It's fair to say that if you understand one foundation, you understand one foundation.
There is tremendous diversity in how foundations operate and, for that reason, generalizations have their limitations.
That being said, there are five things you can be certain about.*
1. Funders don’t care about your nonprofit’s mission. Funders care about how your proposed project activities can complement their missions.
For example, the William Penn Foundation is, at heart, seeking to help the Philadelphia region better compete in the global marketplace. For this reason, the projects that the Penn Foundation supports need to move the needle on that mission.
On the other hand, a number of corporate foundations exist in order to help the corporation’s employees be more involved in their local communities (and thus be more fulfilled and loyal as employees). In this case, your grant-funded project would need to build employee engagement.
If your organization doesn’t seem to be a clear fit for a funder's mission, don’t just submit a proposal or letter of inquiry and hope for the best. Start by reaching out to the funder (via a phone call or meeting, ideally) to determine if there is a match of any kind between their interests and your projects.
And if you make it far enough in the grantseeking process to determine that a foundation does see a fit between their mission and your organization, then the funder may be willing to help you best target your grant proposal. In this scenario, a program officer will give feedback to a nonprofit as its refines the goals, objectives and planned outcomes of a proposal.
2. Your nonprofit’s turf battles with other nonprofits make funders want to drink gin straight out of the cat dish.**
Foundations favor collaborations between nonprofits – and they are tired of seeing organizations operating duplicative services and refusing to work together.
This is why some funders – particularly federal agencies – write RFPs that force nonprofits into substantive, real partnerships.
Other funders view that tactic as heavy-handed, but would be delighted to receive a proposal that hinged on a creative collaboration between complementary nonprofits.
3. Your nonprofit’s fiscal stability is of paramount concern for funders. Foundations don’t want to fund an organization that is going to go out of business during the grant term.
Funders break out in hives at the very thought of supporting a nonprofit that may have to close its doors in the middle of spending down a grant. If this were to happen, program officers who are accountable to board members and other bosses will have to deal with the perception that a grant made to a now-out-of-business nonprofit was money wasted.
Corporate foundations are particularly wary of making grants to nonprofits that are teetering on the edge of insolvency. These funders are using what is seen within the corporation as “shareholders’ money” to make grants – money that could otherwise go to stockholders/partners or be invested back into the business.
The Comcast Foundation, for example, wants to see about 18 months of reserve funds available to your nonprofit before they will feel comfortable making a grant. Along the same lines, many funders will read your nonprofit’s financial statements carefully to determine if your organization has experienced any recent deficit years. If you have run a deficit, they’ll want to know why, and, more importantly, how you’ve remedied it.
4. No funder wants to be your nonprofit’s largest funder. Awkward!
With a few exceptions (the cases in which a foundation was instrumental to the creation of a nonprofit, and is committed to its survival), the vast majority of funders don’t want to be an organization’s largest, or sole, institutional funder.
Instead, foundations want to see that your organization has a diverse base of financial support. You need to present evidence of broad support from your community, including grants from other foundations and corporations, and financial support from individuals.
5. Funders understand that your nonprofit really needs general operating support, but most are leery of providing it.
Your nonprofit would love to have general operating support funding – money that can be used for the organization’s highest and greatest needs. But foundations love to fund projects – activities tied to specific goals and objectives, with measurable outcomes.
Projects have built-in accountability and marketing potential for funders. By limiting their support to projects, funders can ensure that their grants won’t be used for purposes they wouldn’t necessarily endorse. Furthermore, corporate foundations can brand a project (by having the nonprofit attach the corporation's name to the project’s public materials).
If a foundation will support general operating grants, then by all means, ask for these. Some funders don't broadly publicize the fact that they will make general operating support grants, but in fact they will consider making this type of grant if you demonstrate how general support will impact your nonprofit. A general operating support grant proposal can tell a story about transformative change – and it is this story that will get you funded.
In the cases where general operating support is definitely not available, your second best bet is to include a percentage for overhead within your project budget. Unless the guidelines specifically prohibit overhead expenses, it’s generally kosher to include an overhead line item of around ten to fifteen percent of the project cost. Overheads that are more than twenty percent can raise eyebrows, so if your overhead rate is on the high side, explain and justify it.
* Are you wondering how I know these things for sure? The source of my surety is the recent “Meet the Funders” panel discussion hosted by the Nonprofit Center at La Salle University’s School of Business. If you’re fundraising in the Philadelphia area, you’ve got to go to these biannual events – the insider’s information shared is golden.
** In a slightly different context, Anne Lamott coined this phrase on page 131 of Traveling Mercies.