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Trends Affecting Grantwriting Background Is it “The Economy, Stupid?” The Financial Market’s “Wiley Coyote” Moment. Qu i c k T i m e ™ a n d a d e c o m p re s s o r a re n e e d e d to s e e th i s p i c t u re . The worst stock market crash since the Great Depression. The dotcom crash of 2000-2002 lost 4,244 points over 2 1/2 years. This one lost 7,427 points in 1 1/2 years, to less than half of its peak value. Many foundations lost 40% of their assets on paper (although they’ve recovered somewhat). QuickTime™ and a decompressor are needed to see this picture. In addition to stocks, the over-inflated housing market and its drop caused many people losses to their biggest asset. This recession is different than other recent ones. Qu i c k T i m e ™ a n d a d e c o m p re s s o r a re n e e d e d to s e e th i s p i c t u re . Recession officially began December, 2007. So 12 months is Dec, 08 and 24 months is Dec, 09. States are facing large budget shortfalls CNBC says Oregon is the 14th worst off in 2010, with a $1.6 billion budget gap, 18% of general fund. Total Private Giving to Nonprofits is Down. Current dollar giving has only gone down two times: 1987 & 2009. (Some say this Giving USA study is too rosy, many nonprofits giving is lower) Stimulus Funding The American Recovery and Reinvestment Act (ARRA) of 2009, aka Federal Stimulus, injected $747 billion into the US Economy. • Most went directly to States or individuals, but billions also went into Federal agencies to be released as grants. • One time funding to be used (in most cases) by the end of 2010 - but RFP’s are still coming out of the agencies. Look at agency websites, not for stimulus websites. • A New Economic Environment? Richard F lorida and some other economists say that this is more than a recession, itÕsa Reset. The economy is u ndergoing fundamental change and the jobs that come back wonÕtbe the jo bs that were lost. Oregon economist Joe Cortright says that ÒRecoveryÓis a misno mer and calls it Òout of sampleÓ for forecasting, meaning that we canÕtuse past experience to predic t the future . This has multi ple causes: Technology, globalizati on, the Internet, world wide immigration, internat ional cap ital flo ws, etc. What does this mean for grants? How are Foundations Doing? BUT foundation giving grew five-fold from $9.2 billion to $46.8 billion in 17 years from 1991 to 2008. The Foundation Center predicts 2010 to be flat and 2011 to show modest growth. Foundation giving closely tracks assets, so assets have grown equivalent amounts. The number of foundations has skyrocketed, more than tripling since 1980. Growth in Foundations Foundation growth is driven by demographics and economics, and shows no signs of declining in the near future. At least four things are happening: • Rich people are dieing and creating or enlarging foundations in their wills. • Rich people are aging and creating or enlarging foundations as part of their estate planning. • Newly rich people are creating foundations (the most famous being the Bill & Melinda Gates Foundation, the world’s largest). • The stock market went berserk in the 1990’s, with the Dow Jones Industrial Average more than tripling in value from about 3,300 to over 11,000. Because most foundations are invested in stock markets, this increased the assets of existing foundations. •While the stock market has been fluctuating wildly, over the long haul it will probably continue to trend up…how fast depending on the reset in the global economy. Growth of Oregon Foundations O REGO N FO UNDATIO NS 1981 1989 1999 Meyer Memorial T rust 120,000,000 M. J. Murdock Charitable T rust 113,035,782 Ford Family Foundation 2,580,985 Oregon Communit y Foundation 11,847,769 T he Collins Foundation 31,535,763 Maybelle Clark Macdonald Fund Ann & Bill Swindells T rust Intel Foundation P amplin Foundation 138,917 Northwest Healt h Foundation James F. Miller Foundation Schnit zer CARE Foundation Knight Foundation Jeld-Wen Foundation 1,754,024 P acificorp Foundation for Learning Juan Young T rust T OT AL ASSET S 280,893,240 5% of total : required grants 14,044,662 Dow Jones Industrial Average 880 276,841,051 220,760,817 3,168,481 66,400,000 89,801,832 454,147,345 360,998,408 279,012,032 217,753,847 168,570,667 1,782,687 W ash in gton Fou n dation s Gates Foundation Allen Foundations Bullit t Foundation 2,000,000 2008 2010 e st 656,972,181 1,772,911,796 32,848,609 88,645,590 2,753 11,497 680,458,704 468,700,000 949,645,467 665,851,000 682,982,000 564,000,000 1,157,146,000 887,351,000 209,689,000 142,000,000 135,598,000 109,000,000 119,276,000 74,500,000 73,815,000 60,489,000 37,766,000 33,331,000 67,000,000 52,163,000 203,011,000 134,690,000 65,238,000 46,996,000 110,394,000 90,073,000 66,538,000 53,531,000 46,901,000 32,901,000 26,703,000 18,756,000 4,632,161,171 3,434,332,000 231,608,059 171,716,600 13,365 8,776 539,005,000 765,728,650 648,600,000 1,020,453,650 163,300,000 125,350,000 85,675,000 69,562,350 38,330,650 59,987,450 154,893,500 54,045,400 103,583,950 61,560,650 37,836,150 21,569,400 3,949,481,800 197,474,090 10,000 296,602,031 17,352,880 100,239,862 38,837,000,000 29,887,000,000 1,503,812 920,547 127,217,000 90,442,000 34,370,050,000 ??? 104,008,300 ? ? 4,711,405 34,648,095 25,942,116 58,814,992 56,982,891 41,206,291 30,566,158 42,486,267 2007 On The Other Hand Grants Trends of the 21st Century Foundation Behavior in 2010 After the 2000 dot-com crash and the 2008 financial meltdown, foundations are being more cautious. Even if their endowments are doing better, they’re not sure that they can count on it in the future. • Many are focusing on strengthening established organizations they’ve funded before, especially shoring up ones that were hurt by the downturn. Some are making “operating funds” grants to these groups for at least a limited time. • A hard time for startups. • There was a move towards basic needs, funding groups that help people impacted by unemployment and poverty -- food banks, shelters, low income housing, etc. • A hard time for arts organizations. • There’s been an acceleration of the trend to look beyond the project to the strength of the applicant. Can you show a strong financial statement, diversified funding? Can you demonstrate program success with data, stories, testimonials? • Again, this favors established organizations. • Foundations that cut staff during the downturn are looking for nonprofits to operate leaner too. • Don’t want to fund “business as usual” ThereÕ s more competition for grants In 1992 there were 516,000 nonprofits; Today there are over 1,200,000. About 25% have inco me over $500,000, with the abili ty to apply for and receive large grants . Local governments are increasingl y seeking private funding and are starting to succeed. Some are forming parallel 501(c)(3) organizat ions to raise money for popular services. (The Schools Foundation, The Parks Foundation, The Zoo Foundation). As state & local government funding for social services declines, nonprofits which previously relied mostly on government contracts are seeking private funding, including grants. ThereÕsalso a trend for these agencies to start seeking federal grants. Growth of nonprofits since 2000 (from Giving USA). Funders are looking for, and receiving, better proposals Partly as a result of the increased competiti on, the quali ty of grant submissi ons is improving. IÕve been told this by foundation staff as well as my own observations. Both public and private funders are lo oking for measurable results , better client outcomes and lasti ng change. Reporting numbers of people served is no longer enough. Government and some private funders are starting to require Òevidence-basedÓ or Òbest practicesÓ, literature reviews, logic models for Òoutcome-based evaluat ionÓ. The importance of relat ionships with foundations is increasin g. Like major donors, this has to be built o ver time, and relationsh ips need to be between organizat ions, not just individuals . The Internet is having a huge impact in every aspect of grants Online funder searches: Foundation Directory Online http://foundationcenter.org/findfunders/fundingsources/fdo.html GrantStation http://www.grantstation.com/ Online 990 searches: GuideStar http://www2.guidestar.org/ Foundation Center http://foundationcenter.org/findfunders/990finder/ The Web is replacing the library for all kinds of research -- demographics, community need. The Federal Government posts RFPÕs on grants.gov, and most agency websites are very good. States and local governments are following this trend, with mixed results. The Feds and larger foundations are going to online applications. Nobo dy has it right yet. Most large foundations have good web pages and are posting their guidelines, application forms and annual reports (that they used to print) online as downloadable pdfÕs. Proposal drafts are traded back and forth between grantwriter and program staff as e-mail attachments. There are good online reading sources: The Foundation Center http://fdncenter.org/, Charity ChannelÕs Grants and Foundation Review http://charitychannel.com, The Chronicle of Philanthropy http://philanthropy.com/section/Home/172 and The Grantsmanship Center magazine archives https://www.tgci.com/magazine.shtml The grant s world is getting more organized Grantmakers for Effective Organizations: A group of foundations dedicate d to improving the organizati onal stabilit y of the nonprofits they fund. http:// www.geofunders.org/home.aspx Project Streamline: A cooperative effort of major foundations and nonprofit organizat ions to reduce bureaucratic re quire ments on grant seekers. http:// www.projectstreamline.org /project-streamline Glass Pockets: A project of the Foundation Center to increase funder transparenc y. http:// www.glasspockets.org/ AAGP, GPCI, NG MA: Grantwriti ng and management is becoming a professio n with its own membership associations & credentials. American Association of Grant Professionals http:// grantprofessio nals.or g/ Grant Professionals Certificati on Instit ute http://grantcrede ntial.o rg/ National Grant Managers Associatio n http:// www.ngma-grants.org/ Non-Grant Issues Affecting Grantwriters Threats to Tax Exempt Status 1) Expired state corporate status Is your organization keeping its Incorporation papers current with your state? There are usually some forms to file on a regular basis, sometimes with more than one agency. Failure to stay current can result in the organizationÕscorporate status being revoked. In Oregon: Form CT-12 with Dept of Justice, Annual Report to Corporation Division. If your corporate status expires, so does your tax exemption! States are posting their databases of corporate statuses on their Web sites. The IRS is starting to mine these public databases, looking for expired corporations. 2) Tipping (into private foundation status) ¥ Too much of your funding comes from too few sources (disqualified persons) A really large gift or grant can ÒtipÓ youinto private foundation status. Check with your accountant. 3. Very small nonprofits are now required to file Form 990-N (an e-postcard) Previously didnÕthave to file if income was under $25,000 year. ¥ For more information go to: http://www.irs.gov/charities/article/0,,id=169250,00.html Up to 400,000 nonprofits are at risk of losing their tax exemption in 2010. The IRS has promised leniency, but the law requires them to cut groups that donÕt file 990Õsfor 3 years. 4. Expired IRS advance ruling letter No longer required to file for permanent status, new applications automatically get public charity status. BUT if a letter expired before 6/9/2008, need to appeal. Talk to a tax lawyer. Changes in the 990 The IRS form 990 that nonprofits are required to file has become more important. It used to be obscure and finance-oriented. Now itÕswell known and is also a legal and marketing document. Every nonprofitÕs990 is freely available, and foundations and large donors are looking at them. GuideStar http://www2.guidestar.org/ Foundation Center http://foundationcenter.org/findfunders/990finder/ The federal government got involved in corporate oversight as a result of the Enron scandal (SarbanesOxley Act of 2002). The IRS is the mechanism for oversight of nonprofits. The 990 now has a governance section. You need to have a lawyer look over your filing. The new 990 gives more attention to your mission and charitable activities. Because foundations and donors are looking at it, it becomes a marketing and public relations document. Grantwriters need to be aware of whatÕsin their agencyÕs990, because foundations are asking for and looking at them. Old 990 New 990 Old 990 New 990