January 02, 2017
When seeking funding, nonprofit organizations often target the best-known, largest donors in their area. For community-based projects, this list might include a large community foundation or a well-known national foundation that has an interest in the organization's focus or geographic area. When it works out, a grant from a large donor can be a significant benefit for the organization. Having a single $100K grant can be easier to manage than four $25K grants. That said, the large-donor strategy has some pitfalls and is not always the best route.
Challenges of Pursuing Funding from Large Foundations
Some of the downsides of pursuing grants from larger foundations include:
The larger and better-known the funding source, the more competition your organization will face in securing a grant.
Larger foundations usually make larger grants than smaller foundations, though not always; they also almost always require more reporting.
The more formal the foundation's structure, the more likely it is that the foundation has subject-matter experts in the form of program officers who will expect to be involved in your project's development and implementation.
In the U.S., many of the largest and best-known foundations tend to give grants to the same organizations year after year. Newly formed or smaller community-based nonprofits face intense competition and little chance of securing one of the few grants that large foundations award outside their portfolio of regular grantees.
One reason organizations look to well-known funders is that they are easier to research. For example, everyone has heard of the Bill & Melinda Gates Foundation and the Ford Foundation. Information about these foundations can be found through multiple channels, including their websites, donor databases, media coverage, and scholarly books.
Small foundations, on the other hand, are much more difficult to research. Not only is contact information hard to come by, but the smallest foundations often do not maintain a website, or if they do, it may contain limited information that is infrequently updated. Additionally, many small foundations are family foundations run by family members and do not have paid staff to answer questions or manage the application process.
While researching and applying to smaller foundations can be challenging, there are several compelling reasons not to dismiss them.
Advantages of Working with Small Foundations
Smaller foundations receive fewer grant applications than larger foundations, so the competition for funding will be less intense. You'll still need to submit an application aligned with the donor's interests, but if you meet their eligibility requirements, you'll have a better chance of receiving funding than you would from a large foundation.
Small family foundations may lack the formal structure of large "corporate" foundations. However, it doesn't mean their grants are small in dollar terms. Family foundations can be small, with few or no staff, yet they can have sizable endowments and award grants in the hundreds of thousands of dollars.
Smaller foundations frequently have specialized interests and fund a narrow area of work. While this can be a negative if your work doesn't fit their interests, if your projects do fit their interests, and you are successful in winning an initial grant, the funder could become a steady source of funding for your organization for years to come.
Smaller foundations, at least in part because they have limited staff to manage their giving program, often award grants with few strings attached. In fact, some small foundations do not require project reports and instead only ask to receive a copy of an annual report for their records
Small foundations are often more willing to fund general operating expenses than larger ones. If your organization needs unrestricted funding, small foundations can be a good addition to your funding mix.
Finding Small Foundations
One of the biggest challenges in applying to small foundations is finding them.
If you haven't already invested in a donor database subscription, you should consider one if you intend to pursue smaller donors. Donor databases are the most efficient way to research donors of any size, but for small donors, the databases are essential. Many small foundations do not maintain a Web presence, so Google will not help you find the information you need about the donor's interests or application processes.
If you don't have the budget to subscribe to a donor database, there are a few alternatives to accessing information. One option is to see if your local library has a subscription to a donor database. This is not uncommon in larger public libraries (at least in the U.S.).
A second, slower option is to use a tool like Grantmaker.io to generate a list of foundations based on geographic location or giving history. The free tool works best when you have a foundation's name and want to learn more about it. With this free tool, you can also research funders using a keyword search.
A third way to reach these harder-to-reach donors is to cultivate individual donors. For example, a family may have a family foundation through which it makes grants, but individual family members may also give to charitable causes. If you can reach a family member and establish a relationship, you may ultimately be able to access the foundation's broader resources.