You don't need a grant writer to start a non-profit

Fully 50% of the calls or emails I get regarding my services involve a desire to hire me to help acquire funding for someone to start a non-profit venture or fund one that has just received a determination letter.

I'm flattered, but you don't need me to find you money, because neither I nor any other grant writer can "get" you a grant at that point in time.

The cold hard truth is there are zero grants available from either foundations or government agencies to start a nonprofit.

That's because true grants (money with no repayment required) have to be made to existing nonprofits. Legally, private grantmakers are prohibited by statute from advancing funds they receive or administer for charitable purposes to a for-profit or an individual.

In the case of  newly approved organizations, while it is technically possible for grantmakers to fund you, in practice that seldom happens.

Here's why.

Typically, every grantmaker will require  that you furnish them with a long-form 990 (the nonprofit equivalent of a 1040 or 1120) for at least the prior two taxable years. Some will even go back five years. They may also require audited financials or have a minimum revenue requirement that you must meet before you can even apply for funding.

Additionally, very few foundations or government agencies have rolling grant open application periods.  Thus, you typically can only apply at specific times, and the awards are actually funded as much as a year later. That means that you never have grant funds available at a moment's notice.

Grantmakers do not fund organizations. They fund programs that align with their interests and produce their desired outcomes. For that reason, they are very picky about what organizations they fund, and look for partners with a proven track record. Only about 1 in 10 grant applications submitted are funded.

Grants should never comprise more than 30-35% of your revenue stream, since they seldom if ever provide unrestricted funding, and almost never fund your normal costs of doing business, like utilities or rent.

In this 2012 report, on page 3,the National Center for Charitable Statistics (NCCS) reports that nearly 75% of all nonprofit income originated as fees for services paid by government and private businesses. 

In other words, you must find another way to fund your operations and programs 100% for a minimum of the first two years, and you must maintain varied income streams for the life of your nonprofit.

How do you do that?

The normal funding development progression happens like this:

·         Self funding – the board members either personally contribute the start-up funding or use their contacts to solicit funds from their business or social networks. BTW – don't state that donations may be tax deductible until you receive your determination letter.

·         Community events –think along the lines of auctions, car washes, bake sales, galas, sponsorships etc.

·         Social impact investors – although this option has not taken off the way the nonprofit industry hoped, there are still investor groups that are active in this field. Note that the funds received have to be paid back with interest, just like a traditional business loan or any other sort of angel financing. The investor's ROI expectations are typically within periods ranging from 90 days to three years.

·         Online appeals – Platforms such as GoFundMe don't require that you have nonprofit status to solicit funds. Other online fundraising options may or may not ask you to provide proof of status. There are fees and commissions involved so don't budget for gross donations. As an aside, the "Donate Here" button on your website will only generate a small portion of your needed funds until you have a track record and good outcomes to share.

·         Fees for services – for most nonprofits this is the largest single source of funds. Studies such as the one refernced above have concluded that from 60 to 75 percent of all nonprofit funding comes from contractual arrangements with government agencies or for-profit businesses.

What a grant professional CAN do to help.

Many grant writers, myself included, can and do provide research and development services to start-up organizations.

For instance I provide a feasibility service for would-be nonprofit founders. Think of it as a preliminary SWOT analysis as found in a business or more properly, a strategic plan. It evaluates such things as your mission goals, monetary support available for your mission and any other competitors working in your field, both for- and non-profit.

I can't possibly stress enough that you need to have at least a basic plan before you even apply for your nonprofit validation from the Internal Revenue Service.

In essence and assuming that you are just in the planning stages, a well researched and prepared strategic plan provides a step-by-step organizational development roadmap, as well as a series of benchmarks that allow you to evaluate your progress.

When I produce (with your input) a full strategic plan, it will cover such things as setting up your initial budget, based on operational and program costs for the first two to three years, whether to apply using the 1023EZ or the full 1023 application form, board development, what type of state corporation you need to form (a step required in advance of your 1023 application) and a brief overview of solicitation law affecting your fundraising. If desired, it may also have a mission development section that defines not just what your mission will be, but what programs and how much money, property  and manpower will be needed to produce your desired outcomes.

I hope this gives you a brief glimpse into world of non-profit financing.  Feel free to contact me at 208-525-2071, or email me at rightwords@ida.net if you have further questions.

Long-form thinking in today's short-form world

I've written a lot about having a cogent strategy when you start a new nonprofit or small business. I'm beginning to think that the market for that advice is as dead as a fossilized woolly mammoth.

  

I get that in the age of information overload, you have about 7 seconds to capture your target's attention. I've written my share of SEO-friendly 50 character action posts and catchy sales pages.

All that's fine, well, and good, as long as there is some actual thought behind your hastily thumbed tweet.

The problem is that it seems as though our brains are now in permanent short-form mode.

Recently a twenty-something wanna-be nonprofit founder/entrepreneur asked me to come up with some content for their Twitter feed. As she put it, "something that will show people we care about "X" and need their money to help."

So I did what any consultant would do…I asked her to outline her value proposition or mission and vision statement so I could better represent her organization.

She didn't have anything, beyond the idea that if she could separate enough people from enough money, she could "help."

No budget, no program/product outline, not even a firm idea whether she wanted to be a nonprofit or a for-profit with a philanthropic division.

Her reasoning?  She did know that it takes money to make money, and she didn't have any, so she figured she'd get the money first and figure out what to do with it later. 

I'm not sure if she was simply naïve or she'd gotten her hands on some really good weed, but that ain't gonna cut it.

Maybe it's old-fashioned, but believe it or not, people actually want some substance available before they invest in anything.

 

If you want other people's money, you have to provide value.  It's just that simple.

As boring as it might be, you have to have a plan, objectives, results and at least some understanding of why people purchase or support anything.

In short, this business thingie is a lot of real, brain-busting hard work.

Hopefully, there are still people out there that can think in those terms. 

How does your small business find employees?

Recently a friend called me to ask if I had any leads to help her find a part-time administrative assistant.

Julia (not her real name) said she had posted an opening on the state employment office's website, but after three weeks, only one qualified applicant had applied. She did not want to use one of the many private employment firms, feeling that the extra 2-3 dollars an hour they pocketed for their service didn't reflect the value of the services they offered to manage just one employee.

In a town of just over 50K with a well-respected technical college that seemed odd. I decided to look for her posting.

I discovered that the heretofore in-house state managed job listing had been turned over to one of those internet-based job posting firms. A call to the local state employment office netted me a referral to the website.

First of all, I couldn't find her posting through the keyword search function, using "administrative assistant". Only when I used her specific business name did the listing finally appear. Predictably, the posting was titled "Office help wanted". At no point in the posting did the words "administrative assistant" appear.

Interestingly, the posting did show up on Glassdoor and Indeed using the keyword "office". The information did re-direct to the state sponsored website, leading me to wonder why only one person had managed to navigate through the maze to actually reply.

I surmise that most of the people looking for work locally weren't using these sites to search for openings. Typically, local employees tend to use local searches, like the employment office or newspapers.

That points up the problems with our keyword and SEO oriented age.

If the person searching isn't using the same descriptors you are, you might never connect.

I referred Julia to the local college employment office, and had her re-write her ad so it would search more effectively. I also suggested that she run a help-wanted ad in the local paper, since it has both a print and online presence, and that's where she finally found her new employee.

After revising her ad, she received over 50 responses, and of those 50, almost half were well-qualified for the position.

In all of this research, I did notice that there were almost no truly small businesses using the new state job search resource. Most of the listings for openings were from government or large institutional or retail employers.

That leads me to wonder whether there is truly a "shortage of people that want to work" or  is it that they can't find each other?

So I'm asking…if you are a truly small business owner (25 employees or less),  where are you looking for employees, and how much success are you having finding them? Email me here or post in the comment section and let me know. Perhaps there's a way to make this easier and more effective for everyone.

Addendum:  If you are looking for work and can't find openings in your town, feel free to contact me as well. Where are you looking, and why aren't you connecting with employers?

Maybe you should market to a goldfish.

READ THIS NOW TO GET MORE MONEY.

In this age of self-taught ADHD, marketing needs to be read, absorbed and acted upon in just 8.25 seconds, or ¾'s of a second shorter attention span than that of a goldfish.

For instance if you are still reading this, it isn't because the cute headline caught you. Indeed, your brain probably only registered these words:

"Read this" and "more money."

Or so says an oft-quoted study by Microsoft. Considering that pre-social media, i.e. back in the dark ages of the 1970s and '80s it used to be 12 minutes, it's no wonder that long form marketing isn't working.

If your appeal or sales pitch (depending on whether you are a nonprofit or a for-profit) can't compel the reader to stay long enough to read your whole pitch, and most especially if it doesn't promise a reward for that reader, it's going to join the rest of the internet trash PDQ.

All that assumes that your target market is people under 40.

High-end appeals are still being read by people who are old enough to be able to read more than 140 characters.

If that's your market, then you may want to take this advice with a grain of salt.  Nonprofits in particular often eschew modern internet marketing trends because their audience tends to be older.

Why?  Because they're the ones with money. Unfortunately, many of them have picked up their kids bad social media habits, so a tweak here and there could be in order. 

It all goes back to the same basic marketing premise. Know your audience and target your message to it.

That's not to say that once you capture a reader's internet attention they won't stick around for a minute or so. But in the world of instant gratification, if they haven't clicked through to buy or give to something in that length of time, you've pretty much wasted your time.

Think about overhauling your sales approach. You really will make more money.  

Do you use sales funnels in your fundraising?

I asked a prospective nonprofit client that question.  She replied "what's that?"

In its simplest traditional business sense a sales funnel is a parameter for identifying the customer or target market that is most likely to be interested in what you are selling.

The value of using it is that it produces more sales for less initial investment in marketing.

Here's an example of what happens when you waste time and money on a campaign that doesn't adequately define a market.

Bill, a very well-to-do businessman, was approached by a nonprofit as a part of their major donor development after he was mentioned in an article as being interested in helping to provide food for needy people in his town.

The nonprofit's mission was to send food to starving people in Africa.

He responded politely to the letter by indicating that he had no interest whatsoever in feeding people in Africa while children, the disabled and the elderly in the United States are going hungry every night.

That should have been the end of it. They tried, he refused, end of story.

Instead he began to get letters and even phone calls asking for his support. After a year or so of that, he hopped on his jet, went to their headquarters and deposited a stack of mail and phone messages on the receptionists desk, with a not-so-polite note to take him off their mailing and call lists or face the consequences.

The problem was that the nonprofit qualified him simply because he was, well, rich and had an interest in feeding the needy.

All that did was to cost them a lot of money and time and made an enemy out of him.

The sales funnel, i.e. their parameters for qualifying major donors for further development was both overly broad and poorly maintained.

It doesn't matter if you are selling cars or a mission proposal…it behooves you to target your efforts to people who are likely to buy what you are selling.

In general, if you are sending out general appeals, monitoring your response ratio for both quality AND quantity and distilling your mailing list or media campaigns down to the essentials will serve you far better than just buying a mailing list. It also helps if your staff takes the time to really read any personal responses they get.

Cross referencing the donations against your contact or mailing lists can save you a lot of money and time, not to mention improving your response ratio from the customary 1 to 3% up to 20% or more.

Grants that are meant to produce tangible outcomes

Those who follow me, both here and on my other blog know that I am a supporter of a diversified educational strategy.  STEM is great, but someone has to build and run the machinery and use the stuff engineers dream up!

It won't do a lot of good to get more manufacturing and assembly jobs back into this country if  we don't have anyone trained to do them. Not to mention the fact that working with your hands as well as your brain is good for the economy, good for your personal financial situation, and may give workers a reason to pursue other education to progress up the career ladder.

Today's manufacturing jobs are not those of the mid-20th century, and often blend in well with more formal STEM educational goals.

Personally, I find that payng for a kid to go to college to "find themselves and their life work" is both fiscally and socially irresponsible, particularly given the dismal report of the emotional readiness of students to enter college.

If I had my way, every person would have to work for two years before they even considered college.

That's just me, but hey...I'm entitled to my opinion too.

To that end, I highlight grant opportunities that fall into that arena, and here is one that fits. To give credit where is is due, this came to my attention through Grant Gopher, and the lead paragraph reads like this:

"Nuts, Bolts & Thingamajigs awards grants annually to trade schools and community or technical colleges capable of hosting a summer camp program for girls and/or boys ages 12-16. Summer camps have been a successful way of introducing middle- and high-school students to the fascinating, high-tech career choices available to them in today's automated manufacturing industry."

The website is http://www.nutsandboltsfoundation.org.  It doesn't offer tons of money, but it could be a good fit for their target partner demographic. The closing date is November 15, 2015. You can visit their grants page at: http://www.nutsandboltsfoundation.org/camps/grants/

Is your grants dept.ready for the election?

OK.   I can hear it now.

OMG!  Enough about the cotton-picking election already!

Seriously though, if your nonprofit depends on government grants, and even if it doesn't, now might be the time to put some "what-if" scenarios in place.

In case you are new to the world of grants, an awful lot of the funding tends to follow what's hot politically and tails off when it comes to what's not.

For instance, if the Democrats retain the White House, you can expect that all of the current funding for STEM, social justice issues and the like will continue and even accelerate.

Conversely, if the Republicans win, their pet projects will receive the bulk of the funding.

If you're saying "Well, we get all of our money through private funding" you still need to look ahead.

While it's unlikely that Dems would immediately get a 90% income tax rate in place, there is little doubt that the wealthiest Americans are going to take a hit in the pocketbook.

Who funds private foundations? The wealthiest Americans.

Of course all the politicians would love to have us believe that all of the "new" revenue streams they are cultivating will be immediately returned to the people in the form of better jobs, or free college, or a host of other voter-friendly  programs.

The truth is, it just never works out that way.

For one thing, there's that little thing called the national debt, currently headed north of 18 Trillion dollars.

 

It's a funny thing, but when people (or governments) lend money they usually expect to be paid back.

Interest payments on that money are forecast to eat up ONE TRILLION dollars in just five more years.

That's up nearly 5 times from $220 Billion reported for  2012. If we do in fact add all of the free stuff envisioned by the Democrats, the debt amount could double again in just ten years.

Not paying that amount isn't an option. Given that many of the current and proposed entitlement programs are forecast to grow exponentially simply due to having more users, it stands to reason that discretionary spending will suffer at every level.

No matter which party wins out in 2016, the funding landscape is sure to change in the next decade.

The nonprofits and small businesses that weather the storm will be the ones that plan for it now.

If you are just thinking of starting a nonprofit, it might behoove you to either wait a year or so, or at least run two opposing SWOT analyses before jumping in with both feet.

If you are an existing organization, you may want to factor in significantly higher costs and lower revenue projections when evaluating old programs and before launching new ones.

Another trend may be that local governments will be looking for revenue of their own to replace any missing Federal dollars.  That could lead to the repeal of many of the traditional nonprofit perks, including tax breaks for property used for charitable purposes.

In spite of the handwriting on the wall, many nonprofits will choose to wait to plan until it is too late.

 

Don't let your organization be one of those wringing your hands and holding "going out of business" sales.   

Don't be guilt-tripped into changing your mission.

In an article posted to their website today, Philanthropy News Digest passes on the information that a report has found that family foundations lag behind in social justice funding.

Reports like this abound in every sector. In general they tend to reflect the bias or mission of the agency or organization that commissioned and compiled the report.

Most people and organizations know that and just will shrug this off and move on, but inevitably some will react by deciding that they are somehow in the wrong.

A few years ago, a client was profiled in a newsletter as being "unsympathetic" to minorities because they chose to focus on developing job skills and teaching low-income folks the value of having marketable workplace skills. The gist of the original article was that their programs didn't reflect  the national ratios regarding racial distribution.

Their programs were not defined by race or gender. The only qualifier to participate in the training was to be un- or under-employed and have an annual income below the poverty level.

Unfortunately for the NPO, the majority of the people that responded were white females. Not too surprising, since females are normally the caregivers in single parent homes and the minority population in their area was low, but it gave the group that published the newsletter ammunition for the presses.

After several weeks of heated social media back-and-forth, the board of the targeted NPO  met and decided to develop a minority-only program within the main program. They reasoned that would not only get the critics off their back, but open up new and perhaps better sources of funding.

It didn't work out very well.

First, they had trouble attracting minority participants. Since that had been a problem from the start, a disproportionate amount of time was spent to reach out to that segment of the population, and the main program outreach suffered accordingly.

Second, when they had to provide racial breakdown information for their program participants and graduates, i.e. their outcome results, they remained weighted toward white females. Hardly surprising, since the total minority population, i.e. all other races, of their service area was under 27%.

After struggling with the problem for three years and watching their funding fall by 35%, the board voted to resume operations as they had been prior to the bad press

The moral to this tale?  Do what you do and do it well. You can't please all of the people all of the time.

Political winds change constantly. If your programs are sound, needed and most of all effective, the money will be there.

Reading grant announcements

A nice lady called and wanted to know if I could write up an application for $500K for her small, one year old organization. Here is the entire announcement as it was forwarded to me:

Blackstone Charitable Foundation

Website:    www.blackstone.com

Program(s):  Employment, Economic Development, Job Related and Business Grants

State(s):  National

Maximum Grant Amount: $5,000,000 Total Funding Available

Deadline:  October 12, 2015

The Blackstone Charitable Foundation is accepting applications for the 2016 Blackstone Innovation Grants program, an annual program that awards a series of targeted grants to innovative organizations focused on entrepreneurship and job growth. Now in the fourth year of the program, the Foundation will award up to $5 million in grants to organizations that are tackling the big challenges facing entrepreneurs and entrepreneurial ecosystems.

Eligible organizations and programs may apply for one of two funding tracks:

BIG Program/Project Grants - Organizations with an existing track record of success may apply for funding for a specific program/project (new or existing) that addresses a major systemic challenge facing an entrepreneurial ecosystem and has the potential to be scaled and replicated.

BIG Event Grants - Established organizations may apply for funding for a specific event or convening that accelerates the conversation around entrepreneurship on a regional, national and/or global scale.

Organizations will be evaluated and selected by a committee and subsequently approved by the Board of the Blackstone Charitable Foundation.

To be eligible to apply, organizations must be at least three years old and have an annual operating budget greater than $1,000,000. (Italics are mine).

__________________________________________________________

Obviously, the lady's brand-new organization doesn't qualify. Now don't get me wrong. There is nothing wrong with shooting for the stars. But hiring someone to write a grant you can't possibly qualify for is just plain bad business.

Moral:  read the whole grant announcement.  The lady got as far as the first 2-3 paragraphs and quit reading at "(new or existing)".  The good news is, I have been able to find her a grantor that does match her organization well, although the amount is certainly not as large as she wanted.

Big grants normally require substantial organizational strength. That's normally why I don't write Federal grants or large foundation grants for new organizations.

Yes, it would be nice if these grant announcements would lead with the eligibility guidelines first. Federal grants are historically notoriously bad for being ambiguous or at least indefinite about what level of nonprofit they are written to attract.  Just saying you have to be a 501(c)(3) to apply  leads to a lot of wasted time, money and ink.

Still, if you read the whole announcement, at some point you can probably get a clue that your organization can't complete the requirements.

The good news is, there are almost always grantors out there that will match up well with your level of development.

In fact, one largely overlooked area is in development grants. For some reason, people just aren't  looking for grants specifically designed to improve their overall organizational capability or provide board or staff training.

It's true that only about one in ten grant applications are funded. You can improve your chances by making sure that your organization and the grantor match up well and that includes reading the entire announcement. 

If you have a question about applying for a grant, feel free to contact me at rightwords@ida.net.

Are donors and nonprofits contributing to income inequality?

A  lot has been said recently about the shrinking middle class, the stagnation or even decline in middle class wages, and the job nonparticipation rate.

Meanwhile, businesses are complaining that the skills they really need are being ignored or even denigrated by both politicians and educators.

Case in point. During one area development group's public meeting they asked existing and prospective business owners what they needed to consider relocating or expanding their businesses to the area.

They responded with answers that largely followed this vein.

                                               

They need people that are willing, able  and trained to do hands-on "blue-collar" tasks. They need mechanics, welders, manufacturing assembly line workers, and even freight handlers. As one business owner commented "It doesn't do any good to design a better mousetrap if there is no one to build, box and deliver it."

Salary.com reports that an entry-level welder with 0-2 years experience can expect a starting salary of over $ 27,000/yr. or $13.24/hr and a top salary of just under $48K, which is not exactly minimum wage. 

One area college responded by sending out a press release touting their current and future  increases in STEM classes. One of the clips played was that of someone saying that they were in business to train "the labor force of the future, and the future is not in a field or a factory."

This single incident illustrates the disconnect between the realities of day-to-day business needs and a certain intellectual naiveté about the future.

   

Nonprofits offer a funding avenue for some low-income students. Since they don't produce a revenue stream of their own, they are totally dependent on the largesse of both the government and private donors. These gifts and grants (or contracts) are the source of some truly big funding pools, such as the $20 million dollar scholarship fund established at Notre Dame.

That money tends to follow what's trending at the moment and that trend isn't money for trade or vocational schools.

While no one would argue that the future does indeed indicate a need for a well-educated workforce with different skills than those of the 20^th century,  the yardstick that we use to define "well-educated" needs to reflect an awareness of functional reality.

When education-based nonprofits set their program goals, and donors at every level write their checks or set up their trusts, it would behoove us all if they could keep that perspective in mind.

Philanthropy without relevancy is as counterproductive as no philanthropy at all. 

Grant information - Animal Shelters and rescues

Rescue Bank is accepting applications from qualified 501(c)(3) rescues and shelters for their pet food distribution and assistance program.

The group has an ongoing application period.  To view the eligibility requirements see:

http://www.rescuebank.org/eligible-recipient-groups/

Please note that there is a phone number given that you can use to see if your organization qualifies as to geographical and organizational status. 

Shifting focus

There comes a time when everything that can be said on a subject has been said, at least in the absence of new data.

That's kind of where this blog is at now. When you start repeating yourself, it's time to move on.

The purpose of the blog was, and is, to assist new or struggling organizations in achieving greater success. In many cases, my mail tells me that mission has been accomplished.

I am aware that every day brings new people into the marketplace, whether it is in the nonprofit or for-profit sectors. If this blog was monetized, then prospecting for new fledgling businesses to advise would be useful, to me if not to you.

That was never my intention. The primary reason the blog exists is to provide free information and hopefully to prevent the readers from making expensive newbie mistakes.

Lately however, most of my mail has been from people looking to game the system.  The only mission most of them have is to scam the public and incidentally, figure out how to get rich doing it.

Those are not the people that any legitimate grant writer or consultant wants to help.

In the future, the blog will probably focus on RFP notices, trends and legislative issues that impact nonprofits and small businesses. In some cases it might stray into political climate changes affecting those groups.

Readers that specifically request "Climbing the Ladder  to Nonprofit Success" can still receive a PDF copy by emailing me at rightwords@ida.net, and of course I am still available at that email for grant writing, business plans and funding research services for qualified entities.

To those following the blog, if you have specific, germane questions about the process of running a successful nonprofit or small business, feel free to ask questions using the comment section. I'm always available for consulting services as well.

It's been a great ride. To all of you struggling to make the world a better place, my hat's off to you. 

The important parts of an LOI

After spending a week reading proposals and letters of inquiry, I thought it might be a good time to offer a refresher course on a properly designed letter of inquiry, sometimes also called letters of introduction.

A letter of inquiry (LOI) is basically a way of introducing your organization to a prospective funding partner and requesting their monetary support. LOIs are meant to elicit an invitation to submit a fully fleshed out proposal, not as the final funding request.

It should be formatted as a formal business letter, with attention to proper business formatting and language. It should contain the date, inside address and the appropriate salutation. Closing signatures should be properly formatted as well. If you aren't sure of the formatting there are innumerable examples online.

The tone should be respectful and business-friendly, even if you know someone at the prospective funder's office quite well. This is the place for "Dear Sir" not "Hey, dude".

If it is done in hard copy, letterhead stationery is recommended for the first page and corresponding paper with a footer showing your address and name for subsequent pages.

As to length, if there are no guidelines offered by the funder, two pages is a good rule of thumb. By no means should it exceed three pages. Some funding organizations are now limiting LOI's to a certain page, word or character count.  Always try to check the requirements with your target organization either via their online profile or by actually contacting someone at their offices for guidance.

Introduction

A modified Executive Summary.

Who are you and what do you want?   Since this may well be the only part that is ever read, it is important. If you were referred to the funder by someone, this is a good place to mention it, as follows:

"Joe Black indicated to us that you are accepting letters of inquiry" or words to that effect.  Just mention the person briefly. 

Introduce your agency. Include a short thumbnail version of your organizational biography (1-2 paragraphs); a short but complete outline of your mission goals; a statement of mission alignment (seeks to show grantor that you recognize their priorities and shows why you think your request for funding fits within their mission).

The amount you are requesting (unless funder guidelines prohibit this).

Your qualifications to accomplish your mission (previous successes, advantageous partnerships, community involvement etc) 

Statement of Need

Briefly outlines the problem you are seeking to solve, the impact the problem is having on your target population and why your program is needed (no one else is addressing it or other agencies are overwhelmed, etc).

Program specifics

Present the macro details of your program.  Be sure to include specific outcome goals that prove impact, and mention how you will verify outcome data. Briefly introduce key program staff and synopsize their qualifications relative to the program. Include a total projected figure for the program, but this is not the place for a line item budget.

Other support (if any)

List any other funding sources or pledges of support including dollar amounts (If your other funders agree.  Otherwise, use percentages, such as "XYZ  has pledged to underwrite 20% of the program costs for the first year).  Remember that no funder wants to be the sole source of support for your organization and your programs.

If matching funds are required, mention where and how you plan to obtain those funds.

Closing.

Thank the funder for the opportunity to present your organization/programs to them and restate the ask. Sample closing:

"Thank you for the opportunity to present our organization and our mission to (name of funder).  We are looking forward to an invitation to present a full proposal further explaining our request for $35,000 for the (name of program)"

The LOI is your only chance to make a first impression.  Do your best to make it a good one. 

Sell solutions, not problems

For those of you who believe that marketing your nonprofit mission is all about explaining a problem…

Wise up!

Donors at all levels want solutions that solve the problem, not perpetuate it. For new or smaller nonprofits, establishing that you have the resources to do that is one of your biggest hurdles.

That's not to say that you shouldn't include the high points of the problem as a explanation for your solution. After all, there has to be a reason to ask for other people's money, whether you are selling a car or a cause.

That's what the statement of need is for, but if your whole pitch is about telling people what they probably already know, you're going to lose their interest quickly.

Unless your mission is very unique or seldom addressed, donor education on the problem is sometimes regarded as just so much more PR hype. More importantly, it wastes valuable space in your proposal.

For local nonprofits, much or your funding is going to come initially from your local area; usually at  the city, county or sometimes state level. 

A case in point

To  combat a stray dog problem,  county commissioners passed an ordinance requiring all dogs be spayed or neutered to receive a license, or that the owners get a $350 annual kennel license for unaltered animals.

As often happens when governments get involved, the policy had unintended consequences. The population of unlicensed and freely breeding dogs skyrocketed.

A local but small  mid-South animal rescue had been trying to build a no-kill shelter for almost five years, with little success. They had four acres of donated land, but little else. The cheapest plans they could put together were still coming in at $2.7 million dollars for construction and all the corresponding preparation costs, including an environmental impact study.

The problem wasn't so much irresponsible pet owners as it was the cost of the surgery. Even at the so-called county discounted average price of $175.00 per animal, most owners in the economically distressed county just couldn't afford it.

The rescue wanted to switch tactics. They contacted every vet in the area and asked them if they could offer  spay and neuter services for $75.00 per head in return for guaranteed payment. 87% of them agreed.

The new mission of the rescue was to collect funds to offer prepaid vouchers to the owners to give to the veterinarians. The owner would contact the rescue, receive a voucher number, take that to the vet within 30 days of issuance, the vet would turn in monthly confirmation of the surgeries  to the rescue, and they would then pay the vets. They will call the campaign "More pets, less puppies"

At present, there are still some logistics to be worked out, such as what to do with animals that have no owners, but initial response to the concept has been outstanding. Pledges have tripled in just a few months.

Why this works

County residents already knew about the problem. They wanted it fixed, but not at the expense of maintaining another shelter forever and ever.

This idea offers a real solution to animal overpopulation. It short, people can see the time when the need for the program will dwindle down to a minimum level.

Results are germane to the county residents. No one wants to have their dog impounded and destroyed, but economics is still the driver of family budget decisions. People who are tired of packs of free roaming dogs can see an end in sight.

Veterinarians, some of whom  had been doing some surgeries for free as a public service, will realize more income, most of which goes back into the community in the form of wages and local purchases.

 

Even the county benefits, since their animal control personnel can spend more time on abuse cases instead of rounding up whole packs and litters of dogs. What little extra revenue was coming from dog licenses will be more than covered by a reduction in county personnel costs for overtime.

Focusing on impact

Rethink your approach to your mission. See if your programs can be redesigned to offer real solutions to the root cause of the problem. Give donors a glimpse of the light at the end of the tunnel, instead of just a longer tunnel.

Understanding donor objectives

Followers of this blog know that I am all about matching the most closely aligned mission objectives when researching possible grant or donor profiles.

How can you do that if the grantor or donor profiles aren't specific?

Anyone who has ever used resources such as the Foundation Center database is familiar with the categories or fields of interest filters. Youth, education, human services etc. are a good place to start. but they are overly broad.

To drill down to specifics, try these things:

·         Go to the grantor's website, and look beyond the obvious.  Who are they supporting, and just as important, who is supporting them? Research those people or entities too.

·         Don't overlook the obvious. Check out their grant application requirements and note the exclusions.

·         Do a general search for mentions of the prospect on the 'net.

·         Research the board members. Their particular interests and passions may drive the grantor agency's policies.

·         The same holds true for the grantor's largest partners or donors.

·         When possible, connect with them before you ask for money. Go to an event they sponsor, or attend functions where board members are likely to be present and listen to them speak about their interests.

·         If you get the chance for one-on-one contact, even just a brief introduction, be prepared.  Perfect your 30-second elevator speech and have business cards available.

Yes, all of this is time-consuming. In fact, grantor research is the single most often-requested service I offer.

Still, why would you spend two hours each writing ten grant proposals that have no chance of being funded, when the same time could be spent on one or two qualified prospects that you may have an 80% or greater chance of landing?

Work smarter, not harder!

Understanding grant cycles

Funding sources, even those run by the Federal government,  are not bottomless wells of money.  Case in point; the SBA has just announced it is out of money for FY 2015 for its 7a small business loan program.

One of the hardest concepts to get across to  new businesses and nonprofits is that you can only apply for funding when the money is made available.

A large part of my business consists of finding suitable funding matches for nonprofits and small businesses, but that's just the start.

Once a suitable candidate is located, the next step is to ascertain when and how they award funds.

Typically, foundations in particular derive the funds they award from earnings on investments.  Like most of us, they can't spend money until they have money.

That produces various cyclical open application periods.  For some foundations, that's annually, while others may have two to four open sessions per year.

Ideally, and assuming that there are suitable matches, a nonprofit should plan on having a mix of grantors to approach that award funds at different times of the year.

Of course, given the funding landscape, that isn't always possible so the next best strategy is to locate funding sources that award at the times when you most  need the money

That involves planning ahead.

For instance, a nonprofit that needs funds for back-to-school supplies might want to look for awards that pay out in the early summer. Since applications typically open from 30 to 90 days before the award, that means having a list of prospects that accept applications as early as mid winter.

It also means being ready to apply at that early date.  There's nothing more frustrating to a grant writer than getting a panicked call to apply for funding with an application close date a week or less out, and finding out the organization hasn't even worked up budget figures yet.

Understanding grant cycles is one of your most important management tools. Use it well and it is an asset, but ignore it and you are going to be in a perpetual state of financial panic.

Need funding leads?  Contact me for assistance

Need grants? Collaborate and conquer!

Is your charity solving problems or just spending money? Many funders are asking that question, and sometimes just that bluntly.

The question of whether there are too many ineffective nonprofits competing for too few non-government dollars has been an ongoing discussion for quite some time. The advent of the 1023EZ is onceagain creating interest not just in answering that question, but solving the problem.

There are two polarizing reasons why nonprofit funding woes continue to proliferate. One,  nonprofit founders feel that they are serving a need not otherwise addressed in their local area, and two, funders have hit the wall in terms of how many small organizations they can fund while still achieving their own missions.

One bone, many dogs

Obviously, some nonprofits are all chasing the same dollars for the same causes.

One of the first things I do when a prospective nonprofit founder contacts me for help starting a new venture is to see how many other groups are tackling the same problem in a relatively tight (say within a fifty mile radius) geographic area.  I also check to see how many national groups have chapters or members in that area.

You know what?  Grantors do exactly the same thing and woe be onto you if you are just one face in a crowd.  

One very popular type of charitable focus, and a crowded one,  is on alleviating hunger. Quite frankly, one or two national groups pretty much have that arena sewed up tight, speaking strictly from a funding standpoint. You can become one of their network members, but striking out totally on your own may not result in success.

Sure, your new food pantry might be the only one in its area, but where is the money going to come from to sustain it? Taking in a few thousand dollars a year might have a positive local outcome, but is it sustainably resulting in fewer hungry people?

Generally, when nonprofits think about mergers they think of other similar agencies. For instance a soup kitchen might collaborate with a larger food pantry or food bank.

That could be the wrong approach.

A new look at an old problem

What about partnering with organizations that remove the root cause of hunger, which is generally considered to be poverty?

Consider forming a sort of local or regional alliance that addresses all the causative factors that result in hunger.

A local food bank could seek out another local group that provides help in getting GED's. Those two could enlist the aid of a group that provides specific technical training or scholarships. Those three could work with a local economic development group seeking to bring in more jobs to the area. Those four could work with a group providing childcare for working parents.

Each of those groups has their own particular expertise, but together, they could actually offer grantors the chance to end the need for supplemental feeding programs.

That's the kind of impact that impresses grantors.

By forming a regional or even local community improvement collaboration, each agency could pool their manpower, marketing and yes, their dollars to create complete outcomes.

Make no mistake, this type of organization is no picnic to form, and even less easy to manage. This definitely a time when you want expert legal and financial advice.

Too many egos, too many pet projects and too little money dooms more than a few collaborations. If one organization gets money from a major donor restricted to say, just purchasing food, and another gets nothing for  school supplies, all hell breaks loose.

I have intimate knowledge of how that works, having written a successful five-year grant for several million dollars, only to have the partners start fighting over the funds when they were awarded. Within less than a year, the cornerstone charity backed out, leaving four smaller agencies incapable of meeting the renewal terms of the grant in the second year. In the end, no one got the rest of the money, and no one benefited.

This "collaboration" was strictly a gentleman's agreement, and when issues arose there was no contract or formal agreement to prevent the largest participant nonprofit from bolting.

Funders currently hold all the aces

If nonprofits don't find better ways to fix problems, funders will do it for them. The reason the big-money, high-profile charities get all the money is because they are perceived as being more effective.

As I look for funding for smaller organizations, I'm seeing more and more foundations closing their public application processes. Others are starting to set minimum revenue qualifiers in the hundreds of thousands and even millions of dollars for consideration of proposals.

Still, some funders do recognize that size isn't necessarily an indicator of effectiveness, and they are looking for innovative proposals.

A relatively small collaborative venture might well be more effective than a huge national organization that is strangled by its own size. Many large nonprofits have been plagued by scandal that resulted primarily because the national organization was far too insulated from accountability by its sheer size.

Nevertheless,  faced with the inevitable reality that there just isn't enough money to go around, funders are attacking the problem by prioritizing in favor of larger or at least potentially more effective organizations.

Community collaborations could be the answer to being shut out all together. 

Independent Contractor or Employee?

As a person who considers themselves to be among the ranks of the independent contractor or solopreneur population, both my clients and I have an interest in how to maintain that relationship legally. Indeed, I have at various times had to sever or refuse relationships with clients that wished to control me as an employee, while still paying me as an independent contractor.

In many cases, I have had a hard time explaining why and how I make that distinction. To many users of so-called freelancers, just the mere fact that their workers are offsite, or their services are covered by a contract is enough to justify 1099 status.

In all fairness to the client side of the equation, in many cases they truly believe that anyone not occupying a desk in their offices or who has signed a contract  is not an employee, particularly if they engage the contractors services through one of the many labor broker or middleman sites like Elance or other similar websites.

I, on the other hand, tend to define the relationship by how much autonomy I have to produce the deliverables that serve the purposes they want or need.

When I come across a client who actually advertises for a contractor on one of the middleman sites, or who after I contact them wants to work through one of those sites, the relationship becomes even more complicated than usual. 

Needless to say, that can create significant misunderstandings.

So, whenever a government agency takes a stab at clarifying the differences, I am interested.

On  July 15, 2015, the U.S. Department of Labor's (DOL)Wage and Hour Division issued an Administrators Interpretation, No. 2015-1 that for the first time seeks to clarify the distinctions used to determine the legal status of workers for employment classification purposes.

While declaring that the intent of the document is not to discourage people from being legitimate independent contractors, it nevertheless has an emphasis on attempting to crack down on misclassification of workers.

Interpretation 2015-1 relies heavily upon defining the somewhat ambiguous phrase "suffers or permits" in determining the relationship of workers to the people benefitting from their work.

By citing numerous examples of legal precedent, administrator David Weil seeks to explain the differences under consideration.

Among the many legal decisions cited, none directly address the proliferation of so-called labor brokers, specifically businesses which depend upon what could be termed "captive labor" i.e. people whose work product the business needs to control in order to earn revenue.

However, on pages 14 and 15 of the interpretation, the document does provide a hypothetical comparison of circumstances that approximates a common scenario found in the actual operational model  of  the labor brokerage business segment, as follows:

"Example: A registered nurse who provides skilled nursing care in nursing homes is listed with Beta Nurse Registry in order to be matched with clients. The registry interviewed the nurse prior to her joining the registry, and also required the nurse to undergo a multi-day training presented by Beta. Beta sends the nurse a listing each week with potential clients and requires the nurse to fill out a form with Beta prior to contacting any clients. Beta also requires that the nurse adhere to a certain wage range and the nurse cannot provide care during any weekend hours. The nurse must inform Beta if she is hired by a client and must contact Beta if she will miss scheduled work with any client. In this scenario, the degree of control exercised by the registry is indicative of an employment relationship.

Another registered nurse who provides skilled nursing care in nursing homes is listed with Jones Nurse Registry in order to be matched with clients. The registry sends the nurse a listing each week with potential clients. The nurse is free to call as many or as few potential clients as she wishes and to work for as many or as few as she wishes; the nurse also negotiates her own wage rate and schedule with the client. In this scenario, the degree of control exercised by the registry is not indicative of an employment relationship."

Whether this actually addresses the business practices of such examples as Upwork, Elance, ifreelance, Demand Media, Creative Circle or any other of the well-known middleman businesses currently in operation remains to be seen.

In another section of the document concerning the control of the worker by the other party to the relationship the document includes this citation:

"…see also Superior Care, 840 F.2d at 1060 (“An employer does not need to look over his workers’ shoulders every day in order to exercise control.”)

Also addressed in the administrative interpretation is whether the middleman or client's main business could exist without the exercise of control over the worker, i.e. is the "control" factor an integral part of the middleman or client's revenue from business operations.

In the case of those businesses that derive a significant portion of their income only if a worker produces a billable deliverable for the end buyer, that relationship becomes central to answering the question of whether the worker is in fact, an employee of the labor brokering business.

For the millions of freelance writers, coders, programmers, and others currently deriving the main portion of their income through their association with the many middleman websites, this document is not likely to fully answer their questions.

In my own case, I virtually quit even responding to clients that advertise for help on these sites, although several years ago I did have several wonderful clients that accessed my services in that way. 

At first glance, the document would tend to support the premise that most of the sites that control access to and/or place limitations or impose standards upon how or even whether workers can access clients, could be in for a rough ride.

For those needing a concrete real world  example of the differences addressed, sites like Elance.com and its corporate progeny, Upwork.com would seem more akin to the first example (Beta Nurse Registry) quoted above, while sites like flexjobs.com, craigslist.com or idealist.org more closely approximate the second scenario(Jones Nurse Registry), essentially providing the same service as the classified ads in your local newspaper.

Although the DOL is to be commended for trying to address this issue, the resulting document does little to provide absolute clarity for the millions of so-called freelancers, or the buyers of their services.

The actual status will probably be clarified on a case-by-case basis, only when someone or some group specifically asks for a ruling or files a legal action requesting clarification of employee status to obtain benefits or settle a tax question.

Another interesting thing to watch will be how the sites themselves react to this DOL paper.

Some already provide an option that allows contractors to request that jobs be re-classified as W-2 positions rather than 1099 arrangements, although the buyers are free to refuse. Others are creating subsets of what are essentially employee/employer relationships within the main corporate structure.

In the meantime, I will continue to structure my contracts so as to leave no doubt about my status. 

How do funders pick award winners?

Successful grant proposals illustrate these key points.

·         Your proposal delivers an important idea relative to the grantor's mission by addressing a significant issue.

·         You show that you understand the grantors mission by providing an innovative approach to that issue.

·         You set reasonable objectives and present a detailed plan, including a budget, to achieve them.

·         You can provide proof to the funder that you are capable of success.

·         You can explain how the project will advance the funder’s mission.

·         You can show that the project is sustainable beyond any support the grantor may provide.

·         You don't apply if you aren't qualified.

Grantors receive from dozens to hundreds or even thousands of proposals when they announce an open application period.

You have to stand out. One of the best ways to do that is to provide documentation of your success in addressing the issues even if it is through a pilot program or another type of program that is still mission-centric.

Sometimes that simply means presenting your program differently.

Homework is the most important part of any grant proposal. You already know about you and your needs. Your assignment is to find out what the funder needs or wants.

Get to know everything you can about the funder. Who have they funded in the past? What type of programs do they fund? Who is on the board? Do they fund the same organizations every year? Is there an opening to present a new twist that those other grantees haven't explored? Don't be afraid to look at those other grant winners and discover their strengths and weaknesses.

 For instance one nonprofit that worked to provide transitional safe housing for domestic violence victims presented their program as "Safer homes mean better educations" and landed a $25,000 grant from a grantor that normally supports early childhood education.

The trend toward online applications that began a few years ago is not your friend. Learn to condense your narratives and program outlines because you may not have several pages to elaborate on your planning and goals.

The last bullet point above is important. Don't apply if you can't qualify. Aside from making you look incompetent, you might very well leave such a bad impression that you hit the funder's blacklist (and yes, virtually every funder has one).

It is rare for a smaller nonprofit to have dozens of potential funder matches. If you can align with a handful each year, you are doing far better than average.

Grantors don't typically fund organizations that have few or no other resources, which is why they almost never fund start-up organizations. New programs are often okay, new organizations, not so much. Grantors are looking for impact potential, and it's hard to have impact if you can't pay the light bill.

On the other hand, if you have managed to grow your organization using financial resources from avenues other than grants, that's a definite plus.

That said, if you have a truly outstanding angle and an ironclad plan of action that offers a new twist on an old problem it might not hurt to try.

Consider these tips and you are likely to connect on more proposals.

Next week – Collaborate and conquer. 

Good procedures improve scalability

This question comes up often on grant applications. "How does your organization demonstrate scalability?" and it drives small businesses and newer nonprofits crazy.

In simple terms, scalability refers to the ability to manage growth. For a very small entity, the first private reaction is usually "I don't know…give us the funds to grow and we'll figure it out!"

A natural but fatal flaw in understanding what the grantor is asking.

What the grantor wants to know is that you have a plan and procedures to facilitate growth. The larger the grant sought, the more formal the procedure becomes.

When I work with a very new organization, I often call this developing a what-if strategy.

What if you actually won a million-dollar grant?

What procedures do you have in place that even a brand-new employee could understand?

For instance, let's take Human Resources.  What procedures do you have (beyond advertising to fill job openings) to assure grantors that the people you hire have qualifications that fit their roles?

A hiring procedure manual will outline what educational and experience profile new hires have to meet. It will cover things like job descriptions,  who conducts background and reference  checks, where they look for that information and what they should do with it when they obtain it.

On the grant application you might summarize this by saying "Our  hiring procedure manual clearly outlines the number of new employees needed for expansion, who can place the order for new hires, and defines the step-by-step procedures needed to verify applicants to ensure they meet the standards required."

BTW…I have seen more than one grantor that required actual copies of procedures at the time of the award decision. There's nothing scarier than receiving a letter that says "You have been selected as a grant recipient, contingent upon receiving documentation within three working days of _________ as stated in your application" and realizing you don't have hard copy.

Believe me, you usually can't create that kind of document out of thin air and get the appropriate board approvals and/or management signatures in 72 hours.

Notice that I said board approval.  Any document that sets policy for an organization should be reviewed by the board and carry a signature page showing it was approved, and that approval should be read into the minutes of the board meeting.

The usual procedure for all that is to introduce the policy at one meeting, have it reviewed by the appropriate legal and financial staff, and then approve it at the next board meeting.

Of course a $500 grant from your local big box retailer or community foundation  isn't going to require all that, but part of growth is thinking beyond the moment.

In short…plan ahead to get ahead.

Need a policy manual?  I can help.  Contact me at rightwords@ida.net for more information.

Nonprofit Coaching

I get a few emails each month asking if I offer coaching to people either contemplating a start-up nonprofit or small business or who are  struggling with one they already have.

The short answer is yes, with almost every client.  It's the most important part of providing high-quality development assistance to you.

That said, I don't have a goal to become the next internet coaching sensation, giving sales oriented podcasts or packing meeting rooms with throngs of adoring fans.

I just don't work well that way.  I much prefer one-on-one client relationships that provide a specific benefit to you, vs. signing up 100 people who may not have any of the same problems that you do. Sometimes that benefit is simply helping you apply for a grant, but often it involves much more.

Knowledge isn't always power.

Most of the people that email me because of this blog are looking for effective help. They've attended a dozen or more webinars or podcasts, watched countless online videos, and they still aren't getting anywhere.

It's been my experience that attending serial podcasts or lectures gets to be a sort of addiction. It starts out as simple curiosity, but morphs into a kind of co-dependent  relationship.

Some people think if they just listen long enough, someone will have that magic bullet that instantly confers riches and success.

Some of these podcasts are really very good on a macro level. Others seem to be just about developing a mailing list. You can spend a lot of time, and sometimes a lot of money following these folks around the internet.

That's not to say that I don't charge for what I do.  A typical client will initially spend from $300 to $1500, usually over a period of four weeks. That can cover everything from conducting an initial feasibility study to determine whether they should proceed, to actually writing a proposal for them.

Every organization and person is different and one-size-fits-all group coaching only gets them part of the way to their goal.

Starting any business is scary.  Starting a nonprofit is twice as hard and ten times as frustrating. You can't look forward to selling a product to help recoup the costs. You are totally dependent on the goodwill of others for your existence in the beginning.

Other than my free white paper "Climbing the Ladder to Nonprofit Success" I don't offer a mass appeal  "course".

Every client is an individual. Solutions that work for one aren't necessarily the answer for another.

In most cases there are one or two specific troublesome areas that hold you back.  Those are the areas I can help you recognize and overcome.

Don't know what grantors look for in a winning proposal?  I'll show you.  Don't know what to expect when filling out all that start-up paperwork?  I'll tell you. Don't understand why you need a board of directors, or need a better one?  I can answer that. Need to know what to include in a program budget?  I can give you a checklist or show you what to add to what you have already.

Does this work?

Here's what one client had to say:

 "Wow. I had no idea what I was getting into with this. The internet makes it all sounds so easy.  Just find a good cause and tell people about it and money will flow in on a river of compassion.  I've spent two years thinking everyone was against me when it was really all about understanding the process and having a realistic roadmap.  I needed to step back and take the steps you recommended.  I just wanted you to know that I now have my determination letter, a far better plan moving forward,  and our organization just received its first big donation." 

 

This was a client that started out adamantly insisting that having a formal 501(c)(3) letter wasn't necessary. There was nothing wrong with his mission or vision but he didn't understand why all the "expensive bureaucratic BS" was necessary. I could have written him a dozen grant proposals and he would still be struggling.

Or this client that initially just wanted an appeal edited:

"Thank you so much for your list of grantor possibilities and for helping us to understand what grantors and donors want to see in a proposal. Thanks to your tips we are now targeting our appeals to people that support not just our overall vision but can help us develop into the organization we always wanted to be."

Both of these clients thought that more money was the answer to their problems. It wasn't.

That's my take on coaching. If you hire me you may very well get it. It's just part of serving your needs as effectively as possible.