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Tuesday, January 23, 2018

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The foundation world is changing. Look for changes in staff and board leadership and shifts in areas of interest and focus in private, community and corporate foundations
Marion Lee, CFRE

January, 2017

The foundation world is changing.  In 2016, across the state, we saw changes in staff and board leadership and shifts in areas of interest and focus in private, community and corporate foundations.  In addition, we heard from foundations about the sometimes bad behavior that nonprofits display in seeking grants.

Laying the “foundation”

For the purposes of this discussion, we are looking at three different types of foundations: private, community and corporate entities. Private/Corporate foundations are 501(c)(3) organizations usually set up by individuals or families for philanthropic or estate planning purposes.  Approximately 60% of the private foundations in the United States have less than $10 million in assets.  Private and Corporate foundations control slightly more than $650 billion in assets and accounted for a cumulative 18% of the charitable giving last year. Community foundations are the odd entity in that they are considered public charities and private foundation rules do not apply to them.

Under IRS regulations, private and corporate foundations are required to give away 5% of the fair market value of their assets.  Assets include: cash, stocks and bonds, land, and any other assets.   Foundations that give more than 5% per year over several years can have one or two years exempt from the 5% rule. Private and Corporate foundations are generally created with broad charitable areas of interest and must make their grants to 501 (c)(3) public organizations.  IRS regulations for private and corporate foundations are different than those affecting public charities.

Building a foundation relationship

Before approaching foundations for support, it is important to examine your organization dispassionately.  Look at the structure of the board and staff and keenly review your mission, programs and financial reporting.  Ask yourself:

  • Does our organization’s structure reflect the community we serve? Do we have financial statements that are correct and present an accurate picture of the organization?
  • Are we practicing our mission in our programs and services?

In discussions with your program staff and other key administrative staff, develop a list of needs, ranging from program support to equipment.  Make sure that you also find out timelines and budgets that are accurate for each of the identified needs. Finally, in conjunction with your  Executive Director and other key staff, prioritize the list so that you can create a timeline for funding.

Tools you will need

Most foundations require basic information on each nonprofit applicant as part of their application process.  To make your life much smoother, it is best to develop a folder with key information about your organization. You can use this repeatedly with only a few items that require regular updating.  These tools include:

  • A copy of your IRS statement granting your 501 status
  • A current list of board members (sometimes with their titles)
  • A list of staff members and their titles
  • A copy of your most recent financials
  • A copy of your mission statement
  • The % of board members who have made gifts to your organization this fiscal year
  • Budget for your projects
  • Your case for giving (if you have not written one, it should be first on your list)

Good grant writers and Development Directors know that half the work of achieving foundation funding is investing in good research into a foundation’s giving history, organizational culture, processes and application guidelines.  If they conduct information sessions, by all means, attend.  It is not unusual for a foundation to change its processes and/or deadlines, so best be safe than sorry.  And, your participation demonstrates that you are willing to invest in their process.

This research should culminate in the creation of what is commonly known as a Grant Calendar.  A Grant Calendar includes: the formal name of the foundation, contact information, application deadlines, areas of interest (the real ones), trustees’ names, grant managers’ names, the application process in brief and the web site address.

Most of us keep this information in multiple locations, but let us assure you, having this data in one place, be it a table or Excel file, will help to ensure that you do not miss deadlines or submit incorrect information.

Cultivating and stewarding foundations

Once you have identified strong potential funders for your mission, make a phone call.  Talk to a grant manager or someone who can confirm basic information. Make your conversation brief and to the point.  Your goal is to introduce yourself, let them know who you represent and ask if the basic information on the web is correct.  Ask if the foundation has specific areas of interest and, if invited, tell them about the program that you are considering asking them to fund.  Make notes on your conversation and keep them in your files.

If you receive funding, make sure that you complete your reports on time with the back-up detail that is requested.  And, above all say “thank you.”  Many organizations that receive foundation grants, fail to express their thanks.  There is a strong attitude currently in our community that foundations “owe” us their gifts and that it is just a part of their jobs. Foundations exist to do good, to do no harm, and to help you make your mission real for the people you serve.  Your job is to be gracious at all times, to demonstrate good professional behavior, and to maintain integrity and strong ethics.

Oh No–You Didn’t!

We talked with several foundation friends in Central and South Texas and learned that they had experienced some negative behaviors from nonprofits in 2016.  You may recall one of our presentations called, “Oh No–You Didn’t.”  It details some of the classic mistakes by nonprofits  when dealing with individual donors.  Created by Mike Bacon and a very kind and generous community philanthropist, this presentation is funny, but sadly indicative of some of the behaviors we see daily.

Given what we heard this year, here’s an “Oh No–You Didn’t” version for Foundations:

  • Informing Foundation staff that their deadline is “inconvenient”
  • Informing the Foundation staff that their application is “stupid” and “takes too much time”
  • Informing the Foundation staff that they are “nosy” and that “some of this information is none of their business”
  • Making Foundation staff chase you for a progress report
  • Posting on Facebook that the Foundation turned you down, how unfair that was, and-owning that it was because the application was late, did not have financials or some other attachment. And, then asking for sympathy because you might lose your job because the grant wasn’t funded
  • Yelling at, crying to, and cussing out a Foundation staff member because you did not receive funding
  • Using restricted funding for other purposes and then asking the Foundation to re-fund the program

Fundraising is an art and a science.  The art aspect of foundation work comes in the building of relationships and earning trust while the science lies in the research that will build a solid base of support for your organization for years to come.

Contact Lee + Associates at


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