Why Your Grant Proposal Is Unwanted

Question: If you had $1 million or even $5 million to give away to charities, would you want to be bombarded by grant proposals from organizations you’ve never met? Be honest…

Over the past couple months, there’s been another debate about the merits of strategic philanthropy. The typical pundits have been involved. Bill Schambra, Pablo Eisenberg, the right-leaning Philanthropy Daily, the left-leaning National Committee for Responsive Philanthropy (NCRP), and others weighed in with their cautions and sometimes downright revulsion to strategic philanthropy. Paul Brest, Phil Buchanan, and others have weighed in with the advantages of strategic philanthropy done well.

Frankly, the same pundits have made many of the same points before, and some used this debate as a platform for their other beefs with foundations. That’s fine – as a philanthropy geek, I love that the debate comes up from time to time and I see merits on both sides.

However, Pablo Eisenberg and Niki Jagpal from NCRP committed an unfortunate logical fallacy. Eisenberg quoted a statistic from the Foundation Center:  60% of the 86,000+ foundations in the United States state that they do not accept unsolicited proposals. They then make the leap to assume that most or all of the foundations in that 60% are strategic grantmakers. They paint those foundations with phrases such as “[we] know what’s best for nonprofits, their constituencies, and the greater good,” “philanthropic arrogance,” and “technocratic and top-down.” An unsavory lot, indeed.

Here’s the fact they glossed over: more than 80% of all U.S. foundations and 86% of family foundations are under $5 million in assets. Small foundations and family foundations choose not to accept proposals for these reasons and more:

  • They have a few organizations they love and continue to support. They’re actually following the advice of Grantmakers for Effective Organizations and many of the pundits listed above by providing general operating support over time.
  • They don’t want inundated with requests because they don’t have paid staff or the personal time to deal with requests. Would you rather be generous in ways that are meaningful to you or spend time reading through mind-numbing piles of requests and screens of emails? Would you want to spend limited charitable resources hiring someone to screen proposals or would you rather use that money for grants?
  • They’re using their own networks of relationships, personal wisdom, local and international news about needs, site visits, presentations to churches and civic clubs, social giving resources, and more to find good charities. The pundits (looking at you Schambra) who describe strategic philanthropies as “technocrats removed from real needs” should be lauding these families.
  • They’re attempting to be quiet about their grantmaking due to their personal values or religious beliefs, or because they just plain don’t want hit up with proposals at the grocery, at parties, or even in the restroom. (I’m not lying – all three have happened to friends or me).

Put yourself in their shoes – would you really create an open proposal process? (If so, I know talented people who would happily be paid to help you with this.)

Why Your Evidence Is Ignored

“The truth is rarely pure and never simple.” – Oscar Wilde, The Importance of Being Earnest 

Thanks to the wonders of social media (specifically Darin McKeever’s Twitter feed), I just read a fascinating article – Why Policymakers Ignore Evidence – by Gerry Stoker, Professor of Politics and Governance at the University of Southampton, U.K.

Stoker’s article is meant as advice to other academics. Based on my experiences, I’d argue his advice is equally useful to nonprofit and foundation staff trying to communicate with politicians, donors, and other community leaders. From Stoker’s many points, I’ve pulled out nine questions that could be swirling in someone’s brain when presented with your facts or your proven solution:

  1. Why is this important right now, and more important than other issues?
  2. Why are you bringing me a problem analysis and no solutions?
  3. What are the administrative, financial, and/or political challenges we’ll face in doing this?
  4. How much social and political capital will we burn trying to get this done?
  5. What are the opportunity costs of diverting time and resources to this?
  6. Is the information coming from a trusted resource or ally?
  7. Does the idea match my personal values and world view?
  8. What are the unintended consequences?
  9. Are you communicating to me in language I understand?

If you’re a program officer trying to sell your board on a strategy, could you predict their answers to these questions with confidence? If you’re a nonprofit advocating for a program, how would your city councilors or state legislators respond to these questions?

I see too many of my colleagues get caught up in their causes – in the “rightness” of their ideas and evidence – that they forget to see the world through others’ viewpoints and experiences. Lord knows, I’ve made the mistakes too.

Stoker’s advice is similar to counsel provided by lobbyists and political communications strategists. Fortunately, there are free resources nonprofits and funders can use to be more successful in turning facts into persuasive communications. Two good places to start are Spitfire Strategies, and if you lean more liberal, the FrameWorks Institute.

What’s On Your Charitable BOLO List?

Part of the recent scandal surrounding the IRS’s Exempt Organizations office was its use of BOLO (“Be on the Lookout”) lists. IRS staffers used the lists to screen groups applying for tax-exempt status based on certain phrases and criteria. Groups that didn’t make it through the screen were subjected to longer and deeper reviews (see the Treasury Inspector General’s report here).

I’ll leave arguments about the appropriateness of the IRS’s processes and staff to others. But, the screening process and lists got me wondering about my grantmaking and philanthropoid peers: “What’s on your charitable BOLO list?”

Foundations and other grantmakers often have public guidelines that describe their priorities. At their best, the guidelines provide clear signals about how inquiries and proposals might be screened. In too few cases, they may even meet nonprofits’ hopes for transparency as recently reported by the Center for Effective Philanthropy.

The Treasury Inspector General’s report described BOLOs as an internal “shorthand way of referring to a group of cases.” I’m likely confirming the suspicions of nonprofit leaders everywhere: grantmakers have BOLOs too, even if unwritten or not labeled as such.

At their most benign, these short-hand BOLO lists are a way to streamline internal communications, e.g. “the founder’s favorites,” “the grantees from initiative X,” or “groups using evidence-based practices.” The lists might signal shorter due diligence processes or a shared sense of internal trust.

At their most constructive, the BOLOs are a means of prompting increased due diligence to better understand how the grantmaker can be most helpful, e.g. “groups that have cashflow problems” or “groups going through executive transition.”

At their most troublesome, the BOLOs can prevent good ideas and organizations from receiving fair consideration. The lists become an automatic gatekeeping mechanism that might not accurately describe the diversity of opinions and interests you’d expect from a group of people at an grantmaking organization. In my work with and around grantmaking groups over time, I’ve witnessed* BOLOs such as:

  • Thresholds around overhead ratios or other financial ratios that don’t take into account the variety of business models and stages of organizational growth
  • Expectations about board composition or behavior that may not fit the cultural norms of an ethnic group or community or 21st century, networked practices
  • Expectations of particular personality traits of nonprofit CEO
  • Groups of nonprofits that are deemed “too small” or “too large” to be effective
  • Nonprofits’ policy or advocacy work unnecessarily preventing them from receiving consideration for program support

My Take

Grantmaker staff and board members, like all people, carry biases, experiences, and relationships that influence their perspectives on their work and on their potential customers. We’re all human – it’s impossible to avoid these influences completely. I suspect BOLOs exist in nonprofits as well – “clients that are abusing the system,” “ticket buyers that will never convert to donors,” “those irresponsible parents from that neighborhood,” etc.

Board, grantmaking committee, and staff members of grantmakers need to uncover and discuss our BOLOs on an ongoing basis, even if they seem benign or useful. I encourage new members to be brave enough to ask about them – to BOLO for BOLOs if you will. And, veterans (myself included) have to challenge ourselves not to let cynicism and years of work create accidental BOLOs. My grantmaker mentors cautioned me always to question my own assumptions and biases before talking with a nonprofit or reading a proposal. I know I haven’t succeeded 100% of the time on this. But I’m willing to dig deeper to ensure any short-hand lists don’t get in the way of my being open to ideas that come my way.

So, what are the BOLOs, even unwritten, at your grantmaking shop? And, what are you going to do about them?

 

* DISCLAIMER: The examples are not and should not be interpreted as the views of my current or past employers or consulting clients. That said, ask me sometime about a former BOLO regarding audacious ideas mounted on foam core. 

The Case of the Overhead Overload

From the files of the Generosity Gumshoe

Jim Barker / Foter.com / CC BY-NC-SA

She walked into my office last night, dripping in cold cash and hot tears. She was a rich socialite from one of those mini-mansions on the edge of town. Before I could lay out my philanthropic detective fees, she spilled her guts. Five shots of bourbon later (for me, she only had three), here’s what I knew.

Four months ago, she was a happy donor, comfortable in her giving. Like most donors, she responded to fundraising requests that tugged her heartstrings but assured her the organizations had integrity and could make smart use of her donations. She shied away from organizations that seemed wasteful, you know the ones. And yet, there was one Smarty-Pants Guy that kept sending her articles on “effective giving” and suddenly her confidence was shattered like cheap glass donor recognition plaques crashing to the floor. There’s always that one guy.

First, he forwarded a video by a slick salesman by the name of Dan Pallotta. Pallotta was provocative and charming, and he put the mental moves on her like nobody’s business. Before the end of his pitch, she was convinced that the way we think about charity is dead wrong. Suddenly she’s a canary for the praises of investing in nonprofit salaries, fundraising programs, and other overhead costs. She says it made sense – she doesn’t ask her favorite restaurant to only charge her for the actual ingredients in her cocktail and couscous salad. Turns out the poor dame didn’t research the controversy around Pallotta’s previous fundraising firm and the beef philanthropy heavyweights like Phil Buchanan and others have with him.

Then she received an appeal from a charity shouting, “Look at us – 97% of your donation goes directly to our programs! And, we’re rated 4 stars by Charity Navigator!” Sounded awfully tempting so she dropped the group a C-Note and checked out this Charity Navigator. Those jokers told her that charities shouldn’t spend more than 25% on overhead and gave her a bunch of Top 10 lists for good and bad behavior for fundraising and compensation. I didn’t even have to open a new case to tell her that nonprofits can cook overhead and fundraising ratios faster than my bookie Big Belly Bob. And even the good ones (nonprofits, not bookies) have suspect numbers because the IRS doesn’t provide clear guidance on how to allocate costs. Go figure the feds screw something up.

Smarty Pants Guy sent her more articles from the philanthropy rags like this and this. Real smart writers, see, but they go for nuance and the gray areas of the problem. Who has time for nuance these days?

Then she saw a CNN show Above the Law: America’s Worst Charities and now the canary’s singin’ the blues. High overhead costs, paid family members, expensive fundraising contracts, outright fraud…all kinds of flimflam artists running supposed charities and bilking old ladies for cash. I’d plug those palookas full of daylight myself, but I ain’t that kind of private dick.

I told her the CNN show doesn’t tell the whole story. They never do. The newshounds found 50 real bad apples in an orchard of more than a million nonprofits. The hype leads you to believe the 50 are the front for a whole mob of bad charities when Guidestar’s data shows only 6.8% of charities reported spending more than 50% on overhead. Not outstanding news, but not the majority.

After her third shot of the strong stuff and half a box of hankies, the dame asks me, “Mr. Generosity Gumshoe, what am I to do? Can you investigate all these nonprofits for me?”

Dollar signs danced in my eyes as I imagined having enough jack to pay off Big Belly Bob, ditch my rusted heap, and take this dame to Tahiti. Plenty of advisors to wealth donors make easy cash answering those questions. But Grandma Gumshoe raised me to be ethical and moral (“or else the cane, boy!”) and I couldn’t bring myself to charge the socialite for easy answers. So, I told her:

  1. Turn off the news and the emails from Mr. Smarty Pants. Instead, trust your instincts, find the things that make your heart sing, and enjoy being generous.
  2. If tax deduction’s your thing, check out Grantr.com for free and look for the green checkmark.
  3. If you want to learn more about an organization, the five questions at Charting Impact are a pretty damn good place to start. If you don’t understand or like the answers, it’s OK to walk away. There a million nonprofits in this naked country, that was just one of them.
  4. If you’re really stuck on overhead issues, the FAQ from this new Overhead Myth campaign is on the square, even if those hinky Charity Navigator folks like it too. Better yet, go visit the group in person. Nothin’ like laying eyes on their offices and staff to get wise to their work.
  5. If you still can’t decide, then get on the blower to your local community foundation and they’ll likely have a bead on the group. Or, I’ll do some snooping around free of charge.

It might have been my honesty. It might have been the booze. It might have been my rugged good looks. But the lipstick on my cheek and new appointment tomorrow night labeled “fundraising gala with socialite” tells me this is the start of somethin’ beautiful.

Hopefully she’ll pay for the drinks.

Raising the Philanthropy Question

Aside

Kudos to Jim Coutre from The Philanthropic Initiative for his recent article on the importance of financial advisers discussing charitable giving with their clients. He cites studies showing that wealthy clients expect the conversation (or will go elsewhere for it) and that the conversation will increase long-term client retention. Community foundations and other nonprofits that work with professional advisers will also gain insights.

Jim also posted the article with additional links in three blog posts in March of 2013.

Connecting Family Philanthropy With Social Giving

A couple months ago, PhilanthroGeek founder Nathaniel James, ioby co-founder Erin Barnes, and I set out on a small adventure to answer two questions:

  • How do we describe the new trends in social giving to the family philanthropy world?
  • What do family foundations make of the opportunities and challenges in these trends?

I’m describing some results of our adventure in this post. Nathaniel and Erin will be adding their thoughts in future posts at PhilanthroGeek and elsewhere. For ease of writing, I’ll use the term “family foundations” to be inclusive of foundations, donor-advised funds, trusts and other forms of family philanthropy.

Framing “Social Giving” (vsn 1)

We started our adventure with the rapid rise of crowdfunding sites and grassroots giving circles. Both tools help donors of any means directly connect with and support ideas, projects, and organizations. Both tools allow donors and requesters to bypass traditional intermediaries ranging from record companies to community foundations. Not all raise money for traditional charitable purposes and very few crowdfunding sites are sponsored by charitable organizations.

The term “social giving” is sometimes narrowly used to discuss online fundraising. We purposely used a broader definition that emphasized the “social” aspect, as not all giving circles are online and both tools truly succeed when people reach out to their offline and online social networks to make great things happen.

Our overview of the field of social giving showed that the tools share three common traits and have at least four trends driving their growth.

social giving graphic

Erin created a matrix of a larger variety of tools for giving, showing how they compare in the proximity of donors to recipients and how driven the tools are by technology.

matrix of social giving tools

Family Philanthropy’s Reaction (vsn 1)

Session picForty or more people attended our session at the 2013 Family Philanthropy Conference. They represented different generations and roles in family philanthropy. Few had direct experience with crowdfunding sites or giving circles.

After our overview of social giving and some quick case studies, we asked small groups of attendees to discuss how social giving trends and tools might complement or distract from their family philanthropy work. Discussion topics came from the National Center for Family Philanthropy’s Pursuit of Excellence framework for assessing family foundations:  legacy, vision, and mission; governance; family roles; program development and grantmaking; and finance, administration, and responsibility. You can download notes from their responses at the end of this post, but I wanted to comment on four reactions from the small groups.

“[We would] need assurance about proper due diligence and legal issues. This adds a layer of complexity to grants.”

Grantmaking – Every small group brought up challenges with supporting crowdfunded projects and giving circle award recipients that aren’t IRS-approved charitable organizations. Many projects provide community benefit, but create the burden of exercising expenditure responsibility. Crowdfunded support for small businesses, even socially-minded ones, likely don’t qualify as Mission-Related Investments, but this could change over time.  In the meantime, organizations such as iobyDonors ChooseGlobal Giving, and Social Venture Partners’ chapters are public charities, providing easy testing grounds for grantmaking.

“[Social giving] can be a glue that brings family together – a family foundation exists for more than just grantmaking.”

Family giving culture – Most founders of family foundations want them to be tools that bind family together over time. Family foundations already use storytelling, family legacy documents, and other tools beyond grantmaking to build cultures of giving. Family offices and some family foundations will assist family members with giving beyond grants made by the foundation. Social giving tools can be a terrific means of family members discovering and acting on their philanthropic passions, either individually or in groups. And, because many social giving projects are short-term in nature, families can learn quickly from the experience and decide what did and didn’t work for their culture.

“[Social giving tools] meet Next Generation members ‘where they are’…They add new dimensions of giving from younger trustees.”

Trustee preparation – Attendees easily linked social giving tools to the interests and behaviors of young philanthropists described in the recent #Nextgendonors report. Family foundations often struggle with finding meaningful ways to involve teens and Millennials in foundation grantmaking processes. Involvement in a giving circle or crowdfunding campaign can be a valuable experiential learning opportunity. In a giving circle, a family member can learn about evaluating ideas, projects, and organizations without the pressure of conforming to foundation processes or parental expectations. Often, participants in giving circles lend expertise to grant or award recipients – another chance a for family member to practice volunteering or learn leadership skills. Foundations could encourage trustees to pitch their favorite giving circle or crowdfunding projects to other family members in an environment that would likely have lower stakes than pitching an official grant proposal.

“[Social giving is] a great way to bring family foundation work to the people, to make it understandable.”

Community relations – Welcome to the magic of crowdsourcing ideas. Nathaniel, Erin, and I hadn’t thought of this in our session preparation. A few years ago, the Philanthropy Awareness Initiative reported that 60% of people in community leadership roles felt they didn’t understand how and why foundations work. Only 15% could describe a foundation’s impact in their community. Everyday people presumably knew even less. In this era of government budget cuts and tax reform conversations, I think this lack of understanding can only hurt traditional foundations. (See my previous post on the topic). Family foundations could use social giving tools to learn about community opportunities, solve community problems, and provide financial support alongside everyday members of their communities. Family foundations have already been providing matching grants to encourage support of projects through ioby and DonorsChoose. And, the Geraldine R. Dodge Foundation seems to be the first foundation to have a curated page on the crowdfunding site Kickstarter.

Your Thoughts?

You can download our session handout (including the graphics above) here and a summary of the small group notes here. Erin, Nathaniel, and I would welcome your feedback:

  • What do you think of our first stabs at condensing the key concepts into a couple graphics?
  • How do you see social giving trends and tools complementing or distracting from your family’s philanthropy?
  • Who do you think will be the first foundations savvy enough to include social giving tools as part of their family engagement and grantmaking work?

Feel free to reply to this post, email me, or reach us on Twitter at @tonymacklin1, @erinargyle, and @Pg33k.

 

Is Family Philanthropy Ready for “New Giving” Tools?

(updated from my post on the Council on Foundation’s re: Philanthropy blog)

“Crowdfunding. Social giving. Unsectored solutions. Hacker and maker cultures. Citizen-led social innovation. These ideas and others are shaping new pathways for giving. Will they complement your family’s philanthropy or distract from it? Join us for a fun, honest discussion of new frontiers in giving.”

That’s the blurb for a 2013 Family Philanthropy Conference session that I’m co-hosting with Nathan James (consultant and founder of PhilanthroGeek) and Erin Barnes (co-founder and Executive Director of ioby).

In her new Philanthropy and the Social Economy: Blueprint 2013 report, philanthropy scholar Lucy Bernholz continues her assessment of the “social economy,” defined as  “private capital used for public good.” She writes about the growing influence of mobile giving, networked action, crowdfunding, and other ways people choose to accomplish social goals outside of the traditional donor/funder-nonprofit relationship.

Nathaniel, Erin, and I have also been thinking about this social economy issue. Erin and Nathan are working daily to grow and connect new pathways for generosity and I guess I’m bringing the “seasoned philanthropy geezer” perspective. At our session, we’ll discuss potential intersections between traditional family philanthropy and the new wave of giving tools enabled by technology and fueled by problem-solving approaches of Millennials, entrepreneurs, and everyday citizens. Some of these tools include:

Here’s where you come in!

These tools are rapidly evolving and rapidly expanding their reach. So, we’d love to tap your curiosity, wisdom, and concerns to bring the freshest thinking to the session:

  • What questions would you want answered by this session?
  • Have family members brought any of these tools up as ways for the family to give? What experiments have you tried?
  • Do you know a foundation that has helped grantees use these tools for friend-raising and fundraising?
  • Do you think these tools would aid your family’s philanthropy or distract from it?

How you can respond

Erin, Nathan, and I encourage you to join the conversation in any of these ways:

We’ll promise to summarize the results of the responses and session discussion on the Council on Foundation’s blog, our blogs, and other places. Thanks in advance for your responses!