Grant-Making Forecast: How Charities Can Make Effective Appeals in 2010 and Beyond

As foundations cope with significant endowment losses, many are reducing their giving. How can charities appeal to grant makers during these tough times? How will grant-making priorities change in 2010? And which foundations are stepping up their efforts despite the economic downturn?

Read the transcript of our discussion with Chris DeCardy, vice president and director of communications at the David and Lucile Packard Foundation, and Steven Lawrence, senior director of research at the Foundation Center, who shared their observations and answered questions about grant making in 2010 and beyond.

Listed below is the detailed discussion:

11:44
Ian Wilhelm: We’ll be starting The Chronicle’s chat on 2010 grant making promptly at noon. Please feel free to submit questions before hand. You can send questions using the field below. Thanks!
12:00
Ian Wilhelm: Hi and welcome to today’s online chat about how to get better news media coverage for your nonprofit group. We have two great guests with us. Chris DeCardy, vice president and director of communications at the David and Lucile Packard Foundation, and Steven Lawrence, senior director of research at the Foundation Center.
12:01
Ian Wilhelm: We expect a lively discussion today. You can submit questions or comments at any time during the chat by typing them into the field below. (As a reminder to readers: this is a text-based chat. There is no audio.)
12:01
Ian Wilhelm: But first I’d like to ask the guests to introduce themselves.
12:02
Ian Wilhelm: Oops. In my opening i meant to say, the topic is grant making in 2010
12:02
Chris DeCardy, Packard Foundation:Hello from not so sunny California.   And I suppose that applies to the weather, the economy and the state’s fiscal situation.   I am looking forward to the conversation and learning from everyone on this chat.
12:02
Steven Lawrence: Good afternoon. I’m happy to participate and will be sharing insights about my nearly two decades of conducting research on foundations.
12:03
Ian Wilhelm: Thanks. Steven, the Foundation Center issued a report last month on the state of grant making. The report is here:http://foundationcenter.org/focus/economy/advisories.html Can you briefly summarize what you all said?
12:03
Steven Lawrence: The key finding is that we expect giving to be down by more than 10% next year and to continue to decrease in 2010 […]
12:04
Steven Lawrence: But that doesn’t mean that all foundations will be reducing giving. However, it will certainly be the case for the majority of funders.
12:05
Ian Wilhelm: Chris, does the Foundation Center report reflect the financial and grant making situation at the Packard Foundation?
12:05
Chris DeCardy, Packard Foundation: Yes it does.   Our endowment dropped nearly 30 percent from 2008 through early 2009.   Our grantmaking will be down about 10 percent in 2009 and our grantmaking budget will be down another 10 percent in 2010.   For us, we tried to slow the reduction in 2009 to help out grantees in the downturn but that will have our payout percentage somewhere around 6.5 percent for the year…
12:06
Chris DeCardy, Packard Foundation: We are trying to be as helpful as possible with types of grantmaking, paying attention to short-term needs, helping with capacity building support and loans, but overall grants levels are still down.
12:07
Steven Lawrence:We’ve certainly heard from funders that their focus is on shoring up longtime grantees. We’ve also tracked almost $450 million in grants and PRIs directly related to responding to the economic crisis.
12:07
Ian Wilhelm: Great. A guest asked for the name of the Foundation Center report. It’s

Foundations’ Year-end Outlook for Giving and the Sector

12:07
Steven Lawrence: You can search these grants via a map in the economic crisis area of our website: foundationcenter.org.
12:08
Ian Wilhelm: Indeed, I hope Steven will point out all the tools and reports that the center produces. they are immensely helpful to grant seeks.
12:09
Ian Wilhelm: Here’s a question
12:09
Ian Wilhelm: David N. Duncan of the Civil War Preservation Trust says: Thank you for taking my question.   It is harder than ever to even get a foundation to accept a proposal.   Unless a member of our board personally knows a member of a foundation board, we can’t even get permission to send a proposal, even if their stated goals exactly match ours. We’re being urged by board members to staff up and hire more people to focus exclusively on getting foundation grants, but given this massive resistance, what advice can you offer non-profits who do not already have pre-existing relationships with foundations?   How does one “break through”? Thank you.
12:10
Steven Lawrence:No doubt this is a challenging time to find new sources of foundation support. At the same time, there is a tremendous opportunity. […]
12:11
Steven Lawrence: The opportunity is that, given that the possiblity of getting funding is less likely, you have a chance to really work with funders to help them learn about your organizations with the most level playing field we may see. With no money on the table, you can be candid about your goals, and funders can provide useful insight.
12:11
Chris DeCardy, Packard Foundation:One of the places our program officers turn to is current grantees and respected leaders in the field for advice about an organization they haven’t worked with previously.   But it is really difficult with declining budgets and existing grantees that need more support than ever.
12:12
Chris DeCardy, Packard Foundation: Stevens point is good.   Becoming a good source for facts, contacts or insight is also a good way to make an initial connection with a program officer.
12:13
[Comment From Tai Hethcock] With the current economic climate, will it be worth it to submit requests to foundations previously unfamiliar with our organizations, especially those not in our area?
12:14
Steven Lawrence:I would not suggest sending a request but rather trying to build a relationship. One of the findings from our recent survey is that most grantmakers are expecting to come out of the crisis being more strategic in their focus and strategies. This means that nonprofits are going to have to be equally focused and strategic.
12:15
Chris DeCardy, Packard Foundation: For the Packard Foundation, we try to be as clear as possible with our program grantmaking guidelines.   If an organization fits within those, then it does make sense to send a letter of inquiry.   We certainly have funded organziations that we never previously funded during 2009.   But, if it’s a stretch to match the guidelines, then it may not be a good fit.
12:15
Ian Wilhelm: Interesting points about building relationships.
12:16
Ian Wilhelm: A lot of readers have asked how to “break in” to foundation grants. This seems key
12:16
Steven Lawrence: It’s also important to realize that some foundations, especially community foundations, may be adjusting their grantmaking priorities in this climate. You should be sure to get the most up to date information on their guidelines before approaching a specific foundation.
12:16
Steven Lawrence: In terms of breaking into foundation grantseeking, I suggest that you begin at the Foundation Center […]
12:17
Chris DeCardy, Packard Foundation: One of the areas where we hope to improve is being more clear about our reasoning behind our program goals and strategies.   We want to put more of that context on our website to give better guidance to prospective grantees.   (This came from the Grantee Perception Report.)
12:17
Steven Lawrence: On the Center’ side, we have both free and fee-based resources to help you learn how to become an effective grantseeker.
12:18
[Comment From Kirin] I have a question–It’s good to see the Packard Foundation supporting capacity building. However, the trend seems to be focus on direct program costs, with little to no allowance for administrative overhead and staff costs. Do you think this will continue to be the case?
12:19
Chris DeCardy, Packard Foundation: I think this is a really important issue.   As many foundations get more specific about the goals they want to accomplish and are holding themselves (and being held) accountable for results, it appears to be pushing down support for general operations at nonprofits (Steven may know the data on this…)…
12:20
Steven Lawrence: I would add that the type of support being provided is often contingent upon the type of work an organization is undertaking. That said, we have seen a modest uptick in the overall level of operating support in the past few years. But I think it will continue to be a challenge for the reason Chris mentions.
12:20
Chris DeCardy, Packard Foundation: For us, we have a separate capacity building program that at any given time is supporting about 20 – 30 percent of our current grantees in some way.   We also look to make general support grants whenever we can — when there is a very close fit between our program guidelines and the nonprofit’s mission.
12:20
Ian Wilhelm: A comment from a reader:
12:20
[Comment From Travis] RE: building relationships, most Foundations ask to be approached with an LOI. It doesn’t seem like many are receptive to taking phone calls, talking aboutnew projects, etc. I agree, “breaking in” seems to be a barrier in an era when grant guidelines and application processes have become highly formalized.
12:22
[Comment From Jay Frost] To Steven Lawrence: Just to confirm, when you say “we expect giving to be down by more than 10% next year and to continue to decrease in 2010,” you are referring to institutional grantmaking as opposed to total giving, correct?
12:23
Chris DeCardy, Packard Foundation: I think a cold phone call is a tough way to get through to a program officer.   A lot of time, it’s understanding from colleagues in the field where foundation staff go for information or conferences or other places where the relationship can get built on mutual knowledge and interests/perspectives.   But I know that takes more time to make happen.
12:23
Steven Lawrence:That’s correct. I’m refering to giving by independent, corporate, community, and operating foundations. I’m not refering to individual giving.
12:24
Chris DeCardy, Packard Foundation: I have a questions for Steven which is on grant volume.   While our budget was down 10 percent in 2009, we actually will make almost exactly the same volume of grants — around 860 or so.   This means fewere multi-year grants and lower $$ per grant.   Is that a trend?
12:25
Steven Lawrence:That is definitely consistent with what we saw during the early 2000s economic downturn and expect to happen down: we’ll see fewer mega-grants but a similar volume overall. Certainly, that was the case in 2008. […]
12:26
Steven Lawrence: And this largely reflects the fact that foundations are going to shy away from making large, multi-year commitments until there’s enough stability in the markets.
12:27
[Comment From stephanie gelman] How can one find out about conferences or other places where relationships can be built?
12:27
Chris DeCardy, Packard Foundation: We still have to analyze exactly what happend with us, but that makes sense….One of the things we’ve tried to do is support ways where nonprofits can share resources or back office operations or other ways to streamline.   We made a big commitment to the United Way in the San Jose area to try to support this with area nonprofits looking to streamline operations.
12:28
Chris DeCardy, Packard Foundation: One place to ask is with current foundation supporters.   If you have a good relationship with a program officer, ask them where their colleagues in the field go for information/conferences; how they like to get information and new resources.   Use your current network in the foundation world as a mini focus group.
12:29
Chris DeCardy, Packard Foundation: If you have experience with high networth donors but not foundations, you can ask them the same questions.   Chances are they have relationships in some parts of the foundation world.
12:30
Ian Wilhelm: A comment from a reader:
12:30
[Comment From Penny] In terms of operating support grants and capacity building, check with your local community foundation. We (and others) are increasingly supporting operating support and conducting capacity building workshops, as well as giving one on one consulting hours to nonprofits. making sure our high performing non profits survive and thrive during these economic times is high priority. That being said, it is indeed harder to get grant monies if you are not known to the CF, unless your organization or program supports issues related to the econ downturn.
12:30
[Comment From Penny] P.S. We take cold calls (esp emails) all the time.
12:30
Steven Lawrence:On a separate topic, an observation that I’d like to make coming from our recent survey is that, with foundations having to cut back on their expenses and become more strategic, they’re expecting the same of nonprofits. So, if you’re approaching foundations for support, you’re going to need to be able to demonstrate how your organization is doing business differently in this new environment.
12:31
Ian Wilhelm: Interesting point. A quick housekeeping note: We’re about halfway through the chat. We’ve had a lot of great questions so far. Please keep them coming.
12:31
Chris DeCardy, Packard Foundation: Along those lines, it’s really important to us to hear early if a grantee is having some financial problems.   Early on, we can work together.   Later on, when it’s a crisis makes it much harder for everyone.
12:32
[Comment From Rebecca Southers] Are family foundations not included in Steven’s assessment?
12:32
Steven Lawrence:Family foundations are included within independent foundations.
12:32
Steven Lawrence: In fact, the vast majority of U.S. foundations are family governed.
12:33
[Comment From Jill Martinez] Do you see a need for non-profits to be collaborating in order to better streamline operations?
12:34
Steven Lawrence: We at the Foundation Center are certainly hearing that expectation from grantmakers. And as Chris mentioned, there are also funders who are supporting opportunites to help nonprofits collaborate and/or share back office operations.
12:34
Chris DeCardy, Packard Foundation: Collaboration is one avenue to streamline expenses or to increase capacity for greater impact.   But I don’t collaboration is always the answer.   It really depends on mission, service niche, management/board capacity — those types of questions.
12:35
Steven Lawrence:Interestingly, we’re also hearing much more from foundations themselves about finding ways to collaborate with one another. Given limited resources, funders are looking for new ways to maximize their impact.
12:35
[Comment From Kirin] Depending on the social climate and media interest, certain “causes” tend to receive more attention. Do you feel this attention affects foundations’ giving priorities?
12:36
Chris DeCardy, Packard Foundation: Sometimes in our world “collaboration” is simply code for trying to get someone else to fund your ideas!!!
12:36
Steven Lawrence:Excellent!
12:36
Chris DeCardy, Packard Foundation:I think it does.   Many foundations try to take the long view, but everyone gets caught up in the “issue of the moment…
12:37
Chris DeCardy, Packard Foundation: As an example: For our foundation, we’ve cared deeply about climate change for a long time and oceans for even longer.   Climate change is getting a lot of — deserved — attention, but the troubles in the oceans sometimes don’t.   We find ourselves asking why.
12:38
Steven Lawrence:Last November, we looked at whether giving priorities had changed during the last downturn and found that there was as much variability in funding before and after the downturn as during. It appeared to have no real impact on priorities. Which isn’t to say that foundations don’t make special efforts to respond to increased human service needs. But it doesn’t dramatically shift their priorities.
12:38
Steven Lawrence: Chris makes a good point. Foundations may change their priorities, but it’s less likely to come as a result of an economic change.
12:39
Chris DeCardy, Packard Foundation: We actually did pay some attention to that issue — responding to the needs of the downturn…
12:40
Steven Lawrence: Absolutely, but we’ve heard from media wondering if the sector will suddenly turn its giving to human services. As I like to say, “Arts funders have a specific mission; they’re not going to suddently become human services funders.”
12:40
Chris DeCardy, Packard Foundation: Our grantmaking in our local areas program (five counties along the central Cal coast) has gone up over the past two years (by 33 percent or so) while some other areas have been reduced.   Part of this was recognizing our local areas grantmaking was some of the most direct in responsiveness to the downturn.
12:40
Chris DeCardy, Packard Foundation: Yes, overall I agree.   We have the same basic program areas and goals.
12:40
Steven Lawrence: Chris, have you in part funded community foundations to do this work? They have been real leaders in the crisis response.
12:41
Ian Wilhelm: Let me throw a quick poll out there to see what people think about whether foundations tend to focus on “trendy” causes.
12:41 Does foundation giving seem to drift to whatever cause is popular?
No – It largely remains steady
( 36% )Yes – it gravitates to the issue of the day
( 64% )
12:41
Chris DeCardy, Packard Foundation: Yes, we work with all of the community foundations in these five counties. In fact, have worked very closely to help the community foundation in San Benito County (one of the traditnoally least served by foundations) increase capacity and grantmaking.
12:42
Ian Wilhelm: Community foundations have been mentioned several times in the chat. We plan to get a group of community funders together to chat online at some point
12:42
Steven Lawrence: That’s a very interesting poll finding. There’s definitely a perception gap.
12:43
[Comment From Travis] So with 15 minutes left to go in the meeting, I’d like to ask how can we make effective appeals in 2010 and beyond?
12:44
Steven Lawrence:I don’t know that the rules of good grantseeking have changed: Make sure that your project goals align with the funders, build a good case, and follow through. There are no quarantees, especially in the current climate, but it will give you your best chance.
12:45
Chris DeCardy, Packard Foundation:I would agree: Strong nonprofits show demonstrated success (data, stories, testimonials); have clear program goals for the future and a strong plan for achieving them.
12:46
Ian Wilhelm: Several people have asked about Charity Navigator and its decision to change how it evaluates nonprofits. Here’s one:
12:46
Chris DeCardy, Packard Foundation:Has anyone benefited during the downturn from social networks or from an increase in volunteers from talented people who find themselves with time on their hands?
12:46
[Comment From deana] With Charity Navigoator moving away from the admin:program ratio, do you think foundations will also begin considering effectiveness more and overhead/admin costs less?
12:47
Ian Wilhelm: Great question Chris. if folks have answers I’ll post them re: social networks or volunteers.
12:47
Chris DeCardy, Packard Foundation: We do not have a straight forumula for admin:program ratio — we know from our own operations that making grants in Ethiopia has different operating implications than making grants in Santa Cruz County.
12:48
[Comment From Jane] Do program officers view visits to a foundation as an effective means to build a relationship in this climate?
12:49
[Comment From Kirin] (Thanks for addressing my questions gentlemen). To answer Chris’ question re:volunteers, YES, volunteers are the lifeblood of my organization. They help with clerical work, and are essential to our emergency serviced based programs, e.g. delivering donated furniture to our clients
12:49
[Comment From deana] For the first time in our history (Big Brothers Big Sisters of NYC) we have more volunteers (for mentoring) than we can match. That’s pretty significant!
12:49
[Comment From Rebecca Southers] When you get “community funders” together, there are others besides community foundations. There are many smaller foundations that are focused on a local community.
12:50
Chris DeCardy, Packard Foundation:At some point for a program officer, nothing beats a direct conversation.   I think that still applies.
12:50
Steven Lawrence:My sense is that, if you’re genuinely interesting in getting constructive feedback from program officers, they’ll be willing to talk to you.
12:50
[Comment From Alexandra Carew (SCG)] Re:social networks or volunteers: With streamlined operations, don’t necessarily have the staff capacity or time to manage volunteers
12:50
Chris DeCardy, Packard Foundation: Very good point on “community funders” being a wide array of people and institutions.
12:51
Ian Wilhelm: Agreed
12:51
[Comment From Kirin] Sadly, many people are out of work and looking for ways to fill their time and gain professional experience. We have even had graphic designers, MBA students, etc, work on projects for us
12:51
Chris DeCardy, Packard Foundation: The capacity to best “use” influxes of volunteers — esp. those who may only be around a short time appears to be a real issue.
12:52
Ian Wilhelm: A comment from a reader:
12:52
[Comment From Jay Frost] Respectfully, we need a platform where donors, NPOs and academicians (e.g. COP, ARNOVA, ISTR, etc.) can vigorously and regularly meet and exchange ideas. As a former grantmaker and a former fundraiser and now a service provider, I have seen the lack of communication from each angle. This chat is a good platform for a challenge: let’s move beyond getting to know one another through existing relationships and build a robust and informed network for exchanges of ideas between the three pillars of the third sector to address the needs and interests of us all.
12:52
Chris DeCardy, Packard Foundation: Bridgespan has done some really interesting work on the “leadership deficit” that is looming in the nonprofit world — ie as people retire and nonprofits grow.   Places like Civic Ventures are doing interesting work attracting people later on in their careers.
12:53
Ian Wilhelm: I’m going to publish the results of the poll on foundations tending to give to the cause of the day.
12:53
Chris DeCardy, Packard Foundation: We tried an experiment with a wiki during our strategy development and are very interested in the opportunity for social network sites to provide some kind of platform for direct and open exchange on a number of issues.     I think there is a “there” there over time even if a lot of foundations aren’t known for being on the cutting edge of these types of things.
12:54
Ian Wilhelm: Quick house keeping note: The poll results appear earlier in the chat.
12:55
Chris DeCardy, Packard Foundation: Also to Jay’s point — it touches on the aspect about being open and honest when things don’t go well and really trying to learn.   I think the incentives to NOT go there can be very strong for both nonprofits and foundations.
12:56
[Comment From Jennifer Friar, Richmond] Perhaps up and coming platforms like googlewave and other interactive and multimedia platforms are going to help forge connections and platforms between community groups
12:56
Chris DeCardy, Packard Foundation: Someone asked a direct question in the cue about cold call vs LOI to the Packard Foundation.   The LOI is likely the better way to go.   Short and to the point and it may help start a conversation.
12:56
Ian Wilhelm: Chris, if you could, define LOI for those readers not experienced in grant seeking.
12:57
Chris DeCardy, Packard Foundation: We’ve benefited greatly from Beth Kanter (author of Beth’s Blog) being with us for the past nine months and trying to introduce staff to the tools and encourage the culture shift to more broadly embrace emerging social network opportunities.   But it is hard to do when program officers already feel so pressed for time…
12:58
Steven Lawrence:I think the time crunch is a challenge across the board for funders and nonprofits.
12:58
Chris DeCardy, Packard Foundation:Sorry.   LOI is letter of inquiry.   It’s designed to be short and answer a few questions so that people don’t go through the trouble of developing a full proposal without knowing if it has even a chance of being considered.
12:59
Ian Wilhelm: A question going back to the poll.
12:59
[Comment From Vanessa] In addition to climate change, What would you identify as the “issues of the moment” for most foundations right now? From what I’ve noticed from both foundations and NGOs, I think there are some contrasting views on this.
1:00
Chris DeCardy, Packard Foundation: Don’t know that I can speak for foundations.   Mostly I was thinking of it from the perspective of popular media.
1:01
Steven Lawrence: From our surveys and historical data, my sense is that foundations are focusing on supporting organizations working in their core focus areas. That said, we’ve certainly seen continued growth in environmental, health, and international funding over the past few years.
1:01
Chris DeCardy, Packard Foundation: I wonder if it works the other way sometimes:   foundations try something very difficult for awhile, get frustrated when progress isn’t huge and then move on.
1:02
Ian Wilhelm: And with that we’ll end today’s chat. I want to thank Chris and Steven for taking the time to be with us. And I want to thank all of the people who submitted questions or comments. Unfortunately we did not get to them all, but we appreciate the interest. Any final comments gentlemen?
1:03
Steven Lawrence: 2010 will be challenging, but there’s definitely a belief among funders that the nonprofits that weather this crisis will emerge stronger.
1:04
Chris DeCardy, Packard Foundation: Thanks to everyone for taking the time.   I learned a lot and would echo Steven’s points.   Best of luck in 2010.
1:04
Ian Wilhelm: Thanks again everybody! A full transcript of the chat will be available athttp://philanthropy.com/live/2009/12/effective_appeals


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