In many if not most human services RFPs, you’ll find an unintentionally hilarious section that neatly illustrates the difference between the proposal world and the real world: demanding to know how the project will be sustained beyond the end of the grant period. Every time a funder asks this question, the answer is always the same: the applicant will seek donations from businesses and individuals of goodwill in the community and will maintain an active grant writing effort to find and apply for grants at the local, state, and national levels. That’s the core of the answer, anyway, although it can be expanded or contracted as needed.
To show why the answer is always the same, remember that there are only four basic ways that nonprofits get money:
- Grants/Contracts: If you’re reading this, you probably already know that nonprofits can apply for grants from various governmental agencies and private foundations, as well as enter into fee-for-service contracts for services like substance abuse treatment and foster care.
- Donations: Usually nonprofits will solicit donations to the extent they can, and occasionally a large one will drop in their lap. While there are always donors to be found, the number of donors with serious bucks they’re willing part with is very, very small, and has probably shrunk considerably over the last year of economic crisis. As with casinos in Las Vegas, every nonprofit is looking for the whales, but there are just more perch out there than whales.
- Charging for Services: Some nonprofits can charge fees or collect membership dues. Fees are almost always charged on a sliding scale, and not all nonprofits can charge fees and still engage in their charitable purpose. For example if an agency provides case management services for the homeless, fees are out of the question. YMCAs and Boys & Girls Clubs usually charge membership dues but raise relatively little revenue, particularly in low-income communities. Community health clinics charge on a sliding scale and accept Medicaid/Medicare but exist to provide primary care to the indigent and, as a result, cannot refuse service because of an inability to pay.
- Investment Income: Some very large nonprofits have endowments that provide a steady source of investment earnings, provided they did not invest with Bernie Madoff, but this is the exception for most garden variety nonprofits. Universities often have endowments, but even then they keep begging for money from alumni, so this revenue stream is hardly a panacea even if it were available.
For the vast majority of nonprofits applicants, the first two are it: grants and donations. If we know this simple truth, how come foundation and federal program officers seem clueless? If the agency had the couple hundred thousand dollars sitting around to fund a given program, it wouldn’t need the grant and wouldn’t apply.
Furthermore, the major cost for most human service providers are staff salaries and other operating costs. So it’s improbable that you’ll just need a bunch of money to get off the ground; although startup costs are real, they’re still dwarfed by staffing and ongoing operations costs in most cases. There might be a hypothetical dream project out there, somewhere, that just needs that DHHS grant to get started and then can run indefinitely off of revenue, but we’ve never seen it.
Maybe the presumption that human service programs are sustainable comes from science grants, where once you get that million-dollar electron microscope you can run an effectively infinite number of trials, or where once you commercialize that protein you’ll be able to earn a stream of patent revenue. But human services don’t work this way: you need someone standing there imparting some skill or ability or, as the name implies, service. Not all science grants have high one-time costs and low ongoing costs, but more work this way than do human services grants.
To recap: salaries and operating expenses are the major costs of most human service delivery programs, and if you had the money to sustain a grant you wouldn’t need the grant in the first place. That’s why the sustainability section of most proposals is almost entirely fictitious: the funder wants to imagine that it’s planting grant seeds that’ll grow indefinitely, when in reality the grant is the water, not the seeds, and as soon as you cut off the water, the program usually dies, only to reborn again when another grant stream comes along. This is one reason why, in almost every proposal we write, the project concept is called “innovative,” no matter how many times the agency or other agencies have implemented the same concept.
Within this sad reality, some nonprofits sometimes come up with interesting and innovative (there’s that word again) fundraising alternatives; for example, one of our Wisconsin clients decided to raise funds by operating a bratwurst stand in front of their office. We have no beef with that and at least it uses local pork instead of D.C. pork, but note that, over the long term, bratwurst might not be the most stable funding source. In addition, selling bratwurst competes with for-profit hot dog carts and depends on volunteers to prepare and sell the brats—in other words, it’s just a variation on bake sales and car washes.
In addition, I’m trying to imagine someone with a Carol M. White PEP program or another physical activity/health grant selling brats, since eating brats is probably antithetical to the healthful purpose of the program itself. In fact, like Big Tobacco, if you sell enough brats, you will eventually kill off your supporters. Our Wisconsin client let us know that the recently completed Madison Brat Festival “sold a record 208,000 brats, and contributed over $100,000 to local charities!” No word on the impact of all of these brats on rising local health care costs due to coronaries, but I think I’m smelling a great grant proposal idea more than a grilling brat. This frank tale illustrates one of many conundrums of nonprofits: it’s all well and good to testify at a public hearing that the local school district is killing kids with junk food, but when it’s time to raising money, most nonprofits will opt for selling brats over tofu dogs. Also, it doesn’t hurt to have the local high school cheerleading squad do the selling for you, but we don’t know if that’s part of the Madison effort.
Still, federal programs continue to ask about sustainability even in the sheer improbability of genuine sustainability actually occurring. You can see it in the Department of Labor’s Green Capacity Building Grants (warning: .pdf):
Applicants should provide a complete description of their strategy to sustain the core training and placement activities in their project after grant funds are expended.
And you’ll see it in others. Just make sure you answer the question according to the proposal world rather than the real world—unless you’re going to make your bread by selling brats.
We already exposed the secrets of matching funds, and this post represents another brick in the common proposal question wall. In the future, we’ll also discuss another typical question from clients and others: how much money should you ask for in a grant? The maximum? The minimum? Somewhere in between? Stay tuned for our answers to that and other vital grant writing imponderables.