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

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. 

The politics of funding – Is your program relevant to grantors?

The reality of nonprofit funding is that sometimes your mission isn't trendy enough to attract support.

Take the current interest of increasing participation in post-secondary education, and contrast it with the goal of helping low-income people get jobs.

One the one side you have millions being poured into missions supporting STEM education, such as instruction in how to access financial aid for college.

On the other hand you have more local nonprofits struggling to get enough funding to do things like improving access to the workplace for people who just need a steady paycheck.

One group with the latter mission focuses on providing decent clothes for interviewees and training to improve interviewing skills and focuses primarily on workers aged 40 and up, displaced from the job market during the recession. Typically they purchased clothing from local retailers and made it available to interviewees. The program budget was in the low five-figure range annually.

This group is starting to find that even jobs which shouldn't require any sort of post-secondary degree are suddenly being restricted or at least are preferential to college grads only.

An example of this is seen in an advertisement for seasonal employees for a major home improvement supplies retailer. The specific opening was for a seasonal week-end position assisting customers in the lumber department.

The ad reads as follows:

"Preferred Qualifications:  Associate's Degree in Business, Retail Management, Specialty related to department (e.g., design, appliances) or related field OR Certification in trade related occupation required."

Most potential applicant's never get past that sentence, although much further on in the ad it does say a minimum of one years experience is also acceptable.

The low-income-focused nonprofit had several people available who had actually done the job for other employers, or who have experience in other types of sales, but they don't have any of the paperwork required. No degrees, no certifications, just decades in the building material or building trades. Several of their people applied, but none were even interviewed.

That matters, because it lowers the impact, i.e. the provable results of their program, making their program appear less effective.

The aforementioned NPO working with the older jobseekers stated that most of their previous funding sources had switched over to what the frustrated ED called "more media-attractive" support. Their funding has dropped by over 50% since 2010, due to grantor mission realignment.

I suggested that perhaps they needed to incorporate programs that were more, shall we say, "funding-friendly" such as programs to get their people into some type of educational setting or training to make a complete career change.

His answer was that maybe funders need to start looking at the world his people lived in today.

He said "These are people with an excellent work ethic and fully marketable and useful skills, who have from another 15 to 25 years left in the labor force. They have families to support NOW. They have household expenses NOW. They haven't done a thing wrong except to become politically and socially irrelevant. Maybe by the time they can retire or die, we will all be replaced by robots, but that time isn't NOW"

Unfortunately that conundrum is the reality of funding. Sometimes, no matter how worthy or timely the cause, it doesn't resonate with grantors.

That reality will eventually impact your results, so getting a handle on a solution will definitely affect your future.

The answer is to either pursue a shift in your own focus or seek out new funding streams and new supporters, and continue to educate the public on the value and relevance of your mission.

In the end, we designed a campaign to appeal directly to individual donors, utilizing both direct clothing donations and a crowdfunding appeal that ultimately raised enough money to meet goal. Longer term, the NPO is seeking to develop relationships with new grantors.

If I can help you with funding solutions, drop me a line at rightwords@ida.net. 

Can you pay for grant writing via commission payments?

Every grant writer gets letters or emails like this:

" We are looking for a grant writer to help us get funds for (fill in the blank). We will only pay for awarded grants, but we will pay 10% of the grant award. We anticipate you writing at least three grants a month."

Ethical grant writers normally refuse this arrangement, and it's not because they are greedy capitalists who don't "get" nonprofits.

The grant writer understands that the nonprofit doesn't normally mean to do anything illegal or unethical. They just don't understand the process or the consequences. The organization does know they have no money, so to them only paying for a positive outcome just makes sense. They reason that if the grant writer's income is dependent on getting grants they will try harder.

So, what's the problem?

That's the organization's side of the fence. What about the other side?

Put aside the fact that these folks are asking for a minimum of 30 hours a month in free labor. Also disregard the high probability that the organization may not qualify to apply to three grants a quarter, much less three each month. We can also ignore the statistical fact that there are approximately 100 nonprofits that need money for every grantor that has money to give. Those are all drawbacks for the grant writer, but they aren't unethical or illegal.

What is unethical and possibly illegal is the process necessary to collect the commission. It almost always requires both the grantee and the grant writer to commit fraud.

With rare exception, grant funding never allows the recipient to pay for expenses incurred before the grant was funded. In addition funding is often restricted, i.e. it can only be used for the direct expenses of a program. The grantee has to attest to the use of the funds in a "use-of-funds" report or statement to grantor, and the grantor can ask for the return of funds not used as specified in the grant.

At the very least, commission arrangements often result in nasty little social media spats over payment once the grantee discovers they can't use the grant funds for that purpose. At worst, it could result in a filing in small claims court.

Assuming that the grant writer actually get does paid, he/she will have to bill for the commission after the funds are awarded (which can be as much as a year later), and he/she usually can't state on the invoice that the funds are for writing the grant. Instead the invoice would have to attest that the funds are for some allowable expense of the program.

In other words, you have to assist the grantee in lying to the grantor to get your money.

There are a very few usually government-funded grants that might allow for grant preparation. I think in fifteen years I've seen three that specifically stated that there was an allowance for "application preparation". This amount is often as little as one to three percent of the awarded funding, putting a 10% commission out of the realm of possibility.

What's the alternative?

So what's a brand-new, broke nonprofit to do? Ask for a volunteer, making it clear that there is no financial compensation. Some students or recent graduates might do it just for the experience, or perhaps it is a way for a volunteer to support that specific charity. Some online job boards that cater to nonprofits have a section for people to ask for volunteers. That's absolutely fine, and totally ethical.

 

If you want to get your feet wet in the world of grant funding at no cost to you, post an ad for a volunteer or visit your local college or even civic groups and ask for help. You could even take some of the comparatively inexpensive online introductory courses and do it yourself.

You can pursue other fund-raising strategies until you have enough funding available to employ the services of a grant writer. Grantors also like applicants that have proven that they can raise funds in several ways.

   

Caveat Emptor

There is no specific universal law against soliciting or performing grant writing services on a commission basis, although some professional organizations do include such a prohibition in their professional code of ethics, for all the reasons stated above.

Are there people out there who will accept your invitation to write grants on a commission basis?  Sure. A few of them may even be qualified to write grants. They may write grants for big award amounts, hoping against hope that one will connect. Or they might write dozens of low-dollar appeals hoping to keep a little money coming in to pay the bills. In the meantime, they may ignore other revenue-generating opportunities such as in-kind or product donations, since there is no commission to be earned.

Eventually the lack of income will result in fewer and fewer grants being written. In the meantime, the organization is racking up a pretty consistent history of being denied funding, and that can hurt their chances with future grantors.

If, and it's a big if, the grant does allow for post-award grant writing reimbursement, and the grant writer agrees to the arrangement, then the commission-based arrangement may work out. If so, include that information when you solicit services on a commission basis. Just be sure that you understand the pitfalls before entering into the arrangement.

Are you over-connected and under-noticed?

There comes a point in every business where you simply hit a development wall. Nonprofits are no different.

In many ways, the internet connectivity we all prize (or maybe despise!) contributes to that sudden stop.

The internet of today is a cacophony of digitized noise. Try following a few Twitter feeds and see how much real thought goes into them and measure how much value you are getting from them.

   

In the rush to have the most likes, followers, retweets or comments it's easy to lose sight of the real purpose of all those connections.

In a business sense, connections are supposed to be about interactive communications that provide value for both sides.

Take a look at your own favorite sites. What keeps you clicking on them?

Is it just to kill time?  To keep score to see how many of your own comments are being commented on?  To have some sort of social life?  Because everyone else is doing it?

If your connectivity isn't producing value, why are you still doing it?

Case in point. I recently reconnected with a person I had known fairly well at one time; not a BFF exactly but we had a pretty close acquaintanceship until she moved away. This was a while ago…before Twitter even existed.

I ran into her at the grocery store, and while we were trying to do the whole catching up thing, she never took her eyes completely off her phone. Twitter was scrolling the whole time. At one point she did mention she was looking for work, but when I asked for particulars, she was busy re-tweeting something and didn't answer.

It didn't take very long for me to see that our face-to-face meeting was only occupying about 10% of her attention, and I did the "well, it was nice to see you…call me sometime" thing.

That's sort of what happens when you focus on just one outreach strategy. You get so busy trying to build a broad audience, you forget that you need to develop real focused relationships.

For instance, let's say one of your grantor targets or a major donor prospect doesn't accept LOI's and you have no contacts in common. Think about something you have or can create, like a white paper or case study that has value to them. Drop them an email and offer it to them, no strings attached.

 Your email might read like this:

I noticed that you are seeking information on X.  I (we) have a case study on X that may help you.  I (we) would be happy to forward it if you are interested."

All of a sudden you are connected. Will that always result in an invitation to apply for that $100K grant or a $1 million endowment? Maybe, maybe not. The purpose is to get on their radar, but by offering something of value, there is an upside for them to notice and contact you.

It gives you a chance to present your organization, prove that you have value to add to their mission, and gives you an excuse to connect again to get feedback on the offering.

This works. One nonprofit that tried this strategy received program funding for three years as a result of this kind of outreach.

     

If you don't have any material that you can offer, it could be time and money well spent to develop a case study, white paper, manual or other outreach material that goes beyond the typical brochure, tweet or Facebook posting.

If you or someone you know would like more information on implementing this strategy, give me a shout at rightwords@ida.net.

Are you sure your nonprofit needs money?

No matter the mission, the most often repeated line in most of my email is:

"If we just had more money we could (Fill in the blank)."

There is no doubt that money greases the wheels of philanthropy, but if you don't understand the  challenges of delivering your services, all the money in the world won't help.

Take the Bill and Melinda Gates Foundation. No shortage of money there. Yet a reprint of a Seattle Times article, posted January 3, 2015 in the Philanthropy News Digest, tells us that even the commitment of a quarter of a billion dollars doesn't guarantee success.

One interesting quote from the article mentions that the Foundation underestimated the difficulty of achieving their desired results due to the lack of even the most basic infrastructure in the areas they were trying to serve, indicating that someone was a little short in planning skills.

On a much smaller scale, a charity working with domestic violence victims was involved in a program to provide computer training, with the desired end result being that the women wouldn't need to depend on their abusers for income.

While they had some success, their program was only graduating about 12% of its participants, and was having trouble attracting funding after the initial $25,000 grant they received. The results just weren't there to impress new funding sources with the program's effectiveness.

When they approached me to find them at least $100K in funding for more computers and class space, I had to tell them that their results just didn't justify asking for that kind of money. To their everlasting credit, instead of firing me on the spot, they asked "why?"

The problem was that they had not anticipated that many of these women had less than a tenth grade education, and for some of them, even that education was over 20 years old.

While teaching them to use a keyboard was pretty easy (most of them had cell phones and knew how to text) some of them couldn't read well enough to understand the online help or even how to find it. All the classes did for them was to reinforce the idea that they were losers, and they simply quit coming to class.

It was like teaching someone how to use a hammer to drive a nail, without any knowledge of what driving that nail actually did to build a house.

It's easy to jump from "let's form a nonprofit" to expecting that your program will immediately get to its desired end result.

Money doesn't necessarily fix the ills of the world. It takes a lot of time and hard work, and sometimes more than a few false starts before you begin to achieve results that can attract more funding.

In the case of the nonprofit illustrated above, they had to back up, add a step, and focus on offering simple basic tutoring to improve math, reading and comprehension skills, an approach that did net them about another $20K in funding from their original grantor almost immediately.

As frustrating as it was, in the end the ladies they wanted so desperately to help got a lot more out of that approach, and many (81%) went on to successfully complete the computer skills classes and get jobs.

This all goes back to understanding the process of being a nonprofit. It's easy to see a problem, but a lot harder to plan a fully designed and effective program that  produces results worthy of continued funding.

The good thing about that problem is that you don't need much money to solve it. You do need a solid organizational plan, a willingness to learn to recognize and overcome obstacles and the patience to achieve it in baby steps instead of giant leaps.

If you do your homework, you can actually outperform even the Gates Foundation, and that's surely something you can be proud to report.

What impact statements say about your nonprofit

What do the people you help think of your nonprofit?  How about your partners?

That's a question I ask when I am working on impact reports. You'd be astounded at how many people can't provide the answer.

Impact statements are an important part of getting grants at any level. 

If you operate a nonprofit, you obviously get something concrete out of it. Whether it's emotional satisfaction or a feeling of being part of a larger cause, there has to be something in it besides a monetary return.

The problem is, no grant maker wants to know what good you derive from your organization.

To some extent most impact statements are about statistics, but numbers don't tell the whole story.

Take the case of a nutrition-focused nonprofit. Their mission was to provide not just more food, but better food to the low-income population in their area. To that end, they held what you might call healthy eating food drives, gave cooking classes and were looking for support to purchase more healthy foods like raw vegetables and fruit.

They had all the numerical data documenting how many meals they had provided, nutrition tables and comparisons of calorie substitutes. They were very proud that they "introduced people to foods they might not have considered previously." They were also trying to start urban gardens.

What I noticed was that they didn't seem to be serving near as many people as the statistics would indicate that they should. Some months, they actually threw away food that had aged past it's safe shelf life.

When I asked the opening questions above they had no answers, because they had never asked them of their clients.

After a lot of prodding, they agreed to collect some data, and the results shocked them.

People didn't like their approach. It was described variously as preachy, stuck up, and out of touch with the community members they wanted to help.

For instance, one respondent shared that she couldn't keep a lot of fresh food on hand, because her refrigerator was 40 years old and had a very tiny freezer. She used a lot of boxed and canned foods, because that's what she could store.

Another said that her "stove" was a hot plate, so she couldn't fix anything that needed an oven.

Still another lady wrote back and said "My kids aren't going to eat brussel sprouts or alfalfa shoots, so why should I waste the gas to go get them?"

And one that typified why their mission wasn't working in the community…"I work two jobs now. When would I have time to do all that canning, and why would I when I can buy the same thing in a can at the store?"

No matter how noble your cause, or how great it makes you feel, if you can't prove to grantors that it benefits others, they aren't going to support you.

Ask for honest feedback. Your impact statement will benefit, and so will your clients or beneficiaries.

The R.E.A.L. Formula for attracting grantors

There are approximately 1.5 million nonprofits vying for funding from approximate 100,000 foundations every year.  Standing out in that crowd requires a strong survival strategy.

There are a few core criteria that every funding source adheres to when sifting through grant applications. Those criteria can be summed up in the R.E.A.L. formula, as follows:

• Relevancy.  Does your organization's application match up well with the donor's mission, vision and geographic limitations?
• Efficacy – If the funder gives you money, will their mission get the most bang for the buck from your organization, or will it just enable you to keep the lights on a little longer?  Various sources have reported that between 30 and 60 thousand nonprofits disappear from the IRS database each year, prompting grantors to confine their support to those organizations that can deliver benefits well into the future.
• Accountability – Does your organization have a strong track record of transparency relative to your previous operations, outcomes  and funding partnerships? Can you provide concrete examples to prove your successes and verify your financial data?
• Legitimacy – are you a legally recognized nonprofit with good references and strong outcomes?

Increasingly, as detailed in an article by Rick Cohen in the Nonprofit Quarterly, foundations are simply refusing to accept unsolicited applications. While some of that reluctance is due to recent economic factors, it is also due to simply receiving too many applications from organizations that obviously can't accomplish their mission.

Other foundations are adding restrictions to application requirements, such as not funding startups, or those whose current revenues are under a preset amount. Most have always required that you provide copies of the long form 990, indicating that your revenues are above six figures.

All prospective grantors use some sort of rubric, either written or implied, to separate the wheat from the chaff. Failing to deliver on funder expectations in any of the above areas can and probably will kill your application.

Some  shortcomings I see often are a lack of data and an unprofessional public persona.

For instance, let's look at legitimacy. The first thing I do when approached by a new nonprofit client seeking grants is to look for them online. I'm looking for a website that actually tells me something about the organization and its key personnel and programs. I want to see some sort of evidence of positive outcomes. There should be a link to the financials and  a copy of their determination letter, or at least the ability to request them.

I am also going to check all the databases for verification of their nonprofit status, including the IRS website, if necessary. While I also check out social media, the most important thing for me is to see if they present well on first impression, since I know that any funding source will be doing the same.

Grantors that ask for a website URL are going to click on the link. Even if they don't ask, they may well include your online presence as a scoring metric.

Master the R.E.A.L. formula and your funding success rate is going to go up dramatically.

Don't know if you will fit the formula?  Drop me a line at rightwords@ida.net for a review.   

Getting grants - Will your application be successful?

The spring grant cycle is opening. Like athletes in the starting block, nonprofits are all out there seeking that one magical grant that will sustain or even rescue their organizations. Can your organization win the race? More to the point, are you even competitive?

Charitable institutions form to address a problem and that problem, or rather the solution to it, defines their mission. Remedying lack of access to food, shelter, housing, education, safety, and healthcare are all worthy goals, and they usually have access to some sort of non-governmental funding. Unfortunately, there are far more organizations needing money than there are grantors to supply it. Some get the financial backing they need and a great many more do not. Ever wonder why your proposal was turned down? 

I asked grantors just that question. The following is a typical reply to an informal survey I sent out in 2011 to 24 foundations requesting information on why they might deny funding to smaller charities, which I defined as NPO's with from $25K to $1M in annual revenue.

"Thank you for contacting us. Our four (4) main reasons for denying a request are:

1. Poor or no financial reporting and/or financial controls.

2. Lack of effective organizational or management structure.

3. Insufficient ability to provide meaningful results, or no proof of impact.

4. Not sufficiently related to our mission.

Comment:

We require evidence that there is an effective management team in place, and that the organization is run in a professional manner. Since we require a minimum  $50K in revenue and a determination letter, this means that we are normally dealing with organizations that have been in existence for 4 years and up. Size doesn't seem to necessarily dictate a well-run organization. We have denied nonprofits with over a million dollars in revenue, simply because they had poor or unprofessional business practices. This seems to go hand-in-hand with relatively poor program design, lackluster or undocumented results and poor fiscal management."

Twenty-one out of the original 24 foundations contacted replied to the survey. They ranged from foundations with less than fifty thousand dollars in annual grants to four that awarded more than five million dollars annually. The number one complaint was that the applicants were not "professionally managed". I didn't get a single reply that indicated the mission was unworthy or unrealistic.

The argument that charities can't or won't adopt for-profit business management practices will probably rage on for as long as there are nonprofit organizations. For some reason, there seems to be a misconception about what constitutes running a nonprofit like a business, and whether that is a good or bad thing. Many nonprofits are very angry that "it's all about the money, not the mission".

In what way does being accountable for the way in which someone else's money is used conflict with mission accomplishment? Is it fear of being judged, a fear of being held accountable for the funds, or a resistance to oversight, i.e. a loss of control?  Why do boards adamantly declare that they don't need anything from the for-profit world and then ask for funding that was probably at least originally based in that same for-profit world?  What standards would they like to have applied to receive funds? 

There is a finite amount of money available for the support of all the charities in the world. It seems somewhat reasonable that the grantors would want to see that money used to provide maximum results for each of the dollars they provide. The methodology for determining that effectiveness isn't a for-profit or a nonprofit method. It is just a method. X dollars provides Y result, or it doesn't. Proving and accomplishing that maximum effectiveness requires the same management procedures that turning a profit in a company does. The procedures are simply tools used to arrive at your desired result.

If your goal is mission accomplishment, wouldn't it make sense to put yourself in the best position to achieve that goal?  Running your nonprofit in a business-like manner isn't about becoming an unfeeling and uncaring robot. It's about putting yourself in a position to win the backing you need to accomplish the mission you love. 

Growing Your Board

Every successful nonprofit can trace its success back to a founder that had the foresight to assemble an effective board of directors. Good boards are not born, they are cultivated and grown.

There are boards, and then there are BOARDS. Good boards are not like a pile of cut lumber. They are more like branches of a tree, in that they constantly nurture the mother plant, evolve to meet changing conditions, and send out seeds or runners to stay alive and viable. Once a pile of lumber is used up, it's just gone. It's static, because the pile will only produce a pre-conceived structure. A tree keeps producing living tissue for decades, even centuries.

Developing good boards takes the skill of a master arborist. You have to know how to select the right seed stock, when to prune away the dead wood, and how to nurture it so it can produce the best fruit, before your nonprofit can collect a successful crop. Here are some of the indicators that your board is growing well. 

A good board provides structure for the nonprofit.

It maintains a coherent mission-centered direction, imposes reasonable limitations on behavior and finances, and oversees and guides mission accomplishment. Board members are legally responsible for the conduct and financial integrity of the nonprofit, as well as the success of the mission.

Good boards participate financially.

Every board member should have some financial investment in the organization. That doesn't mean the board is, should, or can be the sole support of your NPO. It does mean that they should give an annual sum that shows they are personally invested in success. Grantors often ask for the amount each board member contributes annually. That amount should show real commitment relative to the size of the nonprofit and its mission. For very small or new nonprofits maybe that's a few hundred dollars a year for the whole board, while larger organizations might expect a minimum four-figure donation from each member. After all, if the board doesn't support their own organization, why should anyone else?

Good boards set goals and make decisions.

The board must have performance standards and clear goals for the organization. If the same action items are on every agenda, or there is no or little progress being made in achieving predetermined goals, the board must be willing and able to take corrective action.

 Good boards understand the requirements of fundraising.

Every board member should understand how much needs to be raised, why it needs to be raised, and have a basic understanding of the process involved in soliciting funds.

Good boards get involved in fundraising.

There are many ways for the board to participate in fundraising. Perhaps they show up at events and pressers. Maybe they sign thank-you letters to donors. They can publicize the nonprofit through their business and personal connections. They can serve on phone lines at telethons. They may plan fundraising events. Whatever their contributions, they are active in the fundraising process at some point.

Good boards understand that there is a cost to fundraising.

"Free" money doesn't exist. Someone has to write the grants, research funding opportunities, attend events where there may be sympathetic prospective contributors, and manage the grants. Paper, printing, and distribution of fundraising documents or other marketing costs actual money. Controlling  fundraising costs can't be limited to "if it costs money we ain't doin' it". Pick a reasonable percentage of the budget to devote to fundraising, monitor its ROI effectiveness, and accept that cost without complaint.

Good boards show up.

Good boards have strict meeting attendance and conduct policies and enforce them. The board chair must take attendance and educate, caution, and finally eliminate no-show, unreasonably disruptive or overly passive board members and recruit new ones that will take their responsibilities more seriously.

Good boards invite civil discussions on issues.

Boards should not be rubber-stamps for the founder, board chair or president. No member should feel that they can't offer a suggestion or request clarification of a point. On the other hand, a good board chair does not allow these discussions to degenerate into shouting matches. Meetings should be run under Robert's Rules of Order, and after a reasonable discussion period any new information or dissenting opinions should be either voted upon, tabled and considered in the next meeting, or assigned to a committee for further investigation.

Growing your board is a learning experience, but the end result will be well worth the effort.

Nonprofits aren't businesses. Really?

Every once and a while I see someone railing against the idea that nonprofits should be managed much like their for-profit counterparts. After all, nonprofit staff can and actually should work for peanuts, right? All supplies will be donated, all services will be free, and the quality of their programs will still be top-notch.

If only it was that simple.

This morning I was forwarded a link to a nonprofit asking for contract grant writing services. The ad sounded great. 21-year old community healthcare nonprofit, multi-million dollar revenues, offering a long-term contract with a somewhat reasonable budget range for grant writing services.

However, upon looking up their 990 history, I could see why they were looking for grant money. Over the past five years this nonprofit showed steadily declining income. Nearly their entire revenue stream was based on one source of income, i.e. government payments for services. Those payments had dropped by almost 30% in that same five-year time frame. In the meantime their payroll costs had gone up by almost the same amount as a percentage of income. In 2012, they posted their first loss ever and it was in the mid-six figure range.

Healthcare is a very labor and supply-intensive field. Good help does cost real money, supplies are not free, the utilities still have to be paid with real money, and being a nonprofit doesn't change that.

You can see where this nonprofit is going. Newly mandated increased costs for healthcare and the natural progression of increasing salaries as employees stayed in place longer and improved their skills was pushing them over the edge. In their entire 21-year history, they had raised less than one million dollars in funding not related to the provider payments from the government. 82% of their income was now going to employee-related expense. Even in healthcare, that's out of line.

Nonprofits are not immune to market forces or economic reality. If your costs of operation outstrip your income, you are going down the tubes, no matter how big or small you are.

I don't know exactly what happened to this nonprofit. Maybe their patient days went down, maybe the provider payments were less than previously received for services, maybe the employees were asking for unreasonably high salaries or the perks had gotten out of hand. Who knows? The point is, their trend line was obviously going the wrong way, and they waited too long to try to address it. Now they are operating in the red, and that means they are unlikely to be considered for grant funding.

If they survive it won't be due to hiring a grant writer. It will be because they get a hard-nosed business management consultant in there that can get their business operations back on track. That's where they should be spending their remaining dollars.

There is no doubt that there are real differences between the motivations and goals of nonprofits vs. for-profits and that is as it should be. I addressed that in another post. Still, whether you like it or not, the nuts and bolts of accomplishing  the end result are pretty much governed by the same realities. Ignore that at your peril. 

Grant Planning- What is it and why should you do it?

Grant planning doesn't start with finding a grant. I get dozens of inquiries like this every year.

" We provide decorated  Christmas trees to low-income families. We need a grant to assist us in purchasing 100 trees. Please help us find grant money for this worthy cause" Rcvd. Nov. 1

Requests like this don't take into account the lead time needed to find a grantor, and certainly doesn't allow any time for the grantor to respond. Grant planning requires you to be proactive, not reactive.

Grant planning requires foresight

Grant planning begins at least one year from the time you need the money and it starts with refining your mission into a program or programs with a budget, and a specific, measurable goal. Here are some of the questions I asked this particular nonprofit.

How many trees do you need?  What is your budget?  Are there trees available at a price that will allow you to furnish 100 trees? Have you worked with vendors (tree farms, direct sellers, etc) to get a discount? Do you have a contract to provide the trees at a stated price? What size trees do you need? What about transportation, both to you and to the recipients? What species of tree do you want? Do you have alternatives? How do you qualify people to receive a tree? Can you store the trees, or do you need them very close to the distribution date? Who has supported this cause in the past?

Setting up a prospect calendar

Typically, foundations plan their giving cycles at annual, semi-annual or quarterly intervals. The application closing date for the grants might be as much as a year ahead of when the grant is awarded. That's why this is called grant planning, not grant getting.

After you have mapped out the when, where, how much and why for your appeal, it still has to fit into the grant calendar for the foundation. That means finding the prospective grantors well ahead of the opening date of the grant application or RFP date. Arrange your prospective targets in a format that allows you to sort by RFP opening date, closing date, amount available, and enter those into a working calendar or spreadsheet.

Qualify targets

If your targets are local, establish some sort of relationship with them ahead of time. Follow them on Facebook, or go to events they frequent. Find out who is on their board, and look for common associations with your board. Check to see if they have a prequalifying phase (an LOI or online qualifying protocol). Look at their previous giving patterns and assign a priority to the ones that are most likely to respond well. There is no sense in "shotgunning" your requests to any and all foundations that have only a very remote connection to your cause. That's expensive both in terms of time and money, and seldom results in an out-of-the-blue award.

If you need help designing a grant plan, drop me a line at granthelp@ida.net, or visit my website, http://www.cloudlancerwriting.com.