Donor-advised funds are now the fastest growing source of potential grants. These funds, created by donations from individuals, are managed by financial companies and community foundations, which invest the donations, then distribute the funds based on donor recommendations. Two articles in the July 15, 2010, issue of The Chronicle of Philanthropy examine the growth of these funds and their distributions. In "After 2 Years of Tough Losses, Donor-Advised Funds are Surging," Emma L. Carew and Ben Gose report that donor-advised funds granted a median of 16% of their assets to charities in 2009. (This far outstrips the percentage donated by most large private foundations, which are mandated to give at least 5% of their assets annually.) Several funds reported that their receipt of new gifts in the fiscal year ending June 30, 2010, topped previous years. In "Charities Can Expect More Money to Flow From Donor-Advised Funds," Ben Gose reports that, when adjusted for inflation, overall growth of donor-advised funds at 64 organizations went from $13.48 billion in 2005 to $16.86 billion in 2009.

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The U.S. Department of Housing and Urban Development (HUD) has revised its grantmaking process to reflect a new strategy and new priorities. The new strategy: use housing grants to address other outcomes that are important to residents and their communities. The article, "Discussion Highlights How to Navigate HUD Grants Maze" (Federal & Foundation Assistance Monitor, July 2, 2010), details the changes and lists HUD’s six new priorities:

1. Job creation
2. Sustainability
3. Promotion of fair housing
4. Capacity building and knowledge sharing
5. Using housing to improve other outcomes (e.g., job creation)
6. Increasing knowledge about housing policies that link housing improvements to access to education, transportation, and other important services

Here’s how two of HUD’s grants programs will implement these priorities:

• The Choice Neighborhoods Initiative will make grants for converting distressed neighborhoods into viable mixed-income communities to local governments, public housing authorities, nonprofit organizations, and for-profit developers.
• The Sustainable Communities Regional Planning Grant Programs will make grants for planning aimed at integrated housing, land use, economic and workforce development, transportation, and infrastructure improvements. They'll go to multi-jurisdictional partnerships, regional collaborations of state and local governments, metropolitan planning organizations, educational institutions, and nonprofits.

Other programs include grants to address the public housing, training, employment, and financial literacy needs of seniors; grants to higher education institutions to address community development needs; and grants to higher education institutions to support doctoral candidates in housing and urban development.

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It may be your responsibility to write the proposal, but to prepare the narrative and budget sections, you’ll probably need to ask your co-workers for some essential data. Why not make this process easier for everyone by following a few suggestions from Cheryl L. Kester ("Getting the Information Your Proposal Needs from Others," CharityChannel, June 8, 2010)?

• Acknowledge that your co-workers’ time is valuable and that they are busy with important work. Don’t make your request seem more important than what they’re already doing.
• Find out how they prefer to communicate (in person, by phone, by email, etc.), and use their method, not yours.
• Don’t waste their time—make requests only when necessary, and hold on to the information they’ve given you previously.
• Ask for what you need early. Give your co-workers as much lead time as possible.
• Be absolutely precise about what you need and when you need it.
• Always say thanks and provide treats on occasion.
• Don’t bring your boss into this process unless all else fails.

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If your charitable organization has failed to comply with IRS annual filing requirements, you may still be able to salvage your tax-exempt status without having to reapply. Here’s the latest word from the IRS, as of August 19, 2010:

"Tax-exempt organizations that fail to satisfy annual filing requirements for three consecutive years automatically lose their tax-exempt status. The IRS is providing one-time relief that will allow small exempt organizations to come back into compliance and retain their tax-exempt status even though they failed to file for three consecutive years. If an organization loses its exemption, it will have to reapply to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.

"This one-time relief benefits Form 990-N (e-Postcard) and Form 990-EZ filers only. Organizations required to file Form 990 or Form 990-PF are not eligible and are automatically revoked if they fail to file for three consecutive years.

"List of organizations at risk of automatic revocation: The IRS website has a list of organizations at risk of losing their tax-exempt status because, according to IRS records, they have not filed for 2007, 2008 and 2009. The list contains the name of the organization and its last-known address. Check this list to see whether your organization is at risk of automatic revocation and can avoid this consequence by following IRS guidance."

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No one needs to know about or track the nearly 100,000 grant-making foundations in the United States. Even large organizations may need to track only 100 or 200 foundations; for smaller organizations, there may be only 20 to 40 foundations with potential.

While the world of foundations does change, the extent of that change is small from year to year, and the speed is relatively slow. New foundations are created all the time. But many of the new ones are relatively small family foundations. Donors who, in the past, might have created foundations now increasingly use community foundations to reduce the paperwork of running a small fund.

Although online subscriptions to funder databases may be useful, they are not the only way to find foundations. Much of the information you need is available free, and you can use search strategies that make the most of those resources.

It’s important to remember that the two primary links to a foundation are usually geography and field of interest. Except for the large national funders, most grants are made within a foundation’s own state or local geographic (sometimes multi-state) area. So you can eliminate tens of thousands of foundations that give only in one state or one city or county—if it’s not your city or state. You can cross another set of foundations off your list because they do not care about your issue. One of the ways foundations create order out of chaos is by being specific about what they will and they will not do. Exceptions are made, particularly on a very local basis, but don’t count on exceptions—they should not be a major part of your search strategy.

Most grantseekers find their prospects are, with some exceptions, divided into two main categories. The first is larger national, regional, and state-level foundations that make grants in a specific field of interest (youth, arts, environment). These foundations generally have staff and websites. The second category is smaller local foundations. These generally have broader interests—stated geographically rather than by topic. They are less likely to have staff or websites.

A thorough search every year or two should identify your prospects. Look at a list of foundations with potential the same way you would look at a list of individual donors with potential. You want to know as much as you can, watch their behavior, and decide how best to approach them.

Finding prospects
What resources can you access for free simply by going online or by driving a few miles?

• Your local library: Your local library’s reference department may have a variety of tools, including printed and online directories. They may have state foundation directories, which generally include not only the multitude of small, local foundations within the state, but also any national foundations that have a history of making grants in the state. Libraries that actively seek grants may also have materials in their files from specific local funders.
• Foundation Center Cooperating Collections: The Foundation Center, which has a wealth of services for which it charges, also fosters a set of publicly accessible cooperating collections around the nation. These collections are generally, but not always, housed in libraries, and they include electronic and printed databases from The Foundation Center. Each of these collections has a trained librarian who provides orientations to the collection and can help with special problems. Many of these collections publish the schedules of their orientation sessions. Some also host "Meet the Funder" events, where representatives from local foundations talk about their funding programs.
• Regional grantmaker associations: There is a growing network of regional associations of grantmakers (RAGs) and many have websites with membership lists and information about the local grantmaking scene. The national organization for these groups is the Forum of Regional Associations of Grantmakers. The Forum provides links to the RAGs around the nation.
• The Grantsmanship Center®: The Grantsmanship Center’s public website lists (under Funding Sources) the largest foundations in each state; community foundations in each state; corporate giving programs; and state government grant web pages. It also provides hot links to short profiles of the listed foundations and community foundations. (Access to the Center’s more extensive online grants database, GrantDomain, is available for a fee.)
• Community Foundations and United Ways: In addition to their own activities as grantmakers, community foundations and United Way chapters often help to facilitate grant searches by hosting grant information centers, providing links to other foundation funders or search engines, or hosting "Meet the Funder" events. Check out the websites of local community foundations and United Way chapters for information about their specific activities and events.
• Use community and professional networks: Attending local events, picking up annual reports from other organizations, being active in professional and community organizations, developing networks with other grant and development professionals, and other networking activities will bring you funding leads you might not find otherwise.
• Don’t forget web searches: As simple as it sounds, using web-based search engines can provide leads. Basic queries like "foundation grants children Arizona" or "foundations Miami" (which brings up both Florida and Ohio) will bring up both names of foundations in those areas and organizations (community foundations, United Way chapters, colleges, and other organizations like Junior League) with an interest in disseminating information about grant funding sources.

Learning more
Two of the most useful tools for learning about a foundation are its own website, if it has one, and its IRS 990-PF tax return. You will want to know to whom the foundation gives grants, the typical size for gifts, who are its key staff and trustees, and whether it publishes grant guidelines.

When you have the name of a foundation, first try a web search. Even if a foundation doesn’t have a website, you may find useful references to other grants given in your area. Staffed foundations have learned they can save a great deal of time and money by having a website—it reduces printing and mailing costs, as well as the number of calls and proposals from inappropriate applicants. Much of the key information you seek can be found there.

The foundation’s tax return, the 990-PF, is easily accessible. The Foundation Center’s free Foundation Finder tool at www.foundationcenter.org will give you a short profile of the foundation and links to past tax returns. GuideStar, at www.guidestar.org, provides background information submitted by the foundation, as well as links to the 990-PF. If you have access to the Grantsmanship Center’s alumni website, you may also access 990-PFs there.

The key information in the 990-PF, which is critical when a foundation doesn’t publish any information about itself, includes gifts given during fiscal year of the tax return; names of officers, trustees, and key staff (if any); and brief guidelines for applicants (if any). By examining the list of grants given over several years, you will learn the range of gifts, the type of grants, the typical recipients, the degree to which the foundation funds new recipients each year--or whether it gives to the same organizations year after year (which is typical of smaller family foundations).

Chuck Putney has been a consultant trainer for The Grantsmanship Center® for more than 20 years. He has worked extensively on successful federal grant proposals funded by the Departments of Health and Human Services, Education, Labor, and Housing and Urban Development.

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