The Delusion of Foundation Gifts

The loudest kind of gift in fundraising is the “grant.” Ministries can shout from the highest rooftops about grant funding, donations that average from ten to twenty-five thousand dollars, because the foundations appreciate the attention. There certainly are big grants to be realized for organizations in the religious sector (according to the Foundation Center 2012 Report), the average gift is $90K, the median $20K.   When ministry leaders read about “that other organization” that benefitted greatly through a certain foundation’s gift it’s especially tempting when the organization is struggling to raise funds.

However, seeking grants is a cruel mirage to naive and unfocused ministry leaders. Following are the top seven myths about foundation grants that trap unsuspecting ministry leaders and boards.

  1. Foundation’s give more than individuals. Not true! In fact, just 14% of all giving in the US comes from foundation grants, while 73% of gifts come from individuals, according to the 2012 Giving USA report.
  2. Unlimited opportunity. While, there are more than one hundred-twenty thousand foundations in the United States, according to The Foundation Center 2012, just 2% of all grants are made to the religious sector. The rest of the grants are given to education (23%), health (21%), human services (15%), public affairs (12%), arts & culture (11%), the environment & animals (6%), and the sciences & technology (4%). This means that, 98% of them will not fund your ministry. Out of that 2%, there are probably less than ten viable prospective foundations that will grant large dollars ($50K+) to ministries like yours.   Keep in mind too that their first gift will likely be a small one to test how well you steward the gift and how well you follow up. Most foundations will give a maximum of 20% of your overall need to a project or opportunity. They want to be assured that they are giving to ministries that are well managed and financially supported by other engaged-givers.
  3. It’s easier than donor development to individuals. Wrong! Instead of working to convince just one person or couple, large-dollar foundation grants are usually decided by many people including an administrator, and a board or committee. Like individual development, successfully securing foundation grants is about building relationships, except there are a lot more people in the equation. This is why it’s so important to connect with a member of a foundation’s board and get to know the administrator so that you can learn what it really takes to be a qualified candidate. More than that, your ministry will have a far greater chance to win a grant if you have an “insider” that is championing your requests.
  4. We can hire a “grant-writer” to do all of the work. (This sounds just like ministries that hire a development director to raise all the money…and how’s that working for you!?!) Yes, part of this statement is very true. A grant writer is an invaluable resource in this process. They can help you avoid many of the most common mistakes as well as help you to steer clear of those grant opportunities where you have little chance. However, no grant writer knows your organization like you do which is why you need to plan to invest a great deal of time working with them. So if you hire one, and the better ones are not cheap, plan for a long-term relationship (5 years minimum). The upfront time commitment to get them up-to-speed is lengthy, but after five or six grant requests, they will be able to work more independently. Understand that your success rate, when compared to other qualified applicants without insider relationships, will be no better, so expect to be turned down often.
  5. Great ROI (Return On Investment). Many believe that the time it takes to apply for grants is relatively small, especially when there is a chance to bring-in a large gift. Most believe that even if they apply for twenty grants and just one actually win’s funding, it can be seen as a victory. But the reality is that ministries that take this approach spend more than 40% of their “development” energies that end-up raising less than 5% of their budgeted income.
  6. It’s easy. The average number of attempts before successfully getting a grant is 8! 45% of grant applications are rejected because the applicant didn’t fill in the required information, or did so improperly. Of those that get through, 50% are rejected because the foundation does not fund the kind of organization or specific kind of need, or does not fall within a certain geographic boundary. Of those that get through that process, 80% are rejected because no one on the foundation’s board knows anyone affiliated with the applicant’s organization. (source. Foundation Directory Report 2012)

I don’t write this to dissuade any ministry from applying for foundation grants but as a way to punctuate the point that doing so should be a part of, not substitute for, a broadly balanced approached to raising ministry partners.

There is no magic bullet in raising large-dollar gifts, especially when it comes to foundation grants.

Conversely, gifts from individuals, even when they are significantly larger donations, are usually quiet. Those who give to ministry work are often giving as an act of worship. They practice the Matthew 6 Principle in that they try not to demonstrate their righteousness before men.