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….

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, GrantsAlert.com). 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!)