Qualifying grant writing prospects in two easy steps

oopsHappy Friday morning, DonorDreams blog readers! I owe you an apology because I missed my mark yesterday and didn’t publish a post. I had good intentions, but my day started fast and snowballed unexpectedly from that point onward. Needless to say, I didn’t even have time to reach into my bag of guest bloggers and share something from them with you. So, I’m going to rectify my Thursday mistake with a Friday morning bonus.
A few weeks ago, a dear old friend of mine — Karen Dove — reach out via LinkedIn to catch me up on where in the world she is. 
I first met Karen when she was working as a grant writer for Boys & Girls Clubs of Rockford, Illinois. Our paths crossed again when she was the executive director of the Boys & Girls Club of Wisconsin Rapids, and I was assigned to help her agency plan and implement its first annual campaign pledge drive. 
Karen finally got smart and fled the Midwest for the warmer weather of Florida where she consults with Boys & Girls Clubs on things like grant writing and social media.
This morning I am sharing a guest blog post from Karen (with her permission, of course) on the subject of grant writing and letters of inquiry.

How Not To Get A Grant — Letters Of Inquiry

By Karen Dove
Originally published on May 12, 2014
Re-posted with permission from KD Consulting Blog
grant writing1I had an interesting chat today with a new client who told me their last grant writer didn’t have any luck using a costly search engine tool for finding new foundations.  After a year, they ended the contract on the search engine and now he is no longer with the organization.  The moral of this story?  Tools don’t make the worker…the worker must really know how to get the most from their tools.
At this organization, the grant writer would identify a group of foundations that funded youth services and send them each a letter asking for funding.  There were no responses.  Why?  Because a simple letter sent out in shotgun approach does not yield funding.  Chances are you know of an organization that has utilized this approach to funding, whether through grants or letters sent to donors.  Just send a letter and you get less than 3% return in most cases!
So if you don’t use research to just identify foundations and send them letters, then what must you do to be successful?
My first step is identifying the foundations closest to my geographic proximity.
Grant writing should occur in concentric circles, starting with those closest to you, then further away….county….state…. region….nation.  Most novice grant writers are ready to write to the Gates or Oprah Winfrey Foundation right off. Slow your roll…. and start close to home, where funders know you and have a real vested interest in your success.  Over time, you may get to Bill and Oprah, but that’s not the place to start.
My second step is most often to make a simple telephone call  (or less desirable…an email) to the foundation to help clarify what they fund and what their process is to apply for funding.
Some have their own set of forms, and will likely offer to send you a copy so you can apply.  Others have specific grant cycles, and might direct you to their website for more information.  Still others do not accept grant proposals at all, but only take advice of their family or board members, in disbursing the foundation’s grant funds (these usually are identified as not accepting unsolicited proposals).
If you want to call, but you can’t find a telephone number for a foundation, chances are they don’t want to be found.  Just strike them off your list and move to the next prospect.  Grant writing is a science and an art.  The research is the science of a successful proposal.

When is the last time your non-profit turned down funding?

Forks and Funding Streams

By Dani Robbins
Re-published with permission from nonprofit evolution blog
forkI once heard a local Executive Director say that fundraising in a non-profit was like a new restaurant looking for investors by asking people to pay for forks. That’s exactly right! It’s illogical, yet it’s exactly right.
Nonprofits raise money through a myriad of sources, often one part of a program, project or piece of equipment a time. Then once a year, or more often, we submit reports on the use of those funds.
Grants, which used to fund general operating, are now far more often restricted to the priorities areas of the funding institution. Major donors fund in a similar way, with fewer restrictions usually, but still often to support a specific program or project and for a specific purpose.
It’s how it’s done, both on the side of the giving, and also on the side of the asking.
Granting intuitions – which for the purpose of this post includes corporate, community and family foundations as well as government awards – fund portions (and occasionally all) of projects, programs and staff; some fund only supplies, capital expenses or materials.
restrictionDonors and funding institutions absolutely and unequivocally have the right to support whatever they want in whatever method they choose.
It’s the nonprofit leader’s role to decline to accept funding that doesn’t meet their mission or make sense for their agency. The caveat to all this, of course, is that those restrictions are not just that one foundation; they’re most foundations and other funding sources too.
Everyone funds like that and we all fundraise like that too — to support forks. Forks – or in the nonprofit world, programs, projects or things – are important, and so are utilities, rent, staff, and programming.
Please let me be clear. This post is not intended to insult or be in any way disrespectful of the many, many institutions and people who support local organizations. We are grateful to you!
This post is intended to question the efficacy of the status quo.
I am not naïve; I’ve been in this field for 20 years. I know that part of how we got here was a lack of accountability. There was a lot of good feeling and a minimal amount of impact. I know there are still nonprofits out there not tracking their programs, not measuring outcomes and spinning their wheels but not advancing their missions.
I also know there are many more non profits that are running good programs, measuring the impact of those programs and being excellent stewards of the community’s resources. They’re also spending a lot of time and energy to raise money and report on that money; time and energy that is taken away from programs.
When I ran the Boys & Girl Clubs of the Western Reserve, we wrote and usually received (and reported on) around 50 grants a year. We asked many more donors each year for financial support. We received money from the United Way, Boys & Girls Clubs of America, the Ohio Alliance of Boys & Girls Clubs. We hosted events and had an endowment.
A large portion of the money we received was restricted.
We tracked every restricted dollar to ensure we spent it the way the donor intended. We were transparent in our business practices and followed financial management  best practices.
That is good financial stewardship.
It’s also expensive and time-consuming. However, it is critically important and not free.
Someone has to track, coordinate and manage all the pots, and agencies can usually only change a percentage of such costs to the grant. It’s labor intensive. It’s expensive. It’s how it’s done. The current non-profit funding model works.
It’s not unacceptable, but it is illogical.
I can’t imagine anyone planned it to be like this. There is no version of a past that I will believe that has donors, foundation, corporate and government leaders sitting around table envisioning a funding system that this one.
By this system, I mean one program being supported by three different grants each paying for a different percentage of the program staff salaries (and a much smaller percentage of the program leadership’s salary) with yet another grant paying for materials and special event income making up the difference.
There’s got to be a better way.
The nonprofit service delivery system has been greatly improved through technology, professional and leadership development opportunities, improved tracking and a lens that is focused on impact. Income generating efforts have similarly evolved, with the introduction of social enterprise and expanded efforts to embrace major donors and mergers when appropriate.
It’s time to re-imagine the funding model.
What else is out there? How else can we ensure financial stewardship, maintain donor confidence and demonstrate our impact? What else can we do to ensure the nonprofits in our communities have the resources they need to impact their corner of the world?
Let’s come up with a new plan: I’d rather do that than raise money for forks any day of the week.
As always, I welcome your experience, insight and ideas.
dani sig

What have you done to increase individual giving?

Events, Grants and Individual Giving

By Dani Robbins
Re-published with permission from nonprofitevolution blog
eventI was having breakfast this week with a friend and fellow consultant and we were discussing resource development efforts, including events and grants. By now I’m sure you are well aware, I’m not a huge fan of organizations hosting multiple events. Events are expensive, labor intensive and don’t usually generate a lot of income.
I can hear you out there saying “No Dani, they’re fun!” And they are, at least some of them are.
One signature event a year is a wonderful way to engage new donors, connect with current donors and showcase your programs while raising significant money. Even signature events that don’t raise significant money may still be a good use of your resources. However, more than one signature event is too much.
More than one event (two, if you must) may be a sign that your leadership, board or executive, is reluctant to raise money in other ways.
Leadership that doesn’t want to embark on an annual appeal or a major donor campaign will often advocate more grants be written or additional events be introduced. Not only will more events not raise more money, more events will cannibalize your signature event and may yield less income for more work. Any process that doesn’t get you to your goal is a bad process.
The Executive Director is the Chief Development Officer” of any non profit that seeks contributed income. (Erik Anderson Donor Dreams blog) Whether they want to or not; whether they’re good at it or not; whether they have a development director whose job it is or not, the Exec is still responsible for fund raising and one of the responsibilities of a governing board is to raise money. Neither is a role that can be abdicated.
Events are often 5% to 15% of an agency’s budget and generally net 50% of what they cost, sometimes less. Most attendees would be appalled to know that, but it’s true. It’s too high! I recommend events net 75% of what they cost. There are other, better, avenues to raise money.
grantsGrants, which are often 30% to 50% of an agency’s budget, more if they receive United Way funding, are one way. Yet, they too come with a cost. Most agencies get somewhere between 50% to 80% of the grants they submit. That means that the time spent on writing the 20% to 50% of the grants that don’t get funded is time lost. For the grants that are secured, there are reports to be written, dollars to be tracked, objectives to reach and programming to introduce. All of which is as it should be, and none of which is without cost.
As I mentioned in the Culture of Philanthropy or Fund Raising post, according to “Fund-Raising: Evaluating and Managing the Fund Development Process” (1999) individual giving offers the highest rate on return for the lowest cost (5% to 10%) to the organization. It is also the largest post of money given in this country and usually only reflective of the percentage special event income in most agencies’ budgets. In other words, 80% of the philanthropic dollars in this country are given by individuals yet 10% to 15% of most agencies budgets are received from individuals. Like the post says, “opportunity is knocking. Get the door!”
Your board, staff and major donors will be the foundation of any individual giving program and the program should be introduced in just that order: Board giving should come first with the Board setting and then meeting a giving goal. Staff should then be asked and then major donors. Individual giving is about one on one relationships that are cultivated — and later, stewarded — and require intentional asks for specific dollar amounts.
Once those asks are made, as mentioned in the Sustainability by Descending Order of Love post:

“If you have the time and the volunteers, consider asking your larger mid level donors and prospects in person. Those with the potential to become major donors should also be asked in person as should anyone who is committed to your organization.  While we follow the path of descending order of love in planning, we love all of our donors equally.  If someone would like to see you in person, even if it will be a small gift, go.  It is fun to thank someone in person and is worth keeping a committed donor engaged. When that is not practical, the next best thing is a phone bank or phone calls.”

There are a lot of ways to raise money and some will generate more money in less time than others. Nonprofit leaders are busy. Get the best bang for your buck and get on the individual giving path. It will be scary, and also worth it!
What have you done to increase individual giving?  As always, I welcome your insight, feedback and experience.  Please share your ideas or suggestions for blog topics and consider hitting the follow button to enter your email.
A rising tide raises all boats.
dani sig

Solving the age-old battle between fundraising vs grantwriting

It is the end of the year and for many non-profit organizations it means:

  1. constructing an agency budget for 2013, and
  2. putting together a comprehensive resource development plan to add meaning and depth to the revenue side of the agency budget.

In the last few weeks as I’ve talked with various agencies about their resource development planning efforts, I’m reminded of age-old battle:

Fundraising vs. Grantwriting

Donors see government grants as “wealth redistribution” and a substitute for their charitable contributions. Fundraising volunteers (and even fundraising staff) get squeamish about asking other people for money, and they prefer asking government and private sector foundations over soliciting family, friends, co-workers and neighbors.

crowding1This phenomenon is called the “crowding out effect” and I wrote about it in the following blog posts in 2011:

While I would love for you to go back and read those posts, I also encourage you to read an awesome 2009 research paper written by James Andreoni and  A. Abigail Payne titled “Is Crowding Out Due Entirely to Fundraising? Evidence from a Panel of Charities“. They do an awesome job of looking at this from a data perspective, and they conclude the following:

Using instrumental variable techniques, we estimate total crowding is around 73 percent, and that this crowding out is almost exclusively is the result of reduced fund-raising. A $10,000 grant, for instance, reduces fund-raising expenses by $1370, which in turn reduces donations by $7271. Adding this $1370 savings in fund-raising expenses reduces the estimate of crowding out to 59 percent. If charities had maintained their fund-raising efforts, our estimates show that donations would have risen by the full amount of the grant.

hell2The crowding out effect is real, and it is something non-profit organizations need to understand and deal with. If not, then I advise putting the following age-old expression in a frame above the boardroom door: “The road to hell is paved with good intentions.”

I’ve been doing a lot of thinking lately about how to put the “crowding out effect” in check, and the following few paragraphs are just a few ideas. I think some are good thoughts and others are a little out there, but let’s work together on refining these ideas.

Planning – Planning – Planning

The planning process is not about the executive director putting stuff in writing and handing it over to volunteers for implementation. Planning is an engagement activity.

So, why not introduce volunteers who are involved in the resource development planning process to the research paper by James Andreoni and  A. Abigail Payne and ask them: “What should we do about this? How should we accommodate for this in our plan?

Simply stated . . . planning is the antidote for the crowding out effect.

policiesFundraising policies

I’ve always seen “policies” as a way of creating hard and fast rules for things that board volunteers and non-profit staff might otherwise find hard to implement if it weren’t “required“. Since so many people find grantwriting easier and preferable to fundraising, I started wondering if there weren’t some policies we could create that could put the “crowding out effect” in check. The following are just a few thoughts:

  • A written policy prohibiting government and private foundation grant revenue from exceeding a certain percentage of the agency’s overall revenue.
  • A written policy that commits board members to increasing their personal contributions by a certain percentage whenever grant revenue exceeds a certain level.
  • A written policy that commits board members to asking a certain number of new prospective donors whenever grant revenue exceeds a certain level.
  • A written policy that ties the agency’s annual campaign goal to the level of grant revenue. (e.g. every 1% increase in revenue goals from grant writing results in a 2% increase in qualified individual giving prospects and corresponding campaign infrastructure)

Truth be told . . . I’m not a huge fan of this approach, but I do think it is worth continued discussion and dialog.

Board development

I suspect that the best solution is the simplest solution — recruit the right board members.

Smart business people will understand a simple concept like the “crowding out effect”. Put this challenge in front of them and ask them to solve it.

I suspect they will simply conclude that more “fundraising-minded volunteers” need to be recruited to off-set the effects of grantwriting on the agency. After all, isn’t that what they’d probably conclude when it comes to their sales force staff and their business if confronted with the same challenge?

Are you in the middle of writing your 2013 resource development plan? Are you facing some of the same challenges with volunteers regarding the question of more fundraising versus more grantwriting? If so, how are you tackling this challenge? Do you have any suggestions on how to improve upon the recommendations I’m providing in this blog post? Please use the comment box below to weigh-in with your thoughts and suggestions.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC

Sir Isaac Newton was right about nonprofit organizations

We all learned as kids in school that Sir Isaac Newton stipulated in his Third Law of Motion that for every action there is an equal and opposite reaction. Thanks to Newton, I was not surprised earlier this week by anything I read in The State of Grantseeking Fall 2011 report conducted by GrantStation and PhilanTech. This excerpt kind of sums up the entire report:

“While nonprofits remain optimistic about their ability to raise funds and deliver services,” said Dahna Goldstein, Founder of PhilanTech, “many organizations – particularly smaller organizations – are applying for more grants but receiving smaller grants.”

Surely, none of you are surprised by this. Right? Anyone who thinks about it for a moment will see the following:

  • Government funds have dried up in “The New Norm” (aka this new economic paradigm that we’re living in).
  • Government debt levels mean that the “golden days of government funding” are probably over for a long time.
  • The difference between writing a government grant and a foundation grant is almost non-existent.
  • Non-profits are shifting their attention and efforts to foundation grant opportunities.
  • The pool of money available from foundations doesn’t magically expand because interest increases. So, you have more proposals chasing the same pool of funding and there are only two possible outcomes (unless the pool of funding expands):
    1. you either get more rejected proposals, or
    2. you get more funded proposals at smaller gift levels

While some people are asking questions like “how can we write better grant proposals and become more competitive,” I think these types of questions all miss the mark. I think the better question is:

“Why the heck aren’t non-profit organizations overhauling their resource development plans to better position themselves to secure more sustainable funding from individuals (e.g. people like you and me) rather than from institutions (e.g. corporations, foundations and government)?”

After all, when you look at the charitable giving statistics for the as long as they’ve been published, you clearly see that the vast sum of all charitable giving come from individuals.  When I scratch my head and ponder this question, I can only come to a few disturbing conclusions:

  • Asking people for money is scary, and it is hard to get board members and volunteers to move beyond this paralyzing fear.
  • Many non-profit professionals (e.g. CEOs and fundraising staff) aren’t practicing the 9-keys of volunteer engagement and as a result there are many disengaged volunteers and board members sitting around our board room tables. So, mobilizing our “people resources” in the name of individual giving seems like a non-starter to many non-profit professionals.
  • It is always easier to travel the path of least resistance. This was what Robert Frost was saying in his famous poem “The Road Not Taken”. In other words, it is far easier to shift your efforts from writing proposals for government agencies to writing proposals for foundations.

Here is my word of caution to the entire non-profit sector . . . It is important to remember that foundations don’t give away magic money, and they don’t typically spend down their fund balance. Their year-to-year contributions are based upon their “investment income,” which usually means that when the stock market goes down so does the pool of available dollars from foundations.

I would draw a comparison to Isaac Newton’s first law of motion that most people have come to know as “what goes up must come down,” but I won’t because I just know there are argumentative investment professionals reading this blog who don’t think this law applies to the stock market. However, ask yourself this question: “Is it possible that the stock market in this ‘New Norm’ might experience adjustments and contractions if the economy doesn’t start dramatically improving soon?”

My point is simple . . . Read The State of Grantseeking Fall 2011 report . . . come to grips with the realities of “The New Norm” . . . engage your volunteers using the resource development planning process . . . and start asking tough questions around “What if?” and “How do we re-align our fundraising efforts, adjust to The New Norm and start asking individual donors for their support?”

There are many different individual giving models out there. Please tune in next week and we’ll talk about a few of those models.

Has your non-profit organization experienced some of the same things that the 900 respondents reflected in the grantseeker report? If so, what is it specifically? If not, what are you experiencing and what do you think accounts for your success against this industry trend?

Please use the comment box below to weigh-in.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC