New features - Up Close and Personal!

I get a lot of emails that start out "I have a really dumb question, and I hate to put it in the comments because people will (laugh at me) (think I'm dumb)"

First of all, there is no such thing as a dumb question. The only thing that's not too smart is to flounder along because you are afraid to ask. Having said that, I know that privacy is important, particularly in today's world. While I plan on maintaining this blog without requiring a subscription for now, the volume of mail I am receiving tells me that it may be time to consider a subscription option. I am finding that I am answering the same questions repeatedly, and I think I can be of better service to you by aggregating them and answering them as a single topic. Request volume will determine frequency of the posts, but at present I am looking at a monthly newsletter format.

If you would like to have the ability to comment or ask a question  within a network of sympathetic nonprofit peers or receive more information about any of the topics, and receive occasional subscriber-only grant notifications, please send your email address and any topics you would like me to discuss to:  granthelp@ida.net. I plan to go live with the content on January 15, 2014. 

While I will still try to answer specific questions individually, many of the questions have common themes. Subscribers will get access to content answering those questions or concerns. Also, I occasionally find grants that are particularly well suited to small organizations, and I will include those for subscribers only.

Again, if you would like to subscribe, you have to send me your email. You can unsubscribe at any time. 

UPDATE! - The  first newsletter will be on "Are nonprofit volunteers considered as employees under the Affordable Care Act?"

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. 

Grantmaker Research

Sometimes I get lists from clients that were obviously compiled from some website like the Foundation Center. Not too long ago I actually got a list printed directly from that website of over 100 "youth-oriented" foundations from a prospective client.

  

I have a subscription to that resource and several more just like it.  If grantor research was that easy, no one would need professional funding consultants and/or grant writers. The reality is, that list is simply a baby step in finding prospective funding.

There are many steps that go into approaching and qualifying a viable funding partner. Does the grantmaker ever support NPOs in your geographical area? What do they mean when they say they make grants nationally?  What makes them choose one nonprofit over another? Does their controlling philosophy match yours? Are you looking for a one-shot funding source, or is a continuing relationship important? What other nonprofit or ideological themes do their individual board members support away from that particular foundation?

There are dozens of things that can influence acceptance of a grant application. Not too long ago, I researched a large family foundation in the eastern U.S. for an Idaho client. I felt that the client's program might fit in with the foundation's underlying interests, but according to their public face, it looked like a stretch.

I literally built a profile for the board members and the history of their involvement in Idaho.  And I mean every consequential board member, all 22 of them. In the end, I was able to help the client craft a customized proposal that stayed true to the client's mission, but still appealed personally to the foundation's board members. This is the first three sentences of the acceptance letter from that foundation:

"Thank you for making our board aware of your program. We have been interested in this type of highly targeted program for many years. Normally, the program would not fit our giving parameters, but we are making an exception due to our personal interest in (the program). We are pleased to inform you that we are funding (the specific area of the program) in the amount of $10,000 for each of the next three years."

This was a highly targeted, well documented and very personal appeal to the specific interests of three of the board members as evidenced by their personal participation in similar projects. I spent almost a month, off and on doing that.

Very large nonprofits may have the resources to do that type of in-depth relationship building, but often they rely on actual personal contacts.  They know the board members they are trying to court. They go to dinner with them, attend the same functions, and often the actual application is simply a formality.

If you don't rub elbows on a personal basis with your target funding source, consider hiring out the research, and acting on it with something more than stale boilerplate copy. It could be profitable.