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

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.   

Rating your Grantability

What do grantors look for when choosing a nonprofit to assist?

While the answer to that question can vary regarding specifics, the general profile seems to be fairly standard.

1. Compatibility with, and relevance to, the issuing grantor's mission. That means your program and organization should fit in with the goals and philosophy of the grantor. For instance, while both your organization and the grantor may support keeping youth in school, if the donor organization is supporting STEM education, they are unlikely to support a program for art education. Even the best grant application will fall flat without this component, making grantor  research one of your more important tools.

2. Geographically qualified. Most, if not all foundations, corporations and even government funding sources list the geographic areas they prefer to support. Even grantors that profess to have a national focus usually seem to support certain areas more than others.

3. Stability. Most grants require that the grantee has been in business for at least two years, have good financial records (including audited financials) and a track record of providing quality programs. Most grantors want to see at least two or even three years of long-form 990's, although your local foundations may settle for one year if you have good financial records.

4. Revenue minimums. There is no specific all-inclusive minimum amount of revenue that applies to all grantors, but all of them want the grantee to have enough income, exclusive of the grant money requested, to cover normal non-program operating expenses. That can vary from as little as $25K for a local community foundation to  as much as half a million dollars for a large national foundation. In general, the grantors want to see that the organization can survive without their contribution, since they are normally supporting your program and want to be assured that their funds will be used for that purpose.

5. Management competency. The grantor wants to be assured that the organization can manage both the program and the financial administration to achieve maximum impact from grant funding. Almost all larger grants require at least a short bio or CV for the board and key staff. The more money you want, the more this factors into the decision to fund you.

6. Positive visuals. Does your organization present well in the public eye?  That can cover anything and everything from having a quality website, to your Twitter profile, to being well-regarded in your community  press. While innovation is often prized, outlandish, immature or highly controversial conduct is not. Your reputation will become interwoven with the grantor, and they want that to be a win-win situation.

7. Strong program design. More grantors are beginning to request a program plan that functions like a business plan. They want to see clear, attainable and measurable goals and milestones they can evaluate for effectiveness.

These seven areas seem to be pretty universal throughout the philanthropic community. While each grantor may have their own subjective criteria, such as degree of sustainability, scalability, and impact, all grantors embrace the basic seven factors.

If you would like an inexpensive review of your grantability rating, drop me a line at granthelp@ida.net.

Donor Development and the Entrepreneurial Mindset

The word entrepreneur conjures up a vision of a person who plans to start and run a for-profit business. Actually, the definition in Webster’s is “one who organizes, manages and assumes the risk of a business or enterprise”. (italics added)

The skills and vision needed to start and manage a successful nonprofit are not very different from those needed to start any business.

You need a goal (mission and vision), a market niche (statement of need), product or service (program), a business plan (strategic plan) and  investors (donors)  for you to stay around long enough to succeed.

So why is it that most fledgling nonprofits can’t accept the idea that they have to have good planning and sound structure to succeed? Why do they approach donors with a vision but no way to make it happen?

There seems to be a sort of “build it and they( the donors) will come” mentality among nonprofit start-ups. Sometimes that works in business…the first personal computer was conceived of and  built long before the investors arrived. More often though, new nonprofits are more like some of the ill-conceived niche carmakers. The DeLorean was a good marketing  concept but it was a lousy car mechanically, and it didn’t capture the market share needed to survive.

Taking your nonprofit from concept to functioning entity requires so much more than just a passion to help someone or something.

Chickens don’t come out of the egg fully feathered and ready to lay eggs, small businesses don’t begin as multi-million dollar corporations and nonprofits don’t attract millions in donations in the first few years, if ever.

In “Climbing the Ladder to Nonprofit Success” I try to prepare new nonprofits for the realities of becoming the next successful  local,  national or global nonprofit. I get a lot of nice feedback from people, but I also get a lot of “you don’t understand the mentality of a nonprofit founder”.

Oh yes, Virginia, I do. That’s why I wrote the darn thing. Every person that strikes out on their own has a dream, but not all of them realize it. The difference is that at some point,  the successful ones learn to borrow from or assimilate existing knowledge to succeed.

There is a “reality” show on TV about prospective small businesses competing to win backing from a group of investors. Yeah, it’s dramatized, but in many ways it is very much like the donor development environment. There has to be value in it for both sides.

For instance, both donors and investors (including social impact investors)  look hard at your team. For nonprofits, that’s your board, your CEO, your CFO, and your program administrators. Let’s face it, there are tens of thousands of nonprofits all targeting exactly the same problems. Donors are going to pick the organization with the best chance to have an impact and the quality of the team is what determines that, not how much money you have.

Telling or showing  donors  that you are the only working and involved member of the team is the kiss of death for your grant application or donor recruitment.

Donors want to know that you have a solid path to success. They want to be a part of that success, but they don’t want to own your nonprofit. On your side, you need to be able to use donations to build your organization’s impact, not just keep the lights on.

Thinking like an entrepreneur isn’t counter-intuitive to achieving mission success. The skills needed to succeed can be learned and developed. Marketing, publicity, planning, results reporting, program design and financial controls translate very well from the for-profit to the nonprofit world.

Want your new nonprofit to succeed?  Start thinking like an entrepreneur.

Need more information on planning to succeed? Drop me a line at granthelp@ida.net.  Let’s talk! 

How your 990 postcard could be hurting you

Nonprofits whose fiscal year ends December 31 have to file their 990 by May 15. If that fits you, consider NOT using the e-postcard information report, or 990N.

Most small-revenue nonprofits file their mandatory 990 report on the e-postcard. It's simple, doesn't require any extra costs to prepare and fulfills the IRS annual reporting requirement. It also tells every prospective grantor that your revenue is under $50K.

Almost every grant application asks for a copy of your most current 990. In part, that is because it proves you are current with IRS requirements and indicates that you are a legitimate nonprofit, but it also provides fact-finding information to grantors.

    

The 990 provides a way to cross-check your financial statements with your gross revenue as reported on the 990. Unfortunately, the e-card doesn't provide that information. There is a misconception that only the over-50K organizations can use the 990EZ, but in reality any organization can file that form if they elect and are qualified under the revenue restrictions to do so. The 990 EZ is a five-page form, which the IRS designates as a short form.

Some grantor websites state their minimum income requirements specifically, i.e. they say that they do not consider grants for nonprofits with revenues under "X". Most are more subtle. At the very least they want to support organizations with enough existing revenue to be effective operating at their current level. The long-format 990 or 990EZ tells them that you have a minimum income sufficient to keep the lights on, helping to assure them that their money will be used for your programs, not your rent or utilities.

While a lot of really small or very new nonprofits really don't have enough income or are operating in a deficit condition, many nonprofits that have enough revenue to support the organization's administrative costs still use the short form postcard simply because it's fast, cheap, and easy.

 

Those organizations might consider the longer 990EZ. This form provides the detail that grantors are looking for and can be used even for the under-50K filers. In some cases, grantors may even accept it in lieu of audited financial statements. The long form not only gives them total revenue, but allows them to see how the revenue is being used.

For instance, one family foundation only supports small nonprofits, i.e.organizations with revenues between 10K and 250K, and they do not require audited financials for NPO's under $25K in revenue, although they do require an accountant's  review letter.While that is a fairly rare scenario, this grantor still requires a long-form 990, even if it is the 990EZ.  Again, they are looking for clues as to how their money might be used. If your report indicates that most of the money is being used for CEO or ED salaries, they might feel that they would be supporting that person, rather than the mission.

Filing a 990EZ does require that you have some sort of formal financial record-keeping system, but then, you should have that in place anyway. If it means gaining increased access to grantor funds, the cost will be an investment in your future, rather than a liability.  As always, if you have specific questions regarding whether or how to file this form, check with your accountant. 

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. 

Does your grant proposal have a bad "I"?

When you are presenting your charity to a prospective supporter, particularly if that first contact is an online application, establishing the credibility and effectiveness of the organization is vital.

When reviewing grant proposals for clients, many of them are written in the first person. "I started XYZ Charities"  "I contacted so-and-so", I did this  and I did that. Almost as bad is a constant string of third-person references to the founder.

There is always one person behind the formation of a charity.  Someone has to get the ball rolling, and that founder is very important.  If the charity achieves longevity, it will always be tied to its founder.  The Red Cross will always owe its existence to Clara Barton as the founder.  Any history of a charity will include a nod to its founder, but there does come a time when that same founder has to be part of a team.

Grantors are interested in supporting an organization because it effectively advances its mission, and that requires the efforts of more than one person.

If your grant application reads more like a political campaign speech than a mission narrative, it might give grantors the idea that the charity can't survive without you, or worse, that there are no other active team members.

When the grant asks for a history of your organization, it's fine to say it was founded by so-and-so, and if that person is still active, a brief biographical sketch of that persons contributions and qualifications. The transition to a team philosophy should be introduced as soon as possible after that initial introduction.

 

Try something like this.  XYZ Charities was founded in 2005 by Mary Doe, and now operates with a team that includes Joe Doe, Nancy Roe and Frank Moe, adding the titles and qualifications after each name. That tells grantors immediately that you are no longer a one-man show.  If you should get hit by a bus, the charity can continue to function, and the money the grantor is investing will not be lost or wasted.

The old cliché "You only get one chance to make a first impression" applies in spades here.  Be sure that impression is about your organization, and not just you.