Grant Seeking in Tough Economic Times
Are you scared yet? Based on the daily barrage of bad financial news, we seem to be in the midst of a global economic meltdown. And, given the psychological underpinnings of our financial systems, the reasons, causes or facts behind the crisis really do not matter. Businesses are going under and the stock market is dropping. So, what does this mean for grant seekers?
Since most nonprofit organizations are primarily local in their scope, the impact of a recession will vary depending on the funders in your community. The demise of Wall Street firms that were pillars of the New York art world is unlikely to hurt social service agencies in Texas – at least not directly. However, the coming days are likely to see a ripple effect of economic hardship that will hit us all.
First, at ground zero, are the large firms and associated foundations that have crumbled. Obviously, if your capital campaign was expecting a big gift from Washington Mutual (as one of my clients was), you should no longer count on it. Furthermore, foundations closely tied to corporations, such as the Starr Foundation which had most of its endowment in AIG stock, are likely to be out of commission for some time to come. Those are direct hits that will be hard to compensate for.
The secondary impact is the broader drop in the stock market. Fortunately, I suppose, we went through a comparable market collapse not so long ago. The dot-com bubble of 2000 and post-9/11 crash encompassed a proportionally similar decline in the Dow as what we have experienced so far in our current crisis. The lessons I learned from that period include:
- As in all things, foundations vary greatly in their response to the markets. Some foundations check the market indexes on their way into board meetings and let the latest dip or spike influence their grant making. Many set their grant making goals well in advance – annually, for instance – and, therefore, a market drop will not be felt until next period’s grant making. Others – understanding the broader social effects of a plummeting economy – hold their grant making steady, giving away more than they are required to in order to support their local community at its time of greatest need. The only way to know how a particular foundation works is to ask your program officer.
- Some foundations learned their lesson. During the rapid stock market ascent of the late 1990s, many foundations made large, multi-year commitments. When the market tanked, they found their hands tied and their ability to make new grants severely limited. Let’s face it: Without the opportunity to fund new and exciting projects, the foundation gig is no fun. My sense is that many foundations did not repeat this approach in the run-up to this crash. Hopefully, they will have more “grantable” cash to work with this time around than last time.
- Proposals still get funded. Good projects by strong organizations will still get their share of grant money.
The tertiary impact of economic collapse is a simultaneous increase in the needs of local populations – i.e., greater rates of homelessness, more difficult access to health care, and a whole host of aggravated social problems – and the decrease of nonprofit revenue by virtue of lower charitable giving and government funding. This is likely to increase the number of organizations competing for grants as they seek to make up for budget shortfalls.
So, what should you do to ride out the storm? If you have the luxury to postpone your requests, do so. No sense diving into the scrum when you can wait on the sidelines for things to clear up a bit. Regular funders may look more favorably on you if you give them a breather – particularly if they have to choose between an organization they have supported for years and one that might represent a new, emerging need.
Remember that the needs of the community prevail, and not the needs of your agency. A drop in corporate or individual giving is no justification for foundation funding. Do not position yourself in the financial context that every organization is in. It is reasonable to speak about the extraordinary need in the population you serve due to economics (if you can connect the dots with facts), but your drop in revenue is no different than anyone else’s (including the foundations). As Albert Brooks says in Broadcast News, “Wouldn't it be great if we lived in a world where insecurity and desperation made us more attractive?” Well, we don’t.
So, stick to the basics of good grantsmanship. And, look for opportunities. There are always winners in a changing economy. For instance, as families have less money, they are more interested in bargains and, lo and behold, Wal-Mart stock is up 50% over the same period the Dow has dropped 25%. Corporate mergers often accompany a shift in the focal point of philanthropic giving. So, one community’s loss may become your organization’s gain as dying companies are bought up by their former rivals.
Most importantly, as always, is maintaining good communication with your supporters. If you are wondering whether to submit a request, call and ask. Given the seemingly epic nature of what lies before us, it is reasonable to wonder aloud how the foundations in your field plan to respond.
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