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November 2009 Links: Governments, Foundations, Data, Broadband, Cities, and More

* US charities expecting lean holiday. This makes writing proposals even more important, as Isaac explained way back during 2008 in “Market Tanks, Donors Disappear, Corporate Givers Vanish: Not to Worry, This is a Great Time to Write Proposals.”

* How government policy defeats itself, with California as an example. That’s my title for the article, anyway; the NYTimes dubs it, “California’s Zigzag on Welfare Rules Worries Experts.”

* What’s Wrong With Charitable Giving—and How to Fix It.

* Recession Drives Surge in Youth Runaways according to Ian Urbina the New York Times. As Isaac said in a note to Urbina: “I loved the subject article, which reads just like one of our grant proposals . . . lots of anecdotes, a few well chosen, but meaningless, statistics from dubious sources, and an entirely specious argument. You would make a great grant writer.”

The article says things like, “Over the past two years, government officials and experts have seen an increasing number of children leave home for life on the streets, including many under 13.” Compare this to our advice in The Worse it is, the Better it is: Your Grant Story Needs to Get the Money and Finding and Using Phantom Data.

(Urbina should’ve referenced Charles Bock’s Beautiful Children, which covers this topic from the perspective of the economic boom times.)

* America can’t be the world’s tech leader without immigration reforms.

* Another round of broadband stimulus money should be coming soon.

* Why newspapers are important, part 10,122: “Clean Water Laws Are Neglected, at a Cost to Health.” Few if any bloggers would go into anywhere near the depth Charles Duhigg does and can.

* Want 50Mbps Internet in your town? Threaten to roll out your own. This is from Ars Technica:

ISPs may not act for years on local complaints about slow Internet—but when a town rolls out its own solution, it’s amazing how fast the incumbents can deploy fiber, cut prices, and run to the legislature.

* The worst kind of good news on AIDS.

* The WSJ predicts “The Next Youth-Magnet Cities,” where D.C. ties for first with Seattle. No mention of Tucson on the list.

* Why are some cities more entrepreneurial than others?

* From the New York Times (and linked to by virtually every blog): Chicago’s [Olympic 2016] Loss: Is Passport Control to Blame? The thrust of the answer: at least in part. America’s immigration process is screwed up, and so is its border control, which manages to combine ineffectiveness with invasiveness.

* The Books of Brin—that’s Sergey Brin of Google fame.

* * Computers are less effective at improving developing world education than other, simpler measures, like de-worming.

* The bookcase staircase is very cool.

* A Brief History of Sex Ed in America. Notice how this relates to our post on the Community-Based Abstinence Education (CBAE) program.

* On helping students to finish college in four years. Given how few students do finish in four, this is of major consequence for economic health.

* Japan shows that knowledge is power.

* Those who would sacrifice property rights to development end up with neither.

* 15 Things Worth Knowing About Coffee. This comes in visual form.

* Learn your damn homophones.

* Hard-Hit Factory Towns Slow to See Relief From Stimulus.

* Ryan Vent on Libertarians and their “transportation blindspot.”

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PSST! Listen, Do You Want to Know a Secret? Do you Promise Not to Tell?* Here’s How to Write Foundation Proposals

Hey you!! That’s right, you! The nonprofit Executive Director lurking in the back. Confused about how to write foundation proposals? I shouldn’t really do this, but, just between me and you, and if you promise not to tell anyone, I’ll let you in on some of the secrets of writing foundation proposals.

Many nonprofit folks, and particularly the “True Believers” I wrote about in True Believers and Grant Writing: Two Cautionary Tales, are hopelessly confused about getting foundation funds and writing foundation proposals. There are basically two ways to get access to foundation funds: the fairy tale way and the hard work way. In the fairy tale world, the nonprofit person (e.g., Executive Director, President, Founder, what have you) cozies up to the foundation representative (ideally, Bill Gates) and breathlessly describes how their new organization will bring instant water to thirsty parts of the world (just add liquid!) or a similar idea. Mr. Gates will be so impressed that he will reach into his Tom Bihn Manpurse**, pull out a checkbook, wad of cash or debit card (depending on the age of the dreamer), and the funding is accomplished.

We call this kind of approach to getting foundation grants “relationship funding” because it depends on the nonprofit developing a relationship with the funder. While this can work, it takes a lot of time and luck. Also, very few folks actually know foundation reps. Any of you nonprofit folks out there play Bunco with Oprah? I didn’t think so. Being serious, most foundations either hide behind an accountant/lawyer/flak catcher type, who you can’t develop a relationship with because there is no one to develop it with, or have a staff, whose job is partially to make potential applicants feel like they’re special (similar to the role of the field deputy in your congressperson’s district office) without actually making any commitments.

People ask us all the time if we have “special relationships” with funders, which always makes me laugh. Let’s say I regularly play bridge with Bill Gates and Warren Buffet. Why would I use my influence on your project, as opposed to the dozens of other projects we work on in a given year or for a project dear to my stone-like heart? In other words, even if we had influence, which we don’t, why would we rent it? So, if any would-be grant writer tells you they have special influence, walk away quickly, as they are likely an amateur. Putting it in Entourage terms, if you want to get into the hottest club in LA, it helps to know Vince, not Drama. When callers ask about developing relationships with funders, I always suggest that they criss-cross the US flying first class in hopes of sitting next to Bill or Oprah. They probably actually probably fly in private jets, but you get the idea.

If developing relationships with foundations is pretty much a fairy tale exercise, how do nonprofits get foundation grants? Here’s the really bad news: through hard work. The task starts with deciding what you’re trying to fund. In the foundation world, there are essentially the following four funding types:

  • Start-Up Grant: This one is for new organizations. The challenge is that you have to convince the foundation that your organization can actually do something, because presumably nothing has yet been done so far other than to identify a problem. But all organizations have to start somewhere, so if you need start-up funds, go for it.
  • Capital Grant: Favored by Boys & Girls Clubs, religious organizations, etc., this means you want to build a building, buy a van fleet or the like. Lots of foundations love capital grants because they can put their name on the project, and they’re easy to evaluate. Either the building is built or it isn’t. In the case of the largest foundation in the world, the Bill & Melinda Gates Foundation, they decided to give themselves an enormous capital grant to build a 12-acre “campus”—or maybe Taj Mahal is more appropriate—in downtown Seattle. Personally, I think it would be better if they simply bought a couple of the hundreds of vacant and abandoned office buildings in Detroit or Flint, but where’s the fun in that?
  • Operating Funds: This means you’re seeking funds for everything done by the nonprofit—the organization is already doing lots of great things but needs more money to do them. From the foundation’s perspective, this is a bit like feeding a stray cat, as they know you will be back for more. But many foundations like operations projects because they recognize that established organizations have to have enough money to keep the lights on.
  • Special Project/Program Development: Let’s say your organization provides supportive services to Cyclopes. A special project could be to conduct outreach to work with left-handed Cyclopes. Foundations often like funding the development of special projects, particularly if you can link the project to some emerging crisis. If you were going to fund Project NUTRIA, as we described it in an earlier post, you would pitch it as a special project.

Keep in mind that not every foundation will fund all of these four project types—a foundation that funds capital grants may love your charitable purpose but not be interested in supporting operations. While we think it is best to settle on a project type before doing research to find funders, it can be done the other way around by finding the funders first and bending your concept to meet the type of projects they will fund.

Once you’ve crystallized your concept, it’s time to do the research into what foundations might fund you. More or less, foundations use the following filters—the details of which are usually specified somewhere in their guidelines—to funnel applications:

  • Geography: While some foundations fund nationally, most foundations fund in a specific place or region (e.g., Owatonna, MN, Southern California, etc.), or my personal favorite, “areas of company operations.” Let’s see, where does Wal-Mart not operate? Chicago, Boston, and one or two other places. Keep in mind that a foundation that funds in Poughkeepsie is unlikely to fund a project in Ashtabula, no matter how much they care about your cause.
  • Charitable Purpose: Some foundations want to help at-risk youth, some are interested in health issues and a very few just want to do something good, whatever that means. It is critical that you find funders who care about what you care about. True Believers often stumble on this filter because they cannot believe that anybody fails to share their passion. Also, try to avoid embarrassing mistakes: if your organization approaches at-risk youth services from an evangelical Christian perspective, a foundation that talks about Jewish philanthropic giving on their website is not likely to fund you, so save the postage.
  • How The Grant Will be Used: See the project concept discussion above. If you’ve managed to find a foundation that wants to fund Cyclops services in Owatonna and you want to build transitional housing for homeless Cyclops, make sure the foundation will fund a capital campaign before you send in the proposal.

Now, it’s time for letting you in on the really big foundation grant writing secret, or as is said in the TV biz The Reveal: How to organize an initial foundation proposal. Unless directed otherwise by the guidelines, we format them as five-page, single spaced letters. Why five pages? Because foundations almost never want a longer proposal and often want a one to three page letter of inquiry. We call the initial submission narratives “foundation letter proposals” and here’s how to organize them:

  • Date, address block and salutation.
  • Introduction paragraph, that includes the ever popular “five w’s and the h.”
  • Goal and objectives. See this post for help in writing these: The Goal of Writing Objectives is to Achieve Positive Outcomes (Say What?).
  • Background on the problem or a needs assessment. Don’t use too many citations, since, unlike government proposals, in foundation proposals you’re aiming for the heart, not the head.
  • Program description. Make this count, because this is where you tell the funder what you plan to do and how the money will be spent.
  • Timeline. We usually do these as a simple double column table.
  • Evaluation plan (a paragraph will do).
  • Staffing plan and budget request. A few sentences, along with a simple attached line item budget/budget justification in Excel will get the job done.
  • Background on the organization. Who are you, and why are you qualified?
  • Acknowledgment. A short paragraph on how you will acknowledge the grant: press releases, name on the building, larger than life statues of Bill and Melinda astride white chargers in front of the building, etc.
  • Summary paragraph.

I know this is pretty much the same as learning how to write a five-paragraph theme, as Miss Cruikshank taught me in eighth grade English at Sandburg Junior High, now Middle School when dinosaurs walked the earth, but writing foundation proposals is really not that complicated—like golf, all you have to do is hit that little ball 400 yards into the tin cup 18 times in less than five strokes a hole. No problem. Of course, it helps to be Tiger Woods, and in writing foundation proposals, it’s a lot easier to simply hire Seliger + Associates. But now you know the secrets, so get busy and write.


* This is a steal from the lyrics of charming, but somewhat forgotten Beatles tune, Do You Want To Know a Secret that I liked about the time I was in Miss Cruikshank’s class.

** This reference is designed to poke fun at Jake, who carries his Tom Bihn Messenger Bag everywhere, stuffed with a laptop, books, tupperware containers with fried tofu remains and assorted other items he can’t be without. While I am way too old for a manpurse, Jake did get me to buy this Tom Bihn Laptop Bag in a particularly annoying shade of avocado green.

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Why Do People Give to Nonprofits and Charities? And Other Unanswerable Questions

This month’s Giving Carnival—discussed here previously—asks why people give and what motivates giving. I have no idea and suspect no one else does, either, but that’s not reason not to speculate. I assume that some combination of altruism, kindness, self-interest, pride, and noblesse oblige motives giving. Slate talks about the “immeasurable value of philanthropy” here:

But the core of [Lewis Hyde’s] insights are about the connections between donors and recipients and about how successful gifts continue to give, in, yes, a circle, from the direct recipients to others to whom they pass a gift along (in one form or another) and back to the donors. While a gift can have market value, its worth is often—and more importantly—psychological and social. Even when its impact isn’t immediate, it’s likely to be what Hyde calls “a companion to transformation.”

I’m not sure that has anything to do with anything. Later, however, the article ties into issues raised by posts about evaluations and their limitations:

As philanthropic organizations become more attentive to businesslike standards—how effective are nonprofits? What is a particular donation likely to accomplish?—they increasingly use the language of finance to describe their goals.

I can buy the dominant narrative in the press about philanthropy becoming more businesslike, but I doubt this tendency over the long run because of the incredible difficulty in measuring output without dollars that can be added up toward a bottom line. Still, this Slate article is actually worth reading even if it strays outside the context of the question discussed here because it raises the right issues, although I’m not sure the reporter fully grasps the issue of measurement. This issue ties back into what motivates giving because part of what motivates giving is probably effectiveness—meaning, is what I’m giving actually doing someone some good? Some recent books, like The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It and The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good argue that much Western aid has been wasted because it’s ineffective, which might lessen the desire to give aid. Consequently, I do think “effectiveness,” or the belief that giving helps someone aside from the giver, who gets a warm and fuzzy glow, at least in part motives ate.

I say “lessen” and “effectiveness” above, but I also think the desire to help others is intrinsic, like the desire for self-improvement. But just as there is an element of randomness in who gets funded, there seems to be a stronger one in the question of why people give.

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Foundations and the Future: How Funder Incentives Affect Nonprofits, Grants, and Grant Writing

“New Voices Of Philanthropy”* is running an occasional series in which they invite bloggers involved in the nonprofit world to contribute; I’m tardy to this month’s question:

Will the Foundation of the Future only fund programs that benefit puppies and children? Will it be run by people that have attained the elusive PhD in Philanthropy? Will the Foundation of the Future actually be the donor advised fund of the future, since foundations are outlawed by Congress in 2016?

The short version: I think foundations in the future will be run much as they are in the present.

The longer version: most foundations seem to be run chiefly for the social prestige and well-being of the people running them. The primary evidence I can discern seems to fall into two categories, the first one stronger and more important than the other: foundations tend only to give away the minimum 5% of their assets every year, as required by law, and they tend to make the process through which nonprofits acquire funding unnecessarily arduous.

The New York Times has reported on a study done by a Barnard economics professor that found “[c]haritable foundations could give away 60 percent more money than they do now without eroding the total value of their assets” (emphasis added). His paper is available here (warning: .pdf link). The upshot is that foundations appear to hoarding money, and, as the study itself says:

[…] Congress intended to keep tax-favored foundations from becoming mere warehouses of wealth. To the extent that the foundation section operates as if though it were a non-endowment system, paying out new giving while allowing existing assets to compound in perpetuity, the foundation sector is in danger of appearing to be exactly what Congress wanted to prevent […] To the extent that individual foundation reduce payout to the legal minimum simply in order to increase their assets under management, they defeat the real social purpose of their privileged tax status[…]

In a similar vein, Akash Deep and Peter Frumkin wrote a paper, “The Foundation Payout Puzzle,” and found that “the average payout rate of this sample of foundations over time, as the policy regime has shifted slightly from a flat 6 percent, to the greater of total investment income or 5 percent, to a flat 5 percent” from 1972 to 1996. This, they later conclude, is bad because a dollar spent today would probably be more effective than a dollar spent tomorrow, assuming that the needs being addressed are important to the recipients.

Since they’re scholars, they give a long and detailed discussion about why foundations don’t increase their payouts. Since I’m a blogger, I’ll be short, mean, and accurate: foundations are, like most organizations, chiefly invested in their own interests and thus would rather propagate themselves into the future; Saul Alinski has argued that the only thing that matters in community organizing is identifying the “self-interest” of the those you are trying to organize, and in this case all that matters is the foundations. If they were purely motivated by the public good—which would seem the primary argument against my argument about foundations—they would presumably raise their payout rates.

Is there any way to counteract this dynamic and thus implicitly change the way foundations operate? It seems improbable. Occasionally a foundation may take a principled stand in a fashion similar to the way Harvard recently used its endowment to cut tuition, but the paper by Deep and Frumkin argues that the situation is getting worse, not better. While foundations are only required to give away five percent of their assets every year, the average American stock market indices have increased by, on average, about 11% per year since World War II. There is apparently some pressure to increase the payout rate, but I don’t think this will actually happen.

I’m skeptical because foundations themselves are unlikely to reduce their power and longevity by increasing payouts en masse, and Congress is equally unlikely to do so because the very rich who donate to congressional campaigns would immediately get every Congressman to whom they (the rich people) ever gave money to on the phone and demand that the payout rule be changed back to 5%. Why? Because the very rich tend to be men, and their wives tend to be the ones sitting on nonprofit boards, running foundations, donating to museums, and what not.

The minute Congress tries to alter this arrangement, the wives of whoever endowed the foundation are going to rise up in arms until the status quo is resolved. Isaac pointed this out to me one time when I read in the newspaper that Congress was threatening to cut the National Endowment for the Arts (NEA) funding: he said it would never happen because of just the situation I described, and he was right. The NEA is particularly unlikely to suffer deep cuts because it represents a very small but highly visible part of the government, and besides, it’s only a small part of discretionary social spending, which is dwarfed by mandatory spending, interest, and defense. This, incidentally, is why Alan Greenspan has been running around and talking about why Medicare—not the war in Iraq, or interest, or any number of other things—is the biggest long-term budget problem facing the U.S.

That was a long enough tangent, and the main point remains that since the same people who tend to fund foundations are also the ones who fund Congressional campaigns, it seems unlikely that Congress will tamper with foundations. So, foundations are unlikely to give more unless they want to. But the question of why do funders give remains.

Maimonides was a 12th century Rabbi who said there are eight levels of giving, with the top loosely being those who help anonymously and without expectation of reward and the bottom being those who give miserly or reluctantly and with the expectation of recognition. As you might have guessed, foundations tend to end up toward the bottom of Maimonides’ chain, meaning that they want to perpetuate themselves, put their names on things, and the like. This makes them highly unlikely to want to raise the payout rate and thus endanger their existence.

Now I’ll more fully discuss the second point: how difficult foundations make it to apply for money, as they seem uninterested in improving the grant making process for those requesting the grants. Questions are too often absurd and forms are poorly thought out (a great example of this will be discussed in a forthcoming post). In the fifteen years Seliger + Associates been in business, the number of times we’ve ever been called by funders asking how the process might be improved is zero.

Never. Not once. Proctor & Gamble, Microsoft, Boeing, and virtually every other large company or organization probably spends millions of dollars trying to figure out how to improve its products and services, but foundations do not appear to, or, if they do, they don’t ask the people who are involved in writing proposals. As a result, they raise the cost of acquiring funding and allow a proportionally lower amount to go to actual services, in a tangent phenomenon to what I discussed here.

Arguably, one could say that foundations make it difficult to receive money so the most interested and hence deserving nonprofits end up with funding. The application becomes a signaling device. There is some merit to the argument, but it also implies that foundations would cause nonprofits that are already successful not bother applying and simultaneously waste the time of foundations that do bother to apply by forcing them to play signaling games.

These perverse incentives coupled with the relative power of foundations compared with grant receivers, the vanity of being perceived as charitable, and the lack of discipline imposed on foundations will probably result in foundations of the future that look mostly like the ones of the present. Perhaps a few of them will buck the trend and spend significantly more than 5% per year, but this seems more likely to be the exception than the norm, especially after the initial funders die. After all, if you were running a foundation, would you be inclined to shut its doors and thus deprive yourself of management fees, free travel to study problems/applicant, or social prestige? Maybe you, the individual, would, but the plural you, who run foundations, wouldn’t.

And I haven’t even discussed how tax advantages work.

I don’t perceive much change in the foundation world, just as Isaac hasn’t seen much change in the overall world of grants in his 35 years of experience. In Charlie Wilson’s War (the movie version), Julia Roberts asks Tom Hanks why Congress says one thing and does another and he drolly replies, “Well, tradition, mostly.” The same could be said of the U.S. nonprofit world, and in 30 years I bet the problems and perils of foundation giving and many other aspects of grant writing will be the same they are today.


* As of 2018, it appears that Seliger + Associates has outlasted “New Voices of Philanthropy,” as the URL that used to be here deadends into a spam site. I guess sometimes the old voices endure longer than the new ones.

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More on Drugs

Drug use, like healthcare and a number of other modern political background noises, offer endless fodder for debate and study, especially when mixed with teenagers. Now the New York Times has an article about teenagers, risky behaviors, and why some programs aimed at teens are likely to fail:

For example, a study by researchers at the University of California, San Francisco, found that teenagers were more likely than adults to overestimate risks for every outcome studied, from low-probability events like contracting H.I.V. to higher-probability ones like acquiring more common sexually transmitted diseases or becoming pregnant from a single act of unprotected sex.

“We found that teenagers quite rationally weigh benefits and risks,” Dr. Reyna said in a recent interview. “But when they do that, the equation delivers the message to go ahead and do that, because to the teen the benefits outweigh the risks.”

For example, she said: “The risk of pregnancy from a single act of unprotected sex is quite small, perhaps one chance in 12, and the risk of contracting H.I.V., about one in 500, is very much smaller than that. We’re not thinking logically; they are.”

For that reason, [two professors wrote in an article that] traditional programs […] appeal[ling] to teenagers’ rationality “are inherently flawed, not because teens fail to weigh risks against benefits,” but because “teens tend to weight benefits more heavily than risks when making decisions.”

In light of research like this, programs designed to prevent teens behaving badly are unlikely to be cut or shrunk any time soon because teenage risk-taking is a perennial and perhaps biological imperative. This is great news for nonprofits that seek grants in the apparently endless “War on Drugs” to save teens from themselves.

(Hat tip to Marginal Revolution.)

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12-14-07 Links

* You may want to read this post from The Wealth Report in the Wall Street Journal, which details supposed changes in the way the rich give or the way they want to give. It’s light on detail but worth pondering:

Today, at the peak of the charity season and the height of the wealth boom, the charity world needs to wake up and realize that the rich have changed. The new wealthy aren’t content to write checks and hope for they best. They are self-made entrepreneurs who want to give away their money just as they earned it — by measuring everything, by being in control, by cutting out waste, and by finding a more-efficient way to deliver a service. They want transparency and concrete results.

(Robert Frank, who writes The Wealth Report, is also the author of Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich.)

* Rolling Stone has an interesting article with lots of good history as well as numerous questionable causal assertions concerning politics. It, combined with books like The Corner, demonstrates why drug treatment programs are never going away:

Cocaine is now as cheap as it was when Escobar died and more heavily used. Methamphetamine, barely a presence in 1993, is now used by 1.5 million Americans and may be more addictive than crack. We have nearly 500,000 people behind bars for drug crimes – a twelvefold increase since 1980 – with no discernible effect on the drug traffic.

* Got links we should post? Send them in.