Tag: grantmaking

The Outsourced Development Office (Guest blog by Andrew Kramer)

August 3, 2017 / jeremygregg

This post was written by our friend, Andrew Kramer.

Image by Andrew Kramer

For most nonprofits that have $500,000 or more in revenue, funding must come from a variety of sources – government, foundations, individuals, corporations, events, etc. – and has to be managed, almost full time, by a senior person in the organization.

The trouble with a broad, diversified funding base is that each stream can – and often should – be managed by a specialist. Most large organizations have dedicated employees who focus exclusively on a single area, such as grants, major donors, receipts, etc. Smaller organizations with limited staff and funding usually don’t have the ability to excel at fundraising for each of these streams. And the problem is that there is always, always, a new way to raise money that you should be pursuing.

Good nonprofit managers will follow the 80/20 rule closely with their time – 80% of their time from the 20% of their donors who provide the most money. Unfortunately, when Dr. Pareto invented his rule, he was looking at it the way that too many managers spend their time – 80% of their time on the 20% of donors who take the most time and energy.

Unfortunately, time spent does not equate with dollars raised.

So, instead of spending the majority of their time cultivating foundations – where a nonprofit might have seen a very good return in the past – they spend all of their time on an event that only bring a fraction of the revenue. And in the end, most activities that consume a poorly organized manager’s time will not lead to the two fundamental activities that every fundraiser should pursue:

Ask for money (see attached photo — I see this car a lot, and I love it every time); and
Send a handwritten thank you note.

There is a possibility today, however, for a small nonprofit to maximize its efficiency by outsourcing the development function. In fact, a secret that most managers might not know is that the larger organizations outsource a substantial amount of their fundraising rather than try and do it in house.

Here are just a few of the things that can be outsourced to free up a development manager’s time to focus on cultivating their most valuable donors:

Grant writing: most grants are fairly straight forward affairs that use some combination of the same text over and over for each foundation. Outsourcing the ROUTINE asks makes a lot of sense so that the manager can focus his or her time on the non-routine grants that can take up a lot of time (but which, when done correctly, can lead to outsized funding for new programs).
Direct mail: plenty of nonprofits outsource their direct mail operations – and there are even some organizations that specialize in direct mail for certain kinds of organizations (food banks, museums, etc.)
Online marketing: In the end, online marketing is no different than any other kind of sales/ask, but it is just special enough that it makes sense for people who are experts in online programming to do the work.
Events: Throw a contract and you can hit an event planner in Dallas.
Major Gifts: In the end, the nonprofit manager has to perform in-person asks for money and resources. But, the reality is that a lot of organizations may never even meet their largest donors – or certainly not each year when they ask for money. Which means, things like invitations to special events, handwritten thank you notes, even the (bi)annual proposal can all be handled by outside experts, freeing the manager up for the tasks where she is really needed (such as phone calls, in person meetings, etc.).
Receipts: This critical, but sometimes overlooked, function doesn’t need to be handled in-house. In fact, sending it out might be the best way to ensure accurate, timely acknowledgments of gifts. Unfortunately, it’s too easy to put off writing fresh stories, updating the content, and customizing the letters for larger or more frequent donors.

“But what about the cost?!?”
In reality, that depends on what the nonprofit executive wants done – and more importantly, what the manager isn’t getting done effectively because of his lack of time and expertise. Consultants and service providers can, and do carry some costs. But, because they are specialists, you are getting their experience and value immediately. A good consultant will have great references and can provide a clear action plan tailored to your needs from the beginning.

And, while it is unethical for a consultant or provider to take a percentage of any funds raised, they are just as interested in helping your cause to raise the money it needs to fulfill its mission because it’s how they stay in business.

An executive director or development manager considering hiring new development staff might give serious consideration to farming out their specialized work to multiple contractors instead of hiring a single employee who might only have expertise in one or two specific areas. Instead of spending $50,000 or more on salary, benefits, and payroll taxes, you can spend (perhaps even a small portion of) that to productively hire outsourced experts – giving you access to the highest level of talent without the risk and hassle of hiring an employee.

Grantwriting: Volume vs Relationship? (Guest blog by Andrew Kramer)

July 26, 2016 / jgregg

This post was written by our friend, Andrew Kramer. Please check out his blog about mental health, Smiling Acrobat.

Andrew Kramer (a.k.a. Smiling Acrobat)

Many nonprofit leaders like to treat foundations as a type of high reward direct mail campaign. As a development leader, almost all of my Executive Directors told me that they wanted me to increase the number of grants I was sending out.

On some levels, it makes sense. The foundation usually indicates in its Form 990 whether it accepts unsolicited applications, provides an address, and instructions for how to contact them. At a minimum, a good grant writer will have done some basic research to determine even a minimal suitability for an application, what the typical range of gifts has been in the past, and some basic information on the board of directors.

My Experience as a Fundraiser

In my experience, I might start with a list of 200 prospects, and whittle that down to about 20 that might even be considered possibilities. Just 10%. Very few of my EDs or CEOs were happy with those numbers.

The issue for me was never going through the detailed and difficult process of putting together an application. Nor approaching a foundation “blind”. No, my problem was always that most people wanted to treat foundations as though they were a different type of donor than an individual or important volunteer.

I like to think of it this way:

Most executives and development professionals are used to attending events in a wide range of settings where they run into people who are prequalified to be potentially major donors (because of the type of event, usually). The executive gets to talking to some of these people and telling them about what the organization does, the great work and results, a great story, etc. A good director can easily see if the other person is interested, or just being polite.

(Ideally, the executive is asking as many questions as they are talking, but that’s another topic…)

No, most times, whether the other person is interested or not, the executive doesn’t insert in the beginning, middle or end of the conversation an ask for $20,000. At least, not without the potential donor telling the executive to make the ask then and there.

But, that is exactly what most EDs and CEOs want their development departments to do with foundations.

A Better Way to Raise Money

I won’t say that it doesn’t work in a very few cases, but generally, it’s not an effective way to raise money. Increasingly, the best and only way to raise money from new prospects is to keep working to build a strong relationship with your donors. It can take a couple of years to get a foundation to even pay attention to you, and another grant cycle after that before your grant request gets serious consideration from the board.

The gold standard of foundation fundraising,
just like with individual major donors,
is always relationships.

I had plenty of foundations where we never met in person, and it could have taken years to build the relationship to a point where we could get a gift.

The best advice I ever got from a CEO who deeply understood fundraising was to spend most of her energy on existing donors and prospects where she had an existing relationship, and only a small (5-7 at most) number of new prospects where she was trying to build a relationship.

My Recommendation

The high-touch services that Jeremy Gregg offers are a powerful way to help build those relationships more quickly and effectively than the typical “wait and see” methods most organizations use. Not only will they help your existing donors make a favorable decision on your request, they can help new prospect foundations learn about your organization very quickly without being pushy or seeming “high pressure.”

All major gift work takes a great deal of time for each donor. Most small organizations aren’t equipped to provide the same level of consistent, high-touch grant writing services as larger organizations with dedicated grant writers. Even then, many grant writers are young and less experienced, whereas Jeremy Gregg and his team are all highly experienced development professionals with millions of dollars raised from every single donor source. They are RELATIONSHIP EXPERTS that can help you supercharge your fundraising, build a great reputation for your organization, and help foundation’s and major donors make the best decisions possible when considering your proposal.

To learn more about Gregg Partners, click here.

Shifting the Collaboration Paradigm Between Funders and Nonprofits (guest blog for The Miles Foundation)

March 27, 2015 / jgregg

The Miles Foundation

Below is a copy of my interview with the Miles Foundation, “Shifting the Collaboration Paradigm Between Funders and Nonprofits.” My sincere thanks to Sara Redington, the Director of Communications for the foundation, for her assistance with this post.

This interview was conducted in February 2015 shortly after I presented at the Dallas Contributors’ Network.

You can also download a PDF of the article here.

Shifting the Collaboration Paradigm Between Funders and Nonprofits

Jeremy Gregg. Image via TEDxSMU.

Guest blog post from Jeremy Gregg

Jeremy Gregg is a three-time TEDx speaker, an award-winning communicator, and an experienced leader in both the entrepreneurial and nonprofit arenas. We heard him speak at a local funders’ luncheon earlier this year, and were captured by his frank characterization of the current “dysfunction” present in the philanthropic community. As so many funders (including us) work to collaborate more effectively with our nonprofit partners, we asked Jeremy to dig into this issue and give us tips for improving our partnership model. Below are Jeremy’s thoughts on how funders and nonprofits can better work together so that we can affect change and positively impact the communities we serve.

1. What is wrong with the current foundation/nonprofit dynamic, in your opinion?

The current dynamic is too centered on “otherness” and overlooks the shared mission that should unite foundations and nonprofits. This does not foster much honest communication between the two, let alone a transparent conversation about common challenges and shared goals. Transparency is important in all foundations, nonprofits, etc. that is why the use of software from resources such as UpMetrics can be seen as a positive connection between all of those who are within these organizations to help communication remain constant and updated when required.

In a way, there is a systemic flaw in the nonprofit financial model: the source of capital (donors) is almost entirely disconnected from the use of capital (clients). As such, this can make it significantly harder to achieve the goals that you have set out to achieve, and without the best financial model that you can come up with, your finances are only going to suffer as a result. And this is where the disconnect comes into play. Nonprofits become a link between the two, which creates a scenario in which a nonprofit’s financial stability depends far more on fundraising excellence than on programmatic excellence. As a result, a nonprofit’s long-term goals become more focused on financial sustainability than on systemic change… leaving grantmakers frustrated because many of their foundations were created in order to change broken systems.

So, as it turns out, philanthropists interested in systemic change might need to look first at changing the system of philanthropy itself.

2. What are some real-world examples of this dysfunction?

The clearest example of this dysfunction is the fear with which nonprofits court foundations for grants. All of the power is on one side of the transaction. When nonprofits seek money from foundations, they often act like the freshman kid trying to ask the homecoming queen to the prom. It’s just silly how imbalanced the conversation is perceived to be.

As a result, nonprofits spend hours reviewing long lists of foundations whom they can solicit for money. They debate whether and how to contact them, afraid to merely pick up the phone and call the foundation lest they be added to “the black list.”

From the foundation side, there is also a powerful conflict at play. Foundations are concerned with sustaining their investments while simultaneously wanting to harness the power of those investments to transform society. As I recently shared with the Dallas Contributors’ Network, I see this dysfunction in several ways:

Foundations may not provide general operating grants to support overhead, yet they desire longitudinal outcomes. How can a nonprofit make the investment to measure such impact without unrestricted funding?
Foundations may not provide grants to expand fundraising programs, yet they desire for nonprofits to achieve scale. What business – nonprofit or for-profit – can achieve scale without money?
Foundations do not provide “risk capital” in the form of unrestricted grants, yet they demand innovation from nonprofits. The ability to innovate is intimately tied to the ability to fail; if nonprofits can only receive funding based on their “best practices,” there will be no innovation.
Foundations often do not provide ongoing funding year-after-year in order to avoid creating “dependency,” yet they demand a plan for financial sustainability. This creates a scenario in which nonprofits are almost punished for success; if they increase individual giving, for example, they might lose their foundation funding. A foundation’s decision to make a grant should focus more on what the nonprofit will do with their grant rather than worrying about whether someone else might be able to pay for it, instead.
Foundations rarely consider multi-year grants, yet they demand long-term planning from nonprofits. Considering that the average nonprofit has less than 60 days of cash on hand, long-term planning is impossible without some visibility into future cash flow.
Foundations often shy away from grant requests for advocacy…yet they desire to create systemic change.

3. What would the ideal or improved collaboration model look like?

Nonprofits have almost no power to adjust this dynamic. Change can only come from the donor side, and it involves several significant adjustments in their approach to grant-making. However, the fundamental shift is from being a “funder” to being a real “partner.”

What does this look like?

Realize that funding is only one tool in your arsenal. You also have knowledge, relationships, influence…invest all of them in your nonprofit partners.
Make multi-year financial commitments of unrestricted capital. Or, better, commit to an amount of monthly funding that will not change. This provides the visibility into long-term cash flow that is critical for nonprofits to scale.
As a result of these two items above, you should limit your grant portfolio from dozens of grants to a handful of serious partners. Don’t be afraid to go deep instead of broad.
Encourage nonprofits to do all of the things that you want your for-profit investments to do: invest in technology, in staff training, in systems that create long-term ROI.
Remain focused on the broader goal of systemic change. Challenge and encourage your nonprofit partners to share their best practices with others, to develop meaningful collaborations with others, to advocate for the broader adoption of their solutions at the public level, etc.

Essentially, change the dynamic from one in which nonprofits are the fortunate recipients of your largesse to a system in which you are rolling up your sleeves alongside the nonprofits in order to drive systemic change in the areas that matter to both of you.

4. What change does that require from both sides?

Both sides need to realize that neither can exist without the other: they are merely different sides of the philanthropic system.

In addition to the changes I mentioned earlier, foundation staff need to focus on becoming experts in the areas in which they want to deliver change. They are not in the weeds every day in their issue areas, which offers them a higher view of what is going on in the field. For example, if the foundation is focused on education, they can see many different approaches, learn what is working and what is not working. And they then need to share that knowledge with their grantees, including helping them to establish the partnerships and to develop the tools that they need to deliver the best results.

For nonprofits, they need to be bold and confident, not timid and apologetic. They don’t need to be rude, but they need to stop acting like the leper who was invited to the ball. They need to realize the tremendous value that they bring to the equation: without them, philanthropists cannot do their job. Nonprofits need to realize that they are worthy of the grants that they seek; indeed, they are doing philanthropists a favor by giving them opportunities to achieve their purpose. What a gift to be able to give someone!

On both sides, there needs to be much more boldness and much less fear. Philanthropists do not need to fear becoming too close to a nonprofit – that should be their ambition, to become so close that they seem like a part of the staff. And nonprofits do not need to fear sharing their honest struggles with their foundation partners.

5. Where have you seen this model work (i.e., can you provide some examples)?

The best example that I ever saw was at CitySquare (formerly Central Dallas Ministries). The organization has a handful of foundations that make serious, long-term financial commitments to the growth of the organization. These commitments provide the base funding that allow the organization to not only focus on doing its work, but on developing bold plans that can drive systemic change.

But here is why it worked so well: as the model succeeded, the original donors did not step back…they leaned in. Their investments increased because they saw the exponential improvements in the organization’s impact that have come from their unrestricted support.

The organization has a very high-profile leader who serves as its face to the community. This is the case with almost all successful nonprofit organizations: they need that dynamic champion to represent the organization. Yet, behind the scenes, the sincere commitment of the agency’s board members and closest donors are driving much of its success. CitySquare is a very effective model for how philanthropists can partner with nonprofits to maximize long-term impact on the people whom they aim to support.

6. How can funders and nonprofits take the first step towards building “mission-critical partnerships” together?

In a way, all they need is the ability to speak honestly with each other without the “elephant in the room” of funding.

Think of a human courtship. You begin dating, and you only reveal the best parts of yourself because you want the person to like you. And as you approach marriage, some of those guards begin to fall so that you can sense whether the connection is legitimate. And once the couple is married, hopefully, all of those guards are down…and they can really begin to focus on what they want to achieve together because they can take for granted that they will stay with each other.

That is what we need in the philanthropic world. We need a model for meaningful commitment that focuses on maximizing each side’s impact so that both are fulfilled.

In other words, the model needs to shift from “transactional” (i.e. grants in exchange for reports) to “relational.” Foundation directors need to get to know the heart of the nonprofit’s mission: not just show up for site visits, but really join in the daily effort of changing lives.

Written by Jeremy Gregg, managing director of Gregg Partners. Gregg Partners is a Texas-based fundraising consultancy that specializes in grantwriting for nonprofits.