Fundraising
Fundraising: Foundations

Updated: 6.1.06

Foundations are nonprofit organizations created specifically to fund charitable causes. Foundations are an important funding source for fledgling nonprofit organizations and new programs within established nonprofits because many prefer to support new, innovative initiatives. That being said, foundations provide only 9.8 percent of the $200 billion donated annually by private sources to nonprofit organizations.

As with every other sector of the economy, the economic downturn of the past few years has affected foundation giving. Foundations invest their endowments in the stock market and must distribute a certain percentage of their earnings. By and large, their earnings have suffered dramatically because of declining stock values.

Foundations have responded in several ways:

• Many foundations are attempting to minimize cuts to grantmaking by concentrating the necessary cuts on operating budgets (e.g., staff layoffs, hiring freezes, travel limitations).
• Some foundations have used reserve funds to maintain or increase their grantmaking levels because the economic downturn has created an even greater need for the programs offered by their grantees.
• Some foundations are reducing the number of organizations they support and keeping that support level, while others have made cuts across the board to every grant.
• Others are limiting new giving.

One encouraging piece of data is a survey showing that in spite of the fact that the assets of community foundations dropped by 1 percent in 2001, their grants increased by 18 percent, totaling $2.6 billion in grants awarded.

Clearly, it is a difficult climate for grant seekers, so it is more important than ever for you to:

• Highlight parallels between your proposal and a foundation's giving priorities because foundations are adhering even more rigidly to their giving guidelines
• Focus on programs that demonstrate solid return on investment
• Develop and nurture relationships with the staff and board members of foundations
• Obtain guidance and feedback on funding priorities from foundation officials to ensure your proposal meets their qualifications

Learn all this and more when you download the full Developing a Fundraising Plan: Foundations.