www.givingforum.org/aboutrags/commonapplication.html, but those tend to be electronic transmission of text documents, rather than databases.

According to Forum President Alison Wiley, "Several regional associations of grantmakers have already taken searchable funder databases online, with more to come. As grantseekers get more used to doing their prospecting step on the Web, they're sure to expect other parts of the process to follow. Online or off, there's the same critical ingredient—that grantmakers come together and relinquish some personal preferences, toward a better system for all."

As noted earlier, about 2,500 grantmakers have pursued the OTS model for grant application, review and subsequent reporting. T.J. Koerner, director of research information management at the American Cancer Society (ACS), comments that "large and small agencies benefit alike from providing their overlapping applicant pool [in this case biomedical researchers] a common Web access as well as a common manner for reviewers to carry out their functions."

Other private funders are using new technologies to create custom-designed integrated information systems. Although the technological underpinnings of those systems vary, many of them are web-based and potentially capable of working together. Ideally, the result would not only be a common system among the private grantmakers, but one compatible with federal systems as well. In fact, it is essential for user acceptance that private funders achieve consistency with the federal format, as many private foundation applicants will submit alternative applications to federal agencies.

At the Howard Hughes Medical Institute (HHMI), where I served as vice president for grants and special programs from 1987 to 2000, a multiyear effort to build electronic databases for all aspects of our grantmaking culminated in the creation of a website called GrantsCentral. Grant proposals, reviewers' ratings and annual reports were submitted via this password-protected Internet portal. Other aspects of grants administration were also managed online.

The primary aims of GrantsCentral were to simplify the application process for those seeking grants and to make the review, award and administration of grants easier and more cost-efficient for HHMI. As an added benefit of such a system, it provides ready access to standardized, digitized data for program assessment. Those efforts are described in detail in the September 1999 HMS Beagle article "Adapt or Die: A Data Magnet for Science Careers—The Howard Hughes Web Initiative" (access HMS Beagle online at http://news.bmn.com/magazine).

Lessons Learned in Hindsight

Barbara Filner, who worked with me at HHMI building electronic systems and then using them to manage several programs, recalls some lessons learned. Standardizing data entry, through pick lists, for example, was essential for subsequent analysis. Setting rules for submission assured complete and eligible applications.

Once we moved to web-based systems, speed and ease of navigation were critical to acceptance by applicants/grantees, as was the ability to upload preexisting documents, such as publication lists. Our first attempt at a reporting system was awkward and slow because we assumed grantees would not have up-to-date technology—it turned out our assumption was not a good one.

Patricia Hinton, director of research administration and information services for the American Heart Association (AHA), comments that for its web-based programs, AHA used a staged approach to implement modules for promotion, application preparation and submission, automated conflict of interest checking, application assignment and review, e-mail notification, postaward communications and financial reporting. The project took nearly five years to reach its current status. For AHA, a staged approach made the entire undertaking more feasible financially and allowed segments to be introduced to different audiences at different times.

Hinton recommends the following issues be considered prior to embarking on the creation of e-grantmaking systems:

• Deciding whether to buy OTS or build a custom-designed system      
• Focusing on details when developing a system's business and functional requirements      
• Using a staged approach to allow you to learn from one component before developing the next      
• Standardizing processes before, or as, you go      
• Building on solid database foundations      
• Investing time in identifying information and functionality needed to support users      
• Announcing intentions ahead of time and giving audiences time to voluntarily adopt electronic processes      
• Planning and staffing for ongoing support for users, particularly at peak times      
• Receiving consistent, knowledgeable support from the information technology group.

No Silver Bullet

Since 2000, as a first step toward collaborative Internet strategies for grantmaking, a group of philanthropies supporting biomedical research and education has been convening meetings to discuss the use of the Internet and various software systems for program development and assessment.

Enriqueta Bond, president of the Burroughs Wellcome Fund (BWF), reminded participants at the first meeting of the importance of sharing information. She indicated that private funders could be more strategic about their investments if they knew what other organizations are doing and if they had an understanding of current trends in research training. (For a summary of the February 2000 meeting, see www.bwfund.org/news/special_reports/
special_reports_the_role_of_the_private.html). The 2000 meeting provided a starting point for ongoing discussion on what types of mechanisms those organizations could establish for developing complementary e-grants systems and sharing data.

In a follow-up to the 2000 meeting, a June 2002 Research Funders' Conference on Electronic Grantmaking underlined the benefits in terms of efficiency, convenience and accuracy, as well as the drawbacks in terms of costs. (For a summary of the conference proceedings, see www.bwfund.org/news/special_reports/index.html.)

It is important to remember that technology is not a silver bullet. As organizations evaluate their unique needs, they must recognize the magnitude of the transformation they are promoting by implementing an e-grants system. Training and technical support are essential for staff and applicant institutions and individuals.

Mary Taylor, president of the Arlington Group, notes that a good e-grants system requires not just an investment of money, but also an investment of time—time to ask all the necessary questions and analyze the answers, time to step back from the current grantmaking process to see if there is any room for improvement, time to integrate with other systems in-house and to move data from legacy systems, time to train the staff and communicate to all constituents the new procedures. An implementation schedule for online application, review, progress reports and grants management modules can be four months, or it can be one year or more, depending on all the variables above, budgetary constraints, the choice of products and services and the culture of the organization.

Done right, e-grants systems can dramatically improve a grantmaker's effectiveness and efficiency, while also improving outreach and accountability. It may initially cost between $50,000 and $1,000,000, depending on the scale of the foundation's operations. Ongoing expenses, which will vary depending on the size of a foundation's IT group, can run between 10 percent to 30 percent of the initial investment, plus the cost of developing additional modules as necessary.

While e-grantmaking might not permit a reduction in staff numbers (typically staff that handle paper applications are retrained to support electronic application receipt and processing), when done right, e-grantmaking will increase the capacity of the system and reduce mailing and storage costs. AHA's Hinton observed that "improvements in depth, breadth and consistency of communications with our audiences, convenience for our audiences, accessibility, efficiency, standardizations of processes, completeness and quality of information on our programs and applicant characteristics, are the real values of automation."

A Full-Service Common Database

At HHMI we also took advantage of newly available electronic and web-based software to generate a comprehensive database of funding opportunities for science education and training called GrantsNet (www.grantsnet.org). Now maintained by the American Association for the Advancement of Science, GrantsNet offers any member of the public a freely available, fully searchable database of more than 1,000 programs.

In addition to offering an important resource to grant seekers, GrantsNet also provides a useful service to funders. Any funding organization can access the database to find out what types of programs are available in a specific area of science education, get detailed information about those programs, link to the funders' websites, and obtain contact information for the people who run the programs. This information is invaluable when deciding whether to establish a new program or evaluating the effectiveness of an existing program. The GrantsNet site now has approximately 55,000 visits per day, most of which are likely to be from trainees or junior faculty seeking financial support. As this technically sophisticated generation progresses in diverse careers, members will expect comparable sophistication in all aspects of grantseeking.

Assessing Value and Impact

The grantmaking process doesn't end with a successful application. Tracking the progress of awardees and reporting on outcomes are additional components that lend themselves to a coordinated electronic approach. A recent report from the Center for Effective Philanthropy (www.effectivephilanthropy.com), Toward a Common Language: Listening to Foundation CEOs and Other Experts Talk about Performance Measurement in Philanthropy, concluded that private nonprofit organizations are striving to determine how to assess the value of their grantmaking programs and determine whether they are having an impact in the areas identified as priorities.

The current overall lack of standardization adds confusion to interpretation of outcomes and increases the statistical noise inherent in data analysis. The Internet and electronic databases can be harnessed to solve those problems and serve to promote knowledge management in the programs of the funder and the field.

While at HHMI, I started a collaborative study with the Association of American Medical Colleges (AAMC) to evaluate the outcomes of HHMI and other programs that train physicianscientists. Di Fang, AAMC manager of demographic and workforce studies in the division of biomedical and health sciences research, underlined the importance of establishing and harmonizing standards to make information sharing among foundations a realistic goal.

As a spin-off of the joint HHMI-AAMC project, AAMC and several biomedical foundations (The Clinical Research Alliance) are now designing a common database that builds on the early HHMI work. The database would include foundations' applicant and awardee data, AAMC medical student and faculty databases, NIH grant and trainee data, and NSF doctoral degree data. The goals of such a database are to establish and harmonize standards (e.g., the definition of "faculty member") and to share the data (anonymously) among the foundations for the purpose of program evaluation and development.

The potential exists to establish standards that all funders could use to transfer data among databases (preserving the anonymity of personal information as necessary). The ability to share data among foundations would allow powerful and comprehensive assessment of the impact of a group of similar programs. Sharing standards and formats for the key components of a grant application would also be a boon to grant seekers, who would not have to provide repeatedly the same information in slightly different formats—a time-consuming, costly and frustrating exercise. Private philanthropy can benefit from much of the standardization already mandated for federal systems such as the Grant Application Core Data Elements, X12 194 transaction set developed in the late 1990s by the Inter Agency Electronic Grant Committee (see also the April 8, 2003, Federal Register's "Notice of proposed requirement to establish standard data elements" online at www.gpoaccess.gov/fr/index.html).

However, it has taken an act of Congress (PL 106-107) and a directive from the President of the United States to streamline the federal grantmaking processes. What will it take for most of private philanthropy to do the same?

If data are to be shared, agreement on the part of all parties must define who may access which data. The applicants, for example, must have access to their individual data (e.g., institutional profile or PI c.v.) for quality control and updating. Other issues include, for example, restrictions on funders' access to data showing whether an applicant has applied elsewhere.

Overcoming Challenges and Barriers

The recent Council on Foundations July 2003 report Grantmakers Information Technology Survey Report (www.cof.org/index.cfm?containerID=187) highlights the challenges ahead. Based on responses by just over 300 foundations, two-thirds have no in-house IT professional staff; not surprisingly, many reported no capability to do technology planning. While 81 percent have grant management or gift management software, only 14 percent have an online application process. Of the latter, two-thirds have developed a custom solution, leading to a panoply of incompatible systems. The report notes "sorting out how to handle online grant applications and online donor information was the challenge/emerging issue cited most often by foundations."

The adoption of the Federal 194 data set described above might mean additional work for those who have already created their own customized systems. Existing, successful technology solutions and databases will have to be modified to adapt to the new standards. In addition to lack of IT expertise, cost looms large. Foundations also want the application system to be compatible with their financial management systems.

Anecdotal evidence confirms that creating online systems for grant management is beneficial: One large scientific nonprofit organization reported a 300 percent increase in its rate of progress report submission, while another national foundation reported a significant reduction in the amount of time spent entering application data. The lack of rigorous and comprehensive evaluation may be one reason why foundations have been so reluctant to adopt this technology.

Bridging the Divide

Despite the current economy, electronic grantmaking systems are an investment that the philanthropic sector must make. Maintaining the public trust in today's fast-paced, information-intensive world requires new approaches. Such systems can achieve effectiveness not conceivable a decade ago. Moreover, the reach of grant programs is extended, as grantmakers' abilities to assess and target the areas of greatest need improve.

It cannot be emphasized enough that when an organization takes on a leadership role in the development of e-grantmaking technologies through the Web, they also create new opportunities for assessing their own program developments, as well as sharing information.

The government, academic and private worlds have created their own portals with comprehensive, well-organized sites where users know that reliable information is only a few short clicks away. The next step is to use the Web to promote grant submissions, review and post-award management. The Council on Foundations, the Forum of Regional Associations of Grantmakers and individual philanthropists, as well as private funders and the government, therefore, should strongly consider focusing their efforts together on developing standards and websites to benefit both funding agencies and grantees.

One example of such a leadership effort is the recent online learning project funded by the Benton Foundation, in collaboration with the New York State Forum and Group Jazz. Together they are hosting a virtual conference entitled "EGovernment for All" (www.egov4all.org) from November 3–14, 2003, to explore how leaders in government, the private sector, community activism, academia and civil societies can work together to lessen the digital divide and increase online "savvy" among their constituents.

The Benton, Sloan, and Markle foundations are three of only a handful of nonprofit organizations that I am aware of that fund e-technology projects to further systemwide progress. There need to be more of such efforts, as well as attempts to include smaller foundations that cannot afford to build their own custom-designed systems or are reluctant to buy OTS products as they lack sufficient in-house IT support.

Another funding opportunity for private funders is an effort by the Government-University-Industry Research Roundtable (GUIRR) of the National Academy of Sciences (NAS), to bring the government, universities and industry together to align diverse systems. GUIRR is the convener of the Federal Demonstration Partnership (FDP), which is working with the National Council of University Research Administrators (NCURA) in a joint exploration of best practices used by private philanthropy and public charities.

FDP and NCURA have established a joint Foundations and Public Charities Task Force to work with those who sponsor research and who might be in the process of implementing or updating their electronic grants management systems. The goal is to find ways for the sponsors to align their software and web applications in accordance with the needs of the nation's research community. To that end, FDP and NCURA will host a roundtable on November 4, 2003, in Washington, DC. (For more about the Task Force, contact John Carfora, NCURA co-chair, at carfora@bc.edu or Jay Walton, FDP co-chair, at jwalton@jhsph.edu.) Additional discussions will be held in January 2004 in San Antonio and May 2004 in Washington, DC.

John Carfora and Jay Walton state that collaborative opportunities are being explored broadly with organizations such as the Council on Foundations, Council on Government Relations, The Foundation Center, National Center for Charitable Statistics of the Urban Institute, Society of Research Administrators, several regional grantmaker associations, foundations and charities.

In 1995, Pulitzer Prize-winning author and Princeton sociology professor Paul Starr wrote, "The growth of the Internet is one of the most exciting developments in the life of our culture today. But by and large, the nation's major philanthropic foundations have not been part of it.... Foundations need to adopt the new technologies of communication in part to educate themselves about developments that will deeply affect their own grant programs" ("Foundations and the Internet," The Chronicle of Philanthropy, February 9, 1995, online at www.princeton.edu/~starr/foundint.html). Web-based grantmaking is the wave of the future—the philanthropic sector cannot allow itself to be left behind.

Illustration by Elizabeth Lada