When I began working with ministries in the early 90s, foundation grants were an important part of our annual fund.  I joined the development department of an established ministry that already had some history of receiving funding from foundations.  Most of the grants were for programs that the ministry had established years before, and I was given the task of adding new funders to the list.

It was then that I began studying how foundations gave money away.  Not only were they required to give a certain percentage of their earnings away just to keep their tax-exempt status, but most of them published their criteria for how to get the money.  The focus of grant writing seemed to be on the quality of the proposal and how many you sent out.

I’ve learned a few things since then, mostly about how things change. 

Back then, it was common that the foundation simply wanted to receive your proposal as the first action.  You spent hours writing a “perfect” proposal, added all the attachments and shipped it overnight.  Then you called to see if there were any questions.  Pretty simple, and for the most part, if you sent enough out, you got enough back.  It was a numbers game.

Not any more.  I returned to the grant process a few years ago while working with a major Christian university.  Things had definitely changed.  The same directories were published and for the most part, the same topics were covered in the books – write a good proposal.  But now it was harder.  What had changed?

I have identified at least two things that require a shift in how funding is sought from foundations:  The “fixed income markets” and “Enron.”

Do you remember what the investment markets were like at the end of 1999?  The NASDAQ high-tech bubble was expected to continue indefinitely.  Y2K was the only risk on the horizon, and by spring of 2000, everyone knew that wasn’t going to affect anything.  But the markets began sliding, and by the time of the terrorist attacks on 9/11, both the stock and bond markets were in a tailspin. 

Then, along came Enron.  The accounting irregularities had a ripple effect on almost all financial institutions, including how foundations accounted for the “administrative functions” of their operations.  It made them focus more on due diligence, whether the proposed gift met their charitable purposes, and most important, how they accounted for the cost of operating their foundation.

What did a lot of foundations do?  They temporarily shut their doors to new relationships, and tried to assess the impact of reduced earnings and higher administrative costs on the grants they had already promised.

Can you imagine what would happen to your family’s budget if your salary were cut by 40 percent and you had to justify each expense?  It wouldn’t be pretty at my house – that’s for sure.

So how can we operate in this new environment?  It works best to realize that we are not playing the old game of “We have a need and you have the money – let’s make a deal.” 

These days, you have to find out what their “mission” is, and match your project to that mission.  It sort of sounds like a major donor visit, doesn’t it?  In fact, I like to think of building a Foundation Relations Program as “major donors on steroids.”  That is because we still need to find out what they want to fund, what is on their agenda, how they want to be recognized, and if our project fits their criteria.  Only then is it passed to the “committee” for review.  It’s a lot simpler visiting with mom and dad at the kitchen table isn’t it?

There is hope, though.  When we identify a foundation that gives (or has given) to our type of programs and projects, the best answer is to discuss its current funding interests and ask them, “How they know a proposal meets the mission of the foundation?”  You don’t want to waste their time, or yours sending something that won’t even be considered.

The hard part of this new environment is that it takes more work now than it did before.  But if it is done right, you end up with an increasing list of committed friends that will help you meet your mission.