What to do when foundations change their application guidelines and funding priorities
What to do when foundations change their application guidelines and funding priorities
By Cara Thornton- Marketing Manager & Lindsay Jordan- CEO and Founder
Few challenges rock a nonprofit budget more than losing a long-awarded grant that was included in your budget - particularly if your organization really depends on that grant. Sometimes this happens because a private foundation has experienced a major change in assets and has less to give. More frequently, a long-time grant is lost because the foundation has changed their funding guidelines or priorities. Either way, the nonprofit is left holding the bag (with nothing in it). What do you do?
According to a study published by Sage Journals in 2019, there are four primary reasons that a foundation might change its mission:
Regulatory changes - Changes to the tax code
Generational shifts - A new generation of trustees is in charge of giving
Professionalization - Trustees are now paid, non-family members; Internal operations and systems are prioritized
Societal changes (response or catalyst) - Changes in response to or in an attempt to impact contemporary social concerns and challenges
While the geographic focus of their giving largely stayed the same, the giving priorities of the foundations studied did not. Nonprofit pros tend to think of foundations as these unmovable, static beings, but they are not. At least 70% of the foundations in this study made a change in their giving some time in the last 20 years in response to one of these four factors.
***Data reflects 448 foundations
The article also notes that 34% of private foundations studied expanded the topics they funded; 17% funded mostly different topics than their founders intended; 8% completely changed their funding priorities; and 8% reduced the number of topics they funded.
Given the drastic societal shifts currently taking place in the nonprofit sector, it’s not hard to imagine why more foundations have been considering (or are already changing) their funding priorities.
Precious little guidance exists, however, for nonprofits that are ultimately impacted (many negatively) by these decisions. If you were to Google Search, for example, “What to do when a foundation stops giving to a nonprofit,” the first hit is “How to close down a nonprofit.” That’s a bit dramatic for our tastes!
There are a couple of steps that we recommend to our clients here at Write On when the dreaded (and seemingly inevitable) “change in funding guidelines” occurs and/or when a foundation that has traditionally funded an organization suddenly decreases or cuts funding completely.
#1 - Request a meeting to get more information
So you got “the letter” in the mail or maybe even a phone call from a program officer. Now what? You need more information! Before you go to the board to report the sad news, reach out to the foundation to see if you can schedule time with a program officer or trustee to gather more information about the foundation’s new direction.
If you received a phone call informing you of the loss/change in funding, DON’T try to secure additional information on this call. You need time to gather your thoughts, secure feedback on the impact of the loss from other staff members, and pull together a comprehensive understanding of how your organization is impacted before you re-engage with the foundation.
#2 - Explore if there are other openings for your organization and clarify why you aren’t a fit
It’s possible that you may still be eligible for funding, but in a different way. Perhaps the foundation has pivoted to focus more narrowly on food scarcity, and you happen to have a food pantry embedded within one of the programs that you just never talked to the funder about. Ask thoughtful questions about what is behind the change in guidelines. What is the foundation working to accomplish? Try to view your programming through their lens to see if any additional opportunities exist.
Note: We are not advocating for “mission creep” here or directing organizations to make major changes to existing programs! Funder priorities should never drive nonprofit programs.
#3 Try to negotiate a tiered decrease in funds
Too often, we see nonprofits receive and accept the terms of changes to funding without attempting to negotiate. If you aren’t sharing with the foundation just how severe the impact of this loss will be, then they don’t know. Sometimes, it is possible for foundations to “stair-step” a decrease in funding so that the adverse impact on the people you serve is lessened and you have more time to replace the funding.
#4 Ask which organizations will be receiving funds
Even when private foundations make major changes to their funding priorities that negatively impact you, there may be opportunities to partner with organizations that the foundation is still funding. Ask program representatives if they can share who will be funded (or which type of organizations might be funded) so that you can reach out to those entities and explore potential partnerships. Your organization may receive pass-through revenue by partnering with a nonprofit that is eligible for the foundation’s funding!
#5 Thank them for their past giving and support of the community
For some organizations, there will be no new opportunities to solicit funding from the foundation, no opening to negotiate the decrease, and no potential partnerships to pursue. If this is the case, simply (and authentically) thank the foundation for their past donations to your nonprofit and for their continued support of the community.
Even if your programming no longer aligns with the foundation’s funding priorities, a rising tide lifts all boats and their continued investment in the community will likely still benefit the people you serve.
#6 Begin prospect research
Now it is time to think about replacing that grant funding. Check out our recent blog entry on Prospecting for Foundation Grants, or reach out to Write On to learn more about the grant calendars we build for our clients.
In short - private foundation guidelines (and subsequent awards) change much more frequently than we tend to assume. Understanding and acknowledging this reality as a natural part of the fundraising cycle will enable your organization to pivot more quickly and make better decisions about diversifying your funding portfolio and prioritizing new relationships. Collectively, we can all tell Google to calm down. There is a way forward.
Resources:
https://journals.sagepub.com/doi/full/10.1177/0899764019866513