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Monthly Archives: November 2012

Federal agencies play a significant role in the funding of many nonprofit organizations. Their role is particularly noteworthy among those types of nonprofits — such as healthcare and human services — that rely most heavily on government grants (not all of them competitively awarded)  in their funding mixes.

 

This post explores the value of government grants and tax subsidies to the nonprofit and charitable sector, and the funding phenomena of crowding in and crowding out.

 

Federal Grants and Tax Subsidies:

In An Overview of the Nonprofit and Charitable Sector (2009) the Congressional Research Service (CRS), estimated that grants amounted to about $100 billion each year in value to the charitable sector. Federal agencies supplied about 90% of the funds; state and local agencies supplied the balance.

 

Beyond direct grants, federal tax subsidies each year were from $115 to $130 billion in value, and state and local tax subsidies were from $30 billion to $50 billion in further value. As a sum, government agencies — at local, state, and federal levels — provided a value of from $245 billion to $280 billion to the nonprofit and charitable sector via grants and tax subsidies.

 

In the four years since this study, in response to the Great Recession, the total value of federal support to the nonprofit and charitable sector has increased. At the same time, in response to the same economic phenomena, the total value of state and local support to the sector has decreased.

 

Crowding In and Crowding Out:

Federal spending in support of the nonprofit and charitable sector can stimulate support from other sources. Such government funding of nonprofit or charitable activities can serve as a signal of institutional quality. In this case, when a government agency increases funding to a specific charitable sector or organization, private funding also increases. The observed phenomenon is called crowding-in. It occurs when government spending leads to additional private sector spending.

 

The CRS has observed that: “Federal support appears to have a crowding-in effect at any level, while local support initially crowds in at low support levels but begins to crowd out at higher levels of support.” In other words, local resources, regardless of source, can only go so far.

 

Public Spending Complements Private Spending:

It’s possible that the one source of funding complements rather than displaces the other source. Over the past few decades, social welfare spending at all levels of government has risen steeply, while the rate of growth in charitable giving has remained relatively flat.

 

This trend lends weight to the argument that the government and the nonprofit/charitable sector complement one another’s resources in the aggregate, rather than act as substitutes. If they were in fact substitutes, observers would have expected that as public spending for social welfare had risen, private spending for it would have fallen.

 

Related Articles:

All four primary types of grant-making foundations – independent, corporate, community, operating – are more numerous today than at any time in the past. They differ in their shares of the sum of all grant-making foundations and in their shares of total annual giving.

 

This post explores recent trends in the United States of America in the distribution of all grant-making foundations by type and by shares of total annual giving. An earlier post explored trends in the numbers of foundations making grants to nonprofit organizations.

 

Foundations by Type:

Data available via the Foundation Center’s FC Stats site indicate that during the period, 2005-2009, independent foundations increased from 88.7% to 89.5% of all grant-making foundations. Operating foundations declined from 6.6% in 2005 to 6.0% in 2009; corporate foundations slid ever so slightly from 3.7% to 3.6%, and community foundations similarly slid from 1.0% to 0.9%.

 

Distribution by Types of Private and Community Foundations
  2005 2006 2007 2008 2009
Type N % N % N % N % N %
Independent 63,059 88.7 64,405 88.9 67,034 89.2 67,379 89.1 68,508 89.5
Corporate 2,607 3.7 2,548 3.5 2,498 3.3 2,745 3.6 2,733 3.6
Community 707 1.0 717 1.0 717 1.0 709 0.9 737 0.9
Operating 4,722 6.6 4,807 6.6 4,938 6.6 4,762 6.3 4,567 6.0
Total 71,095   72,477   75,187   75,595   76,545  

 

Foundations by Annual Giving:

The Foundation Center’s data indicate that corporate, community, and operating foundations accounted for shares of total annual giving disproportionately larger than their shares of all grant-making foundations. In 2009, corporate foundations were 3.6% of all foundations, but accounted for 10.2% of annual giving; community foundations were 0.9% of all foundations, but accounted for 9.1% of annual giving; and, operating foundations were 6.0% of all foundations, but accounted for 9.1% of annual giving. By contrast, independent foundations were 89.5% of all foundations, but accounted for 71.5% of annual giving.

 

During the period, 2005-2009, independent foundations’ shares of total annual giving rose from 69.2% to 71.5% and community foundations’ shares rose from 8.8% to 9.1%. During the same period, corporate foundations’ shares of total annual giving fell somewhat from 11.0% to 10.2% and operating foundations’ shares fell somewhat more from 11.0% to 9.1%.

 

Annual Giving Among Private and Community Foundations
  2005 2006 2007 2008 2009
Type $Billion % $Billion % $Billion % $Billion % $Billion %
Independent 25.199 69.2 27.457 70.4 32.219 72.6 33.818 72.3 32.752 71.5
Corporate 3.995 11.0 4.097 10.5 4.397 9.9 4.570 9.8 4.690 10.2
Community 3.217 8.8 3.596 9.2 4.347 9.8 4.492 9.6 4.174 9.1
Operating 3.990 11.0 3.852 9.9 3.428 7.7 3.900 8.3 4.160 9.1
Total 36.402   39.004   44.393   46.781   45.778  

 

Trend Implications:

Among the implications of the trend data for cutting up the grant-making pie:

  • Independent foundations form an ever-larger slice
  • Operating foundations form an ever-smaller slice
  • Community foundations form a stable but growing slice
  • Corporate foundations form a stable but shrinking slice

 

Growth in the number of potential funders is good news for nonprofit organizations operating in the United States of America. Grant-making foundations are far more numerous than they were two decades ago – as are the nonprofits that compete for their philanthropic attentions.

 

This post examines trends in the numbers of foundations making grants to the Nation’s 1.6 million federally registered nonprofit organizations.

 

A Census of Foundations:

The Foundation Center’s FCStats database reports that:

  • In 1991, out of 33,356 grant-making foundations, 29,476 were independent, 1,775 were corporate, 1,770 were operating, and 335 were community.
  • In 2001, out of 61,810 grant-making foundations, 55,120 were independent, 2,170 were corporate, 3,918 were operating, and 602 were community.
  • In 2010 (the latest year available), out of 76,610 grant-making foundations, 68,992 were independent, 2,718 were corporate, 4,166 were operating, and 734 were community.

 

Growth Trends:

From 1991 to 2010, the total number of grant-making foundations is up 129.7%. The numbers of three types of foundations more than doubled —Independent foundations are up 134.1%; operating foundations are up 135.3%; and community foundations are up 119.1%. The number of corporate foundations is up by only 53.1% during the same period.

 

Year Total Independent Corporate Operating Community
1991 33,356 29,476 1,775 1,770 335
2001 61,810 55,120 2,170 3,918 602
2010 76,610 68,992 2,718 4,166 734

 

Later posts will explore trends in the distribution of grant-making foundations by type and trends in the distribution of grant-making foundations by their shares of total annual giving.

One way that grant writers can improve their insights into effective grant writing is to serve as a peer reviewer of competitive grant proposals. A second way they can do the same is to read books on grant writing and related topics.

 

The 15 books listed here (in alphabetical order) comprise a small library about grant writing and fundraising. The list is by no means exhaustive, but it does include the most current editions available for each title.

 

Some titles focus on how to plan and write proposals; others cover the entire grant life cycle from cradle to grave. Some titles zoom in on getting grants from foundations; others focus more broadly on getting grants from both public and private sources. Finally, some titles offer samples and/or models or provide templates and/or checklists. Many of the titles are available at no cost from public libraries or Foundation Center Cooperating Collections.

 

Shorter List on Grant Writing:

A short list of books for persons wanting to learn how to win competitive grants might include:

  1. Karsh, E. and Fox. A. (2009). The Only Grant Writing Book You’ll Ever Need: Top Grant Writers and Grant Givers Share Their Secrets. 3rd Edition.
  2. Thompson, W. (2011). The Complete Idiot’s Guide to Grant Writing. 3rd Edition.
  3. Wason, S. (2004). Webster’s New World Grant Writing Handbook.

 

Longer List on Fundraising:

A longer list of books for persons with some experience in writing proposals and an interest in other aspects of fundraising might include:

  1. Bray, I. (2010). Effective Fundraising for Nonprofits: Real-World Strategies That Work. 3rd Edition.
  2. Brewer, E. and Achilles, C. (2007). Finding Funding: Grantwriting From Start to Finish, Including Project Management and Internet Use. 5th Edition.
  3. Collins, S., ed. (2003). The Foundation Center’s Guide to Winning Proposals.
  4. Geever, J. (2012). The Foundation Center’s Guide to Proposal Writing. 6th Edition.
  5. Greenfield, J. (2002). Fundraising Fundamentals: A Guide to Annual Giving for Professionals and Volunteers. 2nd Edition.
  6. Grobman, G. (2011). The Nonprofit Handbook: Everything You Need to Know to Start and Run Your Nonprofit Organization. 6th Edition.
  7. Klein, K. (2011). Fundraising for Social Change. 6th Edition.
  8. Margolin, J. and Lubin, S., editors. (2005). The Foundation Center’s Guide to Winning Proposals-II.
  9. New, C. and Quick, J. (2003). How to Write a Grant Proposal.
  10. Smith, N. and Works, E. (2006). The Complete Book Grant Writing: Learn How to Write Grants Like a Professional.
  11. Warwick, M. (2009). How to Write Successful Fundraising Letters. 2nd Edition.
  12. Wells, M. (2005). Grantwriting Beyond the Basics: Proven Strategies Professionals Use to Make Their Proposals Work. Book 1 in series.

 

Again, these are both short lists. If you’ve discovered other titles that have worked for you in competing for grants, please do let me know!

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