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.

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. 

Do you value your volunteers?

Volunteers are an asset to any organization. Most nonprofits literally could not exist without them. These are the too-often unsung heroes that prop up your programs and provide the most effective community outreach there is…leading people to support your mission through their dedication to it.

But did you know they are also a monetary asset? Their hours can be the nearest thing you will ever find to a pot of gold at the end of the rainbow. It's one of the first things I ask for when preparing a grant proposal for a client if it isn't recorded in the financials or annual report.

Many grant applications also ask for the number of volunteers supporting your mission, or the number of volunteer hours contributed annually. Many smaller entities can't answer that question because they don't track that number.

This is why you should.

In 2014, the average value of a volunteer hour was reported by Independent Sector to be $23.07 an hour nationally and well over $24 in some states. While your state might be above or below the average, it's still evident that these good people save you a lot of money vs. having to hire help.

Most grantors feel that excessive paid labor expenses detract from the impact of their support.

Grantors understand that some programs require paid staff. Any program that needs degreed or certified staff will have labor costs.

However, if you are paying a social worker with a masters to hand out paper and crayons and act as a room monitor for an early childhood learning program or hiring paid staff to do that, it's not seen as a wise use of funds.

If  your program description shows that the licensed or degreed expert is designing and evaluating a curriculum to be taught by trained volunteers, the grantor knows that you are budget and value conscious, and the kids are going to get the maximum amount of hands-on help and the necessary supplies at the lowest possible cost per student.

Ideally, you should have a volunteer coordinator that not only assigns and recruits volunteers but makes sure they actually show up and knows what they did, where and for how long. That means you should be classifying their input as either program or administrative for budget purposes.

The value of a volunteer hour can also positively impact your bottom line. By recording their value, you may be able to meet the requirement for matching funds for grants requiring them, or increase your book value net worth.

For instance,  if you have them build a shed, the materials might cost $500, but the value of the volunteer labor could push that value to $2000.

That can help you qualify for grantors that have a minimum balance sheet requirement. Check with a qualified nonprofit-savvy accountant for the proper journal entries.

So there you go. You always knew you were happy to have volunteers, and now you have a reason to love them even more.

BTW – volunteers are not supposed to be practicing their trade or craft as volunteers and then getting a donation slip to offset the cost to their businesses. See the guidance for in-kind contributions at http://www.irs.gov/pub/irs-pdf/p526.pdf, page 7, middle column, example  #3 and #4.

Should you use a templated proposal?

It depends on what you are calling a template.

Periodically I have people ask me to write a template for them to use to reply to RFPs or LOIs (Letters of Inquiry or Introduction). What they seem to see as a template is a one-size-fits-all canned response, like a sales letter, that they can send out shotgun-style to multiple grantors.

In some cases, they will send me to their "about" or Facebook page and tell me to use that wording verbatim, but "put it into a grant format."

It would oh-so-easy for me to just add a couple of paragraph headers and collect a few bucks and move on.

The problem with that is the client would probably never win a grant with it, and here's why.

All Requests for Proposals (RFPs) and all grantors are different.

It follows then that there will be differences in the verbiage in your application. While they may have a similar macro-focus their goals will be different.

Take youth program funding for instance. That's a macro-category. To one funder that may mean providing money to purchase tablets or laptops. The next one may see it as providing after-school care.

If you send out your canned LOI, but none of your programs address laptops or after-school care, you just wasted your time.

What CAN be templated or reused.

When I think of a template I think of the headings in an application or proposal. Things like program descriptions, statistics,  board member biographies, prior year outcome reporting, annual reports and organizational history tend to stay fairly constant for at least a year, and these can be pasted into a proposal.

Most RFP's have sections for these things. Statements of need can utilize statistical reporting such as population, race, age or gender percentages, income profiles of the targeted populations, etc. That wording can be pretty much left as is for as long as they are accurate.

Other things will have to be written so that they apply to the specific grantor.

   

Program descriptions and goals tend to stay pretty much the same, but sections of them may need to be highlighted or even extracted to show relevancy to the grantor's goals.

Board members, key personnel and their bios usually don't change much for at least a couple of years  but should still be reviewed and any additions or subtractions noted such as promotions or a change in title.

   

Notice that I don't include the executive summary as a static document. If the proposals are slightly different the executive summary will also change. That's why it's called a summary. Sections of it might not change, but it should still reflect the proposal you are submitting.

I distinctly remember one summary I read that was still talking about funding for an event that had happened several years in the past. I do a lot of these documents, and I always verify that all, and I mean all, of the information is up-to-date and applicable to the grantor.

So the answer to the title question is a qualified maybe.

If the grantor or the request you are sending, say for assistance with a capital campaign, is exactly the same you could get away with sending out nearly the same proposal or LOI to several grantors during the year. If not, you may need to do a substantial rewrite.

BTW - Do be sure you have the right grantor's name in your executive summary or request for funding. I remember one person who used a foundation's name in the original LOI, and then hit "send to all" to seven different funder  prospects. Awkward!

Questions or comments?  Drop me a line at rightwords@ida.net

The one question that many nonprofits can't answer

That question is…what are your costs?

I do a significant number of business plans and grant applications, and they all require some sort of budget or financial forecasting. For some reason, almost everyone can tell me how much money they think they need for a given program or to start their business. When it comes to filling in the other side, i.e. what costs will that money pay for, less than 50% can provide the information. Added to that is that often they really don't seem to know how to calculate costs. It's almost as though they feel that if they don't think about the costs, they won't have any. If only that were true!

Costs are not just paper plates, postage, and computers. When I ask about things like taxes, the answer is, "We are a nonprofit so we don't pay taxes". Are you sure? What about sales tax, property tax and payroll or self-employment taxes? What about your rent, mortgage and property insurance,  even if your operation is housed in your private home?  If you use your private vehicle in your business or nonprofit, what percentage of its cost of operation can be attributed to business use as transportation costs? Even your internet access fees can be prorated to your operations.

Every single dollar of revenue generates some non-program costs. If you need $5,000 to run a certain program, then you have to know how much of that will truly reach your clients. When you are asked to send in a report on the uses of the funds, it better be accurate.

Donors want to see that you have a grasp on costs and you know where to allocate them. If you don't understand the difference between program costs and administrative costs, there is a good chance that the money the donor thinks is going strictly to programs is actually being used to keep the lights on. Most donors don't like that if they didn't know about it in advance.

Grant applications, loan applications  and business plans always have a section for financial data. Some of them are extremely detailed, while others may just want a total cost figure. Some people try to plug in a number that sounds good, but if pressed for details, they can't provide them. Accurate, detailed financial reporting is important. 

For instance, one grantor followed up on an application with a request for the cost breakdown analysis for a program budget line item. The applicant couldn't provide historical data on the cost to operate a delivery truck, because they had simply never tracked it.

That's why winging it doesn't usually work very well for very long.  More importantly, if you do try to wing it, it is usually pretty obvious to both investors and donors and your funding requests will hit the proverbial round file.

If you aren't sure whether your financial reporting will pass inspection, drop me a line and we'll look it  over together.