Essentials for Creating Grant Guidelines - Exponent Philanthropy
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Essentials for Creating Grant Guidelines

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With open communication, and detailed grant guidelines, you can build good relationships with potential partners from the start. At the same time, you can help other grantseekers move onto different funding sources quickly.

However, guidelines are just guidelines. If you want to make a grant outside of your stated guidelines, you can certainly do so.

What To Include in Your Grant Guidelines

In just a page or two, touch on each of the following:

Mission, Vision and Values

What are the goals that guide your giving? How does your foundation want the world to be different because of its work?

Brief History of the Foundation

Help grantseekers understand what motivates you; whether it’s a donor’s legacy, roots in a community, or another event or experience. What aspects of the foundation’s history shape its interests today?

Program Interests

If not defined in your mission, what are your broad interest areas (e.g., education, social justice)? Have you identified a niche within those areas? Talk with community leaders, nonprofits, or your local community foundation to identify unmet needs and ways your foundation can add value.

Geographic Focus

If a geographic focus is not outlined in your mission, time to consider this important point. Foundations with a narrow focus may find geographic limitations to be unnecessary, but others that intend to focus on a community or region should be specific about that. Being specific will go a long way toward reducing the number of ineligible grant proposals.

Grant Restrictions

This is where you say who and what you don’t fund. Consider:

  • Type of organization: It’s common for foundations to say they only make grants to 501(c)(3) public charities. This is to avoid the additional requirements that might be necessary if funding other organizations. In most cases, it is better to phrase the restriction as giving only to public charities with a 509(a)(1) or (2) designation or governmental agencies. Currently, these are the only charitable organizations that require minimal paperwork.
  • Size of organization: Some foundations limit their giving to organizations below a particular annual operating budget, believing they will have greater impact when partnering with smaller organizations.
  • Funding uses: Some foundations choose not to fund individuals, fundraising drives, religious activities, or litigation, for example. Do certain funding uses not match your goals?
  • Repeat grantees: Some foundations fund the same organizations year after year. Others seek new organizations and programs after a few years, or require grantees to take a year off before reapplying for funding. There is no right or wrong approach but, rather, an approach that best fits your overall strategy.
  • Unsolicited proposals: If your foundation does not fund unsolicited proposals, preferring instead to fund those it identifies, state that clearly. Nevertheless, grant guidelines are helpful in educating the grantees you do invite to apply.
Initiating Proposals

When a foundation initiates proposals, it takes responsibility for finding those organizations and programs that will best fulfill its mission. This is particularly effective for foundations that have a clear focus and knowledge of the field in which they fund or the time to gain such knowledge. Although this approach allows funders to better manage the number of proposals they receive, the foundation may miss some excellent ideas. Some foundations do most of their grantmaking proactively. However, they allot a small portion of funds for other ideas.

When grantseekers initiate proposals, the onus is on the grantseeker to engage with the foundation. Depending on how widely you publicize your guidelines, a grantseeker may or may not know much about your giving. This open-door policy may bring proposals from organizations outside your usual applicant pool. This is useful when the foundation is new, or funding a new area of interest.

Grant Types

Foundations often tend toward one or two grant types, awarding other types as circumstances warrant. For example, if you’re interested in shoring up young organizations in your community, you might offer a series of general operating support grants to stabilize those organizations. If you’re interested in expanding affordable housing, you might consider loans, loan guarantees, or another form of program related investment (PRI).

Consider the following grant types:

  • General operating support: This type allows a grantee to decide how funds are used, although most foundations and grantees have conversations about expectations and intended outcomes.
  • Capacity building grant: This grant type funds core organizational skills and capabilities, such as leadership, fundraising, and management.
  • Project support grant: This grant funds a particular program or project.
  • Scholarship: A scholarship typically funds individuals for a particular purpose, usually for travel or study, and requires special Internal Revenue Service approval, unless a third party selects the grant recipients.
  • Seed grant: This type provides start-up funds for a new organization or program.
  • Challenge/matching grant: This grant type provides funds with the expectation (or on the condition) that additional funds are raised from other sources.
  • PRI: This is a loan, loan guarantee, or other investment that offers a return—either through repayment or return on equity.
  • Capital grant: A capital grant funds the purchase or construction of a building, land, or major equipment.
  • Endowment fund: This type builds an organization’s endowment and helps it achieve financial stability.
  • Innovation grant: This grant type funds projects that experiment with new solutions to social problems. Innovation grants are key roles for foundations because few organizations have the same luxury of funding projects perceived to be risky.
Grant Sizes

Foundations give grants of all sizes. Consider how grant size fits into your overall grantmaking strategy:

  • What are the needs of your community? Will a few large grants have a greater impact than several small ones? If your foundation funds in a new area and/or one with only a few effective organizations, a few large grants may be the right fit.
  • What is the best grant size considering the foundation’s resources and time? Many small grants may take more time to review, administer, and monitor than a few large ones. In addition, for grantees you intend to fund over time, larger multiyear grants can reduce the administrative burden significantly for you and the grantee organizations.

Note: Large grants to small public charities can force or “tip” the public charity into private foundation status—a disservice for most public charities.

How to Apply

Foundations vary in the amount of information they require from grant applicants—some as little as a letter or e-mail. Because the law establishes few requirements for simple grants—other than knowing a grantee’s tax status—your foundation has a great deal of flexibility in deciding what to require. Before assuming more documentation leads to better grants, consider asking for only what you need to determine if a grant fits your foundation’s strategy. Whatever you request, be specific, even down to a page limit.

Depending on how specialized your funding strategy is, you might consider accepting a common grant application used by other foundations in your state or region. Be sure to check if grantees find the local common grant application to be a time-saver. You also might consider accepting applications electronically via downloadable forms that grant applicants can e-mail to you or via forms that grant applicants can completed and submit online.

Many foundations use a screening process to help the foundation and grantseeker know early on if there is a possible fit. Only those organizations with the possibility of receiving a grant go through the work of submitting a full proposal. For example, you might ask for a letter of inquiry, or one or two pages that include the organization’s mission, the dollar amount requested, and a brief description of the program to be funded, the needs to be addressed, and the intended outcomes.

Contact Person

Even after grantseekers read your guidelines, they may have questions. You might welcome e-mails or phone calls to offer advice. Some small foundations even organize events that help grantseekers learn about the foundation’s people, interests, and how to apply for funding.

During her time as executive director of Pottruck Family Foundation in California, Exponent Philanthropy member Nancy Wiltsek encouraged potential grantees to call her to discuss projects and proposals.

“Although it may seem inefficient, a short phone conversation saved time for grantseekers and our foundation,” she says. “We received and processed far fewer proposals that didn’t meet our guidelines. In fact, we reduced by half the number of proposals outside our guidelines.”

Publicizing Your Grant Guidelines

Put your guidelines to work by making them easily accessible to grantseekers via one or more of the following sources:

  • Foundation directories
  • A one or two-page information sheet (print and electronic)
  • A small brochure about the foundation
  • The foundation’s website
  • An annual report

You can even use your outgoing telephone message to communicate basic requirements and direct applicants to your full guidelines. If an organization seems of interest to you, you can also send your guidelines directly to the organization.

“A website has really streamlined things for us as a small foundation,” says Exponent Philanthropy member Katy Pugh Smith of Piedmont Health Care Foundation. “We used to mail out a brochure each year to explain our grant guidelines and field many calls with questions about what we fund. Now, I simply e-mail the link to our website.”

Establishing a website is a particularly effective way to get your guidelines out to potential grantseekers. Websites also are good places to feature a list of your grants during the past year or two (with grant purpose and amounts) and your foundation’s annual tax reporting form (your Form 990 or Form 990-PF).

Ways To Let the Public Know You Give Grants

Here are some ideas for foundations—new or well-established—looking to expand program areas or grantseeker pools:

  • Distribute your mission and guidelines on your website or at local nonprofit events.
  • Talk with other foundations that have similar program interests. They can sometimes refer grantees to you.
  • Ask if your regional association of grantmakers publishes a directory of funders.
  • Notify the Foundation Center of your mission, guidelines, and recent grants, and update your entries, as necessary.
  • Invite nonprofits to meet with you to describe their programs.
  • Issue a request for proposals, which outlines your vision for a project and solicits appropriate organizations to apply. You can mail your request for proposals to nonprofit organizations in your community or advertise it in a newspaper or online.
  • Host events that allow potential grantees to learn about your interests and ask questions.

Have You Registered for the Annual Conference?

Exponent Philanthropy’s 2023 Annual Conference
October 17 – October 19, 2023 | Baltimore, MD
The only conference designed specifically for and by lean funders—those who give with few or no staff. Join your peers in knowledge sharing, skills building, and networking. Sessions will center on foundation management fundamentals; catalytic leadership; equity-centered philanthropy; and more. Register today >>

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