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Early Trends in the 2015 State of Grantseeking

 

Scientia est quaedam potentia intelligentisknowledge is power—and accurate and timely data can provide you with the knowledge you need for organizational planning, development, and budgeting. It can help you manage expectations—board member expectations, donor expectations, etc.—by providing real-world benchmarks.

We at GrantStation are committed to providing that accurate, timely data to assist you in grantseeking. One way we do so is through the free reports that result from the data gathered in the twice-yearly State of GrantseekingTM Survey. This spring we reached a new high in participation—more than 1,800 organizations, educational institutions, government entities, and independent grantseekers took the time to make their voices heard.

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Here are some key points gathered from the survey data collected for the Spring 2015 Report as compared to the Spring 2014 and Fall 2014 Reports: over the past five years, grant funding as a percentage of the annual budget has trended downward. In the lowest grant budget contribution range (under 10 percent), there was a 16 percent increase in the number of organizations, while fewer organizations report grant funding over 25 percent of the annual budget.

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While this may seem like a negative trend, it is actually a very good sign that the third sector is developing strong, sustainable sources of revenue. Relying too much on any one source, including grant funding, is always a bad idea. A few years ago we saw a nationwide example of this when early childhood programs throughout the country received substantial cuts in their federal grants, throwing most of them into a tailspin. Many of those groups have rebounded by diversifying their grants income as well as diversifying their overall revenue streams.

All funder types were reported less frequently as a funding source than in the Fall 2014 Report. In addition, only corporate and local government funders showed an increase when compared to the Spring 2014 Report.

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On the far right of the graph, the percentage of organizations that reported receiving funding from each source is listed in orange. For example, corporate gifts were reported as a funding source by 30 percent of respondents. This was a 9 percent decrease compared to the Fall 2014 Report and a 29 percent decrease compared to Spring 2014 Report.

This is where we see an early blip turning into a trend; these three reports reflect 18 months of data, and we are able to see both annual and seasonal comparisons. This data can help guide you when choosing where to spend your time in grantseeking; for example, applying for a corporate grant as opposed to corporate in-kind gift may prove more successful.

Although Giving USA recently reported that Foundation giving was over 7.8 percent percent higher last year than in 2013, our respondents are telling us that individually they have not seen that translate into funding frequency or award size. Because of this, we are eagerly anticipating the Fall 2015 Survey results. (Take the survey.)

Private foundations continue to be the most frequent source of total awards. Private foundations also continue to be the most frequent source of the largest individual award at an ever-increasing rate, up 19 percent from the Spring 2014 Report, and up 12 percent from the Fall 2014 Report.

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There are really two distinct reasons for this trend: the payout requirement grows as the foundation's investment portfolio increases, and there is a set of private foundations now actively giving away all of their assets.

The payout requirement has remained relatively the same for decades: It is simply the minimum amount that private foundations must spend each year for charitable purposes. Therefore, as the stock market regained its wobbly feet, foundations' portfolios grew, generating more grant dollars in the market. Reading grantmakers' annual reports can give you an indication of how well their investments are doing. You will want to target the grantmakers whose portfolios are improving in your next round of requests.

Most foundations are set up to have a perpetual life span. Some, however, are set up to spend down their assets within a given amount of time. Over the past several years, we have seen more and more small, family funds decide to spend down their assets, creating sunset dates for those foundations. As you can imagine, knowing who these funders are can be very helpful if you are attempting to establish your own endowment.

The median largest award size also showed a downward trend. The median largest award is often indicative of the overall grantseeking experience, and we have been tracking this figure for years. The median largest award for all survey respondents was $43,800, a 3 percent decrease from the Fall 2014 Report, and the lowest reported since the Spring 2011 Report, which reflected the effects of the recession. The median largest award varied by organizational budget size, service area, and mission focus, with an overall range of $5,000 to $4,000,000 across all categories. Download free reports based on these categories.

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Organizations continue to reduce their indirect/administrative costs at a notable rate. Our respondents generally kept these costs quite low; over 60 percent reported these costs as 20 percent or less of their budgets. This was a 14 percent increase in organizations with costs under 20 percent of the budget compared to the 2014 Reports. Only 7 percent of survey respondents reported costs over 30 percent of their budgets, a 30 percent decrease from the 2014 Reports.

Unfortunately, there is no standard percentage of overhead that all private and government funders accept as reasonable. There are some guidelines out there you can tap into, such as Charity Navigator and the Better Business Bureau, each of whom has its own benchmarks for overhead. What is important to note here is that some funders allow you to charge a percentage for indirect or administrative costs, while others do not. Just know and understand each funding source's policies before building your budget.

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We want to be able to provide you with early access to data from like organizations regarding cost management. We would also like to encourage you to meet with other organizations that share your mission focus or service area to discuss cost control techniques or large-lot purchasing, etc. Because survey respondents reported that over half of funders (52 percent) allocate 6 percent to 15 percent of an award for indirect/administrative costs, we see very tight cost control as more than a trend—it is a paradigm shift.

So, how can these data, and other information found in the State of GrantseekingTM Reports help your organization find the funding it needs and build a successful and resilient grantseeking program?

Overall, the data that we gather speak to the importance of targeting the right grantmakers, writing powerful and competitive grant requests, and adopting a grantseeking process that keeps the grants pipeline full. It is meant to serve you and to help you determine where you need to focus your energy.

  • First, define your organization by budget, service area, or mission, and look at the rates of funding by the largest source of total awards or the largest individual award for your organization's type. If your organization has limited time and/or staff, focus on applications to funding sources that other, similar organizations have reported success with.
  • Next, apply for awards both online and offline; 98 percent of organizations that used a mix of techniques won awards, while only 36 percent of organizations that relied only on traditional paper applications won awards.
  • Finally, set realistic expectations for the projected contribution of grant awards to your total budget. We suggest that you may want to reduce it by 4 percent for the remainder of 2015 in order to be in line with current trends.

The State of GrantseekingTM Reports include recent data on reasonable levels of funding to expect, which can help keep you on point through awareness of trends in funding. However, it only happens if people representing organizations like yours take part in the survey. Take part in the Fall 2015 State of Grantseeking Survey—your opinion really does count.

Cindy-Adams-resized3.jpgThe preceding is a guest post by Cynthia Adams, CEO of GrantStation, a premiere online funding resource for organizations seeking grants throughout the world. Ellen Mowrer is GrantStation's director of business analysis. Providing access to a comprehensive online database of grantmakers, GrantStation helps nonprofit organizations, educational institutions, and government agencies make smarter, better-informed grantseeking decisions. GrantStation is dedicated to creating a civil society by assisting the nonprofit sector in its quest to build healthy and effective communities.

Topics: Fundraising