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'Don’t Call Us, We’ll Call You'

March 04, 2011

(Bradford K. Smith is the president of the Foundation Center. In his previous post, he wrote about transparency and the Giving Pledge.)

Rotary_phone Okay. You're working at a great nonprofit, you've got a wonderful idea that's going to change the world, and all you need is a grant to get you started. Guess what? The majority of America's foundations don't want you to send in a proposal.

Of the more than 86,000 independent, community, and corporate foundations in the United States, 60 percent state that they do not accept unsolicited proposals. Together they represent 32 percent of total assets and 34 percent of annual giving. Nearly $16 billion of the $46 billion distributed every year is not up for grabs; you need an invitation.

Foundations in America are private institutions and have the right to decide how, when, and on what terms they will accept proposals and make their grants. At the Foundation Center, we respect that right and clearly indicate in our databases when a particular foundation does not want to receive unsolicited proposals. But people seeking foundation grants find this more than a bit frustrating. One of their most common questions is, "Why won't foundation X let me send in my proposal?"

There are at least two reasons. The first is foundation size. Dealing responsibly with requests for funding requires significant effort, time, and people. Yet in one Foundation Center survey of 11,000 foundations, 76 percent of respondents had fewer than four staff. Foundations are frequently inundated with proposals. My own experience working in philanthropy has taught me that for every grant approved by a foundation, eleven more are declined. The ratio can be much worse. One year at the Ford Foundation -- which accepts unsolicited proposals and has hundreds of staff -- we decided to count every letter of inquiry, e-mail, and actual proposal and came up with something on the order of 144,000. The number of grants actually made that year? Fewer than three thousand. The situation could be helped if foundations were clearer about their grantmaking priorities and nonprofits were more careful in targeting their proposals, but the reality is one of greater demand than supply. From a foundation's perspective, not accepting proposals can be like building a dyke to hold back the flood.

The second reason has to do with the growing emphasis in philanthropy on strategy and social impact. Foundations may command billions of dollars, but the challenges they aspire to address -- educational quality, access to health care, workforce and economic development, climate change, and more -- require far greater resources. Moreover, in recent years a new wave of business-oriented, often younger philanthropists have entered the field and brought with them notions of social investment, metrics, and assessment. All this adds up to a trend among some foundations to design their own theories of change and strategies and then either implement programs themselves or select the organizations from which they are willing to entertain proposals. The actual design of these strategies frequently is done in collaboration with nonprofits and universities, so if you happen to be part of the process, you'll most likely get a grant. If not, well, you're just not part of the in-crowd.

In 2009, with the economy in the tank, I was doing a live chat with the Chronicle of Philanthropy and someone asked whether they should still try when a foundation said it didn't accept unsolicited proposals. My answer was not "no," but rather that they should pay attention to what the foundation is saying and try to find someone who knows a board member, a staff person, or any other connection that would help get them in the door. In our grantseeking classes here at the center, we always teach that a grant begins with a relationship. That's true whether a foundation accepts unsolicited proposals or not.

Lately, I've seen some slightly less foreboding language crop up on a number of foundation Web sites: "The foundation does not encourage unsolicited proposals." Maybe that's the solution for smaller foundations not wanting to be overwhelmed and larger, highly strategic foundations striving to maximize their impact. Foundations receive a tax exemption on their investment income in exchange for contributing to the public good. One way to do that is to maintain at least a single program area, however small, that invites the public, in the form of nonprofits, to freely apply for grants. Besides, no matter how knowledgeable a donor, staff, and consultants might be, the next big idea out there may be the one that literally comes in over the transom.

What do you think?

-- Brad Smith

Comments

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As Kim Klein says,

"I never even look at Foundations because They don't have enough money."

Seriously.

Here's my exclusive interview with her about that.
http://www.wildwomanfundraising.com/interview-kim-klein/

Most money that is given away in America is given by individuals. Like, 75% of it. So if most foundations don't accept proposals, I say good riddance. Go where the money is.

Mazarine

Actually, Foundation Source just launched a new online philanthropy network called Foundation Source Access that enables nonprofits and foundations, for the first time, to find each other online based on their interests, resources and mutual philanthropic missions. Using Access, nonprofits can present their most urgent fundraising needs and find new foundation donors in an easier and more cost-effective way that circumvents the usual obstacles that you lay out in your post. Access is the first service to offer fresh and relevant information about specific projects and causes directly from the source, allowing private foundations to seek projects that match their own missions.

Nearly 1000 private foundation clients of ours currently have the ability to search profiles and project pages through Access. As private foundations review funding projects there, they can interact with comments and endorsements, ask questions of the nonprofit, and in the very near future, participate in foundation-only forums. Foundations may also visit Cause pages to learn about major philanthropic initiatives in urgent need such as the earthquake in Haiti, and then fund projects that directly address those needs. When a “match” is made, our clients can click on a Grant button to send funds instantaneously.

In short, everyone benefits, as Access makes it easier and less expensive to match donors and recipients.

access.foundationsource.com

Actually, Foundation Source just launched a new online philanthropy network called Foundation Source Access that enables nonprofits and foundations, for the first time, to find each other online based on their interests, resources and mutual philanthropic missions. Using Access, nonprofits can present their most urgent fundraising needs and find new foundation donors in an easier and more cost-effective way that circumvents the usual obstacles that you lay out in your post. Access is the first service to offer fresh and relevant information about specific projects and causes directly from the source, allowing private foundations to seek projects that match their own missions.

Nearly 1000 private foundation clients of ours currently have the ability to search profiles and project pages through Access. As private foundations review funding projects there, they can interact with comments and endorsements, ask questions of the nonprofit, and in the very near future, participate in foundation-only forums. Foundations may also visit Cause pages to learn about major philanthropic initiatives in urgent need such as the earthquake in Haiti, and then fund projects that directly address those needs. When a “match” is made, our clients can click on a Grant button to send funds instantaneously.

In short, everyone benefits, as Access makes it easier and less expensive to match donors and recipients.

access.foundationsource.com

Brad articulates well the current reality and arguments on both sides. I would add to this important discussion one additional point:

In 1995, when I was a newly-minted program officer at the Ford Foundation,
during my orientation, I learned that one could categorize one's grants into three categories: initiatives where the foundation designs a new grant making program and solicits by invitation select prospective grantees; flagship grants where the foundation extends support to highly-regarded organizations in its fields of endeavor; and opportunity grants where a program officer receives a proposal over the transom that matches her or his strategic priorities, and is promising and innovative.

I endeavored to recommend to the Foundation's leadership for their approval grants in each of these three areas. Some of the most exciting (and yes, potentially risky in some cases) grantees fell in the third bucket. As Brad asserted, Ford certainly has a lot of available human resources to respond to unsolicited inquiries and proposals. However, many smaller foundations also have the same policy.

In this area of greater public expectations for transparency and accountability among foundations, I find it the height of hubris when foundation executives and program staff believe that they can know all of the significant players in their areas of interest. It is far more preferable that they open the doors to all players. The results will be richer, and the public good will be better served.

Michael Seltzer

I think this is the most important part of this article: "... so if you happen to be part of the process, you'll most likely get a grant. If not, well, you're just not part of the in-crowd."

How are people coming from disadvantaged socio-economic backgrounds going to "try to find someone who knows a board member, a staff person, or any other connection that would help get them in the door"?

This post just reaffirms that organized philanthropy still has a long way to go in order to become a truly progressive force for social good… Otherwise it is just an avenue for those in "the in-crowd" to push their own agendas and perpetuate their wealth by only giving out 5% of their assets while keeping the other 95% of their money locked up in foundation trusts in perpetuity.

I've been fighting this battle for 18 years and boy is it frustrating. So, I've also being trying to build a new system that might improve the flow and distribution of needed resources while lowering the costs on both sides.

There are a growing number of intermediaries and donor advisers who are trying to help donors make giving decisions. Many of these base evaluations on financial metrics.

Instead of this, I have been building a map based knowledge library that anyone who wants to help kids in urban poverty can use to support any of nearly 200 youth serving organizations offering tutoring/mentoring to Chicago area kids. Our maps include poverty demographics and information showing poorly performing schools on a visual interface. With this donors and volunteers can shop and choose what program they want to support, based on where the program is located and what they show on their web site. You can see our maps and directory at http://www.tutormentorprogramlocator.net

While I focus on one city and a small interest area, the potential of map-based directories helping donors choose who to support, and encouraging a broader distribution of support at the same time, is growing. On the Boston Indicators Project web site (http://www.bostonindicators.org/Indicators2008/) is an Innovation hub, where anyone can click on a slice of the pie and dig deeper into an issue area, ultimately having some choices of organizations that they might reach out to support.

If tools and resources like this become more available and are promoted in more ways maybe NPOs will be a little less dependent on relationships and LOIs because donors who want the same outcomes will learn to shop and find programs doing work that aligns with the outcomes they want, and the geography they want to help.

Finding donors who support this has been extremely difficult, but by networking in forums like this we all increase the chances of being discovered.

This blogpost proves that a change is needed in the grant process. Has there really been any change from the formula Nonprofit writes application, trys to get first in line, Grantmaker reads application, thunbs up or thumbs down? The process has been the same for centuries. With the increasing number of nonprfits and grantmakers, this process is becoming more and more inefficient.

On a side note, it would be great if people posts were about the article and not spam trying to promote something.

I will not attempt to reply to all of the above but thank everyone for chiming in on this topic. A number of comments relate to new experiments out there that attempt to structure a more rational marketplace for giving (and receiving). The experimentation is welcome and holds promise as long as the barriers for nonprofit participation, accreditation and rating do not create a new, pseudo-scientfic version of the "in crowd" phenomenon I described in the post.

Mazarine is right in saying that 75% or so of charitable money in the U.S. comes from individuals and like all fund raising it costs you money to get it. Much of that money is given for religious purposes and like all giving it is skewed: the biggest, most visible and best connected organizations get more of it than the others. Foundation grants will remain hugely important because, despite the hoops that nonprofits might have to jump through to get one, they remain a source of often large amounts of relatively flexible capital that is difficult to find elsewhere.

I am suprised that no one commented on the public purpose issue raised in the last paragraph.

One thing that should be noted - in this post a lot of the discussion centers around the implications for the biggest foundations, but one thing only briefly mentioned is that mid-sized and smaller foundations often stop accepting applications in self-defense - they just don't have the staff or time to wade through the flood of proposals and give each applicant the service they deserve.

I would hope that the problem could be alleviated at least in part by developments such adopting field-wide standards, automated application pre-screening, wider use of common application forms, etc. It won't end the problem but it sure could put a good dent in it.

Am I missing something or does this leave it all up to the foundations to find what they are looking for while non-profits stand on the sideline and wait to be asked to dance? What am I missing?

Luis, not all foundations have the same "in crowd". I am part of a VERY small charitable trust, and we give to our personal "in crowd"--the people we know who are busting their rear ends for their causes, who don't have the time or knowledge to apply to bigger foundations (other than us, their funding mostly comes from individual donors in their communities, rather than grants, because these small groups just don't have grantwriters). So this kind of connected giving can have a positive flipside when the people giving the money are personally connected with the people doing the best work. I don't think our money would be doing more good if we suddenly decided to open ourselves up to proposals from strangers!

Also, it's true that we do not give away all our money at once--we give away mostly investment income, thus preserving the principle for future giving, so that we are a savings account for charities. We don't do it to avoid giving more money away. We can't touch the money for anything but charitable giving anyway, and we can't take deductions on our personal returns for giving it, so we aren't getting any personal benefit from maintaining the trust for future giving. I mean, we could give it all away this year and be done, not have to argue amongst ourselves about who to support next year and the year after, but I don't see how that would benefit charities more than our current, sustainable level of giving?

I am forever grateful that I stumbled into foundation work under the leadership of Sid Repplier, who headed up The Philadelphia Foundation for 21 years until he retired in 1982. Unlike, I would venture to say, most foundation directors and program officers, Sid spent more time in the community listening than in the office, and our policy (if there was one) was to accept anything that looked like a proposal from anyone who wanted to send one in. "Over the Transom" was the ethos. That meant, for instance, that we were learning about AIDS from the very beginning, and those proposals, from a wide range of proponents, from tiny grassroots groups to the largest institutions, helped us figure out what to do and, by extension, enabled us to share our learning with other grantmakers.
Thanks for raising this, Brad. It's just as important now as it was in 1982.

It's interesting that Kim edited one of my favorite grantwriting books, Grassroots Grants :).

Foundations were CREATED by individuals and I approach grantseeking from the perspective of relationships. By that I mean conducting regular foundation prospect research with a focus on potential connections. It can be a rather tedious habit (many habits are) to continually cross check with your own board and staff looking for potential connections, but eventually you'll not only develop a stream of consistent foundation funding, you'll also build relationships with foundation funders.

I absolutely agree with you Pamela. Knowing how to ask for financial support is a critical skill for all fundraising professionals, but focus on how to make "the ask" should not be at the expense of relationship building and the development and management of a strategy for stewarding those relationships. I sometimes think we forget that, so thanks for this reminder! Knowing how to weave networks of people who can support your cause is also a critical skill that all fundraising professionals and leaders of social movements need to have.

I met Mazarine in 2010 during the early days of my nonprofit for investigative reporting, The Austin Bulldog. She's dynamic, enthusiastic, and I wish I had been able to take advantage of her services.

Given my limited success with foundations and the fact that the Bulldog has been sustained, however modestly, by local donors, I agree with her comments here. I just wish I could find more of them who are interested in supporting high-quality public interest journalism to hold the powers that be accountablel

By not being accepted as part of the "in crowd", tribal communities have a wide cultural gap with the foundation community. Yet, in this country, this is where the most need exist as tribal communities are heavily affected by every issue in the book. According to the organization Native Americans in Philanthropy, Native Americans face extraordinary challenges when entering the philanthropic maze created by foundations. While $5.4 billion is awarded in grants across the United States, less than one percent is targeted toward Native American communities and some of those funds are granted to non-Native controlled institutions.

Pamela's counsel to treat foundation officers as individuals and not part of the "borg" of philanthropy mirrors my experience. They are very knowledgable and have networks that can be of as much value as their grant funding. They have some degree of discretion in grant making,and they appreciate it when you deal with them like the committed and compassionate professionals they truly are. Many haven't always worked for gigantic foundations and often started fighting the good fight at a nonprofit, and they understand both sides of the philanthropic equation. If they are valued for who they are, not just the money they steward, they can be the best ally you can have. They can offer referrals to other program officers, advise on how to improve your programs and proposals, suggest new strategies, and quietly insure you know when to apply and shepherd your request through the often Byzantine systems and personalities internally. They will know how to budget in a way that the CFO will approve, what the trustees are really thinking about despite what's published. They are some of the best friends you can have, even if you never get a grant. Treat them like individual major donors, keep track of what they say, let them know you followed up on their suggestions. You can't buy better advice.

Brad, what do I think? It's a terrible excuse - supply and demand. Why? I think that Rockefeller (http://www.rockefellerfoundation.org/) didn't intend his foundation to be worth approximately $1.3 billion, 120 years after his death. I'd assume he wanted it to be given away. It's an ineffective vehicle, as well intended as it may be, at solving problems. I think the advisers, managers and directors of that foundation benefit the most. Charities have to uphold a standard of 95/5 to even qualify for the watch dogs, so they can't spend money on marketing and therefore can't raise funds effectively to do the work on the grass roots level. A charity should not need to bare both burdens of raising money and doing the work, when there are hundreds of thousands of foundations with trillion's of dollars locked away...generating fees ;)

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