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Chapter 1: Grantmakers and Gramtseelers
What is a Grant?
In general, a grant is funding provided by a charitable-giving foundation, public charity, or a government agency to a nonprofit organization that enables the nonprofit organization to perform specified activities for the common good. Grants may also be made by corporate giving programs or nonprofit intermediaries, which pass through funding from another source.
What is a Grant Proposal?
A grant proposal is a narrative description of the work that a nonprofit organization plans to undertake to fulfill both its own and the grantmaker's goals. The proposal includes, at minimum, a description of the problem to be addressed, a detailed plan for addressing the problem, what it will cost, and what results the grantmaker can expect from the proposed project or initiative. After the proposal is accepted by the grantmaker and a grant award is made, the grant proposal forms the basis for a legally binding contract between grantmaker and grant recipient. By signing the contract, the recipient (grantee) agrees to perform mutually agreed-on plans of work and to report its progress toward fulfilling the terms of the grant and achieving the goals set forth in its grant proposal.
Who Qualifies for Grants?
Most grants are made to nonprofit 501(c)(3) organizations: designated public charities made exempt from federal income tax under IRS code 501(c)(3). Nonprofit 501(c)(3) organizations include such institutions as schools, hospitals/clinics, religious organizations, homeless shelters and services, social service agencies, arts/cultural organizations, universities, and many others. To maintain its 501(c)(3) status, a public charity must pass a public support test showing that it receives its financial support from a broad segment of the general public. Therefore, a nonprofit organization should not seek most of its funding from one source. If it does so successfully it could forfeit, or "tip," from its nonprofit status, making it ineligible for any other charitable gifts. Private foundations are restricted by law to fund only public charities and some government agencies, such as police and fire departments, unless they follow a lengthy and complicated process called "expenditure responsibility." Community foundations and government agencies may fund a non-501(c)(3) if the grant is for a charitable purpose such as relief of poverty, advancement of education or religion, promotion of health, government or municipal use, or another purpose that would be beneficial to the community. Grants to individuals are rare except in the case of scholarships and instances such as commissions for artworks, translations, or scientific research. (There are many resources on the specialized topic of grants to individuals; they are not covered in this book.)
Who Writes Grants?
Most often, grant proposals are written by the director or other staff member of the applying nonprofit organization. Individuals who work in development or fund-raising often are called on to have grantwriting skills. There are also professional grantwriters who write grants for a fee, which is paid by the nonprofit organization.
The job of a grantwriter may or may not be limited to the actual writing of a grant proposal. The level of involvement varies based on the individual grantwriter's level of skill and knowledge, the position the grantwriter has within the applicant organization, and the type of approach used in grantseeking.
What Do Grants Fund?
Grantseeking is a form of fund-raising in which money is requested for a defined purpose and a specified time period. Most grants fund programs or projects developed by the nonprofit organization to respond to a specific problem or need. Other relatively common types of grants include:
-- Capital: A grant for a building, equipment, renovation, or construction
-- General Operating: An unrestricted grant for the everyday operations of the applicant organization
-- Technical Assistance: A grant made to strengthen the nonprofit organization's staff development, infrastructure, or other function that needs improvement
-- Endowment: A grant that is to be invested in perpetuity so that the nonprofit can draw earnings from the fund to support its defined purpose
-- Challenge: A grant made to stimulate giving from other sources; the donor releases funds only after the grantee has met the challenge (usually a specific amount of money to be raised) outlined in the grant agreement
-- Matching: Funds that correspond to those of other donors; e.g., funds will match two to one those of other donors within a specified time frame
-- Demonstration: A grant made to develop an innovative project or program that, if successful, will serve as a model for others' replication
-- Start Up: A grant to cover the costs of starting a new project or organization; start up grants are also called "seed grants"
-- Exploratory/Planning: A grant that enables an organization to flesh out a good idea, develop a stronger project and project implementation plan, or test a theory or plan of action
Two Approaches to Grantseeking
There are two primary approaches to grantseeking: reactive and proactive. Reactive grants are those developed in response to a request for proposals (RFP). Reactive grant proposals are much like bids for a job and require grantwriters with strong analytical reading and good writing skills. Proactive grants are those that involve identifying appropriate funding sources to support a specific nonprofit organization, program, or problem-solving initiative. Approaching grantseeking proactively requires a well-planned strategy and an overall knowledge of potential donor sources and their interests and motivations for funding.
A Decade of Change
In the last ten years, grantwriting has grown both easier and more difficult. Several innovations have streamlined the grant search and application process.
-- The federal government has launched a notification service that makes requests for proposals from all federal departments available to any person who signs up for the service.
-- The federal government and many foundations have established electronic submission forms and processes. You can submit a proposal (and often a report of progress) without shipping or hand delivering.
-- Search engines help grantseekers find funding sources with the use of just a few key words.
-- Grantwriters once had to send letters or call to learn more about funders or to request guidelines and annual reports; today, most grantmakers post this information on their websites where it is easily accessible.
What's more difficult? Philanthropy in general has become far more sophisticated than it once was. Today, grant proposals must focus strongly on outcomes and evaluation. Progress reports require data to support detailed explanations about what the grantee has accomplished with grant funds. At one time, any decent writer could write a grant proposal; today, successful grantseeking requires more than writing skills alone. Now, a good grantwriter must also be a good strategic planner, an analytical reader, a master of basic accounting principles, and a perpetual student of the field.
The federal budget for the next five years decreases grant money available to fund programs of interest to nonprofit organizations. To make up for these reductions, private giving from all sources, including foundations and public charities, will have to grow at a rate two or three times that of recent years. Whether that compensatory growth is likely or not, the facts point to increasing competition among grantseekers-and an increasing need for highly skilled grantwriters.