Monday, November 12, 2007

Grant Writers, Commissions, Best Practices, and the "Why?" of it All...

Happy Veterans Day! "THANK YOU!" to all of you who have served in our country's Armed Forces, and to you who were/are at home missing them while they did/do so. Our country is indebted to you for your selfless and brave service. If you would like to support our active duty service people, consider the organization Operations USO Care Package . For service people who've returned home, consider contacting your federal representatives to request that the U.S. Department of Veteran Affairs Hospitals receive better funding and support now and in the future.

Maya Norton, author of The New Jew: Blogging Jewish Philanthropy is hosting the November 2007 Giving Carnival, a virtual discussion about philanthropy, that we'd love to have you join. All of the details are available on her post, "Announcing November's Carnival of Giving..." Check it out, join us, check back to read our colleagues' responses, and respond to one of them. Be a part of the virtual philanthropy community and discussion. This month Maya asks us to consider what business practices nonprofits should adopt to save agency resources.

Her question happens to relate to a discussion that I had with a friend this weekend.

My husband and I were at a fundraiser (as supporters) and per chance sat at a table with one of the organization's board members. During polite discussion everyone shared what they did professionally. My husband mentioned that I am a grant writer. The board member responded that I should contact their organization. She eagerly shared that they've been without a grant writer for a few months, and they provide their grant writers with a commission from each grant received.

We live in a small town. We moved here from Seattle. My nonprofit career began in Seattle where there is a tremendous focus on professionalism in the nonprofit sector. Excellent, professional, nonprofit affiliations abound there, with focuses on recent study results, best practices, ethics, continuing education, conferences, and dialogue between anyone and all involved in philanthropy. See my post, "Talking Is Good" , "Yes, Grant Writers Should Talk Amongst Themselves..." , and "This Past Week A Group of Grant Writers Networked..." When we moved here I, admittedly naively, struggled with the difference in not for profit professionalism between where I'd come from and here. Despite my ridiculous expectations, the reality in this small town is that the well meaning nonprofit professionals here have not and do not have exposure to strong, current, and effective modern nonprofit management practices. The problem is - if you're operating a nonprofit as 'business as usual' and don't proactively research and learn about modern management paradigms, you're operating your organization perhaps less ethically and perhaps less effectively. Actually, probably so.

I mentioned, before, a discussion I had with a friend.

After the fundraising dinner we sat with a friend who was also at our table. My husband was explaining to him that it is considered unethical in American professional fundraising for a grant writer to accept a commission from grants. Our friend did not understand why it should be so.

You've read, here, in some of my other posts the litany of reasons why it is unethical for a grant writer to accept a portion of a grant. Let me reiterate them:

- Grants are not raised by the grant writer. While the grant writer must be knowledgeable, successful, and talented, today, grants are donated based on the nonprofit's track record, effectiveness, mission-success, need in the community, innovation, collaboration/relationships with other nonprofits, etc. Providing grant writers with commissions from grants suggests that it's up to the grant writer whether a grant is given. It is not.

- Those who donate grants are not doing so to pay for a grant writer's services. The grant is given to address the need, and support the effort, described in the grant proposal. Giving any money from a grant to any entity other than the expenses specifically accounted for and described in the proposal is lying to a donor, and frankly, poor nonprofit management. There's a better way. See my post, "What Is A Well Run Nonprofit?"

- Your organization should be managing its resources responsibly. All money that is raised should be going in most part (at least 70% is generally accepted) to your programs. If you are spending portions of donations on overhead or operational expenses other than what you told the donor you would spend it on - why would they ever give to your organization again? Also, why wouldn't they share with other donors who would potentially give to your organization that you've deceived them when they donated? Your organization's reputation is on the line. See my post, "Your Track Record Is Out There"

- It is incumbent on your nonprofit that it be aware of and responsible for each of all of its operational expenses. See my post, "The Word 'Gets" Is in 'Budgets'" Your organization should plan out its annual development (fundraising) plan for this year, and for the long term (i.e. 3-5 years) based on the organization's need today and planned future growth. Your organization should responsibly and ethically follow through with your development plan to raise money as needed, should spend wisely, and save. See my post, "Fundraising Isn't Optional, Nonprofits..." If you know that you need a grant writer today or in one year - plan on paying for their service. See my post, "How Do We Afford Grant Writing?" Raise that extra money needed. Save it for when the expense begins. Grant writers are often staff members, but can also be hired as contractors. Either way - the cost to your organization is overhead if they are working on more than one program's fiscal needs, and should be accounted for as overhead costs. If your organization is utilizing a grant writer for one program's finances, and you plan on paying them from the grants you raise for that program, you better have listed the grant writer expense in the grant proposal budget and expressed it in in writing in your proposal. Grant donors usually do not like to pay for overhead unless they state that they do in their giving guidelines. Always be honest with any potential donor. See my post, "About Grant Guidelines"

- Grant writers should build their relationship with the nonprofit that they work for. Nonprofit organizations should be building relationships with potential donors, including grant donors. Providing grant writers with commissions from grants removes the nonprofit organization's importance in the relationship between donor and recipient and places the grant writer in the key relationship position (as if it's up to the grant writer whether a grant is given). Nonprofits should foster relationships with all interested potential donors. If a potential donor does not donate a grant to your organization - it should be an organizational concern - not an indication as to whether the grant writer is doing their job or not. The grant writer did their job. Your organization, must, now. In other words, if your organization does not receive a grant, call the potential grant donor and ask why. See my post, "The Declined Grant Request" If the potential grant donor you applied to, for instance, states that the proposal was great, they love your mission, and your track record, but are concerned that it appears that there's not enough community interest in the project; your nonprofit can develop community interest (if it is truly there), demonstrate it (i.e. share with them the other grants issued for the project, individual donations raised, major donor donations raised, etc.), and apply again for the grant during the next giving cycle. The grant writer did their job. Your organization still has some work to do to get that grant - but you can!

- Grant writers are providing a professional service just as your social workers, scientists, lawyer, bookkeeper, etc. do. They should be paid a regular fee or salary for their work, not only a payment for "success". Grant writers are not making a sale. They're writing potential donors about why your organization should have their interest and support. Their pay, if based on commission, puts the responsibility of raising grants on them (rather than the organization) and best practices can fall by the wayside in the interest of earning a living. You can not risk ruining your organization's reputation as an honest and well run operation.

- Raising grants is a long term relationship building practice. Success can not be measured simply by whether a grant is issued. Success should be based on how close your organization is with potential grant donors interested in your organization. Having a relationship with them strengthens the likelihood to receive their grant now and others later. For instance, some grant donors employ a standard that an organization must apply at least three times before even being considered for a grant. Why? They may want to see that the nonprofit that they donate to is dedicated to the program or project that they're applying for, and can support the program despite not receiving a grant that they applied for. If your organization follows through and complies with this donor's protocol while demonstrating your organization's operational excellence, successes, and the need in your community for your program - why wouldn't your organization receive the grant now AND then in the future. Grant writing relationship building's goal is not to get one grant now. The goal is to develop relations with potential donors so that support is raised now and in the future.

The best business practice that any nonprofit could adopt to serve its organization's resources is to keep up with and learn modern, effective, ethical management. Implementing demonstrated effective best practices in your organization's operations, as appropriate, will save your organization money, time, and its reputation. When operational issues arise don't continue to do what's broken, or reinvent the wheel, when you can take up what someone else has found to be successful. Find out what's the latest and best.


Unknown said...

thanks for all of the great info. I started a non-profit (a really little one) last year, Karma Dogs. It is growing more quickly than we anticipated and we are working on getting grants and trying to figure out how I can quit my full time job and run the non-profit as a permanant job. I found your blog and articles really helpful. Thanks for posting all of the information.
Kelly Gould
Founder, karma dogs

Arlene M. Spencer said...

Thank you for your kind comment! I'm so pleased that the information, here, has been helpful! Good luck with KarmaDogs!