Incredible Shrinking Awards

I have noticed an interesting situation over the past 6-8 months: With the exception of two grant awards, ALL of the grants that have been awarded to my clients recently have been lower than the original requested amount. Of course this does happen frequently and over the past eight years I have experienced the rush of receiving an award and at the same time the disappointment of realizing the awarded amount is lower than the original ask amount. However, the reduction in award amounts seems to be happening more frequently with foundations and corporate giving programs.

In my quest to find out why, I discovered that there is not currently a good answer. At first, I thought that I could blame it on the economy since it is a catch all blame basket for whatever is ailing the country. Then I thought that it was because more giving was diverted from the usual funding areas to help with hurricane relief efforts.

However, the latest statistics show that in 2004 giving increased by 5%. A report released last month by the Foundation Center noted that grants made only by foundation grantmakers increased in 2005. "Giving by the nation's close to 68,000 grantmaking foundations reached a new milestone in 2005. Estimated giving totaled $33.6 billion, up from the previous high of $31.8 billion recorded in 2004" (Foundation Growth and Giving Estimates Current Outlook, p.1).

So if giving is increasing then why are the grant amounts typically smaller? Several factors come to mind. Funding for the natural disasters over the past two years have only slightly diverted funds from other more traditional areas such as education, arts, and research. In addition the number of nonprofit organizations that need grant funding to operate has grown dramatically over the past ten years to over 1 million organizations in the United States alone.

Lastly, corporate and foundation assets have remained relatively flat or only slightly increased over the past three years. Foundations in particular calculate their grant budgets for the next year based on their assets from the past three to five years. When budgeting for 2006 many foundations utilized figures that may have reflected their 2001 assets. If you recall, 2001 was a tough year financially for many including foundations that lost millions with their investments.

More focused giving, higher competition for grant dollars and lack of perceived assets are part of the reasons why many organizations are giving smaller than the requested amount of grant dollars.

Next time, I will explain what to do when you receive a smaller check than expected.