Is Your Federal Funding in Jeopardy?

Is Your Federal Funding in Jeopardy is Hall Powell’s take on how to prepare for changes when local, state and federal grants are cut. Here’s what our favorite fundraising veteran has to share:

When I was the chief development officer for three nonprofit hospitals in past years, my comprehensive fundraising plan included grant-seeking, including individual and corporate foundations, and government grants, both state and federal. However, I always made sure that I was not dependent on government grants in making our annual fundraising goals.

My fundraising plan was solidly founded on the understanding that philanthropic gifts from individuals, corporations, and private and family foundations are the greatest source of revenue for nonprofit organizations. With that premise in mind, my focus was on a strategy that would maximize all efforts to secure “major” philanthropic gifts needed to reach my annual goal. Grant seeking would also be included in my fundraising plan, because there are opportunities to seek grants for healthcare support from some government agencies. Each year, when the opportunity to seek government grants became feasible, my team would go thorough the tedious, and time-consuming task of seeking government grants (state and federal). And, if we received a grant, the task of managing and reporting annually to the grantor greatly added to the time and efforts of the development team.

Federal and state grants can be very meaningful for a fundraising program but they also can be dangerous. Why? If an organization is totally or partially dependent upon government grants for its philanthropic revenue, it is in great danger. Those funds can dry up in a hurry depending upon many varying possibilities, such as changes in what is funded by the government from year-to-year. When nonprofits have difficulty obtaining government funding, the organizations and the people they serve suffer. Cuts in federal or state funding would have a negative impact on the organization.

Is Your Federal Funding in Jeopardy?

While government grants can be sources of meaningful philanthropic revenue, they can also be challenging partners.

For an organization that has the opportunity to apply for government grants, I suggest that it proceed with eyes open to the reality that dependency in governments grant seeking is, or can be, risky. Therefore, proceed with caution. Fire your best shot, with the assurance that if you fail to receive the grant or the source “dries up,” you will be OK because your major gifts fundraising strategies have provided a solid base that ensure the success of your annual goals.

How do build a successful major gifts program? Follow the plan:

1. Have a strong annual fund that lays the foundation for developing major gifts (See below).
2. Have a major gift ramp up program (MGRU) to ensure the that major gifts donors are being cultivated, solicited, and stewarded every year.
3. Have an effective Planned-Giving, Estate Gifts program as a result of step *2.

For an annual fund fundraising plan to be effective and justifiable, it must be planned and conducted with the understanding that the purpose of annual gifts is (1) an opportunity for any and every one to be philanthropically involved in the organization, regardless of their income bracket (via special events, webpage giving, direct mail, etc.), and (2) all of the annual giving tactics should be planned as also being methods of identifying, qualifying, potential major gifts prospects.

For Example: The annual gifts strategies for the medical centers I served as Chief Development Officer were all planned as cultivation tools for major gifts. While the annual galas, golf tournaments, newsletters, webpages resulted in a portion of meaningful annual contributions, their main impact was that they became tools for identifying potential major gifts prospects.

My staff was trained to be development directors for their departments of medical care e.g., Heart and Vascular, Women’s and Children, Rehabilitation, Cancer, Radiation, Emergency Care, Nursing. Each director had his or her own annual fundraising plan for raising major gifts which included annual gifts strategies such as The Heart Ball, The Children’s Hospital Gala, etc. Annual event attendees were usually recruited by host committees made up of major gift donors who invited their closest friends and acquaintances to the event. After every event, the attendees were reviewed and evaluated for potential major gifts, with each one having a planned follow-up cultivation strategy assigned to the development director and his or her volunteer hosts.

In this article, I have not emphasized that private foundations (including family foundations), and corporate foundations should be viewed as major gifts prosects. Private and family foundations should be approached as though they were individual gifts prospects. Even though foundations usually have certain required ways to be approached and solicited, they are still people (or families) and need to be cultivated for major gift asks. For instance, get to know who are the Board members for the foundations. Invite one or more of them to an event as a “first step” in the cultivation process. The same would be true for corporate gifts. Some corporations have their own grants department. Invite their department chief to an event. Or, find another way to be introduced to her or him.

The primary purpose of this article if to stress that it is potentially dangerous and possibly irresponsible for some nonprofits to primarily focus on government grants as their source of revenue, and that, in fact, there are better ways with less risk and better results in securing funding for their organizations. The best way to secure and ensure the realization of an annual goal for philharmonic funding is to present a compelling reason for philanthropic support to potential donors who can review a comprehensive fundraising plan that focuses on a major gift. Don’t put your organization at risk by prioritizing government grants.

Is Your Federal Funding in Jeopardy was first posted at NANOE

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ABOUT HALL POWELL:

Hall Powell, Jr. is an ordained minister and has served as an expository preacher and teacher since 1974. His book, The Missing Link reflects his ongoing commitment to provide insight into the practical application of biblical truths for those who seek true spirituality. Mr. Powell received an A.B. Degree in Philosophy and Religion from Guilford College, attended Columbia Graduate School of Bible and Theology, and earned a M.B.A. degree from Winthrop University. He lives with his wife Melinda in Southport, North Carolina and they have three married daughters, eight grandchildren, and eleven great-grandchildren.