Year-End Thoughts and the “January Effect”…

At FoundationSearch, we are frequently asked whether there is a seasonality to foundation giving, as there is in individual giving.

Unfortunately, foundations most often don’t report the exact month of their donations, however we can easily determine their fiscal year-end.

Why is the year-end date of the foundation important? For a few reasons…

“Year-end” is the time that funders must ensure that they have met their minimum required donation amounts to qualified donees. The Internal Revenue Service requires that private foundations donate at least 5% of their assets averaged over a 5 year rolling timeframe. If they have not met this donation threshold, they will most likely be looking to meet it before their year-end. This presents an opportunity for charities to apply at an advantageous time.

Even if foundations have met their minimum giving thresholds, “left over” funds at year-end can leave the impression that those in charge of the grant making process have been unsuccessful in their efforts to locate a worthy recipient. This also presents an opportunity for the grant seeker.

The “new year” for every foundation starts the day after “year-end”, with renewed purpose – and funding. All donation budgets and plans are refreshed and await a new cycle of funding requests, decisions and grant awards. The sooner the grant seeker approaches the foundation after the start of their new year, the better the chances are that funding will be available.

So why did I title this blog “the January Effect”? Because December and January see more foundations ending their fiscal years and starting their new ones than any other months in the year. Of the 122,345 foundations contained in FoundationSearch, 87,424 have their year-end during this period.

So, while we cannot prove that there is a granting seasonality, there certainly is an “opportunity” seasonality awaiting the grant seeker.

If you want to learn more about how to identify the year-end for foundations, please drop us a note and we’d be pleased to help you.

In the meantime, all of us at Metasoft wish you and your families a safe and happy holiday!

Trevor Skillen

For other blogs in this Foundation Fundraising series follow this link.


Foundations – Should they be part of your fundraising strategy in 2017?

In the course of speaking with almost 20,000 non-profits each month about their funding needs and plans, we sometimes hear that “foundation fundraising is not part of our focus”.  We believe that there are some very compelling reasons to introduce or re-visit foundations as a potential source of funding for your organization. Those reasons are:

Growth – the most recent GIVING USA report from Indiana University indicates that foundation funding was the fastest growing giving source in 2015, growing at a rate of 6.5%, compared to 3.8% for giving by individual donors. Foundations gave $58.46 billion, in the form of an estimated 832,000 grants – that is one grant for every two charities in the US so your odds of getting funded – if you apply of course – are good.

Stable Giving – Foundations must make charitable grants – in good times and bad – of at least 5% of their assets, averaged over five years. Importantly, foundations frequently INCREASE their donations in challenging times to attempt to compensate for the financial difficulties their recipients may face.

Predictable giving – Foundations exist to donate to charity (unlike individuals and corporations) and often publish giving guidelines relating to geographic and philanthropic areas of giving interest – furthermore, analysis of giving through time indicates that most foundations maintain a strong, consistent focus in the areas they support.

Low risk / low cost – unlike high, upfront expenditure fundraising efforts like golf tournaments and galas, foundation fundraising requires very little upfront investment, typically $5,000-$10,000, and with the average foundation grant amount of $66,300, it provides a cost efficient method of fundraising – all that is required to start is a funding database which identifies good funding prospects, a good letter, and stamps and envelopes.

Low effort – relative to almost any other form of fundraising, approaching foundations requires fewer resources to succeed. This is particularly true of the upfront work in sorting through the over 120,000 US foundations to identify a list of “best prospects” for your project, a task that a few years ago could consume months of effort. Foundation funding information and management systems like FoundationSearch are now able to intelligently and accurately identify a short list of the best prospects for a variety of project funding needs – and recommend a safe asking amount based on the funders prior giving history.  The balance of the upfront effort simply involves writing and sending a letter of inquiry to your foundation prospects to determine their interest in helping you.

Increased credibility for you and your organization – well, once you get funded by a foundation that is. When Metasoft was a small, three person software start-up, we had only one customer – but that customer was Microsoft, and that client said good things about our software and people and opened the doors of more than one hundred other large high tech companies who became customers of our graphics and imaging technology. Similarly, if you were to be successful in attracting a grant from the Gates Foundation, this would open up many doors in the foundation and corporate world for your organization for years to come.

Diversification of funding sources – financial advisors will strongly advise you not to put your life savings into a single stock or sector; for the same reason, having a variety of funding sources—including foundation funding—will strengthen your organization and protect it from the sharp downturns every economy periodically experiences.

Want to learn more or add your thoughts? Feel free to contribute….

With foundation funders, does “No” mean “Maybe”? – Part 1

A sizeable number of the more than 121,000 foundations in the US -19,888- indicate that they do not accept unsolicited proposals.

We also know that a significant number of current and past FoundationSearch members (more than 16,000) do not approach them for that reason. Is there a missed opportunity here?

Many grant seekers believe that these funders are “captive funders” that act to support a single non-profit such as a school or hospital; or they have a small list of charitable organizations they wish to support and are not receptive to solicitations from new charities. In fact, many of our FoundationSearch users “tag” these foundations in order to exclude them from searches and prospect lists altogether.

But is this really an effective or advisable strategy?

Internet research on the topic reveals that Bradley Smith, the President of Foundation Center, wrote about this topic in 2011 in a blog post entitled “Don’t Call us, We’ll Call You”.  In this piece, he addresses some of the reasons why foundations state that they do not accept unsolicited proposals – the two principal reasons he cites are – one, a desire by funders to limit the volume of requests they are receiving, and two, a desire to proactively choose charities to fulfill their strategic goals. Unfortunately, he did not examine how pervasive the issue is with foundations, and we found no other credible research on the matter. So as such, we decided to do our own.

To do this, we conducted a comprehensive review of FoundationSearch data spanning more than fifteen years of US granting history for over 75,000 grantmaking foundations including more than 10 million grants to gain some insight.

This is what we learned:

19,988 foundations indicate that they do not accept unsolicited proposals.

Of these, 4,608 of these foundations – 23% –  provided no grants to new recipients over the period analyzed.  But 15,380 of these foundations – 77% –  in actual fact did provide grants to multiple new recipients over the period analyzed.

So, the good news is that the majority of funders that state they are not soliciting new proposals are, in fact, funding new recipients.

There are two takeaway lessons from this.

First; don’t be too quick to write off a foundation that states that they are not soliciting proposals –FoundationSearch provides detailed charts in each foundation profile indicating new vs repeat recipients by year. A review of these FoundationSearch charts offers detailed insight into grant funding provided to new recipients. These funding trends can be viewed by Value of Grants, Number of Grants, and Number of Recipients.

Comparison of the Value of New vs Repeat Grants Given by the Marvin and Donna Schwartz Foundation
Value of New vs Repeat Grants Given by the Marvin and Donna Schwartz Foundation
Click on chart to view full size
Comparison of the Number of New vs Repeat Grants Given by the Marvin and Donna Schwartz Foundation
Number of New vs Repeat Grants Given by the Marvin and Donna Schwartz Foundation
Click on chart to view full size
Comparison of the Number of New vs Repeat Grant Recipients for the Marvin and Donna Schwartz Foundation
Number of New vs Repeat Grant Recipients for the Marvin and Donna Schwartz Foundation
Click on chart to view full size

Second; for those funders who are in fact funding new recipients year over year, you will need to find another way in the door – more on this in my next blog.

Recommended Ask Amount

You have worked your way through over 120,000 US foundations to find the best foundation funding prospects for your organization (see my previous blogs on how to determine your best funders, and my review of some of the tools available to do this). Now, you need to answer a crucial question: how much do you ask for from each funder?
It’s a question that every fundraiser needs to ask, and more importantly, needs to have the answer to. In this week’s blog post, we’ll review the problem, do a web survey of the prevailing wisdom, and then outline some of the possible solutions.

You may be asking yourself why you should not just simply ask each of your funding prospects for the amount you need to fund your project. The answer is that foundations have both “floors” and ceilings” on the amounts they give — a request that is too small may be deemed too expensive for the funder to oversee relative to the amount donated; too large a request may exceed the funder’s capacity to give. To compound the problem, these floors and ceilings vary by funder, your area of operation, your non-profit category and other factors including the size of your proposed outcome.

There has been little discussion in the sector on the topic of ask amounts for foundations. A survey of some of the advice available online about optimal ask amounts reveals that most advice is geared toward individual giving capacity — how much to ask from individual donors. From blog posts at DonorPerfect (“the secret to asking the right amount”), to gift range calculators from Blackbaud, most of the guidance and recommendations center around how to deal with individual giving. Some of the suggestions can translate to the world of foundation fundraising, but some of it simply doesn’t apply.

A post on TheGrantPlant, a blog site, directly addresses foundation funder ask amounts and suggests the following: do your research for appropriate funding prospects, check the foundation’s giving history, and don’t expect the entire amount to come from a single foundation funder. All of which makes sense in a very basic and time consuming way. Cataloguing a foundation’s giving history can take time, even when you have tools like Foundation Center’s Foundation Directory Online and Metasoft’s FoundationSearch available. Some foundations actually state their desired gift amounts and publish their desired grant range amounts, but most do not. So, a review of the foundation’s past granting history can give good — and perhaps the only — indication of what an ideal ask amount should be. To do this, you would examine all recent grants made by your foundation prospect, select those that were made to your funding category and location, and determine the “median or middle” amount given, and repeat for each funding prospect — lots of work but essential work. If you had originally identified 200 good foundation prospects for your project, this work could take an hour per prospect, or 200 hours…

Grants given by Dave Thomas Foundation for Adoption, to New York state, social & human services category
Grants given by Dave Thomas Foundation for Adoption, to New York state, social & human services category

FoundationSearch is working to take some of the work out of this process, by providing a method of calculating the ideal ask amount automatically, for each funder. Built into its analytic tool for finding the “best funders” for your project, a recommended ask amount is calculated on a foundation by foundation basis by your stated funding category and location. The system reviews the entire granting history for each of your foundation prospects, selects the historic grants that most closely match your project parameters, and calculates the median, maximum and minimum grant amounts made by the funder. The median (middle) grant amount is selected as the “recommended ask amount.” Users can click the amount, and easily view a chart (like the one shown above) of the relevant historic grants and see in which range most of the grants fall.

By asking for a grant amount that is in the middle of the amounts previously granted by the foundation, you lessen the risk of your request being rejected, and you stand a better chance of securing the grant from the foundations you approach. With a list of the best funders, and the optimal amounts to ask from each funder, you are in a much better position to succeed in your fundraising efforts.

(Please feel free to leave a comment, or link/re-post as you like. I look forward to your comments, and opening up the conversation on foundation fundraising!)

Which Foundations are Your Best Foundation Funding Prospects? Part 2

In my last blog, I discussed the key foundation funding factors that determine who gets funded – and who doesn’t. These factors were determined based on foundation funding statements and demonstrated funding preferences identified through analysis we have conducted on over 10 million US foundation grants spanning 15 years. The identified factors are:

    Project or recipient location
–    Grant size requested
–    Giving interests
–    Types of support
–    Granting category
–    New versus old recipient giving ratios
–    Giving trends

Applicants ignoring even one of these when applying for funding may see their requests being rejected, so it is clear that the best approach is to evaluate every funder against all of the factors to maximize the probability of a successful fundraising campaign.

To start, in-depth foundation information is readily available through online searchable databases, such as FoundationSearch and Foundation Center’s Foundation Directory Online (FDO). In comparison, both provide tools to allow filtering of foundations by grant amount, location, area of interest, and funding category. While these filters are useful, they do not account for new versus old recipient giving ratios or giving trends. Recent testing of the filtering capabilities of both FDO and FoundationSearch prove both are adept at producing a “not so short” list of prospective funders for various search criteria. For example, a search for “scholarship” funding in New York state quickly produces an unsorted list of 1,670 potential funders in FoundationSearch using that product’s Grant Analyzer feature. This is certainly gets the fundraiser much closer to their goal of a targeted and ranked list of the most likely funders, but still leaves much work to do.

Foundation Center acknowledges the problem and provides a Prospect Worksheet, designed to “help you focus on funders whose priorities match those of your project.” The PDF form, which is four pages long, covers some of the key factors that should be evaluated when reviewing foundation prospects (again, see my previous blog post for an explanation of those factors). The form includes a section for determining whether the funder is a good match or not; you can make notes on subject focus, geographic limits, types of support, and populations served. The worksheet helps you organize your research, but it is still a manual process, and would need to be repeated for every foundation you want to evaluate. We tested this method, and average time to complete a sample worksheet was 30 minutes for a prospect. To complete a prospect sheet for each foundation in our example of a search for funders for scholarships in New York implies over 800 hours of additional research work, which is not feasible for most organizations.

One fundraiser who has founded her own research group, Jennifer Filla, has developed a method she calls “prospect prioritization” for corporate and foundation prospects. This involves creating a worksheet to record the client’s specific project criteria, and a rating legend to rate the funder prospects she’s evaluating against criteria including giving interest, location, and giving capacity. Through detailed interviews with the client, she determines which criteria are most important for the project, and weighs those more heavily in the scoring system. This is a step beyond the simple prospect worksheet, because it integrates a rating or scoring element, so that prospects can be weighed against each other and evaluated against specific criteria and then ranked. Although I have not tested this method, it appears to be a better method than the one offered by Foundation Directory Online in terms of ultimately producing a ranked list of funders. Unfortunately, this is still a manual method, requiring upwards of an hour’s analysis for each prospect, implying 1,600 hours of additional research work for the scholarship example.

FoundationSearch provides an analytic tool (My Best Prospects, or MBP) that greatly speeds up the review and ranking process—analysis of tens of thousands of foundation prospects is reduced to minutes rather than months of effort. Basically, this tool takes the prospect worksheet concept, integrates it with the rating/scoring aspect, and—here’s the best part–automates the entire process. 

The tool allows you to input your specific project criteria, including project or recipient location, granting category, grant size, giving interests, and types of support. It then takes those criteria and evaluates every single funder in the database, and scores each of them on how well their past funding history matches your project criteria.

It also rates the funders’ granting histories, by checking out whether they’ve given more grants to new recipients as compared to old (i.e. repeat) recipients. And lastly, the tool also checks to see whether the funders are increasing or decreasing giving to your granting category through time. Some funders won’t make the cut, but the ones that do are ranked in descending order by relevancy to your project, and by funding frequency to your project criteria.

With the FoundationSearch tool, the best prospects are selected automatically for you, and presented in a ranked list of the 250 best prospects, with research profiles related to your particular project criteria for each.

So what does all of this analysis achieve? Good, timely funder analysis will increase your chances of getting funding by enabling you to focus on funders most likely to fund your project. Seems obvious, yes? For those who are time-pressed, narrowing the list down further to focus on funders with immediate deadlines can also benefit (see my previous blog post for a discussion on researching deadline opportunities). With foundation funding histories readily available through online searchable databases like FoundationSearch and Foundation Center, availability of information is no longer an issue. Efficient and accurate analysis becomes the challenge, and choosing the right tools to help with that analysis is key.

It would be interesting to hear how other fundraisers are dealing with evaluating foundation prospects…

(Please feel free to leave a comment, or link/re-post as you like. I look forward to your comments and feedback!)


Which Foundations are your Best Foundation Funding Prospects? Part 1

Defining what makes a best foundation prospect is easy to agree on – it is that foundation that is most likely to fund your organization, in the amount you need, when you need it. So much for the easy part; the tricky part is analyzing the over 120,000 US foundations and their stated and actual funding criteria to determine which of them are most likely to fund you.

In this week’s blog post, we’ll review the key factors that must be considered when evaluating a prospective funder, in order to maximize your chances of getting funded.

In analyzing foundation prospects, our experience shows that a review of foundation funding history is everything. Although many foundations publish detailed funding guidelines, actual funding history gives the truest picture of a foundation’s giving interests and patterns. Based on our analysis of fifteen years of granting and an analysis of almost ten million grants made by US foundations, we have determined that most foundations can be quite predictable in their granting behavior.

Multiple factors need to be considered when reviewing prospective foundation funders, and foundation research products like FoundationSearch and Foundation Center’s Foundation Directory Online provide many of the tools required to identify funders that meet a diverse range of funding criteria with comparative ease.

The funding factors that are the most determinate are:

Location of Recipient or Project. Geography – yours and theirs – is important. Our research has shown that funders can be quite geographically specific in their mandate (think “community foundations”), and will often reject otherwise very good proposals based on geography alone.

Giving Category. Arts, health, education, the environment, social services, sports and recreation, international causes – almost all funders are specific in terms of which non-profit categories they wish to fund. A few questions to ask yourself when evaluating a funder’s granting history: How diverse is the foundation’s funding pattern? Do they give to a wide range of giving categories, or are they very specific in what they choose to fund? If they do give to a wide range of interests, then perhaps they may be open to funding something new?

Grant Size. Grant size can be overlooked, but it’s important to note that if you are asking for too much—or even too little—the funder may be less likely to fund your project over a competing project that has an ask amount more in line with the funder’s giving preferences. Not only should you look at the dollar amount given per grant in your category, but also the total number of grants given at that dollar amount. There is no sense in asking for a $500,000 grant from a funder if they have not previously given a grant of this size. Similarly, foundations frequently set “floors” on the smallest grant size given as they find that it is difficult to cost-effectively oversee the progress made by recipients.

New versus Old Recipients Giving. Determining the degree to which a foundation is receptive to funding new opportunities is another key factor to evaluate. Funders may differentiate between recipients that have and have not been funded previously by the foundation. Some funders are very open to new opportunities, and a close examination of their past granting history may often reveal these preferences. To complicate matters, foundations may decide to change funding emphasis – or de-emphasis – by non-profit category or geography, so any analysis needs to be sensitive to these dimensions.

Giving Trends. Reviewing a funder’s funding history should also include reviewing the overall, general trends in giving. For instance, is their funding to the arts increasing over time, or decreasing within your category? It may be trickier getting grants from a funder that has given dozens of arts grants five years ago, but only one arts grant in the past year. The odds of getting grants from a funder that is increasing granting to a category is better than from a funder that is decreasing granting to that category.

Giving Interests. “Giving interests” are frequently a more specific level of funding interest within a category. For instance, “performing arts” is a specific funding interest within the Arts category, and “ballet” would be an even more specific interest within performing arts. Although it is tempting to qualify foundations to the most specific interest level, this poses two concerns – first, that you would be eliminating potential funders with a broad range of interest in the category but have not yet funded (in our example) “ballet.” Secondly, if the foundation has funded “ballet,” they may not be looking to make additional donations in this area. The general success principle would be to “cast a wider net” than you think you need.

Types of Support. Knowing what types support the foundation is willing to fund is also important. While some funders will not specify where or how the grant dollars should be spent, other funders will explicitly provide only program support, or may choose not to fund capital campaigns.

Note also that when reviewing each of these factors, the frequency of granting is critical. You may find a funder that matches on all vital counts—but if that funder has only ever given one grant that matched, how likely would that funder be to fund you next, compared to a funder that has given dozens of similar grants?

So all well and good. These are the things you need to look for in a potential funder’s giving history, in order to determine whether they’ll be a good match or not. But, how do you create a framework for generating a ranked list of prospects for your project, in a timely, efficient way? How can you find all the best potential funders, not just a single perfect funder?

We’ll discuss some of the options available in the marketplace in the next blog post.

(Please feel free to leave a comment, or link/re-post as you like. I look forward to your comments and feedback!)

Tracking Foundation Application Deadline Opportunities

As a non-profit, you know the challenges around keeping up to date on new and upcoming foundation funding opportunities and their deadlines. Although your first instinct may be to check a foundation’s website for deadlines, our research shows that fewer than one in ten US foundations provides this information on their site—or has a website at all.

A handful of deadline alerts services are available for non-profit researchers. Why so few? Because the main challenge you face is the same one these alerts services face: staying ahead of ever-changing deadlines. We’ll outline a few of these available services, and review some of their features and strategies for keeping informed of relevant opportunities.

Philanthropy News Digest, or PND, is a free US based service published by Foundation Center, and includes notices of awards and RFPs. Sent out biweekly as an email you can subscribe to, PND provides predominantly US opportunities, and those opportunities are grouped by category of giving. In conjunction with their email alerts, PND also provides an online search tool that allows you to search through their database of currently active RFPs; you can search by category of giving, state, or keyword. PND provides approximately 500 opportunity alerts per year, or about one alert for every thousand grants made.

FoundationSearch provides several comparable features related to keeping current with RFP deadlines and awarded grants. The Grants in the News Alerts can be emailed directly to your inbox and will also appear in your online Activity Box within the FoundationSearch product. You can customize the alerts you are sent, by selecting the granting state(s), receiving state(s), and category that you are interested in. You can also easily search the database of past Grants in the News alerts, using giving category, granting state, receiving state, or date range. FoundationSearch also provides Foundation Deadline Search, a search utility that lets you search for applicable deadlines from any of the active foundations included in the FoundationSearch database. You can easily search by deadline month, fiscal year end, foundation name, giving interests, city, or state, and can display the results sorted by either deadline date, foundation name, city, or state. A subscription is required to access this feature as well as the Grants in the News Alerts. As part of their subscription, members can also receive detailed RFP deadlines reports, customized by state and category. In the past three years, FoundationSearch has tracked more than 10,000 distinct funding opportunities from US foundations.

Beyond these tools, a quick search on Google for “foundation deadline opportunities alerts” will reveal a couple of free online grant deadline search services, most of which are specifically related to education (for example, Great if you’re a school or educator, but not so great if you’re looking for any other type of grant. Most other hits are postings from foundation websites announcing their own program application deadlines, which may or may not be applicable to your particular organization. Some larger foundations will provide email updates on upcoming deadlines if you request it, or provide RSS feeds that you can monitor. Ultimately the onus is on you as the researcher to find and request information on deadlines from these sources.

In brief, comprehensive deadline listings are few and far between. The larger services provide alerts and search capabilities, but even these provide only a limited sampling of all the possible granting opportunities available each year in the US.

While the challenge of keeping up to date with new and upcoming deadlines may be made somewhat simpler with alerts services, perhaps a better strategy for keeping abreast of the opportunities for your organization is to first identify the best funders for your organization, and then determine the application deadlines for each.

More on this in a future blog installment….

(Please feel free to leave a comment, or link/re-post as you like. I look forward to your comments, and opening up the conversation on foundation fundraising!)