How Does a Nonprofit Find Funding to Keep the Lights On?

GrantStation's founder and CEO, Cynthia Adams, recently gave a free 30-minute webinar on the Zen of Grantseeking.

In the webinar, she focused on the importance of embracing grantseeking as an integral part of the overall financial approach for your organization. Because, as we all know, learning to think beyond today, tomorrow, and next week is a tough assignment. And it is important to clarify your thinking as you consider establishing a solid grants program for 2017 and into 2018, especially in this time of uncertainty around government funding.

One of the participants asked this question, which I feel sure is on the top of your mind as well: "Program grants have a budget directly related to them, and for the most part do not cover operations or overhead costs. Capacity-building grants are limited and very difficult to get. So, how does a nonprofit find funding to keep the lights on and grow the programs?"

This is a complex question with no easy answers, set among some rather chilling statistics. First, let's look at the statistics, culled from GrantStation's most recent State of Grantseeking™ Report:

Almost 70 percent of nonprofits keep their indirect and administrative costs at 20 percent or less of their annual budget. That figure obviously doesn't leave much room for infrastructure growth or personnel development.
These costs — for 70 percent of respondents — were paid for by some combination of fees for services, fundraisers, and individual donations. Private or government grants or contracts were the source of administrative cost funding for the other 30 percent of respondents.
Indirect and administrative costs remained the same or decreased for 70 percent of respondents. So how did these organizations, already operating on very tight administrative budgets, accomplish this?
- They reduced staff. In fact, almost two-thirds of respondents reported that they controlled costs by reducing staff.
- And that is alarming — because it is a data-supported example of the greatest challenge faced by nonprofits: the lack of sufficient time and staff to meet their missions.

Reduction Technique	Spring 2017
Reduced number of staff	65%
Increased reliance on volunteer labor	29%
Reduced services and programs offered	23%
Reduced staff hours	19%
Reduced staff salaries	16%
Reduced organization hours	12%
Space or location sharing	9%
Buying groups: economy of scale for purchases	5%
Reduced organization geographic scope	3%

Back to the question, "So, how does a nonprofit find funding to keep the lights on and grow the programs?"

One way to do so is to make your grantseeking strategy a priority. Invest in tools to give you a hand up, and streamline your grantseeking based on efficiency and the likelihood of an award.

GrantStation's databases of private foundations only include those that accept unsolicited letters of inquiry. In effect, GrantStation's staffers have already done a part of the research for you. They've sifted through the tens of thousands of funders who are "closed shops," and include only those funders who are willing to engage with you.

Your funding search can be defined by your mission or your location. It can also include the support type (general, capacity, project planning, and so on), as well as whom you serve (children, LGBTQ, Latinos, and so on). And, it can include the type of grantmaker (private foundation, government, corporate foundation, giving circle, and so forth).

GrantStation also provides a simple decision matrix to help you weigh if it's worth your time and effort to apply to this funder. It offers guidelines on creating a grantseeking calendar, and how-tos on all facets of the application, from developing a letter of inquiry to using appropriate tone and style.

If you make administrative cost funding a grantseeking priority, just as you already make program and mission funding a priority, you may well uncover the support you've been looking for.

TechSoup is offering a full GrantStation membership for just $99 for three days in September, from September 26 through 28.

Check out GrantStation

We look forward to having you join us — and to GrantStation becoming one of your tools to fund your organization's administrative costs.

Learn More About Finding Grant Funding with These Great Webinars

On September 20, learn how to get started with grantseeking and make your grant requests sparkle. This free 90-minute webinar for TechSoup's audience (normally $89!) will help you prepare the basic documents needed to write compelling letters of inquiry and grant proposals.

Make your grant proposals sparkle

On September 21, learn how to build a winning grants strategy. In this free webinar (normally $69), GrantStation CEO Cynthia Adams will lead you through creating a grants calendar for the next 12 to 18 months.

Build a winning grants strategy

On September 26, get a free tour of the GrantStation website. This tour will provide tips on the most effective way to use all of the valuable resources the website offers, including extensive funder databases that can help you identify the grantmakers most likely to fund your programs or projects.

Learn how to leverage GrantStation

On September 27, learn how to be bold when conducting your funding research. Grantseeking has changed over the past several years. Funders are looking for those organizations that demonstrate intentional movement toward substantial and sustainable change. "It is time for grantseekers to be bold in their requests," says GrantStation's CEO and founder Cynthia Adams.

Hone your research approach

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"Program grants have a budget directly related to them, and for the most part do not cover operations or overhead costs. Capacity-building grants are limited and very difficult to get. So, how does a nonprofit find funding to keep the lights on and grow the programs?"

By not relying only, solely on grants. A healthy nonprofit is one that gets its funding from a diversity of sources. A nonprofit can look for ways to charge for some of its services.

-- For instance, if you are organizing an activity for a group of volunteers from the local branch of a large national bank, that requires a huge amount of time and resources on your part, an activity that is mostly about giving the group a feel-good experience rather than getting critical tasks done. Are you charging the corporation a fee, even a small amount, to cover some or all of these costs? Be ready to show a detailed lists of what the costs are for your organization to create this group volunteering activity.

-- Corporations frequently ask nonprofits to collaborate on a project, to advise the company on an activity, such as the development of new software or the launching of an event. For anything that is going to require staff to spend more than an hour on a corporation’s project, ask the corporation to cover the staff person’s time.

-- Should volunteers be asked to pay a fee to cover some of the costs of training and supervising them? Would a corporation or business be willing to give you a donation in return for saying that they “sponsor” all volunteer training?

Also, be up front and detailed about what operations and overhead costs are. Detail them on your web site. Show, without apology, just how essential having a space (or spaces), office equipment and a paid staff are to delivering your services - and make sure there is a "donate" button on your web site so that anyone can donate to help cover those costs. Individual donors play an essential role in covering such costs.

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How Does a Nonprofit Find Funding to Keep the Lights On?

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