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Grant Writing from Recession to Recession: This is a Great Time to Start a New Nonprofit

I received a phone call last week from a woman (let’s call her “Mrs. Smith”) who just started a tiny new nonprofit in South Central LA during this never-ending recession. She wants to help the growing number of homeless youth and unemployed young adults hanging out on the streets. Mrs. Smith’s call reminded me of how Seliger + Associates got started and the many Mrs. Smiths we’ve worked for over the past 17 years.

During the almost-forgotten recession of the early 1990s, I was toiling in the local government fields as the Community Development Director for the City of San Ramon. To paraphrase Mister Roberts, San Ramon was located somewhere between Tedium and Apathy in Contra Costa County. The recession cut city revenues drastically, and because I was not particularly loved by the City Manager or City Council, one day the ax just fell (“Tangled Up in Blue,” B Dylan). I joined the swelling ranks of the unemployed.

This happened in late 1992, and I had a few months of severance pay to more or less keep the wolves at the door and not in the house. By March, the idea of Seliger + Associates had formed; through some initial connections, incredibly hard work, and luck we began to get clients. The early 1990s was, of course, long before the Internet and email. To get clients, we bombed nonprofits in LA with cheesy direct mail flyers, and once or twice a week I flew down to meet with any nonprofit executive director who called. I spent a lot of time in churches, living rooms, drug treatment centers, half-way houses, and the like, mostly in South Central and East LA, pitching our services for very modest fees.

Our first clients more or less fell into two categories. The first were fairly large United Way-type agencies that seemed amused at the concept of an itinerant grant writer parachuting in every week from the wilds of Northern California. The second category were tiny start-ups, like Mrs. Smith, trying to get grants to help people around them who were being devastated by the recession. As I’ve blogged about many times in the last two years, tough times are good times for grant writers because lots of grant funds are available and lots of organizations need to replace falling donations.

Tough times are also good times for new and nimble organizations that address local challenges. Like Mrs. Smith, such newly minted nonprofits, provided they have taken the time to get their 501(c)(3) letter, can compete successfully against their larger, more bureaucratic brethren. This is because small, new nonprofits are not paralyzed by hand-wringing over drops in donations and lowered United Way grants while simultaneously trying to avoid staff lay-offs. About a year ago, Jake wrote about this phenomenon in “When It Comes To Applying for Grants, Size Doesn’t Matter (Usually).” Such nonprofit start-ups (perhaps “upstarts” is a better characterization) helped us start our business.

In the early years, we wrote tons of funded proposals for such organizations—often LA City or County grants—enabling them to take contracts from ossified nonprofits that had been around since the Watts rebellion. It helped that I was then willing to drive all around the dicier parts of LA to get work. But our small fish clients also saw their neighborhoods being devastated and had an intense desire to do something. Then, as now, doing something at any sort of scale requires grants and someone to write the grants. We appeared at the right time with the right skills. We’re still here and a new recession is growing a new crop of small nonprofits, whose executive directors are calling us for help.

Today, Americans are mired in much worse economic times than when our business started. I just Googled the LA unemployment rate in September 1993, which was 9.8%—compared to 12.5% in September 2010! I could do the same with pretty much any part of the country. I’m writing a proposal this weekend for a client in Yuma, AZ, where the current unemployment rate is 27.2%, which is Grapes of Wrath / Tom Joad territory. It is not surprising that Mrs. Smith called looking for grants to kick-start her efforts to help youth falling through the safety net.

She may or may not hire us, but we’re working for lots of similar organizations once again, as the recession provides opportunities for new nonprofits to emerge to meet emerging needs (whew: this sounds like a proposal sentence). Other kinds of startups have also discovered this. We find ourselves where we started, and to quote the Grateful Dead in Truckin’: What a long strange trip it’s been.

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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 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.

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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.”