Grant writing during an economic boom: primary health care, substance abuse, homeless services, job re-training, and foundations

In 2010, I wrote “Grant Writing from Recession to Recession,” and last week the Bureau of Economic Analysis announced that GDP increased by 3% in each of the last two quarters. The stock market is rocketing upward.

This post is the obverse of my 2010 post; while grant seeking and grant writing are eternal, they’re different during economic lows and highs. As we’ve written many times before, nonprofits typically derive revenue from a mix of donations, membership dues, third-party reimbursements (e.g., Medicaid, substance abuse treatment, etc.), fee-for-service contracts (e.g., foster care, home health care, etc.), government grants, and foundation grants.

As the economy takes off, nonprofits will see increased donations, fundraising revenue, and/or membership dues, as people either have more disposable income or think they do. Still, it’s a shortsighted nonprofit that puts too many revenue strategy eggs in the donation / fundraising / membership dues basket—any number of impossible to predict black-swan events could occur, or the economy could just fizzle back into the slow growth pattern of the recent decade. Donations and membership dues could disappear in a flash, just like they did in 2008 – 10.

Nonprofits that provide some kind of heath care should see a big uptick in third-party reimbursements and fee-for-service contracts, particularly regarding Medicaid services (FQHCs for example), opioid-use disorder (OUD) treatment, and HIV services. Despite eight years of political posturing, it looks like some version of Obamacare and expanded Medicaid is here to stay. Also, with more Americans now dying annually from ODs than car crashes, there’ll be big increases in funding for OUD treatment and HIV services, since HIV transmission is closely linked to the injection drug use that is at the center of OUD.

This brings us to grants. Despite rumors, the Trump administration and Republican congress have not decreased federal funding for discretionary grant programs. The FY ’18 Federal Fiscal Year began on October 1. Since 1998, Congress has funded the federal government via a series of Continuing Resolutions (CRs), rather than passing actual budgets. In general, CRs use a “baseline budgeting” concept, which means that the FY ’18 CR, which just passed Congress last week, mostly continues funding levels for discretionary grant programs from the previous CR, adjusted upward for inflation.

Since every Federal program has a strong lobby and highly paid lobbyists, Congress rarely makes significant, real spending cuts. Instead, if anything happens, Congress might restrict the rate of federal spending growth—but not adjust the underlying, baseline level. Funding for the NEA, public broadcasting, etc., will not be eliminated or even reduced. These parts of the government are popular symbolic targets, but virtually all of the growth in the federal budget comes from Medicare, Social Security, and Medicaid. Any budget hawk that doesn’t propose reductions to the first two is simply not serious.

There are actually more federal grant dollars up for grabs in FY ’18 than in FY ’17. The same will be true for grants from most states and big cities/counties, as tax revenues will climb with the rising economic tide. Counterintuitively, there’ll probably be less competition for most RFPs. With the better economy, some nonprofits will forgo submitting competitive grant proposals, choosing to pick the new low hanging fruit of donations, membership dues, and fundraising. Smart nonprofits will, however, go after every plausible government grant opportunity, since there’s no good reason not to and some organization is going to get the grants.

In the coming years, the big grant opportunities will likely be in primary health care, substance abuse treatment, Ryan White services, homeless services, and job re-training. One of the oddities of America at the moment is that homelessness continues to increase, despite a pretty good economy. Many cities, like Los Angeles, Seattle, San Francisco have passed, or proposed, big new local taxes to fund homeless services, in addition to the federal McKinney Act Programs through HUD. With respect to re-training, despite low unemployment rates, about 90 million working age Americans remain out of the workforce for reasons ranging from former incarceration to less than catastrophic disabilities to outmoded work skills or something.

The workforce must adjust to the rise of robots and AI-related manufacturing and services, which means lots of grants will be available for job training and re-training project concepts. Nimble nonprofits, who traditionally have been involved in such services as housing, prisoner reentry, family support, after school programs, teen pregnancy prevention and the like, would be wise to change their missions to go where the money will be.

Foundation grants will also be a good target. By federal law, foundations are required to spend at least 5% of their endowments annually on grants. With the huge stock market run, foundations will be flush with investment earnings that must be distributed through grants. Go get ’em tiger.

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