Category: Financing & Loans

Show Me the Money & Keep It Coming
For today’s look at grantsmanship, I am outlining a four-step process for successful nonprofit grantsmanship. And, because many people – not me, but many other people – find grantsmanship a bit dull, there are plain-language subtitles to lighten it up a bit.

Grant Prospecting

Figuring out who has the money: “Prospecting” is the process of looking for likely grantors to fund your organization. I’ll go into more detail in next month’s post about what makes a good prospect, but the most important factor to look for is significant overlap between the foundation’s purpose and your organization’s mission. In later posts I’ll also describe more about prospecting and some good tools to use.

Grant Cultivation

Getting in good with those who have the money: Cultivation is an extremely important step, just as important as identifying good prospects. Building a relationship with foundation trustees and/or managers takes time, but is a valuable investment to position your grant applications for success.

From my own experience, I can verify that working with potential grantors before submitting an application will result in a much higher acceptance rate. It can also save you time, because meeting with a “hot” grant prospect may yield information about their foundation’s purpose that suggests they are not such a good fit with your organization. Better to find out early before spending time to develop the proposal.

Grant Development

Telling those who have the money what they want to hear: this step could also be entitled, “Proposal Development,” and includes writing and submitting grant proposals (including budgets), and sometimes planning projects if they haven’t been implemented yet at your organization.

Grant writing is creative, but it’s not freeform fiction. Following the grantor’s guidelines and telling them what they want to hear is very important. And, grantors certainly don’t want your budgets to be works of fiction.

Grant Management

Telling those who gave you the money that you spent it well: I often find this step to be the most rewarding because I can report to the grantor that we did meet the goals and objectives described in the proposal they funded.

This step, and the Grant Development step before it, also requires working closely with your organization’s program staff to establish goals and objectives, and monitor and report on outcomes.

When these four steps are done well – with each step considered and implemented – you can be sure that your grants program will be productive and cost-effective.

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Lynn deLearie Consulting, LLC, helps nonprofit organizations develop, enhance and expand grant programs, and helps them secure funding from foundations and corporations. She can be contacted at lynn.delearie@gmail.com.

I received an email some time back that, with my response, suggests a way to think through the question of whether or not to use a prospect research firm.

“I was a participant in your recent workshop on Major Gifts and wanted to thank you for an informative and inspiring session. My organization, The XYZ Trust, is poised to launch a major gifts effort and, while I have numerous questions I would like to ask, I will spare you by limiting it to one.

“I have recently received a solicitation to subscribe to a prospect research service and I’m intrigued by the potential of such a service in the identification of high net worth individuals and their personal and organizational networks.

“Have you ever heard of such a resource? I know you probably won’t explicitly endorse or pan such a commercial service, but is it at least worth exploring? “

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My Response:

If that firm can provide all they “promise,” it sounds like it would be a worthwhile investment depending on the following factors:
1. If you have the volunteers who can tap into any network or establish/expand contact with potential major donors that the process uncovers for you;
2. If those volunteers would be willing to make the contacts and work on the creation/enhancement of the needed relationships (the cultivation);
3. If your volunteers couldn’t make many of the same identifications of individuals and networks on their own;
4. If the price of the service is “reasonable;” and,
5. If you (read: your volunteers) will actually ask major gifts prospects for major gifts – using the definition I provided in a much earlier blog posting.
(See: ”What is A Major Gift”)

If you have a volunteer cadre that would be willing to work at creating and cultivating networks of potential major givers, I’d be pleased (as would other consultants) to be asked to work with/train you/them in that process. In the long term, teaching your leadership “how to fish” – and how to clean and cook the fish, would likely be more cost effective than having someone else do your fishing for you.

And, once the research firm does your fishing for you, do you have that volunteer cadre that knows how and would be willing to do what must come next ??

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Have a comment or a question about starting, evaluating or expanding your fundraising program? With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions. Contact me at AskHank@Major-Capital-Giving.com
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Have you seen The Fundraising Series of ebooks ??
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If you would like to comment/expand on the above, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply” at the bottom of this page, click on the feedback link at the top of the page, or send an email to the author of this posting.

…With Great Application Instructions
Once you decide to apply for a federal grant, you should immediately develop a set of Application Instructions. While every solid grant effort begins with a great kick-off meeting, every successful kick-off meeting begins with a comprehensive set of Application Instructions.

What are Application Instructions?
When you go on a trip with a group of people, you need to study the same maps, read the same guidebooks, and develop a common itinerary.

Embarking on a proposal effort is very similar to taking a group trip. Your team needs to have a common understanding of the tasks ahead.

Good Application Instructions will provide everyone with a clear, detailed roadmap to take them, confidently, from the kick-off meeting to the delivery of the proposal.

The Contents of Application Instructions

Before the kick-off meeting, provide team members with a copy of the grant guidelines and other relevant documents along with your Application Instructions. This should be a three- to four-page document that contains the following:
• Notes and Conventions. This is a bulleted list that includes information about
  (1) the proposal’s due date and how it will be submitted;
  (2) the number of anticipated awards, the amount of money
       available, and the maximum size of a grant; and
  (3) the format and layout of the grant narrative – font style, size,
       justification, size of margins, etc.

• Application. This should be a table in three columns. The column on the
   left should list every section of the entire application from the cover
   sheet through the appendices. The narrative should be outlined according
   to the grant guidelines. The middle column should be titled “Person(s)
   Responsible” and left blank. And the third column should list the dates
   when each of these application sections are due to the Project Manager.

• Evaluation Factors. List the evaluation factors, discuss how the application
   will be scored, and explain what should be emphasized in the proposal
   narrative as a result.

• Schedule. Create a two-column table. The left column should show major
   dates starting with the kick-off meeting and ending with the delivery
   of the application. The right column should list important activities
   keyed to these dates, such as “Complete the first draft of the budget.”

Now your proposal team is ready for a productive kick-off meeting where everyone leaves with a shared understanding of how your proposal will be conceptualized, developed, and delivered.

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Dr. Jayme Sokolow, founder and president of The Development Source, Inc. helps nonprofit organizations develop successful proposals to government agencies. He can be contacted at Jayme Sokolow.

Give, Get or….

A reader asked if we “have any examples of good “get or give” policies for a non profit board.”

I like wording similar to: “It is the policy and practice of the Board of Trustees of (name of the NPO) that each Board Member shall make an annual (cash) contribution to this organization in an amount that would represent the best of his/her ability to give.”

• Where I believe strongly that no organization can ask others to give if the
   Board Members of that NPO have not given to the best of their individual
   abilities; and,

• Where Board Members are (and should be) recruited based on those skills,
   experiences, and perceptions/attitudes that they’ll bring to that role to help
   advance the NPO’s mission; and,

• Where every Trustee should, to the best of his/her ability, participate in
   the process of identifying potential (major) donors, not every trustee can
   be a good solicitor.

• Therefore, not every trustee should be required to “get.”

Even though having a Board comprised solely of major donors and effective fundraisers would be a (tongue-in-cheek) tough situation to live with, Board responsibilities extend far beyond just providing funding.

That old expression about Board Members having to “Give, Get or Get Off” is obsolete. And, not only that, it can be counter-productive, even destructive.

People with the “right stuff” to be Board Members, can’t always be major donors and/or “getters.” You can’t define a good Board Member just based on the size of his/her portfolio or that of his/her contacts/friends/etc.

When it comes to raising the big bucks, you can always (hopefully) create a volunteer cadre/council/board/committee the purpose of which is to function in that capacity. Board Members with the “right stuff” aren’t always easy to find.

(See: Leadership For A Major Gifts Program: Part 1 & Part 2

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Email me at AskHank@Major-Capital-Giving.com. With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, we’ll likely be able to answer your questions.

If you think that people online give to your organization only through your web donation form, you’re missing significant slices of the online giving pie. See the chart below to see how big those missing slices can be.

I recently studied 701 gifts that a nonprofit client received in 2010. All were made by visitors to their web site. However, less than two-thirds of those gifts (64%) actually came in via the web form.

24% of the gifts came in via the nonprofit’s PayPal account.
There are 85 million PayPal accounts in the US and they exist for only one reason – so people can spend money, online. Don’t you want to make it convenient for those active web users? They’re already comfortable with PayPal, and they can make a gift to you easily and quickly, without having to enter a credit card number online.

(I also think that people are more willing to spend money from their PayPal account than from their credit card or checking account.)

10% came in via the mail…
…on forms printed from the web site. These are people who don’t trust the web at all, or who had trouble using your web form (no web donation process works 100% of the time).

The smallest slice (two percent) came in via Amazon’s payment system.
Amazon lets nonprofits establish a vendor account, and donors can use their Amazon one-click process to make a gift to the nonprofit. Again, it’s convenient for the donor.

Figure 1: Percentage of online donations by channel

There has been a shift with this nonprofit in recent years. The mail used to account for a higher percentage, and PayPal a lower percentage. Times change, and your donors’ online donation preferences will, too.

Neither Amazon nor PayPal take a cut of the donation. That is much different than what your online credit card merchant takes, so the net to you is pretty much the same. (You need to negotiate rates based on your volume, average gift amount, and security measures).

Online check payments – those made online directly from the donor’s checking account – will increase in popularity, particularly as people seek to avoid credit card interest rates, and as such payments are more often used for online bill paying in general.

So, if you only have a web form, you might be missing more than one third of the gifts people are willing to give you.

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Rick Christ has been helping nonprofit organizations use the internet for fundraising, communications and advocacy since 2009, and has been a frequent writer on the subject. He delights in your questions and arguments. Please contact him at: RChrist@Amergent.com or at his LinkedIn Page

A reader indicated that she was, “trying to find accounting literature that defines whether we can capitalize the cost of a capital campaign consultant and the project management time provided by development staff who worked on the campaign,” and she asked, are “these costs usually capitalized with the new building or building expansion as project costs?”

1. The technical/accounting answer comes from Christine L. Manor, CPA
( clm@clmanor.com, who wrote “QuickBooks for Not-for-Profit Organizations”) referencing Financial Accounting Standards Board (FASB) guidelines:

In terms of accounting for fundraising costs, refer your accountant to 13.08 Per FASB ASC 958-720-25-4, costs of fundraising, including the costs of special fundraising events, should be expensed as incurred, and costs are considered to be incurred when the item or service has been received.

Fundraising costs incurred in one period, such as those made to obtain capital campaign counsel, compile a list of prospective campaign donors, or actually solicit commitments to a campaign, may result in contributions that will be received in future periods. These costs should be expensed as incurred.

Christine emphasized that, “even though you may lump all the planning and construction costs into a capital campaign asset account, you can’t put the fundraising costs there. Fundraising costs must be charged directly to a fundraising expense account.”

113.43 Per the FASB ASC glossary, fundraising activities are activities undertaken to (prepare to) induce potential donors to contribute money, securities, services, material, other assets, or time…

2. Even though the question seemed to focus on accounting practices, regulations and requirements, let me add that my experience has been that most nonprofits build campaign costs into their overall campaign goals.

So, even though the actual costs of a campaign have to be “accounted for” in the period in which they were accrued, those costs can be recouped by adding the anticipated total amount of the expenses to the campaign goal.

But, caution, those costs must be listed as such in any campaign budget or literature that includes a breakdown of what the campaign is designed to accomplish. Anything else would be unethical.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Email me at AskHank@Major-Capital-Giving.com. With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, we’ll likely be able to answer your questions.

This is the first in (what’s likely to be) a long series of postings about the Combined Federal Campaign (CFC).

Workplace giving, with the CFC, is the only type of non-profit fundraising that is subsidized, low-risk and high leverage. If you’re not familiar with the CFC, let me share a few facts and debunk a few myths.

1. Myth   It’s hard to get into to the CFC.
   Fact    94% of nonprofits that apply are accepted.
The CFC actually has an “open admissions” program. If you meet the criteria, you’re in. And, in general, the 6% that don’t get in are the ones that don’t follow the instructions.

2. Myth  The CFC doesn’t raise significant money.
   Fact    One billion dollars of unrestricted funds in the past 5 years.
CFC donors have contributed more than $200 million to thousands of local, national, and international non-profits. CFC monies are unrestricted, reliable and predictable. In terms of actual giving, if the CFC were a foundation, it would be the 10th largest foundation in the United States.

3. Myth  The only place that has Federal employees is Washington, D.C.
   Fact    89% of Federal employees live outside of the DC region.

4. Myth  The CFC is only for the “big guys” (National Nonprofits).
   Fact    40% of the funds raised go to local nonprofits – the “little guys.”

5. Myth  There’s a lot of red tape.
   Fact    No more than any grant application, much less on the “back end.”
The regulations were substantially streamlined in 2006, so even if this was the case before, things have changed. There is zero red tape for the non-profit after the funds are received — (not bad for a government program!)

6. Myth  Some “expert” is going to decide if our non-profit gets any money.
   Fact    Donors designate more than 90% of CFC dollarsto specific nonprofits.

7. Myth  CFC Donors are fickle
   Fact    Most CFC donors are multi-year donors to the same nonprofits.
How many ten year grants have you gotten from foundations that support your organization? CFC donors are consistent !!

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My next posting on the CFC … “What is the CFC and Where to Apply”

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During his 25-year career in the Federal sector, Bill Huddleston, The CFC Coach, served in many CFC roles. If you want to get involved in the Combined Federal Campaign, maximize your nonprofit’s CFC revenues, or just ask a few questions, this is the guy to contact: Bill Huddleston1@gmail.com .

That question was asked on one of the listserves where I am (usually) just a lurker, but was one I felt moved to answer. What I said was that….

I’ve been a fundraising consultant for well over 30 years, and I obtained my CFRE when the program was relatively new – back in the early ‘80s. I maintained my certification for twenty years, and (for the most part) found the initial process and the required ongoing-recertification to be worthwhile.

The CFRE is a basic certification. It says that the person who has worked for and earned the designation has a minimum of five years in the field and has an understanding of the fundraising/development basics.

But that’s it !! Where having the certification “says” that a person has knowledge of the basics in fundraising, the certificate alone does not say anything about an individual’s skills or ability to use the knowledge.

The field of fundraising is fairly broad, and most people who enter the field have little knowledge/understanding of what all of the elements are and how they relate to and support each other.

So, my response to the question is: If someone plans on staying in the field, it would be to their advantage (and to the advantage of any non-profit that might hire them) to be serious about their education, to discover what it is that they didn’t know they didn’t know and learn to take seriously this field we work in.

The certification process organizes the various elements, relates them to each other and presents them in a way that is relatively easy to grasp. In that context, I believe it is worth the time and cost of pursuing the certification … whether or not you maintain the certification over the long term.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Email me at AskHank@Major-Capital-Giving.com. With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, we’ll likely be able to answer your questions.

Although Merriam-Webster defines grantsmanship simply as “the art of obtaining grants,” the reality is so much more than that. A broader, more realistic (somewhat dramatic) definition of that term would be, “The cradle to grave process for ‘birthing,’ ‘raising’ and managing grants.”

Regularly, on this blog, I will share my experiences, real world examples, and other resources to help you develop or expand a grants program for your nonprofit.

So, as promised, in this, my first post focusing on grantsmanship, let’s look at some real world examples…

The Good: According to a 2010 WealthEngine white paper, “Measuring Fundraising Return On Investment and the Impact of Prospect Research,” the average cost-per-dollar-raised for grants is 20 cents … an ROI of 500%. For each dollar raised for direct mail donor acquisition the cost is over a dollar, and it’s often fifty-cents-per-dollar-raised for special events. Clearly, grant seeking can result in a good return on investment … when managed well.

The Bad: If your financial statements and program budgets are not in order, then you’re not ready to start a grants program. Many grantors will scrutinize your financials with a magnifying glass, and if your books are not in total order, don’t expect to be awarded a grant.

Take the case of New Jersey’s application for a U.S. Department of Education “Race to the Top” grant. According to an August 31, 2010 article in The Trentonian, New Jersey “lost crucial points in reporting budget figures for the wrong years in one section of its application.”

The article stated that New Jersey “was a top runner-up in the competition, missing by only a few points.” This financial gaffe cost New Jersey a $400 million federal education grant, and it cost New Jersey’s education commissioner, Bret Schundler, his job.

The Ugly: Grants are NOT a no-strings-attached gift – they are a contract between the grantor, who provides the funds, and the grantee, who performs the tasks and delivers the outcomes described in the proposal. OK, maybe this isn’t The Ugly. It’s just reality. But, if the grantee fails to deliver, it can get ugly, really ugly.

Take the case of the Center for Civic Education (CCE). CCE received grants during FY08 from the U.S. Department of Education to facilitate civic education. The DOE conducted an audit to determine whether CCE administered the grants in compliance with applicable laws, regulations and grant award provisions.

The audit findings were really Ugly, ranging from, “Not meeting the standards for administering federal education grants,” to, “Charging costs that were not reasonable, necessary, or allocable to the programs.” Needless to say, the DOE was not happy, and “recommended” that CCE return over $925,000 that they’d spent in FY08, and that CCE be designated a “high-risk grantee” … subject to special grant conditions.

By the way, the audit and CCE’s response offer some very interesting reading:
The Audit    CCE Response
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Lynn deLearie Consulting, LLC, helps nonprofit organizations develop, enhance and expand grant programs, and helps them secure funding from foundations and corporations. Lynn can be contacted at lynn.delearie@gmail.com..

An Ethical Question:

The following is based on a question raised by a financial planner….

In the non-profit world, there is an ethical prohibition against anyone profiting by advising/encouraging another to make a gift to a non-profit organization. There is also a specific prohibition against anyone being compensated by a percentage of any amounts donated to an NPO.

It’s OK for a financial adviser to be compensated by a nonprofit organization for advising on and/or managing its assets; and, it’s OK for a financial adviser to be compensated for advising on and/or managing the assets of potential donors.

It seems like it would strengthen the relationship between a financial adviser and his/her individual (wealthy) clients to be able to offer advice/direction regarding their giving … and the benefits they’d derive from giving.

But the advisor should not seek nor accept compensation based on the money that moves from the donor to the NPO.

Four related thoughts:
1) By offering a useful service to wealthy clients, without “additional”
compensation, financial advisers are likely to get more referrals to
other wealthy clients.
2) The recommendations a financial advisor makes to his/her wealthy
clients should be based on his/her knowledge of whether a nonprofit
does good work, manages its finances effectively, and if the potential
donor’s needs will be satisfied by giving to that nonprofit organization.
3) It is considered unethical for an NPO to provide financial planning
advice to a (prospective) donor if the intent of that advice is to get
that individual to make a gift to the NPO.
4) If a (potential) donor wants/needs financial advice about making
a gift to an NPO, and asks the NPO, the NPO must (ethically) refer
that person to his/her independent financial planner.

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Have a comment or a question about starting, evaluating or expanding your fundraising program? Email me at AskHank@Major-Capital-Giving.com. With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, we’ll likely be able to answer your questions.