Good News for Nonprofits Seeking Operating Grants

June 30, 2014

Guest Blog by Erica McGeachy Crenshaw, CEO, Execute Now! and Maryland Nonprofits Associate Member

Read the original blog here.

Few of us have the chance to ask program officers or foundation board members to tell it like it is. And if they do, how often must their answer be filtered to protect their foundations and positions? If you don’t have a foundation officer you can ask to be a truth teller, Foundation Source‘s recent annual report on private foundations is your next best thing-especially if you’re a nonprofit seeking elusive operating support. Tune in to some interesting and encouraging statistics.

Small foundations drawn to operating

According to the report, small and mid-sized foundations with assets between $1 million and $10 million granted almost as much money for general operating support as they did for program-specific support in 2013. In contrast, larger foundations with assets between $10 million and $50 million granted about two-and-a-half times as much program-specific money ($48 million) as general operating grants ($19 million).

Number, size and type of grantees

Naturally, larger foundations outpaced their smaller counterparts in terms of size and number of grants awarded. The average number of grants per foundation in 2013 was 62 for the largest class of grantmakers in the study, 25 for mid-sized foundations and nine for small foundations. As for the category of grants awarded in 2013, Foundation Source reported the top two designees were educational organizations with 29 percent and human services with 17 percent.

Why are the smaller foundation figures important?

The results of this report are worth noting because smaller foundations represent the majority of funders among all private foundations. “Foundation Source conducts this annual study of private foundations with assets under $50 million to provide a better understanding of foundations that, although not immense in terms of asset size, constitute all but the top 2 percent of the roughly 86,000 private foundations currently in existence in the U.S.,” explains report author Andrew Schulz, Foundation Source’s executive vice president.

Foundation Source also highlighted a small difference in grantmaking from the prior year. “For the foundations in our study, the very slight decline in grants awarded in 2013 relative to 2012 may signify that, after responding to years of extraordinary need, these foundations took advantage of the improving economic climate to replenish their endowments,” added Schulz.

Don’t forget the follow-up

If you are one of the fortunate nonprofits to have secured an operating grant, don’t forget the importance of follow-up. A surprising majority of grantees falter on this count, according to former foundation CEO and field education supervisor for the Harvard Divinity School, Martin Teitel. He encourages nonprofits to follow these grantee guidelines:

What to do after you’re funded:

1. Thank your funder formally via a letter or card.

2. Judiciously put your funder on the mailing list so he/she receives everything you produce.

3. Start a folder that’s dedicated to funder reporting and begin filling it over the year with clippings, reports and other essential data that will make it easier to build the year-end report on how you spent the grant.

Four reasons to pay attention to grant reporting include:

1. Reports build relationships with the funders.

2. Reporting can help with repeat funding.

3. You might actually teach the funder something.

4. You might learn from your own reporting.

Teitel also reminds fundraisers to put foundation grants in its place. In other words, when foundation grants are a limited portion of a diverse mix that supports your work, your organization will be more independent and more stable. This organizational confidence bolsters other forms of fund development as donors perceive the nonprofit as enduring rather than desperately casting its net in unlikely foundation waters.

As Execute Now! observes the funding trends both within our clients’ budgets and as a sector, we’re encouraged not only by nonprofits’ increase in funding diversification but also by the growth in operating grants. These grants are a critical source of support when a nonprofit needs to upgrade its systems and tend to “housekeeping.” A nonprofit’s ability to deliver quality programming is much like the tracks on a railroad. The staff and management systems are the railroad ties and the programs are the rails. Without the two constructed together, the nonprofits cannot reach their destination.


Join Maryland Nonprofits’ 2014 Annual Conference “Connecting for Impact!” November 5th at the Universities of Shady Grove in Rockville, MD.

Connect with Maryland Nonprofits on FacebookTwitterLinkedIn, and Google+, tell us what you think and what kind of topics you would like to see more of on our blog.

Find the perfect nonprofit career this summer, follow @MDNonprofitJobs