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Second Verse, Same as the First
Part Three
The initial search should result in a set of grantmakers (government and/or private) that may work for your project or program. As I mentioned last week, this will probably be a list of 15 to 20 potential grantmakers. The next step is to look at these grantmakers more closely. Drill down into this list – eliminate those funders that are less than a perfect match.
How do you do this?
Take your list of potential grantmakers and review their application guidelines. Be sure to reference the letter of inquiry you drafted before you began your research. Your letter of inquiry answered some very specific questions, such as the geographic focus, how much money your organization will need, timeline, etc. Now you want to cross-check these specific items against the application guidelines to make sure the grantmakers fit your needs.
If a deadline date is too far out, or too close, you can set that lead aside for now. If grant awards are too small, or the minimum grant award is too large, set those aside. If a grantmaker's guidelines call for a prerequisite or other action (a board of directors made up of regional representatives or an established coalition of local nonprofits) that you know will be difficult to fulfill, set these grantmakers aside as well. Doing so should narrow the field considerably.
If you have identified private grantmakers, you will now want to review their latest annual report or their IRS Form 990 (no need to do both – just select one or the other). If the grantmaker has a website, these documents will usually be posted there.
You can also conduct an online search for the IRS Form 990 using GuideStar. You will need to register with GuideStar in order to use this no-cost service.
For those of you who aren't already familiar with it, the IRS Form 990 is an annual document that public charities and foundations use to report specific financial and operational information to the federal government.
Organizations that claim tax-exempt, public charity status face various IRS reporting requirements. Religious organizations and organizations with gross receipts of less than $25,000 per year are not required to file annual information returns. Most organizations fall into one of these two categories. However, others are required to file one of the following forms:
- IRS Form 990 (for organizations with annual receipts of more than $100,000 or total assets more than $250,000)
- IRS Form 990-EZ (for organizations with annual receipts of less than $100,000 and total assets less than $250,000)
Some of the grantmakers you may have identified will probably be corporations. Corporate giving programs do not file the IRS Form 990 because their detailed financial information is filed under the corporation's tax returns. The information on a corporate giving program is often found in the corporation's annual report, which may be available on a company's website or can be obtained by requesting a copy from their headquarters.
What the IRS Form 990 Provides
The IRS Form 990 provides detailed financial information, such as sources of revenue, a summary of an organization's expenditures, and changes in net assets or fund balances.
Most funders that file a IRS 990 Form include an attachment that details their charitable giving for the previous year. This will often include a list of grantees, their location, the amount given, and for what purpose (e.g., general support, building funds, project support, etc.). The total annual giving is often included at the end of this list. Check to see if the grants given match your own funding priorities. This list will sometimes help determine if you should include or exclude a funder in your funding strategy.
Keep in mind that an organization's financial information is more useful if examined over a longer period of time. One year's IRS Form 990 presents only a limited amount of information that may not be indicative of the organization's prior or future giving priorities and programs.
For the federal and state funding sources you may have found, look for information about the enacting legislation that originally set aside funds for the program. It can be very enlightening and help you determine if this is truly a good match for your program or project. Also, check the application guidelines, just as you've done for private grantmakers, to help you determine if they meet all of the specific criteria you outlined in your draft letter of inquiry.
Once you have collected all of this information, read through the materials and eliminate those that obviously don't fit the proposed project. Your list will shrink considerably. Remember: one strong lead is worth 100 weak ones. (By the way, this is a great job for a volunteer, or a board member who is willing to take on fundraising activities but isn't too keen on asking individuals for donations.)
At this point, you should have narrowed your search to half a dozen, or fewer, grantmakers. It will probably be a mix of government and private grantmakers. Next week, we'll talk about connecting with the grantmaker. What questions you should ask, and how do you prepare for that first contact.
Tracks to Success is edited by Katy Mulcrone.
Questions, comments, suggestions, and useful tips for other Tracks readers
can be sent to her at katy@grantstation.com.
If you would like to suggest a topic for a future Tracks
to Success series, or if you are interested in writing
a series for us, please email
Katy, or call our toll-free number: 877.784.7268.
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