The realities facing the foundation community are stark. According to a recent Council on Foundations report, the foundation community in the United States lost $150 billion in assets during 2008, leaving total foundation assets around $530 billion. This decline is being felt in Colorado. At least a few community foundations across Colorado have or plan to entirely curtail their grantmaking. A number of private foundations have announced that they will not accept applications from organizations that they do not already fund. Others have not announced plans, but are faced with making decisions about what to do with endowments that lost up to half of their value. Yet, many of the nonprofits CRC serves have not changed their fundraising strategies in response to these realities, in part because they assume that they have special relationships with their funders that will insulate them from the cuts that others will face.
Relying on this assumption and thinking that your organization will be immune to these cuts and funding changes could significantly inhibit your ability to meet your mission if you do not have a strategy for replacing that funding. If your organization relies on foundation funding, consider these action steps to enhance your sustainability:
Stop thinking that special circumstances apply to your organization.
Assess whether or not your organization is relying on valid assumptions around foundation funding. For example, if you assume that funders who have always supported your programs will continue to do so, you may be basing your fundraising activities on invalid assumptions. Identifying and testing assumptions like these about your fundraising can help your organization is assessing the overall sustainability of your fundraising model and make the changes that are necessary to maintain your organization’s sustainability.
Stay up-to-date on how your funders may be changing their grantmaking.
If you have an established relationship with a funder, depend on that funding for sustainability, and have not heard from them about any changes to their giving for 2009, a visit to their website, a phone call, or an email could help you get valuable information about the vulnerability of your funding sources. Some will not be able to provide much information, but others will be able to give you an indication of their future direction and priorities. This kind of information can help you better anticipate how vulnerable a particular grant might be.
Then, considering this information from all of your funders can help you get an overall picture of the sustainability or vulnerability of your funding. For example, if seven of the ten foundations that support your organization will be cutting their funding next year, now is the time to consider how your organization will replace funding that could be reduced or cut entirely.
Consider contingency plans now.
Creating contingency plans now, when your organization is not faced with an unanticipated decline in funding, will help ensure that you make sound management decisions should something like the elimination of a major funding source actually happen. If your organization has not considered what it would do should a major funder not come through, now is the time to do so. Would you cut the program? Redirect funding from another source to preserve the program? Dip into your reserve?
Thinking about these decisions and scenarios now can increase your organization’s ability to think strategically instead of being forced to respond in a crisis situation and can also help you direct your fundraising efforts in the areas that are vulnerable.
Strengthen your case.
With a decline in available funding, the competition for that funding will only continue to increase. One essential activity for enhancing your fundraising effectiveness and sustainability, especially in the area of foundation funding, is ensuring that your grant applications are up-to-date and communicate a compelling case for support.
Here are some things to consider to strengthen your organization’s case for support:
· What is the effect of the economic downturn on those you serve? Communicating information about the impact of the economy on your organization (for example, focusing organizational resources on core programs) can be important information for funders. However, many funders are going to be more interested in how the economy is affecting those you serve. Is your organization seeing an increased demand for service? Changes in types of people accessing your services? If your organization does not serve people, these questions still apply. For example, if you provide services for domestic animals, have you seen increased demand or an increase in the number of people who cannot care for their animals? Answering these types of questions and providing this information help your organization strengthen the funder’s understanding of the need for the services or programs your organization provides.
· What impact does your organization have and what are the outcomes of your activities? Being able to communicate effectiveness and results is critical to strengthen your case for funding. If your organization does not measure determinants of effectiveness, now is the time to start tracking and gathering this information because funders will likely choose to fund programs that can demonstrate results and effectiveness over those that cannot.
Additionally, ensure that your applications are complete, provide all requested information, and are submitted, with any required reporting from previous funder grants, on time. Complying with these basic grantwriting best practices can help ensure that your application does not get removed from consideration for something minor. Then, strengthening your case by crafting compelling grant applications will help increase the competitiveness of your organization’s applications.
Don’t Wait For the Decline Letters to Start Showing Up to ActSome nonprofits may be insulated from declines in funding because they do, in fact, have special relationships with their funders. For most of us that depend on foundation funding, however, considering the impact of the potential decline in foundation funding and doing something about it – today - will help preserve our programming and our ability to achieve our organizations’ missions.
Written by Sarah Fischler, Interim Co-Director of the Community Resource Center
Have thoughts about this article? Please share them below.