For many charities, the world of private and family foundations is an undiscovered frontier. While many in Canada are familiar with their local community foundation or larger public foundations, a large percentage of organizations have never attempted to explore the vast and diverse assortment of private foundations that invest in solutions aiming to make life better for everyone.
However, we are not always certain what variables separate strong foundation prospects from lesser ones as we navigate Google or perhaps our favourite online funding databases like Grant Connect. Below are five (5) variables we must bear in mind when determining which private foundations are most likely to support our charity’s programs, capital projects and other initiatives:
1) Assets
Asset totals are a good indicator of a charity’s vitality. Since proceeds from private foundations are generated from interest income, the larger the asset base, the higher the amount of available funding. Total assets of seven-digit dollar amounts or more are preferable. Yet some foundations with asset totals of $999,999 or less that focus their disbursements locally might be a suitable prospect for smaller organizations situated within the same geographical area.
2) Year of Incorporation
Older private foundations are more likely to have a higher grant-making capacity. Yet they are also likely to be “set in their ways” by granting to a set of preferred organizations and may not be overly responsive to new proposals.
In contrast, foundations established recently may still be trying to “find themselves” in terms of what specific charities or types of causes they wish to support. They tend to be more receptive to first-time funding applicants.
3) Ratio of Number of Grants & Total $ Grants Made Annually
A key objective of any organization approaching a foundation for the first time is to gauge the probability of having their application approved for funding. One method is observing the number of grants that a foundation awards in relation to its overall $ amount of grants made annually.
A favourable ratio is for every $500,000 that a foundation approves, it allocates them in the form of 20 grants or more. You can prorate this ratio for larger amounts – eg. at least 40 grants for every $1M in grants awarded.
The ratio indicates how much a foundation ‘shares the wealth” by granting to several different organizations rather than supporting the same group of charities annually. Foundations that demonstrate flexible grant-making practices are most apt to give each funding proposal serious consideration.
4) Variety of Charities & Projects Supported
If there appears to be no rhyme or reason regarding the types of charities or projects that a foundation supports, it is possibly due to an absence of any specific focus or grant-making criteria. Giving to a range of different causes usually means such foundations are frequently receptive to first-time applicants and are willing to fund program, operating and capital projects.
5) Designated Contact Person
A majority of private foundations are simple operations with no staff, office headquarters, website or social media presence. Many are simply a group of 3 or 4 trustees who meet periodically to review submitted proposals and make funding decisions. Preciously few of them have designated contact people who serve as the foundation’s first point-of-contact.
Designated contact people play a crucial role since they frequently have direct access to the decision-makers and are fully aware of their foundations current funding priorities. Cultivating ties with designated contacts is important for charities since it enables them to understand a foundation’s current focus, determine if their proposal is a fit and ascertain whether it is worthwhile to submit. Thus, when identifying funding opportunities among private foundations, focus on prospects where there will be human interaction.
