When it comes to sustainability for your nonprofit, some grants are better than others.
New grantseekers are often afraid to ask for changes to their grants for fear of jeopardizing grant approval. But you don’t have to ask for more grant dollars to make your grant funding more sustainable. Let’s look at how.
Your First Grant from a New Foundation
Usually, your first grant from a new or re-engaged foundation will be a one-year project grant.
Project grants fund specific activities related to that program or project. These grants often have limited overhead rates, meaning most of the funds must be allocated to direct project costs.
While this is fine for a first grant, too many nonprofits end up cobbling together a portfolio of primarily project grants. If you have too many project grants and not enough unrestricted funding, you can end up in what’s called the “nonprofit starvation cycle.” This starvation cycle shortchanges your internal capacity and infrastructure, leaving gaps in funding for basics like leadership, administrative costs, and even your fundraising team.
The good news is that you don’t have to stay in this cycle.
Talking to Program Officers About Grant Type
Nonprofit fundraising is all about relationship building. This includes foundation fundraising. You should be communicating regularly with your program officers—sharing impact, inviting them to events, and discussing renewal funding at the appropriate moment.
During your grant renewal conversations, talk to your program officer about whether the foundation is open to other types of funding beyond project grants. Even if they say no for this year, you’ve planted the seed and made it more likely that they will be ready to change your grant structure in the future.
Here are three types of grants to consider requesting and tips for approaching conversations with your program officers:
Unrestricted grants
Also called general support or core support grants, unrestricted grants are made to an organization as a whole, rather than for a specific project.
Unlike project grants, unrestricted grants allow nonprofits to spend funds where they are most needed, including in less flashy areas like operations and infrastructure. An unrestricted grant is a vote of confidence in the grantee organization.
When you’re talking to a program officer about transitioning a project grant to unrestricted funding, be ready with a list of how the shift will help your organization accomplish its goals—and support the foundation’s goals as well. For example, perhaps you are struggling with staff recruitment or turnover and want to invest in human resources capacity to better support your project staff.
Even if a foundation isn’t willing to transition to a 100% unrestricted grant, they may be open to making a portion of the grant unrestricted or to increasing overhead rates. It is also common for unrestricted grants to be informally tied to specific programmatic goals via the grant narrative and/or conversations with the funder.
Multi-year grants
Multi-year grants provide funding to your nonprofit for two or more consecutive years. With a multi-year grant, you can plan programming and spending several years into the future, all without having to prepare for an annual ask and grant proposal.
Multi-year grants still generally require formal grant reporting. Plus, you still need to provide regular updates to your program officer as you would for any donor.
Asking to make a grant renewal multi-year is straightforward. All you need to do is ask if the foundation would consider making a multi-year gift—and then be ready with an explanation of what the gift will enable your organization to accomplish.
Not every foundation provides multi-year grants as part of its grantmaking strategy. That’s okay. You can still have a conversation with your program officer about the need for long-term investment in and sustainability for your programming. Then, be sure to stay connected with your program officer and to start renewal conversations early. A foundation that renews a grant every year for ten years can become a pillar of your funding strategy.
Capacity-building grants
Some foundations are increasingly exploring how they can help grantees build capacity. Dedicated support for capacity building enables organizations to make sure their internal capacity keeps up with their external impact. Perhaps the most well-known example of this is the Ford Foundation’s BUILD Program. BUILD provides grantees with significant multi-year grants that are split between unrestricted support and funding dedicated to capacity building, such as undertaking a strategic planning process.
While most foundations don’t yet have BUILD programs, you can still ask your program officer about capacity-building resources available. For example, foundations may pay for or provide access to facilitators or space for leadership or board retreats, management training for staff, strategic planning processes, or IT infrastructure. This may be in addition to your current grant funding.
As with the other types of requests, always approach the conversation with an idea of WHAT your organization most needs and why.
Next Steps: Crafting Your Ask from Foundations
As the recommendations above make clear, when asking for more sustainable grant funding, it’s essential to be able to articulate WHAT the grant will enable you to accomplish.
If you’re not sure about the answer, take the time to step back with your leadership team for longer-range planning. Your strategic plan is obviously the best resource to start with because the process includes needs assessments and stakeholder input. But you’ll also want to look at your annual plans, your current year operating budget, and your fundraising plan for the current year.
Consider: How much of your projected funding is unrestricted vs restricted? How many of your projected gifts are one-year vs multi-year commitments? Are there any internal capacity projects that you’ve put on the back burner, hoping to “get to them someday”? These are all great starting points to begin mapping out your asks for program officers.
If you’re looking for hands-on support, Funding for Good offers on-demand strategy calls. Book your session here.
