Tag Archives: Great Recession

Grant Writing Confidential Scoops the Wall Street Journal and More on Being Creative in Finding Funds During the Great Recession

As the editor of my high school newspaper—the Cooper High School Hawk’s Quill—and a short-lived college journalism major, I take great delight in scooping the Wall Street Journal. Shelly Banjo wrote Donations Slip Amid Anxiety on June 9, which said:

For the second year in a row, philanthropy has seen the deepest decline ever recorded by the Giving USA Foundation, which has tracked annual giving since 1956. Donations fell 3.6% to $303.75 billion last year, down from $315 billion in 2008, according to the latest Giving USA study, released Wednesday. In 2008, they were down 2%.

Faithful readers will note that I made more or less the same point in my May 29 blog post, Tough Times for Folks Means More Grant Writing for Nonprofits, although with more humor and helpful advice. If one read Ms. Banjo’s article and knew little about nonprofits, one would get the impression that the end is nigh. This is because her article, like most stories about nonprofits, perpetuates the conventional wisdom that all nonprofits depend exclusively on donations, which is simply not true.

As I pointed out in my post, while donations are important, particularly for certain kinds of nonprofits, most human services providers support their service through grants, fee-for-service contracts, third-party payers and/or quasi-business enterprises, in addition to donations.* These alternative revenue streams, which can be ramped-up when donations are down, are not mentioned by Ms. Banjo and the cast of nonprofit “experts” she quotes and data she cites.

Although new contributions to foundations may be down, foundations still must give away 5% or so of their endowment every year, and the feds, through the Stimulus Bill and lots of other appropriations, have keep the grant spigot wide open. Cagey nonprofit executive directors are busy writing grant proposals and dreaming up other revenue strategies, not wringing their hands and gnashing their teeth over declines in donations. But not in the conventional wisdom world of newspaper writers.

A second Wall Street Journal article by Jennifer Levitz and Stephanie Simon on June 12, “A School Prays for Help”, confirms the importance of getting creative during tough times. While this article mostly discusses public schools, police departments and other public agencies seeking alternative funding sources, the same concepts apply to nonprofits.

In this article, the writers describe how some schools are getting local churches to “adopt” them and other strategies for what amounts to advertising in order to supplement limited tax dollars. Nonprofits can do the same sorts of things instead of just waiting around for donations to pickup.

One of the several odd aspects of a church providing donations to a public school, however, is that the church itself is a nonprofit that depends almost exclusively on donations from its members. Why would they do this? One reason could be that the church expects to get new members from school parents and staff, and they will eventually try to extract donations from the new members. In other words, the church and the school are probably competing for donor dollars and the church may be taking the longer view that investing a small amount of its money now, derived from its members, will result in more members and more money later.

While most nonprofits and public agencies like to present themselves as collaborating, in reality they compete with one another for donations, grants, and all kinds of resources. I pointed this out in What Exactly Is the Point of Collaboration in Grant Proposals? The Department of Labor Community-Based Job Training (CBJT) Program is a Case in Point, a post that generated quite a comment thread.

Some readers understood my point, while other denounced me as a hopeless cynic. Of course, I am a hopeless cynic, but nonprofits and public agencies are largely in competition, and the ongoing economic mess just makes this competition rise to surface, like the somewhat baleful giant crocodile in the best “big animal” movie of recent years, Lake Placid.


* Jake also wrote about funding sources in Bratwurst and Grant Project Sustainability: A Beautiful Dream Wrapped in a Bun.

Tough Times for Folks Means More Grant Writing for Nonprofits

This morning’s New York Times brought a depressing tale: “Blacks in Memphis Lose Decades of Economic Gains.” No matter what macro economic metrics indicate, it is clear that the Great Recession continues to rage across America and, as Van Morrison put it, it remains Hard Nose the Highway in the hardscrabble neighborhoods where Seliger + Associates usually works.

While the situation is dire for folks who are unemployed, losing their homes and perhaps losing their hope, it is even worse for the nonprofits that provide human services, particularly United Way agencies and other organizations that depend directly or indirectly on donations. This is because service demands are up and donations are down. Although recessions always make it harder to do fund raising, the sad truth is that donations lag economic improvement.

This means that it will likely take two to three years from when the Great Recession really ends for nonprofits to get back to donation levels of 2007. The same thing happened following the last major recession in the early 1990s. It took until the late 1990s for donations to recover—just in time for the busting of the dot.com bubble, which drove donations down again, and the September 11 attacks, which diverted donations from around the country to NYC.

While you’re waiting for donations to pick up with rising economic conditions, it is always possible that some other crisis, natural or manmade, will screw up your plans. How about a huge hurricane in the Gulf this summer, slamming millions of barrels of crude oil from the seemingly never ending Deep Horizon spill into New Orleans, just as donations are beginning to rise?

What should a nonprofit do? Well, you can cut staff and services, try to squeeze more donations out of your exhausted supporters, provide third-party payer services (e.g., foster care, substance abuse treatment, etc.), try to setup a quasi-business, or re-double your grant writing efforts. That’s pretty much it.

It’s difficult to cut staff and services with double-digit unemployment and your service population hurting, so most nonprofits will eat into reserves before doing so. Many organizations lack the certifications and licenses necessary to offer third-party payer services, making this a tough path. And, while some nonprofits generate revenue through such businesses as landscaping, moving services, affordable housing rehab/resale (HUD’s 203k program, for example), and the like, these usually depend on using clients as essentially slave labor to perform the work without much compensation. Doing so impedes building client self-sufficiency and raises ethical issues; I’ve never been a fan of nonprofits running businesses.

These problems take us back to grant writing as the most plausible alternative for struggling nonprofits. You don’t want to hear it, but this is the reality of Life During Wartime. The good news, as I pointed out in Where Have All the RFPs Gone?, is that the feds are slow in releasing RFPs this year. The June to September period will be much better for seeking federal grants than usual, as lots of RFPs will have to be released before the start of the next federal fiscal year on October 1. This is not the summer to take off for that long planned trip to Kafiristan.* Instead, find a grant writer and start applying for any grant programs that are remotely appropriate for your agency. There will be plenty of competition, but some organization is going to get funded. But you are more likely to get a grant than to get results from the sixth donor letter sent this year.


* Kafiristan is the setting for one of my ten favorite movies of all time, John Huston’s The Man Who Would Be King. Faithful readers will know that I have about 100 top ten movies, but this is one of the best.