Strategies for Including Operating Funds in Program Grants

Sections of this topic

    My two previous postings included the nuts and bolts of preparing financials for grant proposals to private and corporate foundations.

    This post will focus solely on a significant issue facing NPO’s seeking grant funding: namely that many foundations don’t provide general operating support. Instead, they prefer to fund specific programs or projects, and often something new or innovative.

    Some specific examples from Missouri based foundations:

    • “Repetitive requests for operating support are discouraged,” Dana Brown Charitable Trust;
    • Grants requesting, “Unspecified general funds will probably not be approved. Innovative developmental and educational programs for children are preferred,” Allen P. and Josephine B. Green Foundation; and,
    • “Non-profit organizations with budgets of $1 million dollars or more may not apply for general operating support grants. Such organizations may only apply for project or capital grants.” William R. Orthwein, Jr. and Laura Rand Orthwein Foundation.

    This issue has been discussed and debated in the nonprofit sector, and there are good arguments on both sides. Being on the grant-seeking side of the issue, I appreciate the perspective offered by Kevin Starr in the August 2011 article in the Stanford Social Innovation Review, “unrestricted money makes an organization work smoothly, enables innovation, and provides fuel for growth.”

    Nevertheless, most foundations don’t provide general operating support, so we grant seekers need strategies for how to procure funds to support our NPO’s general operations from these foundation grant makers.

    A strategy that I have used successfully involves rethinking how to describe what your NPO does, and breaking down your services into individually fundable “programs.”

    For example, if you are a school with a mission to provide a holistic education to underserved children, think about all that this entails. Do you serve breakfast and lunch to your students? Do you provide counseling services for your students? Do you provide after-school athletic or enrichment programs? If any answers are yes, then you can submit each of these programs as stand-alone proposals to foundation that only provide program support.

    This strategy is not a quick fix. It entails all the work you will need to do, with the help of others at your NPO, in fleshing out these programs. You will need to develop all of the following for these individual programs (described in detail in my previous post on Proposal Development – Part 2): Needs Statement; Target Population; Program Goals & Objectives; Program Activities & Timeline; Program Evaluation (what are the specific metrics your NPO will use to determine the effectives of this specific program); Personnel; Collaboration; and Program Budget and Budget Narrative. Your NPO will also need to commit the program resources to collecting the evaluation data – if your grant proposal is funded, you will need to provide report(s) to the foundation, including data on program effectiveness.

    This sounds like a lot of work, because it is, but I encourage you and your NPO to consider the statistics on fundraising that I quoted in my first post on this blog from 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; this compares to over a dollar for direct mail donor acquisition, and fifty-cents-per-dollar-raised for special events.

    So, a lot of work, yes, but still a good return on your investment!

    Lynn deLearie Consulting, LLC, helps nonprofit organizations develop,
    enhance and expand grants programs, and helps them
    secure funding from foundations and corporations.
    Contact Lynn deLearie.
    Look for Lynn’s ebook on Grants & Grantsmanship.
    It’s part of
    The Fundraising Series of ebooks
    They’re easy to read, to the point, and cheap 🙂

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