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
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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
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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
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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.