Monday, July 20, 2015

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. 

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