A Half-Century of the Five Percent Rule

In the philanthropic Dark Ages (before 1969) there was no rule that said foundations had to make any grants with their money. Congress more or less closed that loophole with the Tax Reform Act of ’69. There were complications and ambiguities, but in 1976 the “five percent payout requirement” was set in stone. It’s been the default standard for grant-making foundations ever since.

Balancing Data & Drama

Nonprofits are often urged to “use storytelling” to make the case for support. There’s nothing, they say, like a compelling story to drive home the nature of the problem or the opportunity for action. At the same time, foundations ask specific questions and make specific requests for data to make the case: how many, how fast, what metrics, how to monitor and measure and plot your impact.

Name Dropping?

It’s time for the board to come up with names of people with whom the nonprofit should make contact—for a request, for inside information about a community program, for any good purpose that benefits the growth and thriving of the organization. “Well, let’s go around the table and share some of the people you know so we can reach out,” suggests the development director.

Proposal as the Tip of the Iceberg

There’s a lot of blood, sweat and tears involved in creating a compelling, persuasive and fundable proposal. No wonder nonprofits put a lot of eggs in that basket. At the risk of a ticket from the metaphor police, maybe we need to spend more time caring for the chickens and ensuring that those eggs are well-nourished. A lot of work needs to be done before, and in preparation for, a terrific proposal. These are some of the important elements of the iceberg which lie below the surface.

Don'ts and More Don'ts

When it’s time to develop and present a proposal to a potential funder, there are a lot of things a nonprofit might do to improve its chances of a grant. Whatever those positive steps for your organization, here are some negatives—things that are a must to avoid—that apply to most organizations seeking funding.

What's New?

Good news: the foundation has given you a grant, you’ve spent the money and now it’s time to submit an application for another award. This is an opportunity to create a “new top” for your story—a new headline, a fresh look at the challenges, a record of what’s been done and how that sets you up for what comes next. It’s also a chance to avoid sounding like “here we are again.”

Holding Up Your End

It’s not uncommon: a nonprofit’s program staff or its executive director get excited about funding opportunities and ask the proposal writer or development people “put something together and go after that grant! The XYZ Foundation says it’s interested in what we do, there’s a deadline coming up in a week, so write it up and submit it.”

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