Nonprofit Grant Strategy – Is Your Box Too Small?

This blog is part two of a series of articles on developing a Nonprofit Grant Strategy.  I began last month by talking about five core competencies of a nonprofit grant strategy.  In that overview, I discussed role of strategy as the cornerstone of a successful grant program.  Unfortunately, many nonprofits do not think about grant writing as strategy but think of grant writing in relation to the short list of funders in our local philanthropic ecology.  In our Northwest geography (Oregon and Southwest Washington), the grant making ecology is pretty limited. In this context, grant seeking becomes a zero sum game of reordering the contents of the local philanthropic “box.”

Let me oversimplify the concept a bit.  Imagine that our local philanthropic resources were contained in a box.  For example, the box would be square and, according to one survey, the 5th edition of grant ecologyTrends in Northwest Giving, the profile of grant making in Oregon (2012) was that roughly 203 million dollars were awarded to nonprofits through a total of 7,139 grants.  Even if you were to do the crude math of dividing the total dollars by total grants, the average grant would be under $30,000. But the reality is even more grim. The median grant value was only $5,850. Remember that the median is the midpoint of a frequency distribution, which means that half of the total numbers of grants awarded fell at or below that number.

Consider also that 30% of the grant dollars were awarded to the Education sub-sector; arts organizations received 10% of the resources; while environmental and animal related nonprofits shared 10%.  Other nonprofit sub-sectors were in between those high and lows.  Combined, it suggests that half of our local grant making is of a small dollar value and that all grant making is unevenly distributed.

What should be apparent in the brief overview is that the local philanthropy box is small.  For nonprofits to simply apply to the same “top ten foundations” listed in the report, at best, reshuffles the contents of the box. In other words, Arts Organization A looses and Arts Organization B wins. Dollars simply shift from one agency to another. Further as the grant makers (who define the dimensions of the box) continue to narrow their focus of funding in pursuit of theHoly Grail of “Collective Impact,” more and more nonprofits are being marginalized to the edges of the box — or are being pushed out of the box altogether.

Faced with the reality of our small local philanthropy box that unevenly allocates resources, I believe that nonprofits are being forced to think about developing an intentional revenue strategy if they care at all about grant revenue stability.  Leading edge nonprofits are doing just that. They are investing the time, money and people power to ensure that they have (and can implement) a revenue strategy. Building  a grant strategy into that revenues strategy will allow you to intentionally move outside of the local philanthropy box by pursuing funding from state, regional, and national foundations and government agencies. “Outside the box” grant thinking can be a driver of revenue growth and is made possible by creating a clear and focused grant strategy.  However, to take the time to invest in strategy, many nonprofits need to change their mindset in three ways:

•  Redirect your Development Focus: If you make grant writing just one of many revenue development strategies, your grants focus is likely lost. This is especially true for nonprofit agencies who are trapped in the single person or small development team staffing structure.  Today, I happened to have coffee with a development director of a small nonprofit.  As we spoke about grant strategy, he laughed, “Grant writing runs through my career experience, yet where do I spend my time? – working with volunteers to pull off a gala to cover basic operating costs, and I am currently neck deep in chasing dollars through giving days, end of year appeals, and social media tactics. We are running so fast we don’t ever think of revenue strategy, let alone a grant strategy.”

•  Invest time, Money and Talent: If your board is comprised of folks working in the private sector, ask them what it takes to develop a new business revenue steam. They will likely tell you it takes planning, investing resources, and ensuring the talent is available to build an infrastructure to support the new revenue stream. The same is true of a nonprofit grant strategy. it takes time, money and talent to build the capacity and infrastructure to support a growing grants program.  Changing you mindset or the mindset of your board requires you to make an investment, even if it means spending limited unrestricted cash, in order to make a grant strategy work.

•  Take the Long View: It takes time to build a strategy, implementation plan, and grant strategy infrastructure.  Building the right team, supported by the right technology does not happen overnight and it requires a long view to cultivate relationships and write grants (not to mention manage them once received).  Starting from little capacity it might take 6-18 months to build a grant strategy and infrastructure. Consultants or hiring a dedicated staff could help shorten the start-up window but the “long view” understands the old axiom that it takes time, money and talent to create time, money and talent.

Investing in grant strategy is not easy. If it were, we would not have the dismal statistics about how few nonprofit organizations have written strategic, business, or fundraising plans.  Yet, in my experience, irrespective of size, the most effective nonprofits that I know; track trends, synthesize data, and translate their knowledge into an “out of the local box” a grant strategy (as a focus of an overall revenue model), which, in turn, is rewarded.  In the words of one nonprofit executive director, by “adding a full-time staff grants officer, we have almost tripled our revenue in less than three years.   We could have added a development director but wanted to focus on grants. It has given me more time to focus on people management, strategic work, board development, and state-wide networking.  As we move into the new year, ask yourself the question, “Is your grant strategy box too small?

As always, your thoughts are welcome.

Photo Credit Green Chameleon

 

 

Mark Fulop
Mark founded Facilitation & Process in 2009 to help organizations and communities bridge the gap between where they are today and where they want to be tomorrow. He’s led dozens of Portland nonprofits, government agencies and philanthropic organizations through complex change initiatives including strategic planning, revenue planning, board development, collaboration, and facilitation.