Transcript Grantmaking & Community Leadership

COMMUNITY FOUNDATION BOOT CAMP
UNIT 7
GRANTMAKING
&
COMMUNITY LEADERSHIP
GRANTMAKING
 A distribution from any type of fund for a charitable
purpose is a “grant”
 Generally, a community foundation uses the term
“grantmaking” to refer the process of deciding on
distributions from the unrestricted funds and field-ofinterest funds
 Usually, this a fairly open, competitive process
 The IRS “5%” rule doesn’t apply to community
foundations; only private foundations
GRANTMAKING
There are two primary types of grantmaking
 Responsive grantmaking
• Community foundation “responds” to community requests
• Open process, broad criteria
 Proactive/strategic grantmaking
• Community foundation decides in advance the type of grants
it wishes to make; narrow criteria
• Typically uses an RFP or other invitation
STRATEGIC GRANTMAKING
 Can require more staff time than
responsive grantmaking
 Difficult to be strategic with small
amounts of money
 Can create a very positive internal
discussion around the role of the
community foundation
 Not always perceived positively as some
see it as “taking funding away” from
other needs
GRANT PROGRAM GOALS
(YOU HAVE TO CHOOSE)
 Think about what you want to achieve with your grant dollars
before the proposals come in
 Talk about the nonprofits in your community, their role,
impact and their challenges
 Are you interested in supporting:
• Programs for particular populations? - youth, seniors
• Particular sectors? – basic needs, education, arts
 Think about how the funds you have can make the most
difference
TYPES OF GRANTS
 Operating – grant for general operations of a nonprofit
 Program support – to fund an existing program or
start a new one
 Capital – structures, furnishings or equipment
 Capacity-building – to improve the functioning of a
nonprofit
 Planning grant
 Program-related investment – using investment
dollars to provide value to your community
GRANTMAKING PROCESSES
 Establish criteria and
priorities
 Balance priorities against
available resources
 Number of cycles; timetable
 Design orientation and
training for grant committee
members
 Create structure for review
process
 Letter of inquiry first or just
proposal?
 Site visits; document
charitable status; other
review process
 Same process for all or vary
by grant size?
 Establish reporting
requirements
 Grant guidelines and
materials–should be publicly
available
RESPECT YOUR APPLICANTS AND GRANTEES
 They are the ultimate reason we exist
 Understand the power differential
 Try to understand the reality of their world
 Keep your proposal and reporting in balance
with the resources you provide
 Communicate in a timely fashion
PENSION PROTECTION ACT OF 2006 (PPA)
Why?
 Senate Finance Committee concerned about abuses in the charitable
sector including:
• Abuse of donor advised funds
• Control by donors over scholarships
• Personal benefit by donors
What?
 Defined Donor Advised Funds (“DAFs”) for the first time
 Distinguished DAFs from “single” advised funds and
scholarships with donor advising
 Delineated key aspects of due diligence for expenditure
responsibility
 Created the IRA Charitable Rollover
WHAT IS EXPENDITURE RESPONSIBILITY?
Reasonable and prudent due diligence to confirm that a
grant is used for qualified charitable organization, purposes
and/or programs.
Two ways of exercising expenditure responsibility are:
1.
Documenting that you are granting to a charitable entity, that
is, a 501(c)(3)/509(a)
2.
Taking on additional documentation and reporting
requirements when you grant to a non-charitable organization
for charitable purposes. This is typically called “taking
expenditure responsibility.”
WHEN IS “TAKING ER” REQUIRED?
 Grants to any organization not qualified per 501(c)(3)
 Grants to individuals (Scholarships/Disaster Relief/Good
Samaritan)
• Criteria/Broad charitable class
• Screening process
 Five Steps
1. Pre-grant inquiry
2. Written agreement
3. Separate account
4. Regular reports
5. 990 reporting (Use schedule O to explain details)
SCHOLARSHIP FUNDS
 Pension Protection Act created many new
requirements for the administration of
scholarship funds
 Most particularly, donor may not control the
distribution of scholarships
 For more information, contact the GIFT office or
access recorded webinar on the PPA
COMMUNITY PROJECT FUNDS
 A group of individuals
determine a solution to a
community need (grassroots
project)
 The group does not have 501
(c)(3) status
 They want to use the
community foundation as an
umbrella for donors to make
charitable gifts
 Fund agreement required,
stating charitable purpose or
program
 Can be a one-time project or a
new program
 Grants made to vendors for
specific charitable purpose or
program
 Determine liability issues
 Expenditure responsibility
required
 Community foundation is
operating the program directly
FISCAL SPONSORSHIP: ACCEPTABLE
 An organization determines a solution to a community need (grassroots
project)
 The group does not have 501 (c)(3) status, could be a mutual benefit
organization, etc.
 They want to use the community foundation as an umbrella for donors
to make charitable gifts
 Fund agreement required, stating charitable purpose or program
 Can be a one-time project or a new program
 Grants are to the non-charitable organization for the charitable purpose
or program
 Determine liability issues
 Expenditure responsibility required
CHALLENGING ACTIVITIES
 During the early years a community foundation tends to say
“yes” to everything
HOWEVER
 All these activities come with a huge workload driving up
expenses
 Community foundation should have policy on what to allow
 Community foundation should consider the fee structure
they will charge
 Community foundation should consider “opportunity cost”
COMMUNITY LEADERSHIP
Community foundations have knowledge, connections,
influence and resources that can be used to for positive change
in a community Every community must assess its capacity for leadership before
jumping into this role.
Values, culture and will
Relationships
Resources
Understanding and skills
LEVELS OF COMMUNITY LEADERSHIP
Levels of community leadership listed in order of
increasing complexity/risk:
1.
2.
3.
4.
5.
6.
Community engagement
Bridge for communication
Provide a product or service
Proactive grantmaking
Community convener
Community initiative
COMMUNITY ENGAGEMENT
Example
 Participating in community activities and organized by
other groups or institutions
 Sponsor a community event or activity
Considerations
 Easy to do
 Everybody wants the CF “at the table” so be cautious
about overextending
 Good way to learn about community, forge relationships
BRIDGE FOR COMMUNICATION
Example
 Bring together a few grantees with similar missions to create
relationships
Considerations
 Fairly easy to do; not much risk
 Do a little background work to make sure you are not walking
into some bad history
PROVIDE A PRODUCT OR SERVICE
Examples
 Provide training or other capacity-building opportunity
for not-for-profits
 Host a speaker on philanthropy or more specific topic
Considerations
 Involves additional cost and staff time
 More public visibility
 Not much risk
PROACTIVE/STRATEGIC GRANTMAKING
Example
 Allocate a portion of unrestricted grantmaking to a
particular area, need or opportunity
Considerations
 Constructing the “strategy” and defining intended
results can be positive by time-consuming
 Moves into a more political arena both internally an
externally
COMMUNITY CONVENER
Example
 Organize a community meeting to discuss an
issue or opportunity
Considerations
 Much more public
 Needs considerable preparation to go well
 CF will be perceived as having some ability to
follow through on whatever happens
 Think about the end game
COMMUNITY INITIATIVE
Examples
 CF declares it will address a particular issue
Considerations
 Enables CF to engage broadly and demonstrate a major “value
add” to the community
 Requires significant investment of time and money for which
there is likely no revenue stream
 Very public; CF reputation can suffer if problem is not “solved”
 Possible donor alienation
 Possible political controversy