The Role of Grants in Your Capital Campaign

Capital campaigns are typically undertaken to raise large amounts of money for nonprofits that need millions for new buildings, land, or renovations. The nonprofit leaders and boards who take on capital campaigns will approach philanthropists, corporations, and foundations to reach their multi-million-dollar goals.

What role will grants play in your capital campaign?

Foundation support in the form of grants is an important piece of the capital campaign effort. Grants do three things for capital campaigns. They expand capacity, they build credibility, and they incentivize donors.

Grants Expand Capacity

Nonprofits with little-to-no capital campaign experience often find themselves asking for the largest gifts they’ve ever sought from a wide field of donors. Large foundation grants can be easier to secure than large gifts from individuals or corporations. Securing large grants as soon as possible is vital because they can expand the capacity and reach of a campaign. To get the most out of grants, nonprofits should purposefully research foundations that support their mission, then cultivate and educate them. Get to know them personally so the actual grant application is associated with an individual instead of just an organization.

Research

Research is the first step in finding grants that support your nonprofit’s mission and your project. Use a tool like GrantStation to find and filter those granting organizations and specific grants that support your mission. Also look up each organization’s IRS 990 documents, which will tell you the type of nonprofits the foundations have supported in the past, for how much, and who sits on their boards of directors. Also consider filters that show whether the foundations you’re considering support capital campaigns and accept unsolicited letters of intent. When you find grants that fit, make sure that the reporting for grant recipients is not too burdensome for your organization.

Local foundations are your best option, as your presence in the community will be a top priority for them. Regional foundations are next best because they know the needs of your area and the important role you play. If you consider foundations outside your region and if you have no relationship with them, study them closely to assess what they are looking for. 

Determining an ask amount from a foundation that you have no giving history with can be tricky. Use 990s to find a starting point. It’s okay to ask for a little bit more than their “standard” gift, but don’t push it too far beyond that. If the foundation’s giving interests match your project and the foundation has a history of making gifts that large, consider asking for 10 percent to 30 percent of your campaign goal.

Cultivate

Nonprofits should ask their board members if they know any people on the boards of the foundations identified. Personal relationships remain the best precursor to success, making cultivation a top priority. If the foundation knows and loves your nonprofit, they want to see it succeed. If you don’t have a personal relationship, cultivate one by mailing the foundation a monthly newsletter produced internally to control the messaging and timing. And don’t be afraid to pick up the phone and speak with a foundation executive. People give to people, so get to know them on a personal level. 

Apply

Timing is important in deciding when during a capital campaign to apply for grants. The magic number is your having reached 50 percent of your goal. Most foundations won’t accept an application until you show evidence of sufficient support from your community. The exception is when you already have a relationship with the foundation. In that case, they might offer support before you have raised 50 percent, and sometimes they may even provide a lead gift to begin the campaign. 

The best application is no application because you have a relationship with the foundation, but when that’s not an option, an experienced proposal writer will help you to put your best foot forward. They should make sure to weave the foundation’s mission and giving interests into the application copy while keeping it brief. A strong case for support for your capital campaign will help provide the information for the application.

Don’t get intimidated; foundations must give away money. They are looking for a good return on their investment. Do call them after your application submission and give them a reason to remember you.

React

There are two possible responses by the foundation to your grant application: acceptance or rejection. If your application is accepted, you react by responding to the foundation’s reporting requirements, offering any recognition that is appropriate, and eventually reapplying with a foundation that you now have a deeper relationship with or a new relationship with.

If your application is rejected, ask why. Learn from the foundation what it was that kept your project from receiving funding. Take that information and reapply next year or during the next award cycle.

Grants Build Campaign Momentum

During the first half of most capital campaigns pledges and gifts come in regularly from your most active supporters as your solicitors start their work. But the second half of a campaign can be more challenging as you start digging deeper into your donor database and your community to find donors.

Grants build momentum by proving to donors that you have buy-in from respected foundations and that the project is close to being successful. They also create opportunities for additions to your newsletter and other talking points for your capital campaign solicitations and marketing materials.

Grants Create Incentive

The support of recognized foundations can enhance the legitimacy of your campaign, essentially providing their stamp of approval on your effort. Their support lends recognition and credibility to your campaign.

If the foundation is willing, use their gift as a matching grant to incentivize other donors. “Double the size of your gift” is great information to bring to a prospective donor. Challenge grants from foundations are trickier but also effective. The foundation will give X amount provided they see Y amount committed from community: “Act today so we can be sure to show this foundation we have the support of our community and can earn their grant.” Challenge grants are more difficult because you need to raise as much money as the grant in a specified time frame, but this is a great incentive to close gifts: “Make a pledge now so we don’t risk losing the grant.” 

Donors love incentives to either make up their mind and sign the pledge form or increase the size of their gift because they see the campaign as being successful. 

Beyond Grant Funding

Grants will play an important role in your capital campaign as you look to them to expand capacity, build credibility, and incentivize donors, but you cannot rely on them solely. If you are interested in learning more about the capital campaign process, CampaignCounsel.org is happy to help. Learn about our no-fee capital campaign workshop for your board and more on our free resources page.