Oh, yes, times are tough for all sources of funding, and they'll stay that way for a while because of the lag effect (see below). That you knew. What you may not know is that getting money from the government, whether at the local, state, or federal level, is a lot like gambling, and more like gambling than getting money from your donors, foundations, members, and users of your nonprofit's services. But there are things you can do to increase your odds, once you think it through and decide that you're ready to play, and which casinos and which games to play.
Are You REALLY Ready to Play?
Here are some things that can make going for government money at best a waste of time and at worst a danger:
Wastes of Time
- You can't afford to lose the fixed costs of going for the money (lobbyist or grant writer fees). You'll at least have the costs of someone's time, even if it's you or another in-house person. First rule of gambling: only use money you can lose.
- Your nonprofit is a startup. Government funders typically won't fund them; too many fail, like any other small business.
- You don't have much to show already. All funders, including government ones, like to bet on track records, not wishes.
- You don't have a strong accounting department, or a partner that does. Government fiscal accountability rules tend to be rigid and numerous. One of the hidden costs of taking government money is a lot of accounting time; that's one reason why there are indirect cost rates. You won't escape that cost with earmarks; the money still comes from an agency, usually with the same fiscal accountability rules as competitive grants.
- Your nonprofit is not willing or able to find match money, or at least in-kind matching. An increasing amount of government funding requires a match, both as a sign that YOU and the community value your project and as a means of spreading available money further.
- Your nonprofit doesn't have a clear (preferably written) mission. Like anyone giving money, government entities have agendas, and those agendas will not likely be identical to your mission, so accepting the money can easily lead to blurring or diminishing your mission.
OK, your eyes are open, you've considered all of the above (and other drawbacks specific to your situation), and you've decided you are, indeed, ready to play. And why not? The above notwithstanding, lots of people play and win. Here's the next question:
You've three main places to place your bets: local, state, and federal sources. Unless you've got a pretty big operation, you probably can't play in all of those venues at once. Where's the most money likely to be? Depends on what you do. For museums, which I know best, the answer is pretty easy: about 95 percent of the government money that museums get is from state and local sources. That's in part because, rightly or wrongly, they are seen as primarily serving local, or perhaps state, but not national audiences. One of my non-museum clients, on the other hand, regularly gets the vast majority of its funding from federal grants, because the work it does directly furthers the national and international agendas of its funding agencies.
Here are some points to consider as you think about where to apply for government funds:
- State and local funding tends to be more volatile. There are at least two reasons for that:
- Inability to run deficits. Most state constitutions prohibit it. If you can't borrow your way out, you tend to cut services (including grants) pretty fast. The Feds, on the other hand, can and do run some Grand Canyon-scale deficits, such as right now.
- Unfunded mandates. The Feds have the ability to tell states what services they have to provide and then not provide enough money to provide those services, leaving the states to make up the shortfall—things like Medicaid, No Child Left Behind, etc. That has a way of messing up state budgets unexpectedly.
- State-level lobbying tends to be a much faster game and a lot more centralized. That's because many state legislatures are in session only a few months a year, or even once every second year, so everything has to get crammed in quickly. And the power tends to be more centralized in committee chairmen and the leadership, as it used to be 30-40 years ago at the federal level.
- State-level funding tends to decline more slowly and also recover more slowly than the rest of economy. This is the lag effect. It's because state budgets tend to be fixed in place fairly far ahead, so they have to guess on revenues and trail actual economic changes, and they mostly can't add extra money mid-year the way the Congress does with supplemental appropriations.
- You can probably do more for and with your local politicians than you can with the folks at the other levels. It's often easier to get them over to see what you do and to do things that will help their agendas that they'll see in the local papers. (But remember that federal elected officials are mostly home every weekend, and they're there precisely to see significant constituents like you.)
- Federal competitive grants tend to have a steadier funding base and be more professionally determined and administered. This is not to say that state and local grant staff are any less capable, just that federal agencies tend to have steadier budgets for reasons noted above, and they've simply got the budget to hire many more grants officers, which gives them the ability to mount pretty good peer review competitions and administer consistently.
OK, you're ready to play and you've figured out at which level (local, state, or federal) you are going to concentrate your efforts this time. What do you need to know to help you make a rational decision about where to risk your limited resources? Let's look at the two main kinds of government funds:
Earmarks are roulette, which is the game with the highest odds favoring the gambling house. An earmark is provision in legislation that sets aside government funds for a specific entity, thus bypassing the competitive grant process found at many government agencies. You see them described in the newspapers, right? As a citizen, you may cringe; as a nonprofit leader, one of whose chief responsibilities is to raise money to further the mission, you may say, "I want one!" (After all, you think, your nonprofit has the kind of mission that deserves some noncompetitive support, especially if other, less worthy entities are getting their shares.)
OK, fine, but be aware that a variety of moons have to align for you to get an earmark.
- Does your representative (House or Senate) sit on the Appropriations Committee for that legislative body? If not, it's not impossible to get an earmark, but it's a lot harder.
- Have you followed all the rules and met all the deadlines? Increasingly, at least at the federal level, there are forms to be filled out, Congressional staff to be persuaded how this will help the member of Congress better than other things he or she could support, deadlines to be met, follow-up to be made, trains to be put back on the track, etc.
- Are you high enough on the member's wish list? Nobody—except maybe the Appropriations Committee chairs—gets everything on his or her list funded, and lots of people don't get anything. That's a persuasion thing.
- As that great philosopher Dirty Harry once said, "Do you feel lucky?" Even if you, or the competent lobbyist you hired, do all of the above perfectly, you've got a good chance—and in the past few years, a REALLY good chance—of having the earmark cut from the bill in committee, in conference, and especially as part of a last-second across-the-board cut in the bill or a stripping out of ALL earmarks at the end. Why? Because earmarks have taken a lot of heat in recent years.
Sounds like it's a fool's game, right? Actually, it's not. Earmarks have been around in the United States since the beginning of the Republic, and a lot longer elsewhere. They aren't about to disappear, because they help politicians get constituents to love (and therefore reelect) them. So somebody's going to get some even in tough times. And there are things you can do to increase your odds. Just be aware that in the best of situations, they are long shots. In addition, lobbyists, who are the expert help you need here if you don't want to do this on your own, don't operate on contingency, like some lawyers, so you could pay some serious money that may or may not produce a return even with the best practitioners. In short, pay for the seeking of earmarks with money you can afford to lose.
Note: One way to get expert help at a much reduced rate is to be willing to do a good part of the work yourself and then finding a lobbyist who is willing to coach you initially and along the way so that you make the right steps. Aside from its being a lot cheaper, thus minimizing your risk, this approach has two other significant advantages: YOU now have permanent knowledge of how to seek earmarks, and YOU now have contacts with your legislators, rather than paying the lobbyist to improve his or her contacts for the lobbyist's own purposes.
Grants are card counting ... with three accomplices. As you know, card counting is a way to increase your percentages in blackjack and related games; it's legal, it works, and it drives the casinos nuts. (If you're curious, see the movie 21, based on the true story of one of the MIT teams that made some serious money until the casinos started to muscle and ban them.) And team card counting, using a main player and accomplices who gather information and advise, produces some of the best results.
The funding ratio for most competitive government grants is less than 50/50, and many are more like 1 in 10. But by knowing how the system works—and as a former grants officer at the National Endowment for the Humanities and a former senior staffer at both NEH and the National Endowment for the Arts, I do—you can significantly raise your chances of success. Team play increases them further. Your team players here are a good lobbyist, a good grant writer (these first two, of course, could be you), and a grants officer inside the target agency. Here are some things you can do to improve your changes of receiving a government grant:
- Target. Locate the handful of best government grant opportunities at a given time for your particular situation. You can do this yourself, a good grant writer can do it for you, and, perhaps best, your grant writer can work with a good lobbyist to locate unobvious places to look. Shouldn't take too much time/money with the lobbyist.
- Read. Once you've found your targets, somebody needs to read not just the application materials but the agency's explicit agenda, or, if it doesn't have one, its implicit agenda (list of projects—where it spends its money) and about how the review system works.
- Contact. Most agencies with a significant grant program have grants officers, part of whose job is to counsel applicants on how to write an effective proposal for that agency's review process. The grants officers sit in on the confidential panel sessions, so they see exactly what works and what doesn't and how the peer reviewers think. Another part of their job is to encourage applicants with projects that might work and politely send away those with projects that won't, either to fix them or to submit them to another funding source.
- Draft, then get agency feedback. See if your agency contacts will review a draft; many will, as they don't want to waste everyone's time with weak proposals. Unless they totally misunderstand what you're trying to do, take all their suggestions. They WANT you to win; the agency needs to spend all its money on good projects or it'll get its budget cut.
- Get copies of successful grant proposals. Successful grant proposals at a government agency are in the public domain. See how the recipients made their case. Discuss the specifics with your grants officer to see if certain approaches are appropriate for you; there may be reasons why they are not, as when your project is very different from anyone else's.
- Follow the rules. Government at all levels is insane about multiple copies, forms, deadlines, and rigid rules. There are reasons for these requirements. Adopt "Ours not to reason why" as your mantra and just do everything required, systematically. No point in going to all that trouble and then getting something bounced out because you forgot to sign in the lower corner of Form 2959-H.
- Give the agency credit if you win, and get the reasons why if you didn't. Your grants officer can guide you on the first, and he or she will usually be happy to get you the detailed reasons you weren't successful so that you can come back again.
- Come back again. Oh, YES! Unless your grants officer explicitly suggests that you never darken the agency's doorstep again, DO revise and resubmit, taking careful account of negative feedback from the reviewers and also their comments on any strengths. The percentages for resubmitted proposals that follow this path are much higher.
Improving Your Chances Overall
Here are six suggestions:
- Spread your bets. Have diversified funding sources: donors, foundations, members, and earned income (from your end-users maybe, or from fee-for-service contracts, such as providing back-office services for other local nonprofits) in addition to government funds.
- Ride the train. Every politician and agency has an agenda. When you've found your targets, study THEIR agendas. Frankly, they only care about yours to the extent that it can further theirs, and it's your job, not theirs, to connect the dots for them on that matter. If they can see a clear path to their goals via your organization, guess where the money will flow when next they have some?
- Be first ... and last. This is related to the previous one. You want to be first in line for new money, last in line when the cuts come. Ride the train, and you will be.
- Have a choir of angels. Everybody's expected to over-praise themselves, so whatever we say in our own favor is discounted. Get well-regarded third parties, such as local teachers, firefighters, business persons, etc., to sing your praises, and politicians (and other funders) will take much more notice. Collecting these statements is not hard if you keep good statistics about how you provide services, to whom, and where.
- Create a win for the politician instead of a problem—self-organize rather than compete. Is yours one of several organizations in the community of a given type, and you all compete against each other for government funding? Natural, but dumb, dumb, dumb! Think of it from the politician's or agency's point of view: "If I give money to one of these guys and not the others, I make one organization happy and five unhappy. Forget about it. I'll put my money with these other folks who have their act together and came to me as a group with a plan that provides funding for each of them AND their joint efforts produce this great product for my constituents that none of them could have done alone—and there I am starring at the joint press conference and all of them clapping behind me!"
- "To Know, Know, Know You Is to Love, Love, Love You." Remember that old song? They won't love you if they don't know you, and surprise, it's really cheap and easy to keep them informed. After all, politicians and agencies are like any of your other funders; they need to be cultivated and feel involved. Here are some cost-effective ways to make and keep things warm and fuzzy with them:
- Add your political and agency contacts to your newsletter mailing list. You've got some PR stuff you send out to your volunteers, your members (aka regular contributors), your donors, the media. Add these government folks to the list.
- Take them behind the scenes. Lead a special tour for the politicians, agency movers and shakers, and their staffs; show them how the magic happens—and by implication, all of the people, with their salaries and benefits, that it takes to make it happen. Your guests will draw the correct conclusion on their own, and they'll be fascinated.
- Invite them to your fundraising and board events. Pols and agency heads and their staffs NEED to meet other VIPs; they are the people who can disproportionately help them get things done and contribute to their campaigns/protect their budgets. Give them those opportunities, and they will have some warm and fuzzy feelings toward you. But be sure you are bipartisan with this and other things. Express your political preferences in the voting booth; your organization needs the help of ALL your politicians.
Finally, have fun. Government people, whether career agency folks or politicians, usually have the public interest at heart, even if they can't express that perfectly every day, and they often know interesting and timely things that can be important to your nonprofit. Besides, they're sitting on piles of money, and now you're better equipped to get them to part with some it.
Jason Hall, Public Trust Strategies
© 2010, Public Trust Strategies
Jason Hall is principal of Public Trust Strategies, a consulting firm specializing in helping nonprofits with government relations and government funding, and a professor at George Mason University. A former Senate staffer, he was both a grants officer and later the Congressional relations director at the National Endowment for the Humanities, a Federal grantmaking agency, and acting director of Publications and of Public Affairs at the National Endowment for the Arts.