Tips for End-of-Year Foundation Fundraising
November 18, 2014
This is the time of year when every nonprofit CEO sinks or swims. Either you secure the last of the grants needed to balance your organization's budget or risk running a deficit and ruining its balance sheet. But while you might think it's too late to save 2014, the last six weeks of the year are actually an excellent time to pursue foundation grants. Here are a few tips to help you do so:
Foundations are like people. At the end of the day, whether it's a small family foundation or a large independent foundation,
it takes people to make a grant, and, when it comes to deadlines, most people procrastinate. In other words, an awful lot of grants get made in the last quarter of the year, and a surprising number of those grants are made in December.
Meeting the payout requirement is trickier than you think. Foundations are required by law to spend 5 percent of their assets annually for charitable purposes. This can include a portion of their own operating costs, but most of it tends to be paid out in grants. Many foundations base this 5 percent minimum on a rolling three-year average of the value of their investments. With the fairly constant oscillations of the stock market, you can imagine this is something of a moving target for most foundations. Add to that the fact that grants sometimes don't materialize, organizations implode, and stuff happens, and foundations often have to scramble to make last-minute grants to achieve their mandated 5 percent payout.
The stock market is on a tear. Though 2014 has been a bit bumpy, the markets are up and have been very good to foundations over the past three years. This means that foundations will be calculating their 5 percent payout on an asset base that is larger than at any time since before the Great Recession. It's the reason why U.S. foundations will pay out nearly $60 billion in grants in 2014.
a special, end-of-year, one-time gift to your organization. Ideally, this would be for general operating support, but it could also be for something that really speaks to your program officer's passion. Foundations are far more likely to make a last-minute grant to an organization they know well and trust.
Try reaching out to a new foundation, but target well. Do your homework by researching foundations you may have previously overlooked that are interested in your organization's priorities. FDO Free is a great place to start. With it, you can search the 990 tax returns of more than 90,000 foundations — I found more than 3,000 foundations whose 2012 tax returns mentioned "homeless" — sort them by state, and look up profiles of the ones located closest to you. The information in FDO Free is enough to get you started and the price is unbeatable. If you want to dive deeper and get more detailed information on new foundation prospects, right down to the individual grants they've made, you can always spring for a Foundation Directory Online subscription plan. But whatever you do, be sure to only apply to those foundations that are a good fit in terms of your organization's mission and programs. Wishful thinking aside, a thousand flowers will not bloom if you send out thousands of proposals at random.
Write a compelling letter of inquiry. Nothing kills a grant request faster than a lousy cover letter. Foundations get many, many more requests than they can approve and have developed a sixth sense about form letters, rambling prose that never gets to the point, and unimaginative email subject lines (i.e., "grant request"). Be creative. Put the ask as close to the top of the letter as possible. But above all, be compelling and concise.
Man the battle stations! If you are fortunate enough to snag an end-of-year commitment from a foundation, you will almost surely need to move heaven and earth to get all the paperwork done in time. Remember: It's worth it, and foundations tend to develop great respect for organizations that are willing and able to provide what is needed to complete the approval of a grant, regardless of the time of year.
Don't be disappointed. Regrettably, some foundations won't even respond to your inquiry. Others will a send form rejection letter, while still others will thank you for your request, appreciate it as a smart thing for an organization to do, and invite you to have a conversation in the New Year. Take that as a very good sign that you have broadened your circle of potential funders and planted the seeds of a relationship from which future grants just may flow.
Yes, this is a tough time of year, but it is also the giving time of year. Responsible nonprofits owe it to themselves to go for those last-minute grants.
Bradford K. Smith is president of Foundation Center.