Grantwriting & the Art of Foundation Relations

Last week I attended a Grantwriting course offered by the Graham School -- the Graham School is the continuing education school at the University of Chicago. I am by no means an expert after three days of class, but I did learn from someone with a great deal of experience. The instructor works in development here at the U of C, and did a fantastic job with the course. We had guest speakers, stacks of resources, discussions, in-class exercises, and lots of fun. I picked up so much information from this course, I don't think I could blog about all of it, and I'm not sure it would be useful to other people if I did. That said, I thought I'd sketch out a few elements of vocabulary & jargon in the hopes that others find this useful.

Types of Funding Agents

I was struck by how widely funding agencies can differ -- in structure, in governance, and in expectation. In addition to operating differently based on their type, they also have their own individual organizational culture, like anywhere else. Our instructor compared the process of researching funders to researching for an important job interview -- it's important to know who you're talking to, and what's important to them.

Individual donors -- we didn't cover individuals very much, except to say that often, if what you need is a relatively small amount of money, individuals can be your best bet. Sometimes you'll find someone who will just write a check for what you need, with no process involved.

Foundations -- in general, the only legal requirement of a foundation is that they give away 5% of their endowment every year. Since they earn a high rate of return on their investments, usually a foundation's endowment will grow over time, even with the 5% giveaway rate. Since the requirements are not extremely rigorous, foundations have a great deal of leeway in how they choose to make grants. Some don't accept applications at all -- don't call us, we'll call you. Some have a rigorous application process or a very narrow area of interest. Unfortunately, some are used primarily as tax shelters, since the 5% rate includes administrative costs, such as salaries for the board and the staff.

Foundations can be thought of as falling into three groups.
    family foundations -- Where the founding family of the fund plays a deep role, and family members tend to hold key positions in the organization. Often, they feel particularly strongly about staying true to the founder's vision or original purpose.
    independent foundations -- Often a family foundation will become considered an independent foundation as the founding family dilutes and the original donor is long-dead. Tend to have professional staffs, and their vision may diverge over time from the founder's.
    corporate foundations -- May be more or less independent from the company that established them. Some corporate foundations are funded from the corporate marketing budget, in which case the foundation will tend to prefer projects that align closely with the goals of the corporation and can be used to accomplish PR goals.

The application process is moderately formalized, involving a series of letters, forms, and proposal packages, although the actual structure varies widely. Some may prefer to filter through ideas at a very early stage, while others tend to filter out ideas only after seeing a full proposal. Foundations also vary in terms of where decisions are made and how -- in some foundations, the program director has wide discretion to filter through all applications and make recommendations to the board for a final "rubber stamp" approval. In others, the board plays a very active role and the program director has a more limited role. Some foundations see their role as being very directive and specific, achieving very specific goals in a specific way -- even, in some cases, creating their own organizations to carry out these goals. Other foundations lean back a little and give wider rein to their non-profit partners.

Foundations, particularly independent foundations, are motivated by philanthropic notions of success, but also by reputation and respectibility. They want to do good work and fund successful projects. But more than that, building up a high level of public and institutional trust can give them access to do particularly powerful and useful projects that might be otherwise impossible.

Donor-advised funds -- This isn't a major topic, but I had never heard of this, and I thought it was interesting. Essentially, if you don't have enough money to justify creating a foundation (the instructor said that sums under $20million don't make for a very robust foundation because of the administrative costs relative to the amount you can give away), or you don't want to bother with the details of administering a foundation, you can essentially outsource that activity to a bank or another foundation. The bank or foundation takes on the role of seeking out projects that fit with the donor's vision. Some donor-advised funds operate anonymously to preserve privacy for their donors, as well.
 
Corporate sponsorship -- This is what you might expect: a corporation gives some amount of money in exchange for having a certain size ad in the program for a play, their logo on cups at your events, or various acknowledgements of their role in making something possible. Sometimes these come with perks for the corporation as well, such as exclusive access to a party, complimentary tickets, a dedicated performance, opportunities to volunteer, etc. The process is structured, but with a preference toward the "executive summary" style of presentation, with a clear delineation of what they get for how much.

Corporate giving programs -- This is the type of program where employees make donations to non-profits, often with a matching grant from the employee. Often there is a form you fill out to put your non-profit's name on the list of designated charities.

Government grants -- Probably a familiar concept to anyone in higher-ed. Grants from the government to non-profits, often for research or social service activities, although the government funds a wide range of activities. The process is highly structured, to the point that some of the grantwriters in the class complained that the format did not allow them to make their case as effectively. The forms can also be quite long and tedious (100 pages+, anyone). The positive side of this is that the process does not require the relationship-building a foundation requires. The government is also willing to fund projects that might never be funded by a foundation -- extensive basic research, or research that might reflect poorly on anyone funding it.


Jargon

I noticed a number of terms came up again and again. Some of these are very familiar to the business world or the IT world, but they have a specific meaning in the context of dealing with funders.

capacity-building -- This is a particular category of grant, where the non-profit seeks funding which will expand their reach or make them more self-sustaining. One example of a capacity-building grant is obtaining funds for a development person who can raise money from other sources and move the organization toward being self-sustaining.

sustainability -- Once you get started, how will you continue this project or program? Will you be dependent on the funder for some time into the future? This is an important consideration for foundations in particular. Foundations in particular seem to be averse to funding operational costs of existing programs, preferring to fund new projects or provide seed money. One of our guest speakers characterized this as a subject of growing debate in the philanthropic community, and it's possible that they may be more open to funding operational concerns in the future. Government grants and corporate sponsorship don't seem as averse to this type of funding.

cost-sharing -- A popular term, if you can use it. Basically it means that someone else is putting up some of the money, and thus the foundation gets more bang for their buck.

dissemination -- How you will share the project with others. Will an article be published in the New York Times? Will you present results at conferences? Historically, this is of particular concern to agencies that fund basic research, but over time this is also more of a concern for foundations.

leverage -- Another popular term, if applicable. Will foundation money enable you to better use existing resources?

cultivation -- the process of forming the very particular type of professional relationship between funder and fundee. As described in the course, this seems like a truly complicated art. Our instructor emphasized the need to be "non-cheesy" -- slick, stereotypical salesmen types will lose out to genuine but strategic human beings in this business. Funding agencies prefer projects which are both aspirational and realistic.

stewardship -- the process of taking care of a grant and its funder after the grant is made. Thank-you notes, progress reports, and invitations to view the results of the work are all appropriate. Getting a grant from a funder more than once is impossible without this.


I could continue and cover a lot more of the information we learned during the three-day course, but I hope that this initial taste is a useful introduction to grants & funding.