Earlier this month, F. Javier Torres and Leila Tamari wrote a piece on shared power and transparency in grant making for Inside Philanthropy. They were reflecting on some of their practices over the last decade at ArtPlace America’s National Creative Placemaking Fund.
One of the things that caught my eye was their discussion of memorandum of understanding (MOU) with grantees. I had written about MOUs vs Contracts for ArtsHacker about three years ago where I mentioned that MOUs generally aren’t legally binding where contracts are.
Despite the fact they were granting significant sums of money to people, Torres and Tamari say it is that non-binding characteristic that lead them to use an MOU versus a grant agreement.
…we developed customized memorandums of understanding (MOUs) instead of using grant agreements. We chose MOUs because they are intended to be jointly negotiated. They allowed us to share power and build consensus about our relationship and expectations of each other (beyond the financial investment). Through this back-and-forth process, funded projects could request non-financial resources in support of their goals.
While using MOUs was a step in building a more equitable power dynamic, funded projects rarely took advantage of this opportunity, and we recognized we still had the ability to “reject” a request as the holder of resources.
Even though the use of MOU didn’t solve issue of an unequal power dynamic as they had hoped, it struck me that this was a benefit of MOUs I hadn’t spoken about in my original ArtsHacker article. Though as I had written in another ArtsHacker article, even though contracts are supposed to formalize an agreement at the end of a discussion rather than be used as a sort of bludgeon at the start of the conversation, contracts are often employed in this latter role.
So if you want to avoid having either party feel like their options are being limited from the outset, perhaps starting the conversation with the intention of creating an MOU is the best approach. As the conversation evolves, you may feel that the relationship is better formalized with a contract instead.
Granted this is probably overly complicating things because both parties are likely to realize their arrangement really requires a contract from the outset, but starting with an MOU mindset may be more conducive to a constructive relationship.