Why Foundation Funding Is A Challenge for New England Non-Profits

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In the field of development, it is well know that corporate and foundation grants are extremely competitive in New England. Our region is blessed with numerous non-profit agencies that perform vital services, but there are very few funders compared to other regions of the country.

Individual-giving statistics fare no better. In a study conducted by the Chronicle of Philanthropy, residents of Hartford were the least generous givers in the nation, according to their itemized federal tax deductions. People in Boston were the third least generous, giving 5.2% of their discretionary income to charity.

Raising money is especially challenging for certain sectors, as not all non-profit recipients are created equal in the wallets of potential donors. In 2002, less than 10% of all U.S. charitable contributions were given to human services organizations, while arts and cultural institutions received less than 6% of the total giving pie. Environmental non-profits receive less than 4% of all national contributions.

Average foundation gifts are in the $4,000 range in our region. Nationally, most funders prefer to fund programs (46%). Some (23%) will fund capital items, such as new buildings or large equipment/infrastructure needs. Precious few will fund general operations (14%), while research and student aid follow at 10% and 7%, respectively.

In Massachusetts and New England this problem is exacerbated. An analysis of our local foundations shows that there are very few funders for capacity building activities, endowment building or emergency funds. Most Massachusetts community foundations, such as Cape Cod, Crossroads, Greater Lowell, and Cambridge, grant less than the average $4,000 private foundation per year. Older community foundations such as Greater Worcester and The Boston Foundation make more grants per year, but even their larger endowments do not provide for many large grants.

A New England non-profit typically begins a search for foundation funding through the Associated Grant Makers (AGM) database/directory. Almost all of the funders in the AGM database are highly geographically-specific, focusing on a single town or county/region. They also fund a variety of areas, such as capital items, programs, and scholarships, for example.

Should an agency seek funds for a capacity building or technical assistance activity, only twenty-two funders are available, excluding the United Way of MA Bay. Only two foundations in this category do not fund other categories as well. Two of them do not accept proposals, choosing to give to pre-selected organizations. Out of all the capacity-building funders, the median grant was $17,500, and they make an average of thirty-eight grants per year. Nine of the twenty potentials are highly specific in geographic eligibility.

A search for emergency funds yielded sixty-nine potential funders, once again excluding the United Way, two of which do not accept applications. All but three of the funders also fund other program areas, so non-profits compete for the same pool of resources, whether they have an emergency need or a program to fund. Out of the sixty-seven potential funders, forty-four were highly specific geographically (predominantly Boston area), and made an average of forty gifts of $7,000 per year.

Seeking capital funders was only slightly more promising. Out of 104 potentials, eight do not accept proposals, and five were not duplicated in the other funding area searches. Sixty-five were geographically specific, including sixteen that will only fund one or two cities. Capital funders also make approximately forty gifts per year, in the median amount of $6,584.

A mere fifty-six funders are interested in funding endowments, and seven of them do not accept proposals. Thirty-five of the remaining forty-nine are highly specific geographically, so if an organization is not located in Greater Boston, its time is best spent on other fundraising activities for endowment funds.

The most cherished type of foundation grant is unrestricted, or for general operations. Out of 172 potentials, twelve fund pre-selected organizations only. The remainders are highly specific geographically. The median figures are almost identical to the capital funders, forty grants per year, in the amount of $6,667.

The most promising “niche” area in which to seek funds is for seed money or special projects, with 131 potential funders. It is with good reason that non-profit staff complain that funders seek new or innovative projects to fund, and not the tried-and-true. Three funders did not accept applications, one only funds developing countries and seventy-nine were highly geographically specific. The median grant was a little higher at $7,500, but the median number of grants, forty, was the same as many other categories, reflecting the overlap of funders throughout each category.

In terms of number of grants made, the three largest funders are in a class by themselves. Verizon makes an average of 13,000 grants throughout New England each year. Fleet Boston Financial Foundation makes 3,000 grants per year, so many people are watching the merger with Bank of America very closely to determine any new level or focus of grant making. The Boston Foundation contributes 1,600 grants per year to the Greater Boston economy.

So how can you or your business help this situation? First, the majority of giving in the United States comes from individuals. Make sure that you or your household is being generous with annual appeals letters and solicitations. Simple ways you can improve the funding environment for non-profits include: opening up your company to United Way payroll deductions for employees, matching employees’ charitable contributions, or sponsoring a worthy non-profit agency event in your community. In-kind contributions of food and drink are especially important to programs involving children.

More targeted giving strategies would be to fund programs in areas where few other funders currently give, or for types of things that area foundations typically do not fund, such as capacity building or endowments.

By supporting your community through its non-profits, you will build not only good will, but also employee morale and personal satisfaction. Happy giving!

Carla C. Cataldo, M.P.P. is the Principal of Proposals, Etc. in Medway, which specializes in helping non-profit organizations raise financial resources to meet the vital needs of our communities. She holds a Master’s degree from Harvard University, and is a Preferred Education Provider for the Association of Fundraising Professionals.