What Funders Want: Lean (Streamlined), Mean (Cost-Effective) Nonprofits

Community foundations often fall into the trap of giving many small grants to the nonprofits in their service areas--spreading the wealth, but spreading it thinly. Their grant application processes can contribute to a culture of competition for grants (rather than collaboration between nonprofits).

For that reason, I was glad to see an RFP from the San Francisco Foundation inviting grant applications for the "Nonprofit Transitions Fund." This program is intended "to help nonprofit organizations rethink and regroup in response to the downturn in the economy." Grants will pay for nonprofit mergers/acquisitions/consolidations; back office collaborations; dissolutions; bankruptcies/reorganizations; post-merger integrations or closure costs; and service delivery joint ventures.

(Note to San Francisco Bay Area peeps: proposals are due Sept. 12, 2011.)

I don't discount the potential losses to service delivery and organizational identity that might come with a merger, but I still think it's great to see a community foundation use its clout to encourage a more nonprofit efficient sector. 

Savvy proposal developers, take note that your nonprofit doesn't have to plan to go out of business, or even to get smaller, in order to be competitive for a "mergers and collaborations" grant. There are any number of creative ways to secure this type of funding by proposing to share services with another nonprofit, without proposing a merger or "dissolution" (what an ominous sound that has!).

The simple truth is that funders want to invest in organizations that will still be around when the grant report is due. For that reason, you can win more grants by communicating two distinct messages in your grant proposals:

1) The message that your organization has concrete, viable plans to reduce costs and increase efficiency through shared services or other efficiency measures; and

2) The message that your organization has the fiscal stability and staff/board expertise to keep its doors open (and its services strong) despite a difficult economy.

I'd love to know -- How are you responding to funders' interest in shared services and greater efficiency?