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June 20, 2007

New Help for and Old Problem

by Andrew Berryhill

For the past few years I've struggled with many funders' (most especially foundations'), desire to focus their giving on sexy project-based grants, and not the basic operation of the organization itself. In my orchestra this issue has become particularly acute in that our most attractive projects have ended-up being funded substantially by corporate underwriters. This is because most corporate funders make their decisions well before foundation grant application deadlines. Further, if a corporation decides to fund a project it will most often be at 100% of the requested grant level. Many foundations however will only partially fund a request: i.e. ask for $10,000 and get $4,000.

Perhaps I'm stating the obvious here, but can we seek to engage these same foundations in supporting some of the specific innovations we're talking about this week? Sure I'd love to have someone underwrite the totality of a season a new ideas, but I'm not holding my breath for that to happen to my orchestra and with my audience. These innovations we're discussing, with their shorter development timelines, are dare I say sexy and project-oriented in a way that just might be appealing to a funder who might otherwise not have an opportunity in our traditional funding scheme that fit their giving wishes.

I guess it again comes back to engagement and development work, but instead of directly with the audience, we should be thinking more about having this conversation with potential funders.

Posted by aberryhill at June 20, 2007 8:09 AM


Dear Andrew:

Re: spending more time with potential funders (foundations):

The Giving Institute (formerly American Association of Fund Raising Counsel) won't release its statistical analysis of giving for 2006 until July 1, but it will not be materially different from the 2005 results or any year for which the statistics have been compiled. Of the $260 billion (in round numbers) contributed to non-profits in 2005, living individuals gave $199 billion, or 76.5 percent of total giving. Individuals gave another $17 billion through bequests and other testamentary gifts, or 6.7 percent. Thus individuals, whether living or otherwise engaged, gave a total of $216 billion, or 83.2 percent of total giving.

The remaining $44 billion was given by corporations ($14 billion, 5.3 percent) and foundations ($30 billion, 11.5 percent). The corporate percentage of the pie has remained pretty constant over many years. The foundation slice has grown by four points or so in the past decade, probably due to two phenomena: 1) foundations are required to spend only five percent of their holdings each year (grants and expenses) and thus have seen their portfolios rise with the economy and markets, and 2) increasing numbers of individuals and families have established foundations to manage what otherwise would be individual giving.

So where do gifts come from? Individuals - they give 83 percent of gifts. Where is the first place to which nearly every nonprofit thinks to turn when they need money? Foundations - but they give only 11 percent, and they are awash in proposals which means you have to get in line. By all means, spend time cultivating foundations along with corporations, but be aware that it is likely to be a long courtship. I advise committing more resources to increasing the sophistication your individual solicitations. Follow the money.

Posted by: James Hopkins CFRE at June 20, 2007 10:48 AM

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