Different Types of Funding

When researching potential funders you will likely see interesting terms for the various categories of support they like to give. It is important to understand what the jargon means so that you are not asking an organization for an in-kind gift when you really want to ask for funding for an endowment fund. You also want to make sure you are not asking an organization for seed money that only gives to building renovations.

I can imagine your heart beating faster and your palms starting to sweat at the thought of these bizzare terms. Don't worry, you will probably catch on quickly, well at least more quickly than say... learning Greek.

Some of the more common terms include the most sought after and most elusive type of funding-General Operating Support. This will pay for pretty much anything you want in your organization. It is typically granted for general rather than specific purposes, and is least likely to be given by funders because they like to give to specific projects that will have specific results.

Building/renovation money is used for construction or renovation of buildings. These funds may be part of a Capital Campaign, which typically takes place over a longer period of time and typically is supported by a multitude of organizations and people for large causes-such as a new science building at a university.

An Endowment is typically a large gift or several small to mid size gifts that are invested to provide income for ongoing support of a particular program or other organizational expenses. Ideally, organizations grow their endowment fund (s) so that a portion of their expenses can be paid through the earned interest while the principal stays in the fund.

Seed Money is used to start a new organization or new program within an established non-profit. Ongoing or Continued Support are pretty much what they sound like-grants to help maintain the work of an established organization or particular project.

Finally, funders understand the importance of organizations exploring what/how their programs are doing and sometimes offer Program Evaluation grants to measure the effectiveness of a program.

There now...you don't have to say that grant lingo is "All Greek to me."

What is in a Name?

..."That which we call a rose. By any other word would smell as sweet." Said young Juliet to Romeo. What might this theatrical prose have to do with grant proposal writing? Mm mm nothing really except the vague connection when you are first attempting to gain employment in the non-profit world or writing your first proposal, some of the language might sound a bit Shakesperian.

If you don't know the difference between an input or outcome or a community foundation vs. an operating foundation-don't fret. Like most professions, non-profit organizations have their own lingo. You might think that you need a secret decoder ring in order to understand a grant application or have a conversation with a development officer. Not so. All you need is a little help understanding the lingo and you can feel extremely confident that you will wow your colleagues at the water cooler tomorrow with your new found knowledge.

First and foremost and the one phrase that I have seen too many people get hot under the collar about is the term "Grant Writer." We do not write grants. That would imply that I have the power to actually write out grant checks. Ahh that would be wonderful. Oh the power, the prestige the....ahem, pardon me. Anyway, most of us refer to our type of work as being Grant Proposal Writers. Off my soapbox now.

Lets look at the different types of grant making organizations. First you have your Government agencies. Typically Federal government agencies receive their funding through the Federal budgeting process. The money goes to particular government agencies to run specific programs. Sometimes these funds trickle down to the regional or state level and every so often make it to the county or city level. One non-profit group usually does not obtain federal funding via the Feds. Typically, your non-profit needs to belong to a group or consortium of other non profits that do similar or complimentary type of work in the same region in order to receive Federal government grants.

According to the Foundation Center a foundation is a non-government, nonprofit organization with its own funds, and program managed by its own trustees and directors that was established to maintain or aid educational, social, charitable, religious or other activities serving the common welfare, primarily by making grants to other non-profit organizations. Whew, that's a mouthful!

Types of foundations include:

• Independent foundations-These are usually established via an endowment from a beloved, departed family member and often referred to as a "Family Foundation."
• Company Foundations-Funds are gained from a profit making company, but the foundation is independent of the parent company. For example PepsiCo is a company and maintains a foundation in order to do good in the community.
• Corporate giving programs are slightly different than corporate foundations as the company gives direct charitable gifts to non-profits without sending the funds through a foundation.
• Community Foundations-manage funds from many different people or groups and disperse grant awards based on the donors wishes.
• Operating foundations provide direct services to clients or other non-profit organizations. These foundations rarely give funding to one, if any other non-profits.

Next time we will discuss the definitions of the different types of support grantmaking organizations give.

Feedblitz

I recently came across an interesting service that melds blog and email services together. Through Feedblitz readers can sign up for free to receive new blog entries via their e-mail. This convenient service garnered my attention because:

1. It is free.
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3. Now readers don't have to remember to come back to my blog site every now and then to check out new entries on the wonderful world of grants.
4.Did I mention it is free?

If you would like new Take It For Granted articles delivered right into your inbox, just scroll down a bit on the left and insert your email address where it directs you to subscribe. This will take you to another nice site that asks you to put in a super secret code word in order to fight spam, and voila you will now receive the most up to date, important information about grants that you could ever imagine. Plus I promise not to sell your email to anyone!

First Quarter Submissions

Grant cycles and deadlines tend to be cyclical-meaning they usually occur at the same time each year. Knowing when the funder you targeted accepts applications is crucial. If possible, try to submit your application during the first funding cycle of the year. Why? Typically, the first quarter of the grant year is when the largest pot of money is available. This is not always true, but properly researching your potential funder might reveal some interesting information.

Read the funding guidelines carefully. Call someone at the organization if possible and ask if their Board prefers to receive grant proposals during a certain season. Look at the organizations latest form 990 at Guidestar where you can register free, or purchase a package for higher-level access to non-profit information. Look at several different years and study the dates (if given) to determine if there is a specific giving pattern that favors giving more or larger grant awards during a specific time of year.

Whenever you decide to submit your grant request, make sure it is a well thought out part of your organization's overall fundraising plan. Submitting scattershot proposals without properly assessing your needs, or researching and targeting potential funders will likely prove to be very unfruitful.

Half of a Check

You are sorting the day’s mail when you come across an envelope from the XYZ foundation that you sent a proposal to three months ago. You had already wondered twice this week when you would hear back from them. You eagerly rip open the envelope, and unfold the creased three-page letter. Great news-your organization has been awarded the grant! In the amount of… Hey, wait a minute. This is only for half the amount that we asked for. What is going on? What are we supposed to do with half the money-give half of a meal or half of a winter coat to our clients?

Why would they do this you might ask? The fact is that many times foundations and other funding agencies do not award all of the grant funds that you need for a project. The hard truth is that you need to submit grant applications to more than one funder for the same project.

Funders are not out to shake your world up. Typically, they have several focus areas (such as education or youth development) that they are trying to promote change in as well as funding multiple organizations. I read recently that many foundations can only fund approximately 5-10% of the grant requests that they receive. One way of helping more people is giving yours and other organizations a lesser amount than requested. Funders expect you to work collaboratively with other organizations including other funders. The more community support that an organization has, the more stable they will appear. The old saying “Don’t put all of your eggs in one basket” applies to both funders and the organizations they support. You want more than one donor for your project.

Even though it might not feel like it at the time, getting less funding than you asked for is really a great opportunity to create a relationship with a new funder or build on an existing relationship with a current funder.

The Grant Contract

You have gone through months of planning, researching and writing your proposal to the funder. After weeks or even months of waiting for a response, the day's mail brings you the envelope you have been waiting for. Encouraged because it seems thicker than the typical one page denial letter, you eagerly rip open the envelope. Your heart beats with joy as you quickly scan the document that explains how your beloved funder has decided to give life to your project with their generous funds. You thumb through the rest of the document. Wait…what is the rest of this information? A contract, this sounds serious. Your pulse slows and breathing may seem a little more labored as you read several pages of lingo that must have taken a team of lawyer’s years to develop. Do not fear. For many foundations and all government agencies, the grant contract is a standard business procedure.

This contract may spell out the precise terms of the award. Some of the components may include allowable expenditures, specific reporting requirements, expected deliverables (Program outcomes) preferred recognition/publicity methods and much more. Study this document before you sign and return it to the funder. Make sure you are able to do exactly what is required.

If there have been program changes since you submitted your proposal, now is the time to call and discuss them with your funder-before you sign the legally binding grant contract and send it back to the funder.

Not every funder requires a signed contract when awarding a grant. Each contract will vary based on the funding organizations requirements. If a funder requires a contract, typically the check will be sent after you return the signed contract. Look at everything very closely, and if you have questions, call your contact person at the funding agency.

Capturing Data

Once upon a time, a level headed grant-writer worked night and day to help his organization receive the funding they needed for its programs. He wrote strong needs statements, helped create reasonable goals and objectives, and a nice evaluation plan. Everything was perfect. The generous funders delightfully gave their grant dollars to help the wonderful people he described in his proposals.

The level headed grant-writer smugly put his feet up on his desk and crossed his arms behind his head feeling very satisfied with himself. He knew all was well in the world. As soon as that thought flashed through his mind, he remembered that the work had only just begun. He knew that now they would have to do what they said they would do and report their progress at appropriate intervals.

Reporting requirements vary from funder to funder, but all funders will want to hear from you about the progress you are making. They want to make sure they have invested wisely. Some funders want an annual report, while others require a monthly status update. Make sure you understand what your funder requires, and that you can fulfill their reporting expectations before you cash their check.

Determine what data is the most necessary to collect as you move forward for both reporting requirements and effectively evaluating the outcomes of your program.

It is prudent to collect appropriate data at regular intervals. If you run a homeless shelter, count the number of meals served daily as well the number of occupied beds each night. Tabulate the totals on a daily, weekly and monthly basis.

If possible, try to have the program officer fill out a brief one page monthly report to keep you informed about the progress of the program. Do not wait until a week before the final report is due to a funder to look at your data. You cannot create data for an entire year for a report. This will make you and your staff very grumpy, and your funder will see right through it. In addition, you want to be able to evaluate the effectiveness of your program on a consistent basis so that you can make adjustments as needed. Consistent qualitative and quantitative data collection will help you to evaluate your activities and outcomes in a fair, honest manner.