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.