Why You Shouldn’t Care About the Largest Foundations in Your Region
What is it about the prospect of foundation funding that lights up the eyes of the most hardened nonprofit staffer?
“When are you going to write me a grant to pay for my raise?” the program staffer asks.
“Where’s my million-dollar grant?” your boss asks, only half-joking.
“My sister-in-law’s brother’s cousin knows someone at the Gates Foundation. We should apply!” your board member suggests, bubbling with enthusiasm.
A mega-grant from a mega-foundation always seems like the answer to your prayers, right? Not quite, I say—as do The Fundraising Mythbusters and a little thing called reality.
The truth is, foundation giving plays a smaller role than you probably think. In fact, in terms of the entire philanthropic pie, foundation funding accounts for a mere 16 percent. As far as dollars, that’s a lot of money, but it’s not the most money, and it’s certainly not the first place I would ever think to look when I have my fundraising cap on. And I wear my cap often.
My journey as a fundraiser began back in the '90s, before technology dominated the landscape. I worked in programming and communications for a fairly large grant-making foundation. To this day, I still remember thinking, as I read our newly written application guidelines, “Why don’t they fund general operating expenses?” It made sense to me that the best use of a foundation’s resources would be to provide unrestricted operating expenses to worthy organizations.
But because foundations’ founders and their leadership tended to come straight from the corporate world, there was a major push in the '80s through the '90s for nonprofits to be accountable and goal-driven. Foundations typically directed funding toward short-term projects—ones that could deliver measurable outcomes.
But you probably know that project-based accounting often forces grantees to sacrifice long-term effectiveness. After all, if your organization is adding more programming or sites continually while your underpaid (and frequently revolving) staff is working on obsolete computers without proper overhead, where will you be five years from now?
You'll be pleased to hear that the trend is beginning to reverse, albeit slowly. And I do mean slowly. As in, “Wow, it sure is taking its sweet time!”
In 2004, the Independent Sector's board of directors inspired a glimmer of hope when it unanimously endorsed a statement to “opt for general operating support over project support when feasible and when the goals of the two organizations are substantially aligned.”
And just last year, Darren Walker, president of the Ford Foundation, announced that the second-largest philanthropic foundation in the nation would double its commitment to unrestricted grants for nonprofit operating support.
Hallelujah! Are foundations finally beginning to wise up, to recognize that nonprofit organizations don’t operate in a vacuum? Only time will tell, but I’ve got hope. After all, slow change is often exactly what leads to permanent results.
Side note: If you're in the mood for a good laugh and can take a break from the madness of it all, read Vu Le's “The Baker’s Dilemma and the Inequity of Restricted Funding.”
Even before this slow change began, my own grants system strategy, intended for smaller nonprofit organizations with limited development staff, advocated targeting small to mid-sized foundations.
Why? I’ll put it to you this way: It makes sense to tailor two or three boilerplate proposals for general operating support from 20 to 30 smaller grant-making foundations than to spend that same amount of time dealing with the headaches of one proposal from a major funder.
And I haven’t even mentioned the hair-pulling reporting requirements of the larger foundations.
Case in point: In one year alone, the Ford Foundation received 144,000 grant applications, but only gave out 2,000 grants.
Would you rather be a big fish in a little pond—or a little fish in a huge pond?
While you're in the process of evaluating what you want to achieve from foundation funding and setting up your calendar for the year, the solo fundraiser needs to take into account the absolute best possible use of his or her time.
After all, where's the money?
According to Giving USA, individual giving makes up a massive chunk of charitable giving, totaling 80 percent. Again, this is compared to foundations' giving—a paltry 16 percent.
I'm not trying to discourage you from grant seeking, but what I am trying to do is get you to think about where you put your time in a strategic way. In a smart way.
By developing a solid system for researching prospective foundations—and consistently devoting two to four hours per week on research alone—you’ll eventually develop a solid portfolio of foundation support from small to mid-sized foundations, which are also more open to funding general operating support.
For every community and mission, there are the standard "known" foundations, and everyone and their mothers already are knocking on their doors. Instead of going that route, take the road less traveled, and take the time to uncover the unknown. You never know what you’ll discover.
Pamela Grow is the publisher of The Grow Report, the author of Simple Development Systems and the founder of Simple Development Systems: The Membership Program and Basics & More fundraising fundamentals e-courses. She has been helping small nonprofits raise dramatically more money for over 15 years, and was named one of the 50 Most Influential Fundraisers by Civil Society magazine, and one of the 40 Most Effective Fundraising Consultants by The Michael Chatman Giving Show.