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Inflation poses potentially major challenges for nonprofits and their budgets

The United States is currently experiencing the highest measured inflation rate since the early ’80s, although it may have moderated a bit recently. We see this in our business—all of our many software-as-a-service (“SaaS” in tech nomenclature) subscriptions have gone up by at least 10% in the past six months, our costs for consumable supplies and equipment have also risen, and anyone who’s been to the used car lot, supermarket, etc., sees it in their daily lives. Still, while there are many articles on inflation in the media, I’ve yet to read one that discusses the significant and deleterious impact of inflation on nonprofits. I was the Executive Director of the Hollywood-Wilshire Fair Housing Council in the late ’70s, and then a full-time grant writer, so I experienced first-hand hyper inflation. Back then, we learned quickly that budgets had to account for inflation, and inflation expectations affected everything we did.

As we’ve written many times, most nonprofits depend on only four revenue streams, no matter how big or small the nonprofit: grants, fee-for-service contracts / third-party reimbursements, fund raising / donations, and, for a few, membership dues. A tiny number of nonprofits have endowments, but, if you’re Princeton or the Met, you don’t really have the problems and challenges normal nonprofits do. Inflation will negatively all of these streams:

  • Grants: Inflation will have the biggest impact on grants. When a nonprofit gets a grant award, the award is based on the proposed budget, and the proposed budget may be modified somewhat during the contract negotiation process. Still, the grant will be a fixed amount, either annually or for the budget period, and grant contracts rarely, if ever, include a Cost of Living Adjustment (COLA) provision. If the grant is, for example, $500,000 annually for five years, and inflation runs at 5% per year, the last year of the grant is going to be much harder to implement than the first.* While it’s usually possible to get approval to move money among budget line items, you can’t go to your program officer and say, “Hey, we now have to pay our Outreach Workers $20/hour because they can make $18/hour at McDonalds” or “our rent went up by $500/month” to get relief. You’re stuck (or a similar, six-letter word that starts with “f” and ends with “ed”). Because inflation has been low, most nonprofit Executive Directors and Boards have never experienced rapid inflation. Not much can be done with existing grants, but in writing future grants, it’ll be critical to propose budgets and services taking into account anticipated inflation. Since an estimated 10% of the American economy is conducted by nonprofits, multiply the impact of inflationary thinking by thousands of nonprofits. The Federal Reserve had to raise interest rates to 20% in the early ’80s to break the inflationary cycle, and that could happen again.
  • Fee-for-Service Contracts and Third-Party Reimbursements: Unlike grants, fee-for-service contracts for things like foster care, home healthcare, some substance abuse treatment, etc., typically reimburse nonprofits at a specific rate for services rendered, which are often capitated (“per head”) or a fixed price for a unit of service rendered. Like grants, such contracts will not usually have built-in COLA provisions. If the contract is based a capitated rate or unit of service provided, inflation will quickly screw this up. A nonprofit may be able to renegotiate contract rates, since in cases where specialized services are provided (e.g., foster care), the contracting agency may need the nonprofit more than the nonprofit needs the contract. Third-party reimbursements, like Medicaid for FQHCs, are even more problematic, as these cannot not be renegotiated and there will be a lag before rates catch up with inflation, if they ever do.
  • Fund Raising / Donations: Let’s say tickets for your nonprofit’s annual “Gala” have been $100 for the last five years. Due to inflation (e.g. venue rent, food, celebrity honorariums/goody bags, etc., cost increases), you may need to charge $150 to net enough money to make the exercise worthwhile. Some number of your supporters will be priced out, if their own wages or investment income aren’t keeping up. Back in my Fair Housing days, most of our fund raising involved overpriced tickets to plays and concerts, Christmas card sales, etc., and, as inflation went up, we netted less and less money. The same is true for donations; as folks’ real incomes are depressed due to inflation, they’re likely to donate less and the amount they donate will be worth less to the nonprofit. Essentially, this becomes a downward spiral, which caused me to start writing more grants to keep the Fair Housing staff on board and the lights on.
  • Membership Dues: A few nonprofits like environmental organizations or Boys and Girls Clubs, are able to charge membership dues. Like with fund raising and donations, however, inflation will make these agencies need to raise their dues to preserve their “buying power,” but dues increases will likely run into resistance from their members. Many members also likely cancelled during the pandemic; Jake had a YMCA gym membership that he cancelled in April 2020 and never restarted. Inflation erodes real incomes as people’s salaries buy less stuff and wage increases typically lag inflation increases. So, membership dues are easier to cut from a family’s budget that say new school clothes for the kids.

Nimble nonprofits will plan for inflation now, just as smart countries planned for pandemics before the pandemic hit. A good strategy is to seek grants that offer “walking around money.” These are grants for nebulous, rather than specific, services and in effect can be used to support other staff and indirect costs. It’s also important to get a Federally Approved Indirect Cost Rate or include a de minimus indirect rate (10%) in your grant budget, if the RFP allows this. Nonprofits will want and need grant revenue that isn’t tied to providing specific services.

Nonprofits that don’t realize the world is quickly changing due to inflation will be in for a rude awakening. As Bette Davis says in the wonderful 1950 comedy All About Eve, “Fasten your seatbelts, it’s going to be a bumpy night.”


* While one can include COLA increases in grant budgets (e.g., 3% annual salary increases), this doesn’t help, because the maximum grant amount is usually fixed. Furthermore, complex budgets violate Seliger + Associates’ basic advice to use the KISS (Keep it Simple Stupid—or “Sally” if you want to be nice) method in grant writing when possible.

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The 3-point revolution in basketball: a lesson for grant seekers and grant writers

I’m old enough to remember the time (not that long ago) when the most important player on most basketball teams was the low-post man, often a back-to-basket center, like George Mikan (the original), Kareem, Wilt, Shaq, etc. That was upended a few years ago with the 3-point shot revolution pioneered by the Golden State Warriors (think Seth Curry, Klay Thompson, etc.). The 3-point shot was added in 1979, but it took basketball experts almost 40 years to figure out that it’s more efficient for players to take more 3-point shots than 2-point shots, even if the shooting percentage for 3-pointers is lower. Maybe humans are less rational than the classical model suggests, if it took so long for teams to optimize for a change, even in a relatively small, controlled environment like pro basketball.

Greater efficiency is achieved by 3-point shooting even if fewer balls technically go through the hoop: we can apply a similar idea or set of ideas to grant writing. It’s more efficient for a nonprofit to submit more proposals rather than spending too much time and resources polishing a smaller number of proposals. We’ve been through many client-induced “polishing” and extensive “editing” exercises with proposals, and they typically generate diminishing returns. Imagine the Lakers rebounding at the Jazz basket and having to take a shot at their end within the 24 second shot clock: the point guard could spend 22 seconds working the ball into a low-post player, who (hopefully) takes a high percentage shot, or the point guard could quickly dribble to the 3-point line, hand off to the shooting guard who takes a 3-point shot at the 6 second mark. While the completion percentage is much lower, this results in many more possessions and opportunities to shoot and score.

In grant seeking, a nonprofit could have its grant writer work tirelessly to polish one grant proposal or have the grant writer do a credible, but maybe not perfect, job on three proposals during the same “grant writing shot clock.” The second approach is likely to produce more funded grants than the first approach, largely because you’re taking more shots on goal. As hockey GOAT Wayne Gretzky famously put it, “I missed 100% of the shots I didn’t take.” Moreover, there’s a lot of noise in the grant evaluation process, just as there is in dating, jobs, and many other human endeavors. The people who succeed most in dating or jobs typically try a lot of different things, knowing that many possible romantic prospects will not like them, for whatever internal reason, and the same is true of employers.

In grant writing terms, and as we periodically blog about, “many shots” means avoiding the perils of perfectionism. It doesn’t matter how perfect the proposal is if you miss the deadline. Also, it’s best to understand that grant reviewers will not study your proposal like the Talmud. At most, the reviewers, who are likely reading dozens of proposals, might spend a half hour reviewing your 40-page opus. As long as the proposal is technically correct and tells a compelling story, it’s probably good enough, since funding decisions go well beyond the proposal itself, including such unknowable considerations as location (urban vs. rural), target population, ethnicity, number of similar applicants, and, the old standby, politics.* There’s likely a pin map in the Under Assistant Secretary’s office to figure out which high scoring proposals will actually be funded (too many in red state Texas, then let’s move a couple to purple state Arizona in anticipation of the 2022 midterms).

Like NBA players who practice long hours to improve their 3-point shooting, your grant writer should be able to get better and faster at writing proposals. Writing proposals, though, is a job that’s hard and drives many grant writers or prospective grant writers mad, or encourages them to leave the business—which is why we have the business we do.


  • At least with federal programs, and large state programs, this is almost never any RFPs of the “let me give you $10,000 in unmarked bills, or bitcoin” variety, but rather of the “Texas is getting five grants, and California zero? That needs to be better balanced” variety.
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New combo COVID-19 stimulus bill and budget bill have tons of grant “ornaments”

The latest COVID-19 Stimulus Bill was signed into law Dec. 27, which, combined with the FY ’21 budget authorization bill, represents a burst of new grant activity. Congress loves to cobble together fantastically complex budget legislation, as this practice, called adding special interest “ornaments,” gives members lots of room for plausible deniability about voting for them; some of the new discretionary provisions include:

    • $82B for “education,” including $54B for K-12 schools and $23B for colleges/universities. Some of these funds will be distributed on a formula basis, likely via pass-throughs to state education agencies, but the rest should be awarded through competitive RFPs, either direct federal applications or RFPs run by the states.
    • $7B for expanding access to “high-speed internet connections,” including subsidies for low-income families. This provision also include $300M for building out broadband infrastructure in rural areas and $1B for tribal broadband programs. We wrote many broadband infrastructure grants following the 2009 Stimulus Bill during the Great Recession.
    • $70B for a slew of “public health measures,” including $20B for “test and trace” programs and “billions for combating the disparities facing communities of color.” This is another way of saying “walking around money” for nonprofits and local public agencies.
    • $10B for child care providers. We write many early childhood education proposals, including Head Start, Early Head Start, Universal Pre-K, etc., and this set of funding provisions will likely be similar. Furthermore, it’s probable that both non-profit and for-profit entities will be eligible, since much of the non-Head Start child care industry is operated by for-profits.
    • $35B for “wind, solar, and other clean energy projects.” These funds will likely be distributed through the Department of Energy, ARPA-E and similar funding agencies.
    • $400M for food banks and $175M for nutrition programs under the Older Americans Act, which will probably be distributed via programs like Meals on Wheels.
    • $5B for the “entertainment industry,” including cultural institutions like theater groups, museums, etc.
    • $14B for public transit.

Some of the other features, listed here more for amusement than anything else, include: a statement of policy regarding the succession or reincarnation of the Dalai Lama; the establishment of two new Smithsonian museums; giving West Virginia a national park; banning the USPS from mailing electronic vaping products; the decriminalization of various minor violations, including the transportation of water hyacinths, alligator grass, or water chestnut plants across state lines and the unauthorized use of the Swiss coat of arms, the 4-H Club emblem, the “Smokey Bear” character or name, the “Woodsy Owl” character, name or slogan, or “The Golden Eagle Insignia; the establishment of an anti-doping program for horse racing; a bunch of foreign aid programs for things like gender studies in Pakistan; and, my personal favorite, a 180-day countdown underway for the Pentagon and spy agencies to reveal what they all know about UFOs.

In other words, the Mulder and Scully Act of 2020” is hidden in this bill. During a conversation with Tyler Cowen, former CIA director John Brennan recently commented on UFOs, saying that he’s “seen some of those videos from Navy pilots, and I must tell you that they are quite eyebrow-raising” and that, after sifting the evidence, “I think some of the phenomena we’re going to be seeing continues to be unexplained and might, in fact, be some type of phenomenon that is the result of something that we don’t yet understand and that could involve some type of activity that some might say constitutes a different form of life.”

We’ll write another follow-up post or two on this topic, as the 6,000 page bill is fully digested.

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The 2020 presidential election and grants: A tsunami of RFPs is likely, no matter who wins

America is a day away from what one of my adult kids calls, “this shit-show election.” A bit harsh for me, but certainly, as Jerry Seinfeld might call it, a Bizzaro World election. Still, from a grant seeker’s or grant writer’s perspective, a tsunami of RFPs is likely roaring toward us.

Despite media speculation, the amount of grant funds available almost inexorably goes up; this is due partially to the fact that the federal budget is a baseline, not a zero-based, system. The budget for the federal FY ’21, which began October 1, is essentially the FY ’20 budget, with a cost of living bump and whatever Congress added for COVID-19 and pet interests. With the possible exception of the first two years of the Reagan administration, I don’t think there’s ever been an actual, substantial reduction in federal discretionary grant spending. When your read the inevitable NYT or Washington Post story following a Republican victory about looming “budget cuts,” what’s usually being proposed is a percentage cut to planned spending increases—not actual cuts.

Despite endless polls and punditry, no one knows how the presidential and congressional elections will turn out. But consider, from a grant-seeking perspective:

    • By almost any measure, 2020 is the Year of Chaos and upper level bureaucrats (GS 14s and 15s) who run federal grant making agencies are both overwhelmed by the COVID-19 crisis and frozen in place by the last months of this election cycle. Many of the Republican political appointees (Deputy Assistant Secretary for Funny Walks, ect.) are busy updating their resumes, or are busy with clandestine political work. There have been way fewer FY ’21 RFPs issued so far than would normally be the case by this time of year. When the election miasma lifts in a week or two, the federal bureaucracy will be shoveling RFPs out the door to catch up.
    • In the run-up to the elections, the last multi-trillion dollar COVID-19 relief bill wasn’t passed, yet America is experiencing another series of spikes, which will likely lead to more lockdowns and ongoing economic misery. A huge new relief bill will likely pass during the lame duck session, and it will in turn likely be studded with what are called “Christmas ornaments”—special interest funding items placed amid the larger bill components. Some of the basic relief funding, as well as some the ornaments, should result in new discretionary grants—either for existing programs or new ones that Congress dreams up. These RFPs will add to the torrent of already authorized FY ’21 funding.
    • Even if Trump pulls out a victory, there’ll be many new faces in House and especially the Senate, because there are many more contested races than usual this year. It’ll be almost irresistible for the departing members, as well as the ones who survive, to authorize more FY ’21 spending for discretionary grant programs during the lame- duck session. Congress can pass new budget authorization bills at any time, as long as the spending bill starts in the House, and what better time than just before you return home to look for work after losing an election? Almost all polls find, however, that Democrats likely to keep the House, but the Senate is still in tea leaf reading mode.

The coming RFP flood presents real-world challenges for many nonprofits. The first three COVID-19 bills had many programs (meaning, more-or-less automatic funding without an RRP process) for certain types of grant recipients, and especially for healthcare providers like hospitals and FQHCs. This money is running out and, while it has to some extent cushioned the immediate negative impacts of COVID-19, most nonprofit management teams have been thrown into chaos, with disrupted fundraising plans, curtailed local revenue for city/county funded contracts for human services, and layoffs—often at the same time as service demands have increased. Many nonprofits will lack the internal resources or focus to go after new grants, because management is too busy keeping their boat afloat. This is good news for the nonprofits with the energy (or consultants like us) to gin up technically correct grant proposals in next few months, since the competition should be less for any given RFP process.

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NYT: Nonprofits should focus on grant writing, not donations, during the COVID-19 crisis

We’ve written two recent posts on the impact of COVID-19 on nonprofits, “COVID-19, donations, and foundation and government grant proposals” and “Less obvious things that impact human services during the coronavirus pandemic.” During an economic crisis like this one, most nonprofits will probably be gob-smacked with cash flow problems, while demand for services, particularly among human services provides, skyrockets.* Since thousands of businesses are suddenly closed, millions are unemployed, and the stock market is gyrating downward, seeking donations is mostly a waste of time and it’s not possible to hold galas and fundraisers. To avoid organizational disaster, the only option for most nonprofits is to immediately conduct grant source research and start submitting foundation and government grant proposals. If the nonprofit lacks internal capacity to do this, hire a consultant like Seliger + Associates.

A recent New York Times David Streitfeld article confirms this, “A New Mission for Nonprofits During the Outbreak: Survival.” Although Streitfeld incorrectly conflates donations and grants, the articles reaffirms what we said in our posts—foundations react to economic crises, at least in the short term, by vastly increasing their grant making:

Foundations, traditionally not among the spryest of organizations, learned from 9/11 and severe hurricanes that they could move fast. They are quickly retooling to disburse emergency money and relax reporting requirements that are suddenly impossible to meet. Bloomberg Philanthropies, Carnegie Corporation of New York, the Doris Duke Charitable Foundation and 23 other foundations as well as individual donors have created a $78 million Covid-19 rescue fund for New York City nonprofits. Grants will start going out to small and midsize social services and arts and cultural organizations on Monday. Interest-free loans will follow.

In hard-hit Seattle, the Seattle Foundation is administering a $14.3 million emergency program funded by local businesses, foundations and government. It released more than $10 million to 120 organizations this week.

These are probably not “donations,” and the nonprofits will likely have to submit proposals of some sort and, unless nonprofits are actively searching for such foundation support, most will miss out entirely. Foundation largess, however, will not last. Within a few months, the spectacular decline of their endowments will sink in and the the fire hose will be reduced to a normal flow—or even a trickle.

While the NYT piece doesn’t cover it, the same phenomenon is happening with government grants, but at a much higher level. In addition the normal billions of federal grant dollars up for grabs, billions more are included in the three COVID-19 Stimulus Bills passed so far, with Congress likely to past several more bills.

So, the time to seek foundation and government grants is now.


* Since grant writing in the time of COVID-19 is a strange experience, this is good time to read or re-read Gabriel Garcia Marquez’s wonderful magical realism novel, Love in the Time of Cholera.

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Charrettes live: Cite them as a planning tool in your proposal

Ten years ago we advised that grant writers and nonprofit Executive Directors “know your charrettes!” (the exclamation point is in the original title). Since then, though, we’ve heard less about charrettes than we really should. Until this week, that is, when charrettes hit me from two separate angles. The first is from Steven Berlin Johnson’s book Farsighted: How We Make the Decisions That Matter the Most. The book itself is highly recommended; large swaths of it could make their way into many proposals.* This passage, though long, has special resonance for me:

A few years ago, the water authority in the Greater Vancouver region faced a decision not unlike the one that confronted the citizens of New York two hundred years ago as to the fate of Collect Pond. A growing urban population meant that the region’s existing freshwater sources were not going to be able to meet demand in the coming years. New sources would have to be tapped, with inevitable impact on local environment, commerce, and communities. The city’s home in the rainy Pacific Northwest gave it the luxury of many potential options: three reservoirs could be expanded, new pipelines could be built to a number of distant lakes, or wellfields could be drilled along one prominent river. Like filling or preserving Collect Pond, this was a decision whose consequences would likely persist for more than a century. (Water from the Capilano River, for instance, was first delivered to Vancouver residents in the late 1800s, and continues to be a major water source for the city.) But this decision began with an earnest attempt to model all the important variables from a full-spectrum perspective. It built that model by consulting a wide range of stakeholders, each contributing a different perspective on the problem at hand: local residents living near each of the water sources being considered; indigenous people with sacred ties to the land being surveyed; environmental activists and conservationists; health and water-safety regulators; even local citizens who used the various bodies of water for boating, fishing, or other water sports. Stakeholders evaluated each option for its impact on a wide range of variables: “aquatic habitat, terrestrial habitat, air quality, visual quality, employment, recreation, traffic and noise, and property values.”

The approach taken by the Vancouver Water Authority has become commonplace in many important land use and environmental planning deliberations. The techniques used to bring those different voices together vary depending on the methodologies embraced by the planners (or the consultants they have hired to help run the process). But they share a core attribute: a recognition that mapping a decision as complex as establishing new sources of drinking water for a metropolitan center requires a network of diverse perspectives to generate anything resembling an accurate map of the problem. The most common term for this kind of collaborative deliberation is a “charrette.” The word derives from the French word for wagon; apparently architecture students at the École des Beaux-Arts in the 1800s would deposit their scale models and drawings in a small wagon that would be wheeled out to collect student submissions as the deadline for a project approached. Students making last-minute tweaks to their projects were said to be working en charrette—adding the finishes touches as the wagon made its rounds. In its modern usage, though, the design charrette does not refer to a last-minute cram session, but rather to an open, deliberative process where different stakeholders are invited to critique an existing plan, or suggest new potential ideas for the space or resource in question. The charrette makes it harder for a complex decision to be evaluated purely from the narrowband perspective of a single business group or government agency.

One way in which charrettes differ from the more traditional forum of a community meeting is that they conventionally take the form of a series of small-group meetings, not one large gathering. Keeping the groups separate reduces the potential for open conflict between groups that have competing values, of course, but it also generates a more diverse supply of ideas and assessments in the long run.

The term “charrette” is under-used today, even though many RFPs include planning process questions, which can be best responded to by describing a charrette-like process. I’m not sure whether I’ll quote this passage directly in future proposals, or quote small sections and paraphrase the rest, but I’m confident the concepts will appear.

The second way charrettes arrived came from a client, who said that her organization was founded following a series of local planning charrettes. We’ve rarely heard origin stories like this; most nonprofits start the same way businesses do, when an individual or small group of people create a nonprofit corporation and file for a 501(c)3 letter. The charrette structure is unusual, and it struck me because it’s so rarely used. Too rarely used, one could say. An organization with that kind of origin story should flaunt the story. Which we, being good grant writers, will.


* Remember that reading is one of the open secrets of grant writing. Read a lot and incorporate what you find into your proposals.

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Yours is not the only organization that isn’t worried about long-term grant evaluations

Ten years ago, in “Studying Programs is Hard to Do: Why It’s Difficult to Write a Compelling Evaluation,” we explained why real program evaluations are hard and why the overwhelming majority of grant-funded programs don’t demand them; instead, they want cargo cult evaluations. Sometimes, real, true evaluations or follow-up data for programs like YouthBuild are actively punished:

As long as we’re talking about data, I can also surmise that the Dept. of Labor is implicitly encouraging applicants to massage data. For example, existing applicants have to report on the reports they’ve previously submitted to the DOL, and they get points for hitting various kinds of targets. In the “Placement in Education or Employment” target, “Applicants with placement rates of 89.51% or higher will receive 8 points for this subsection,” and for “Retention in Education or Employment,” Applicants with retention rates of 89.51% or higher will receive 8 points for this subsection.” Attaining these rates with a very difficult-to-reach population is, well, highly improbable.

That means a lot of previously funded applicants have also been. . . rather optimistic with their self-reported data.

To be blunt, no one working with the hard-to-serve YouthBuild population is going to get 90% of their graduates in training or employment. That’s just not possible. But DOL wants it to be possible, which means applicants need to find a way to make it seem possible / true.

So. That brings us to a much more serious topic, in the form of “The Engineer vs. the Border Patrol: One man’s quest to outlaw Customs and Border Protection’s internal, possibly unconstitutional immigration checkpoints,” which is a compelling, beautiful, and totally outrageous read. It is almost impossible to read that story and not come away fuming at the predations of the Border Patrol. Leaving that aspect aside, however, this stood out to me:

Regarding Operation Stonegarden, the DHS IG issued a report in late 2017 that was blunt in its assessment: “FEMA and CBP have not collected reliable program data or developed measures to demonstrate program performance resulting from the use of more than $531.5 million awarded under Stonegarden since FY 2008.”

Even in parts of government where outcomes really matter, it’s possible to have half a billion dollars disappear, and, basically, no one cares. If FEMA can lose all that money and not even attempt to measure whether the money is being spent semi-effectively, what does that communicate to average grant-funded organizations that get a couple of hundred thousand dollars per year?

We’re not telling you to lie in evaluation sections of your proposal. But we are reminding you, as we often do, about the difference between the real world and the proposal world. What you do with that information is up to you.

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Grant writing during an economic boom: primary health care, substance abuse, homeless services, and jobs!

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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The federal budget in the age of Trump: Round up the usual suspects

The New York Times says that “Popular Domestic Programs Face Ax Under First Trump Budget.” Those listed include the Corporation for Public Broadcasting, Legal Services Corporation, AmeriCorps, National Endowment for the Arts (NEA), and National Endowment for the Humanities (NEH). With the exception of AmeriCorps, which wasn’t yet born, the rest are the usual suspects, which have been proposed for the chopping block on and off since David Stockman* was Director of the Office of Management and Budget in 1981. I’ve seen this movie before, and I’m highly confident that, after the Congressional inquisition is over, NEH, NEA and the rest will ride off from Capitol Hill like Keyser Söze at the end of The Usual Suspects.

You might be surprised to learn that Congress last passed an actual Federal budget in 1998! Since then, Congress has used a variety of legislative tricks to “pass” non-budget budgets, including Continuing Resolutions (CRs), department budget authorization bills, and budget reconciliation bills to enable senators and representatives to avoid going on the record voting for or against an actual budget. This whole mess is tied up with the headache-inducing need to pass a bill increasing the Federal debt limit every six months or so.

In March, we’ll get to experience this exercise in political theater again, as the Trump administration will likely propose a revised FY ’17 budget (not to be confused with FY ’18 budget coming along later in the year). As reported by the NYT and others, this revised budget will likely propose a decrease in FY ’17 budget authorizations for selected discretionary domestic Federal spending agencies/programs like NEA and its pals. This is opposed to the usual practice of “budget hawks” to propose reductions in the rate of increase in Federal spending, due to the Feds using baseline budgeting (another headache-inducing concept) rather than zero-based budgeting.

My guess is that few discretionary programs will receive actual cuts and none will be eliminated (see one of our most popular posts, “Zombie Funding—Six Tana Leaves for Life, Nine for Motion,” to learn how Federal programs usually return from the dead). That’s because every Federal discretionary funding/grant program has constituencies in every Congressional District—along with an army of lobbyists.

Let’s use NEA as an example. NEA funds symphonies, theater groups, art museums, etc., everywhere. These are nonprofits, the boards and docent corps of which are composed mostly of well-off locals, who might be married to Congresspeople or their donors. They’re likely to be members of the same country clubs, churches/synagogues, and Chambers of Commerce as Congresspeople. That means Congressman Horsefeathers is not only going to be beaten up by lobbyists and donors but is going to an earful at the breakfast table.

As a young grant writer during the Reagan ascendancy, I learned that—despite the fevered rhetoric you’re going to soon hear and the attempt of the Trump administration to cut something—most grant programs will squeeze through. In contemplating Federal budget cuts, I use the Economic Development Administration (EDA) as my yardstick. EDA, the most overtly political of Federal grant-making agencies, has been around since 1965. Every so often, an administration or Congress threatens this small nimble dinosaur with a budget meteor, but EDA always dodges. I won’t take the latest budget battle seriously until EDA dies. I won’t bring up the real budget brontosauruses like HUD and the Department of Education. They’ve survived Presidents Reagan and Bush the Younger, as well Speaker Newt.


* Stockman now shows up in infomercials hawking various doomsday economic books (or gold), but he actually wrote a terrific political autobiography, The Triumph of Politics: Why the Reagan Revolution Failed. I read this in the mid-80s and it’s relevant once more.

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Is a good idea to “Kiss and Tell” in grant writing?

Most of us have had the experience of deciding if you should tell the new girlfriend about the old girlfriend or the old girlfriend about the new girlfriend, or tell neither and shower frequently instead. While I can’t help you with those dilemmas, I can tell you when you should kiss and tell in grant writing and when you should keep it on the down low.

Let me explain. In pursuing foundation grants for a new project, it’s always a good idea to tell the new foundation about the old foundation that has already committed funding. The old foundation’s commitment makes the proposal a “matching grant” request. Like having more than one date offer for the senior prom, this will make you much more intriguing to the new foundation—all foundations want to give the last dollar to a project, but it’s harder to get a foundation to commit the first dollar. Foundations are like lemmings and they prefer to jump off the cliff in groups. Still, they know that they’ll have to  go first in most cases.

Telling the new foundation about the old is particularly potent in capital campaigns. Say the Waconia Cyclops Youth Recreation Association want to build a new facility. It’s not a bad idea to start by getting the Waconia Community Foundation to commit a $100K grant toward your $1 million capital goal before seeking grants from other foundations. When the project is pitched to new foundations, you can trumpet that you’re one-tenth of the way there; if you want to really go old school, erect a 10 foot tall “capital campaign thermometer” in front of your building.

The new foundations may think that the Waconia Community Foundation knows what they’re doing and will want to get on train before it’s too late. NRP stations, like KCRW in LA, have honed this approach over the years for what seems like bimonthly pledge drives. KCRW knows that the closer the breathless announcer says the station is to that hour’s $10K matching grant from Himmelfarb Industries, the more likely it is that you’ll finally give in and call. Plus, there’s that “handsome” tote bag they keep dangling.

For most nonprofits, captive audiences lured by tote bags are not an option, as they have to hunt down that first foundation grant. Keep in mind, however, that you never want to seem like you have too much money, as foundations want to feel special, just like girlfriend analogy above. Enough money for momentum is good; so much that you seem like you don’t need the money is bad.

The situation is more complex for government grants. Some federal funding agencies like EDA or Rural Development more or less force applicant to demonstrate hard money matching grants,* since they mostly fund large capital projects and almost never provide 100% of the funding. The vast majority of government funders that require a match for human services projects, however, are perfectly happy with an in-kind match, an ephemeral beast I wrote about in “The Secrets of Matching Funds Exposed: Release the Hounds and Let the Scavenger Hunt Begin.”

Most government grant proposals we write use variations on the “but for” argument to demonstrate need: “But for the grant being requested, at-risk young adult Waconian cyclops will not have access to job training with wraparound supportive services and will be doomed to intergenerational poverty.” If you tell the new funder that you already have funding, they may conclude that you don’t need the grant as much as other applicants, who are all screaming poverty. Also, boasting about other funding in a federal grant proposal is likely to raise the dreaded specter of supplantation, which must be avoided at all costs. The Feds usually want to be the first dollar on projects that wouldn’t exist without them.

While contemplating this kiss and tell conundrum, keep in that the funder usually only knows what you tell them in the proposal. While we always advise our clients to be truthful in proposals, proposals can be like writing a match.com profile. It’s not necessary to list your seven previous failed relationships until you’ve gotten past the Starbucks meet & greet.


* We describe stacking several government grants for a capital project as a “layer cake” approach. The grant we’re writing about is invariably the top layer.