When Projects Flounder: Coming to the Rescue When Good Grants Go Astray

What warning signs might alert you that a project is floundering? In this guide, grant makers recount their experiences with troubled projects and tell how they responded - or how they wish they'd responded. With the benefit of hindsight, veterans describe what they learned and offer advice on the most effective and timely way to handle distress signals.


  • Recognizing the warning signs
  • Deciding whether to intervene
  • Shaping your response to the situation

What's in the Guide?

  • Introduction: Every floundering grant flounders in its own way, and each one calls more for judgment than for technique alone.
  • Varieties of Floundering: Some grants flounder just because the program design or implementation plan had some flaws. Those tend to be the easier ones to fix. The other two types of troubled grants are usually harder: those where the grantee has organizational or management problems, and those where the grantee and grantmaker have different (or even conflicting) values. In this guide, a group of grantmakers share personal experiences with each type of floundering grant.
  • Looking for Warning Signs: A few warning signs can help grantmakers distinguish between fleeting or momentary problems and those that point to greater trouble ahead. When grantees turn up with chronic cash flow problems time after time, or when they start to engage in a desperate chase for dollars, or seize on dubious funding breakthroughs (poorly linked to their core mission), something deeper is likely to be wrong. When you sense that the grantee's board of directors is inattentive, or its founder suffers from major blind spots, you may be seeing signs of trouble. Most of all, trust your own inner feelings when they start to nag at you — even if the nagging isn't yet specific or clear. Several veterans recall the moment when they saw the "trouble" signals begin to flash. We include a miniCase on page 6 of the guide.
  • Deciding to Intervene: When a grant starts to flounder, grantmakers must choose whether to treat it as a failure or to stick with it and correct the problems. When grants are large or strategically important, when the funder feels a special obligation to the grantee, or when the grantmaker represents a foundation that doesn't mind intervening in grantees' affairs, it may be particularly important — even necessary — to rescue a troubled grant, rather than writing it off. This section describes how some funders make that decision. We include a miniCase on page 9 of the guide.
  • Tactics for Intervening: If you decide to try to rescue a floundering project, grantmakers argue that it helps to get help from your colleagues and superiors, from other funders, and from consultants — but also to stay involved yourself. They also advise that you make the issues institutional, not personal, to avoid provoking a defensive or evasive response from the grantee and from yourself. In some Cases, it helps to engage the grantee's board. But above all, be sure to be aware of the power imbalance, and use your power judiciously. While you're at it, you can try to create opportunities for learning so the next troubled organization or grantmaker might benefit from your experience. We include a miniCase on page 13 of the guide.
  • takeaways
    Lessons from Grantmakers on When Projects Flounder

    What did grantmakers who contributed to this guide most commonly wish they could go back and do over? Almost all of them expressed regrets about due diligence — which would have enabled them to steer away from trouble, or to be better prepared for it if they were still committed to the grant.

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  • takeaways
    What Grantees Wish Grantmakers Knew: Avoid Mixed Messages
    • Problems are stigmatized.
    • Help-seekers can be punished.
    • Don't be too polite.
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  • takeaways
    What Grantees Wish Grantmakers Knew: Work on the Underlying Relationship
    • Work on the underlying relationship.
    • Encourage candor.
    • Don't make it solely a business relationship.
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  • takeaways
    Talking Past Each Other: Conflicting Strategies

    Misunderstood and conflicting strategies have their roots in miscommunication — as grantmaker and grantee misunderstand each other’s underlying intentions, make assumptions about their compatibility, or withhold nagging doubts about the prospects for the grant. And since the trouble is really one of conflicting judgments or preferences about strategy — not necessarily a problem of performance — the solution requires a new commitment to thoughtful dialogue.

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  • takeaways
    Intervention Tactics

    Don’t go it alone. Given how difficult it can be to find the right intervention strategy, it can be especially helpful to involve colleagues in your assessment of the situation and review of options. They can act as sounding boards and provide some perspective if you’re in danger of underestimating or overestimating the gravity of the problem.

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  • takeaways
    Deciding to Intervene: When the Foundation Needs the Grantee

    Strategic importance of the grant: While every grant is made in the hope that it will make an important difference, some grants are obviously more important than others to the grantmaker’s strategy and therefore warrant more attention.

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  • takeaways
    Deciding to Intervene: General Approaches

    Large-scale grants: While most grantmakers can live with the reality that not every grant will lead to flawless work, grantmakers who faced the possibility of an especially large flounder understandably felt they had to get involved.

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  • takeaways
    Trust Your Gut

    Many grantmakers sensed trouble even in the absence of clear warning signs, describing “nagging feelings, uneasiness, or a sense of foreboding.” In most cases, the nagging feelings were followed not by program or organizational problems — but by conflicts over strategy or values.

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  • takeaways
    Floundering Warning Sign: Founder Blindspots

    Founders of nonprofit organizations are often rightly credited for their vision and determination in molding a mission into an organization, and almost as often found to be ill-suited for the job of running that nonprofit over time.

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  • takeaways
    Floundering Warning Signs

    Chronic cash-flow problems: Most nonprofits, especially small or new ones, have limited cash reserves and high uncertainty about the timing and sources of revenues, so a reasonable grantmaker will not take occasional cash-flow problems as a sign of financial distress. But chronic cash-flow problems are almost certainly a sign of deeper trouble.

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  • takeaways
    Varieties of Floundering

    There are three prevalent types of floundering — each of which exhibited different warning signs, called for different interactions, and even created different dynamics in the grantor-grantee relationship:

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This guide is designed to help grantmakers think about how they handle troubled grants and ways they can navigate through them more effectively. You may find it useful to review this guide at different times, including:

  • When you are just starting out in the role of grantmaker
  • When you recognize a grant may be floundering but aren't sure why
  • When you look over a period of grantmaking, and want to reflect on your role in these complex interactions

As you work through the issues raised in this guide, you might find it helpful to share the guide with others who can be important to your success. For example:

With Your Board 
If your board considers individual grants, either routinely or periodically, the members might find it helpful to review past problems in light of this guide, or to decide how to respond to floundering grants that may emerge in the future. You could ask them to read the guide with questions such as these in mind:

  • Do we have the kind of relationship with our grantees that makes it possible for us to spot warning signs in time, and to respond effectively?
  • What kinds of problems have we encountered most frequently, and how have we responded? Were those responses as productive as we would like?

With Grantees 
This guide may not be helpful to share with grantees in the midst of a floundering situation. It was written mainly with the grantmaker's needs and responsibilities in mind. But under less stressful circumstances, it might be helpful to share the guide with certain grantees for a candid discussion about how both parties should respond if trouble arises, or for a discussion about how both of you have reacted to past problems and what that experience has taught you. These questions might be relevant:

  • What can we do to be certain that both the grantmaker and grantee have enough information about the progress of a grant without getting in one another's way?
  • Do the interactions between grantmaker and grantees produce the kind of trust and free exchange of ideas that will make trouble less likely, or make problems easier to resolve?

With Colleagues and Advisers 
You might find it helpful to discuss this guide with other grantmakers, or with experts who advise you on grantmaking, either informally or in organized discussion sessions. The guide could prompt a discussion about:

  • How others have handled floundering grants, and how that experience compares with your own and with those in this guide.
  • What potential problems appear to be on your horizon, or on theirs, and how you might prepare for (or prevent) those possibilities.

As a Training Tool for Those Who Aren't Primarily Funders

  • Are there warning signs of a floundering grant that might be visible to other parts of the foundation before the grant maker sees them? If so, what is the best way to respond?
  • When a grant seems to be floundering, who in the foundation (or among its advisers and associates) might be helpful in resolving the problem? And when should such assistance be called in?
  • When other parts of the foundation communicate with grantees — for example, in administrative or legal correspondence, in offering technical assistance, or in the course of program assessments — does their correspondence contribute to an atmosphere of candor and trust that will help us in times of trouble? Or do they inadvertently do things that encourage grantees to conceal problems?