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

Can your nonprofit apply for grants?

To most of the public, the definition of a nonprofit or charity  is the one used to describe 501(c)(3) organizations. In other words, organizations that solicit and spend tax-exempt and  tax deductible funds "for the public good."

Actually there are several subsections of section 501, and how you file your initial paperwork can substantially change the funding landscape for you.

For some of the differences, check out this chart.

Lately, I have run into several organizations self-described as foundations and approved as 501(c)(4) entities that want to apply for grants from other foundations.

In most cases, I don't quite understand why they chose that subsection to file under, but that's a topic for another post.

If you are wondering "what's the difference, we are still a charity " then you might not understand why foundations reject your grant applications and donors don't support you.

 One major difference is that donations to a (c)4 are not tax deductible, and you are legally required to state that fact prominently on all your publications asking for support.

While tax deductibility in and of itself is not the major reason people donate, the lack of that component can lead casual donors to question whether their money will be used for charitable purposes or political lobbying.

As far as major foundation and corporate donors are concerned, the (c)4 can legally only access funds from other charitable organizations under certain well-defined conditions.

That means that (c)4's are far more dependent on developing their donor base one-on-one than their (c)3 counterparts, meaning that grants are usually not part of the fund-raising equation.

Fundraising for a (c)4 may involve more donor education to attract individual donors.

Particularly since the flap about the IRS targeting (c)4's for their political activities, donors need to be told why your foundation is problem-centered rather than politically centered, assuming of course that is the case.

Other types of fundraising that are typically more productive are things like black-tie events, one-on-one donor meetings, social media campaigns, website donation capability, direct mail, phone campaigns  and email solicitations.

You can combine events with a (c)3, as long as the donations are clearly separated. You can rent an email-list from (c)3's, but it must be rented at fair market value (typically .10 to .40 cents per name).

If your mission and that of a public charity are aligned in some way (for instance a research mission to find a cure for cancer could combine with a public charity seeking funds for respite care for cancer victim caretakers),  the (c)3 might welcome your participation.

A major donor cultivation program is essential to access larger lump-sum donations. Just be aware that currently donors are limited to a $13,000 a year limit.

It is absolutely essential that your board participate in fundraising efforts. Even more than usual, (c)4 fundraising is more about who you know than what you know.

Some (c)4's are spin-offs from(c)3's and vice versa. If your organization is having a lot of trouble fundraising, you might want to consider converting to or adding a (c)3, again assuming that your primary mission is not political. 

Holiday fundraising – Planning ahead

Many nonprofit organizations are looking at the end of the year, particularly in terms of revenue raised. Those that met or exceeded their goal have one thing in common – they thought ahead.

Every year about this time the internet blossoms with ads seeking help to "design a holiday appeal" or "boost our end-of-year giving campaign".

If you've waited until now to think about holiday revenue, you are about six months late.

In terms of grants, most foundations have already closed their application window for the year. While it is true that many grantors disburse a lot of their funding at year's end, they already know who is going to receive it.

In terms of local funding and many of the traditional campaigns such as Giving Tuesday (which occurs  December 2 this year) the participants have already been selected and the advertising, web pages, emails and even snail mail reminders have been delivered.

At best, your choices are social media blasts, and at this point that can throw you into competition with a maelstrom of carefully planned campaigns, many of them coordinated with big-budget marketing strategies.

Social media usually succeeds best with a broader, well-defined base of followers, so if your pages are mainly being visited by a few friends and relatives, social media may not immediately provide the oomph you need for serious fundraising.

One of the things that many organizations fail to account for is other people's budgeting.

Whether it is a huge foundation or your next-door neighbor, most available funding has already been allocated.

There is and will always be a certain type of last-minute donor, just as there are last-minute shoppers, but these tend to be one-time gifts.

Your goal is, or should be building  sustainable donor relationships well in advance of seasonal campaigns.

Seasonal campaigns rely on traditional marketing tactics. Building your contact lists, developing your media kits, lining up success stores or examples of need and tracking your appeal success rate all require implementing a cohesive plan with clearly defined steps and goals.

Any holiday fundraising is likely to  produce some revenue.  If you come up short of your goals, it might be a good time to consider preparing for the spring grant season, and begin developing next year's holiday campaign plans now by broadening your contact list and seeking out partners to help you expand your prospective donor base. 

Understanding Logic Models

Many grant applications require a formally presented logic model. Beyond that, logic models should be developed for every program as an in-house quality control tool. They can even be used to qualify prospective grant partners.

What is a logic model?

 

The easiest way I have found to explain it is that it is your program development blueprint or roadmap. Essentially, it provides a visible model of how your program efforts will result in reaching or supporting your mission goals.

There are many physical formats for the visual presentation. Documents, flow charts, spreadsheets  and slideshow-style presentations are the most common. I have found that the easiest way for most people to start is with an outline format in a word document. The visuals may be defined by a grantor in a different manner but any word document will generally translate well to any format

Content is king.

Regardless of what visual format you use, the content is the key ingredient. A beautiful picture frame with nothing more than a dirty piece of cloth in it doesn't usually rank highly as art.

The key element of a logic model is to show that your program is achievable, measurable and verifiable as to outcomes and impacts. It is nothing more than a step-by-step explanation of how your program will function.

Most logic models start with the resources and inputs needed to operate the program. That can include both monetary and human resources. For instance, you may need $10,000 dollars for materials, but you may also need trained personnel. It is nothing more than a list of what you have on hand or need to acquire to run the program. It is usually structured by defining what you will do and what you need to begin, and then provides criteria for measuring results.

What sections do you need?

The first section (Input) defines what you need just to get started. The following sections deal with what happens once you have that input secured. An outline for a program could look like this:

Program Name:   Remedial reading assistance for grade-school students

1. Required Inputs to provide tutorial assistance to 30 students per school year

·         Human resources = 10 qualified volunteer tutors

·         Monetary resources = $10,000 for books and paper supplies, rent, transportation and background checks

·         Suitable area for tutoring – minimum 600 square feet rented or donated

·         A curriculum for reading improvement

In other words, you need these things before you can go on to the next step, the activities that will be provided.  At this first step you might want to note or sub-list influencing factors, i.e. obstacles or assets such as whether you need to apply for grant funding, whether that funding will coincide with the start of the school year, should you approach the community for donated space or rent space and can you  recruit qualified volunteers. Obviously, if you don't have the means to go forward, that would be your immediate focus.

The next step would be to outline the activities that will be used to achieve your desired outcome.

2.  Activities (also called plan of action):

·         Assess each child's level of competency and divide into groups of three.

·         Assign the appropriate curriculum and tutor to address each groups need.

·         Hold twice-weekly one-hour sessions after school on Tuesdays and Thursdays

·         Relate reading activities to every-day life by having children read labels, signs or simple directions.

·         Have children real aloud for once each week.

The next sections of the logic model deal with results. Typically the next three headings would be Outputs, Outcomes and Impact, in that order. For instance, outputs would be how many of the target group of 30 signed up, and how many completed the program. Outcomes would be how many met or exceeded current grade-level proficiency. Impact would be following up with the students to see if they continued to progress and maintained grade-level  proficiency in the next school year or beyond.

Other benefits

At each step, the logic model should provide a chance to develop  some sort of" if>then" scenario. If we only get $8,000 then we can only enroll 20 students. If we only get 50% of the students to grade-level, then we need to evaluate the curriculum and the tutors. If we only get five qualified tutors then we need to do more community outreach and recruitment. In other industries, this is called contingency or variability planning.

Why you can't ignore the process

The larger the grant and the more competition there is, the more important a logic model will become. If you are chasing a relatively small local family foundation for less than $5,000, you may be able to condense a formal model into a few paragraphs or headings. The more zeroes you add, the more detail is required.

While these five categories usually cover the basic structure of a logic model, some grantors will also require that you document the contingency planning for a new program. The models can also be weighted  toward theory, activities and outcomes.

 

Beyond the obvious relationship to money, producing a program logic model will serve to keep your organization focused and efficient. Far too many people come to me with only step 2 and 3 developed. I can't present that to a grantor, so then we have to assemble the rest of the pieces. Why not do it before you need the money?  If you need help, you can contact me at granthelp@ida.net.

Coming Soon! "When should you consider Federal grants?" A new handout for growing nonprofits. 

Are you caught in an online fundraising box?

Are you targeting your entire fundraising budget to the internet?  Do you think that if it isn’t online, it’s just too much trouble?  Is FaceBook your outreach program? Does the idea of interacting face-to-face scare the living daylights out of you?

This isn’t a rant against technology. It is a rant against boxing yourself into just one fundraising strategy.

Ten or fifteen years ago, everyone was struggling with how to integrate the internet into their fundraising. Now it is often the only fundraising strategy that new nonprofits consider.

I am one of the biggest boosters of an effective internet presence. I probably derive 80% of my business from contacts that originate on the internet. I constantly maintain that having a professional looking, grammatically correct, cohesive and informative website isn’t optional in today’s world. A social media presence is just expected. Online donations may only generate about 7% of nonprofit revenue, but that’s 7% you might not have without online donation capability

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What seems to be missing now is that once you engage a nonprofit online, there is often no personal follow-through capability. I see more and more nonprofits that don’t provide any contact data beyond an email pop-up, even on their website.

There are real people behind those SM posts. They may want to shake your hand or visit your offices, if for no other reason than to prove that you actually exist and confirm that their money is actually being used for the public good.

With all the media coverage highlighting how unsafe your data really is in the cloud, many people are becoming street smart about how easy it is to set up a scam online. If the only place they can find you is online, they may shy away from committing to more than a minimum donation.

It is all too easy in our electronically defined world to lose that sense of real engagement. However close you might feel to your online group, when push becomes shove, how many of them could you actually reach out and physically touch? One out of 1,000?  One out of 10,000? None?

Nonprofits are all about people. They are about people that cry real tears, bleed real blood and have real lives. Don’t lose the human aspect of your mission. If you are uncomfortable with or can’t arrange face-to-face meetings, at least consider video chats and conferences that allow for personal interaction. Have a phone number and a real mailing address available. If your charity is still in the spare bedroom, think about having an informal get-together at a local restaurant or coffee shop. Put a real face and voice in front of your message.

The internet can be a wonderful meet-and-greet tool, but it’s just a tool. Don’t let it become a surrogate or stand-in for real donor engagement. You can hire a developer for your online world, but you need to be the one developing your donor connections.