Connecting to Philanthropy: The understudied behaviors of grant seekers and grantmakers

NEW RESEARCH

Could you imagine opening 246 pieces of mail (not including junk mail) and reviewing it thoroughly? Foundation staff members are doing just that – on average, they receive 246 grant applications every year.

Researcher Dr. Lewis Faulk, from American University’s Department of Public Administration and Policy in Washington, D.C., wanted to explore behaviors of grantmakers and grant seekers. Over the summer, Faulk’s team conducted a Grant Seeking and Grant Making Study.

The Donors Forum of Wisconsin was happy to partner with the Helen Bader Institute for Nonprofit Management at the University of Wisconsin-Milwaukee to bring Dr. Faulk to Wisconsin to share the results of this study.

DFW members were eager to hear about the understudied behaviors of both nonprofits and grantmakers. Jim Marks from United Way of Greater Milwaukee was interested in comparing their funding to the survey findings. Jim stated, “With the increasing competition for foundation grants, I enjoyed hearing how foundations in general are adjusting their grant distribution patterns in response”. Although there have been studies on general fundraising success, few studies exist on foundations and grant success. Faulk’s study provides transparency into the behaviors of both nonprofit and foundations.

Below are a few highlights from the study.

ABOUT THE STUDY

The Grant Seeking survey collected data from 450 nonprofits that offer services related to aging, youth or homelessness, and are based in ten large metropolitan areas of the U.S. (Atlanta, Boston, Denver, Detroit, Houston, Minneapolis, Philadelphia, Phoenix, San Francisco and Washington D.C.).

The 258 foundations included in the Grant Making survey were selected based on relevance to the same three service areas and their acceptance of grant applications from the same metropolitan areas.

FINDINGS FROM THE GRANT MAKING SURVEY

Nonprofit organizations submitted an average of 25 grant applications to foundations. The average number awarded was 15, making an average award rate of 63 percent.

On the other side, foundations reported receiving an average of 246 grant applications. They reported awarding 132 grants, with an average funding rate of 53 percent.

Recently, grantmakers are seeing an increase in the number of submitted grant applications – an 11 increase in the past five years.

Surprisingly, a significant percentage of grant applications are coming from nonprofits that the foundation is not familiar with. When awarding grants, grantmakers consider familiarity of the nonprofit, i.e., a past grant applicant or recipient, or if the nonprofit has had personal contact with them.

In response to the increased grant applications and unfamiliar applications they receive, grantmakers have been increasing the number of grants awarded but decreasing the amount of the grant- in essence, a wider breadth but smaller depth. Grantmakers have also increased their overall rejection rates.

So, what are foundations looking for in a grant application? Looking broadly, they are looking for proposal fit. Specifically, foundations look at grant applications for fit within their focus areas and funding guidelines, if it is feasible, and if it includes realistic budgets. Foundations reported in the survey that on average more than 75 percent of grant applications they received fit those basic criteria – and also that over half of the grant applications received included supporting program data. Foundations also reported that fewer than 50 percent of their proposals are innovative.

Grantmakers reported that the grant applicants’ financial health is also an important factor to their funding decisions. Financial stability was even more important for foundations that have seen the fastest growth in grant applications.

TAKEAWAYS FROM THE STUDY

The study highlights that the best predictor for earning a grant is applying for them. Investments made into fundraising capacity, such as increasing staff dedicated to grant management, are likely to pay off.

Financial health (including an organization’s past operating margins) and having received past grants (familiarity and track record) increase an organization’s chances of being awarded funding.

Foundations are adjusting their grant distribution patterns in response to an increase in applications.

Lead researcher, Dr. Lewis Faulk hopes to lead additional studies to uncover more trends in the nonprofit sector. Understanding more about the challenges and opportunities grantmakers and grant seekers face better supports a growing and dynamic nonprofit sector.

You can learn more about the “American University’s Grant Seeking and Grant Making Study” by visiting Dr. Faulk’s page: http://www.american.edu/spa/faculty/faulk.cfm.

Contributed by Jill Van Calster, president and CEO, Donors Forum of Wisconsin

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