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How to Raise Money for a Nonprofit

By David H. Bangs Jr. | Entrepreneur

Step 4: Foundations and Other Funding Sources

There are over 30,000 charitable foundations. They represent a rich source of funds for nonprofits—usually for restricted funds for specific programs or services, less often for unrestricted operating funds.

How do you get funded by one of these? The same way as you get funding from individuals. You have to know what you are seeking, do research on foundations that might be interested in what you are doing, and establish a relationship with people in those organizations who make funding decisions (remember that organizations don’t make decisions, people do). Then and only then can you sensibly ask for funds.

Foundations, whether public or private, are very explicit in their interests. You can research them via the Internet, go to the library, or (more efficient) ask your peers and the helpful people at the United Way for guidance.

Local charitable foundations serve local nonprofit needs. Community foundations are very approachable and are a major source of funds for capacity building, which is jargon for helping small nonprofits acquire skills (planning, grant writing, negotiating, board training, and so on). If your nonprofit would benefit from a strategic planning retreat, for example, your community foundation (or other local foundation) might be willing to pay for a facilitator to help with the strategic planning process. Make the relationship, get clear on your needs, and ask for their assistance. Even if they say no, they will go out of their way to explain why, how you can improve your chances, and let you in on their grant cycles (timing is important) and decision criteria.

The big independent foundations (Ford, Gates, Rockefeller, and so on) are not likely to give money to small nonprofits. Unless you have a really big idea that fits their stated criteria, don’t bother—and even if you do, the chances are slim.

Corporations and other businesses have charitable wings, usually under the aegis of community or public relations. Some are targeted frequently: banks, financial service companies, law firms, utilities, and medical businesses are besieged by requests. Ask them what their donation criteria are. If you fit them, great, but if you do not, don’t waste your time or theirs. What they may be willing to provide even to a brand new nonprofit is used furniture and equipment. They also are a great source of board members. Some companies even require junior officers to be active in local nonprofits as part of their training.

The United Way and other federated fund drives operate on a local level. They are major trainers for nonprofit boards and staff as well as substantial funders. However, in recent years their trend has been to concentrate on a few broad areas (medical and dental, homelessness, and early childhood education are favorite areas of interest), so they are less apt to provide direct funding. Ask them. You have to get to know them very well, because they act as a clearinghouse for nonprofit information and referral.

Service clubs such as Rotary, Elks, Lions, and many others have a strong local presence. They have been known to adopt small nonprofits, steering funds and raising awareness as part of their service duties. They also provide a great venue to speak, allowing you to reach business and community leaders in a favorable environment. Chambers of Commerce provide great speaking venues, though not a funding source.

Public funding sources include federal, state, and local agencies. The good thing is that they provide a lot of money. The bad thing is that even if you are able to secure a grant, a contract, or a direct-purchase/fee-for-service deal with a government agency, the paperwork and the oversight can be very burdensome. (Fair enough; it’s public money.)

Step 5: Getting Grants

Unless you have grant-writing experience, hire a pro to help out. You can learn by doing, to be sure, but it will take far longer than you can probably afford. There are literally thousands of books on grant writing, but working with a pro will speed you up the learning curve, give you insights into the process from both the grantor and the grantee sides, and markedly increase your chances of getting funded.

You should also look for local grant-writing seminars. This is a strong point of your local United Way—the staff benefits by eventually receiving well-thought-out grant proposals and saves time by helping nonprofits learn not to submit long-shot proposals.

Start by deciding which funding sources to target. A minimal requirement is a close fit between your needs and their interests. Sometimes foundations issue requests for proposals (RFPs), stating their interest in funding some specific area of interest. You propose (following their guidelines, which they will provide) and they dispose.

There is a danger: twisting your mission to fit their requirements on the theory that some money, any money, will be helpful and, after all, it’s pretty close to your mission…. Beware of mission creep. It is insidious. While you might get some funds, in the long run it will cost your nonprofit credibility.

Return to your case statement. Slant it to the selected funder’s requirements. Good grant writers can do this in their sleep.

Document the need for the services and programs you provide. Make it clear that you will avoid duplicating the efforts of other nonprofits in the area.

Get to know the funders. They will work with you. You want to establish a long-term relationship with both individuals and the foundation itself; this is a relationship that must be nourished.

Remember that the foundations make a point of being clear in their directions to potential recipients of their funds. Your hardest job is making sure that you follow their instructions. Once again, make it easy on yourself by working with a professional grant writer until you feel confident in your ability to successfully apply for grant monies.

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