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Tag Archives: Grant-Making Foundations

The future of competitive grant making, in both public and private spheres, is of considerable interest to grant seekers and to those who work with and for them.

 

This post explores three trends impacting the future of private grant making: grants as investments, social media, and product-driven support. Its purpose is descriptive, not normative. Arguably, although the trends’ context is American, their scope and consequences are potentially global.

 

Grants as Investments:

The notion of grants as investments is a commonplace in venture philanthropy, but it is not unique to it, nor even to the world of private capital. It reflects premises that grant funds represent scarce social and economic resources, that they require careful stewardship and prudent use, and that providers of such resources ought reasonably to expect them to bear returns. The challenge for grant seekers is to demonstrate that their defined problems or needs – and their ideas or strategies for solving or reducing them – are worthy of an initial investment (and continuing or renewed investments in later years).

 

For grant recipients, the challenge is to demonstrate that they have made significant progress in solving or reducing those problems or needs. In the longer term, just as in other settings, if the investment underperforms, and evidence of this progress is weak or absent, the (public or private) investor is apt to invest its funding elsewhere – and to do so sooner rather than later.

 

Social Media:

Perhaps it’s too soon to tell if the emerging practice of awarding grants or gifts-in-kind based on the number of hits or clicks or ‘votes’ on a competition sponsor’s website is a marketing fad or an enduring trend. By hosting and advertising the competition, the sponsor creates a marketing buzz. There is little or no need for the contenders to craft formal proposals so long as they can rally more ‘votes’ than their rivals. Instead, the process replaces any more or less technical review of a proposal’s comparative merits with a popularity contest.

 

Product-Driven Support:

Manufacturing corporations usually seek to realize a profit on what they sell. By making their products available as in-kind gifts to school districts or hospitals or other entities they can create familiarity with their product line and brand. In turn, daily use can lead to loyalty and to a desire and decision to buy more of the products, particularly if they prove their value during use. The Chronicle of Philanthropy reports that during the 2010s corporate “donations of products are growing at a faster rate than cash.”

 

Sometimes a manufacturer’s product-driven support can be just as good as cash and its products can totally transform the places that receive them. The Apple Corporation once hosted Apple Partners in Education (Apple PIE) and awarded highly competitive grants of hardware, software, and extensive training to partnerships involving Apple, a school, and a college of education. The resources were worth as much as $150,000 over two years.

 

Many other corporations also offer product-driven support. In some circles, such as in health-related philanthropy, the trend of its use is accelerating. The challenges for grant seekers are to be able make effective use of the products they may receive, and to be able to tap other sources for the cash they need to be able to support their users and their ongoing use. If they lack options for obtaining cash, they may well be wiser to forego seeking an award of products.

 

A previous post explored three other trends impacting the future of private grant making: discretionary decline, asset attrition, and social entrepreneurship.

 

 

The future of competitive grant making, in both public and private spheres, is of considerable interest to grant seekers and to those who work with and for them.

 

This post explores three trends impacting the future of private grant making: discretionary decline, asset attrition, and social entrepreneurship. Its purpose is descriptive, not normative. Arguably, although the trends’ context is American, their scope and consequences are potentially global.

 

Discretionary Decline:

The Foundation Center reports that all foundations based in the United States are forecast to have awarded a total of perhaps $48.4 billion in grants during calendar year 2012 – an increase of as much as 3% over 2011. By contrast, the Office of Management and Budget (OMB) forecasts the Federal government to have awarded $159.53 billion (estimated) in discretionary grants to state and local units of government during fiscal year (FY) 2012 – a year-to-year decrease of $47 billion (or 23%) over FY2011.

 

The reduction in Federal grant making in the United States nearly equals the forecast total of all foundation grant making there. Most of the Federal decline ($32 billion, or 68%, of it) is expected to occur in discretionary grants for education, training, employment and social services. Private grant making is unlikely ever to make up anything near the amounts involved.

 

Beyond funding forecasts, other trends during the 2010s are also impacting the private grant making. Among them are asset attrition and social entrepreneurship.

 

Asset Attrition:

Study any 990-PF filing and one can see how much private foundations depend upon returns on stock investments to sustain their capacity to make grants each year. As measured using the Dow Jones Industrial Average, in August 2012, the stock market was performing at the same level (at 13,000 points ±), as it was four and a half years earlier. It takes some time before a foundation translates the values recovered in its investment portfolio into more or larger grant awards. Meanwhile, during the same 54-month period an annual rate of inflation change of 6.4% is likely to have eroded the real value of its investments.

 

Social Entrepreneurship:

A recent empirical study by EIM and the Dutch Ministry of Economic Affairs explored social entrepreneurship as an enduring trend in economic development. It found that social entrepreneurs tend: to be mission-driven in seeking to deliver a social value to the underserved; to act entrepreneurially; to act within entrepreneurially-oriented organizations that value innovation and openness; and to act within financially independent organizations that plan and execute earned-income strategies. Their objective is to deliver an intended social value while remaining financially self-sufficient. Among their goals in blending social and profit-oriented activities is that of reducing beneficiaries’ reliance on donations and government funding.

 

A later post will explore three more trends impacting the future of private grant making: grants as investments, social media, and product-driven support.

In examining a 990-PF filing, if grant seekers know what to look for and how to interpret what they see, they may improve the results of their prospect research.

 

This post covers several useful aspects of 990-PF filings, such as but not limited to contact information, application procedures, and grants awarded.

 

Reporting Period:

On Page 1, near its top, are blanks for the period a Form 990-PF filing is to cover. By definition, a calendar year starts January 1 and ends December 31. Many foundations use it as their fiscal year. If a foundation’s fiscal year is not a calendar year, the blanks will state different start and end dates. The fiscal year governs the timing of a foundation’s grant-making activities and thus may affect the timing of an applicant’s proposals.

 

Contact Information:

Page 1 asks for the foundation’s current name and address (Section G), and its telephone number (if it has one) (Section B). Potential applicants should crosscheck the specifics with the foundation’s website, if any, since the information may not be up to the moment.

 

Foundation Assets:

On Page 1, Section I states the fair market value of the foundation’s assets as of year-end. This figure is one indicator of the foundation’s size. In general, each year, by rule, foundations must expend 5% or more of their assets in making qualified contributions, gifts, and grants. Consequently, at a bare minimum a foundation’s assets should be at least 20 times greater in value than the applicant’s possible grant request.

 

Foundation Staff:

In Part I, Lines 14-15, reports employee salaries, wages, and benefits. Sums significantly larger than zero imply that the foundation has at least part-time staff (one or more) to handle applicant queries.

 

Grants Awarded:

In Part I, Line 25, Column D gives the total contributions, gifts, and grants the foundation paid during the year of filing. This amount reflects the foundation’s recent actual grant-making activity. It should be several multiples larger than the applicant’s possible grant request.

 

Foundation Management:

In Part VIII, Section 1 names the officers, directors, trustees, and foundation managers, among others. The list represents who manages the foundation and who makes decisions about grant proposals. Researching their biographies may reveal possible connections between the applicant’s Board or staff and the foundation’s Board or staff; it may also disclose possible leads for initial contact and/or proposal selling points.

 

Charitable Activities:

Part IX-A lists the foundation’s four largest direct charitable activities during the tax year. The list is one source of possible insights into the foundation’s priority beneficiaries and program areas. Review of the foundation’s website and publications, if any, may verify whether these priorities remain in effect after the reporting period ended.

 

Application Procedures:

In Part XV, Section 2 summarizes the foundation’s application submission procedures: to whom to address the application (Line A), what type and content of application are required (Line B), submission deadlines (Line C), and restrictions and limitations (Line D). A checkbox, if left blank, will indicate that a foundation accepts unsolicited requests for funds. Again, applicants should crosscheck the particulars by reviewing a foundation’s website, if any.

 

 

Grant-Making History:

In Part XV, Section 3 lists recipients – and amounts awarded – of grants and contributions made during the year or approved for future payments. The more that the details (e.g., type of recipient, location of recipient, amount awarded) match those describing the applicant and its contemplated grant proposal, the stronger the foundation should be as a lead for future funding.

One key to winning a grant is to be aware of patterns among potential grant makers. This post highlights several recent and current patterns in grant making in the United States as a whole.

 

The Foundation Center conducts periodic surveys of samples of the nation’s foundations and publishes summaries of its findings online. Among other topics of potential interest to grant seekers, the surveys of various categories of grant-making foundations look at types of support, types of beneficiaries, and types of program focus areas.

 

Types of Support:

As a percentage of their total funding, foundations continue to favor requests for program support far more than other requests. Based on a sample of 1,490 larger foundations, surveyed in 2010, 50% of grants were for program support, another 20% were for general or operating support, and 18% were for capital support. Grant seekers should note that subgroups of foundations – such as family foundations or community foundations – do not necessarily share the same patterns of grant making as may prevail among all foundations.

 

Beneficiaries:

Based on the same sample, again as percentages of total funding, the top beneficiary groups for all foundations are: economically disadvantaged (29%), children and youth (20%), women and girls (8%), and ethnic and racial minorities (7%). Again, grant-making tendencies within the subcategories of foundations differs from the overall patterns.

 

Program Focus Areas:

Among the many possible program focus areas in grant making, health vies with education for pre-eminence. As percentages of total funding, based on all grants of $10,000 or more awarded by a sample of 982 larger independent foundations, surveyed in 2012, the top program focus areas are: health (25%), education (24%), human services (15%), and arts and culture (14%).

 

Consequently, when viewed on a nationwide basis, the most opportunities for securing a grant from a foundation in 2012 appear to lie with applicants that seek program support for delivering health or educational services for persons who are economically disadvantaged. As one might expect, the actual number of such opportunities varies significantly with an applicant’s specific geographic location and with the specific type of foundation it approaches for funding. Potential grant makers are far more numerous in the country’s most populous states, and family foundations are far more numerous than other types of foundations.

Sooner or later, many grant seekers visit a Foundation Center Cooperating Collection to do an online prospect search. After spending an hour or less, they often leave smiling broadly, having just sent long lists of leads to their e-mail accounts. But what do they do next?

 

Prospect Research:

How do experienced grant seekers make sense of their sometimes lengthy lists? How do they decide which leads are worth pursuing and which ones are dead-ends? As they study each grant maker profile, they do so by posing and answering questions such as those presented here.

 

Descriptors Questions
Physical Location Is the foundation local?
  How near is it to the applicant?
Website Is there one?
Limitations Does the applicant fall within any one or more of them?
Type of Grantmaker Is the grant maker an independent foundation?
  Is it a family foundation?
  Is it a corporate charitable giving program?
IRS 990-PF Forms What years are available?
  What is the most current year available?
Deadline(s) Is there one or more? When is it or when are they?
Purposes/Activities Do they match the applicant’s purposes/intended activities?
Fields of Interest Does they match the applicant’s interests?
Trustees/Directors Does the applicant have a connection to any of them?
Financial Data Are the asset amounts more than $100,000?
  Is total giving more than $50,000?
Selected Grants Does the grant maker profile list any grant award selections?
  If so, for what amounts were they?
  If so, to what kinds of organizations were they made?

 

A later post will discuss how and why answers to these specific questions will help potential applicants to winnow the grains of strong leads from the chaff of weak ones.

 

 

Everyone who has ever had a grant proposal funded has ideas about what made it win funding. Here are four last imperatives for improving your success at winning a grant from the start.

1. Leverage Assets:

Collaboration maximizes a grant’s impact. Leverage the grant maker’s limited funds with local resources. Share costs with other organizations. Help the grant maker to expect to achieve more benefits than it would if it were the only source of funds. Avoid asking for a grant without being able also to show a local commitment of funds or other resources. Show how solving a problem is so important to your organization that it will invest its own limited assets in solving it.

2. Write to Win:

Always write with a definite audience in mind. Anticipate probable reviewer profiles and predispositions. Predict the reviewers’ responses to your content and format and adjust them accordingly. Weigh your options before selecting a funding program and seeking a grant. Don’t waste scarce time and resources on grant opportunities that don’t fit your organization.

3. Do Reality Checks:

Every proposal draft has flaws, including the final draft; some flaws prove minor, others prove fatal. Exercise quality control before your organization submits a proposal. Do an internal pre-submittal review to ensure that your narratives and budgets make sense. As reviewers, recruit and use persons who will offer candid, detached perspectives on a proposal’s quality and content. Thank them for their insights.

4. Learn from Results:

Nothing ventured, nothing gained. If you’re not in the game, you’re not going to win it. Grant makers reject proposals from even the most sophisticated and capable grant seekers. Win or lose, always request and study reviewers’ comments, if available. Some grant makers measure your organization’s commitment to a project by its persistence in applying after an initial rejection. If at first a proposal doesn’t succeed, revise it and try again. Such persistence often pays off.

This is the last of a series describing 18 imperatives for winning competitive grants.

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