Tuesday, April 23, 2013

Donors are more like used car buyers

Recently a nonprofit contacted me to "fix" their grant boilerplate because an application was denied. I am not a fan of cut-and-paste grant language. Still, as boilerplate goes this organization had a pretty good pitch.

Luckily for them the grantor had sent the grant back with the comment, "results not quantified". That really threw the nonprofit for a loop. To put it simply, they were offended by the comment. They had shown how many people they had served in the past three years, documented the number of repeat versus new clients to show continuing need and included a number of testimonials from clients. That's the way they've always done it. That approach had previously gotten them a fair amount of funding, so why didn't it work this time?

As foundations and even individual donors operate in the current cash-strapped environment and confront possible adverse changes in the tax code, they are beginning to act more like used car buyers and less like the tooth fairy.

If you have ever shopped for a used car you probably started out with a subjective list. For your new ride maybe you want a black car with a high-performance option package and it needs to look cool. You may find a dozen or so candidates that fit that list. Then your selection criteria becomes more objective. You want it to be in a certain price range. How many miles on the odometer?  How much tread on the tires?  How good is the paint? Has it got good service records? How much extra equipment do you get for comparably priced models? Has it ever been wrecked?

No one thinks there is anything wrong with that scenario. Everybody pretty much shops for used cars that way. You demand a lot of information so that you can make the best decision about how to most wisely spend your money.

That's pretty much the same mindset that is driving the current donor trend toward seemingly hard-nosed approaches to handing out grant money or even major gifts. Donors want to award funding to the best vehicle for their funds. Even those nonprofits that seem to have a continuing relationship with certain foundations or donors are suddenly being held to a higher standard.

The trend in nonprofit funding is to place a measurable value on every mission. The pitfalls of this approach by grantors are obvious when considered from the viewpoint of smaller or more local nonprofit missions. Suppose that you offer free 6-week art classes to inner-city youth. Is it possible to quantify improvements in painting skills, improved compositional awareness or any of the intangibles that are specific to that genre?  Are you supposed to follow the participants to see how many became professional artists?  How do you quantify creativity? Is there any place in the world of philanthropy for local charity or is everything going to be focused on some massive global program with clear metrics?

At first glance some programs just don't seem to lend themselves easily to numerical measurement or financial representations. There is a justifiable perception in the nonprofit community that by reducing every mission to a formula the real spirit of the nonprofit mission  is dulled, and even worse, this type of mission may not receive enough funding to survive.

Does that mean you should ignore or repudiate the trend? Only if you really don't need grant money. This is the current wave, and you can either ride it or let it roll over you. History shows that to survive everything has to adapt, so how do you adapt to this new reality?

You could consider defining or stating the program/mission goals differently. Instead of a program goal  program being "to offer fun and challenging physical activities to improve childhood health"  you might state it as  "to provide physical activities that produce improved long-term positive behavioral and physical attitudes toward controlling obesity". The latter statement provides focus and definition for data collection and conditions the grantor for the data to follow. It also places your agency under a more stringent standard for service delivery. Once you define the program in terms of desired results, you can prove that it is effective or alternatively, that the funds you are requesting will make it effective in achieving the desired results.

Taking the art class example above, you could define the program as a way to reduce participation in gang activities, or as a way to encourage children to move away from video games to more creative forms of self-expression. That would give a starting point to include hard statistics and follow-up reporting. You can provide some form of numerical reporting for almost any type of program or mission. That will make the program more credible to funding sources instead of just a feel-good exercise.

Supporters for your mission still exist, but there are a lot of organizations competing for the same dollars,  just as there are lots of used muscle cars for sale. Those supporters want to kick the tires a little more now. That shouldn't offend you; it should make you proud to show them you've got the best ride out there for them. 

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