By Jon Pratt, Executive Director at the Minnesota Council of Nonprofits

In an ideal world every nonprofit would have adequate funding for its authentic mission. Realistically, every organization faces funding complications at one time or another. The difficult, ongoing challenge is for nonprofit boards and managers to successfully assert and maintain a strong focused mission and, simultaneously, get the resources necessary to carry it out.

Nonprofits and their funders need to have a serious discussion about the tradeoffs between achieving donor expectations and supporting nonprofit initiatives. It is inevitable that the grantmaking interaction brings out conflicts and differences in view point, and even opposite conclusions on the same aspect of the relationship.

Since listing differences can be the first step in opening communication toward resolving misunderstanding, the following two lists bring out this conflict. Obviously not all of these apply to everyone, but they represent the strongest feelings on each side.

10 Things Foundations Hate about Nonprofits

  1. Nonprofits that fail to read the foundation’s funding guidelines, or submit boilerplate proposals that do not address the foundation’s’ focus areas.
  2. Nonprofits fail to submit agreed upon progress and financial reports after a grant is received.
  3. Nonprofits that fail to disclose major facts or changes that bear on an organization’s proposal, ranging from key staff, funding, or legal issues.
  4. Nonprofits that read the guidelines but ask to be an exception, or present a contorted argument about why their organizations falls within the corporations interest area: “While our main purpose is x, here is an explanation of why what we do is actually something else the thing you fund,” and then quote the guidelines.
  5. The failure of nonprofits to appreciate limitations on the foundation, including limited time, money, and staff authority.
  6. Organizations that only call when they need money and then don’t send a thank you letter, and fail to take advantage of other resources available from the foundation (reports, contacts with other organizations, ideas on potential new directions).
  7. Nonprofits that don’t accept rejection well, taking it too personally and out of context.
  8. Poorly organized nonprofits: lack of time management, fiscal discipline, or self-sufficiency.
  9. Duplication of effort–too many nonprofits.
  10. Grantseekers that have a smug, self-righteous certainty that their own cause is the most important, and that they act out of ideals while others act out of self-interest.

10 Things Nonprofits Hate about Foundations

  1. Foundation staff fail to take the time to schedule time for meetings, site visits or carefully review the proposal necessary to fully understand an organization’s needs.
  2. Foundations and corporations are not sufficiently open to new organizations to get corporate support.
  3.  Grantmaking guidelines lack clarity, or use buzz words laden with meaning clear only within the foundation, so that reasonable people reading the guidelines can reach completely different conclusions about the foundation’s funding interests.
  4. Foundation staff are inaccessible, hard to meet with or get on the phone, let alone get to return phone calls.
  5. Foundations mislead organizations about the likelihood for funding, encouraging them to submit proposals or feel positive about funding requests when the actual prospect for support was slim or none.
  6. Foundations have quick fix funding expectations. “Yes Minister,” one of the wittiest British television comedies, portrayed the plight of an appointed cabinet officer manipulated by career civil servants. In one episode, the minister’s chief aide described the four words to use in a memo to guarantee approval as “quick, simple, cheap, and popular.” The four words to use to guarantee rejection were “lengthy, complex, costly and controversial.” To totally squelch an option the decision would be described as “courageous.” Nonprofits feel buffeted by changing funding interests, with increasing emphasis on what this grant will accomplish this year.
  7. Foundations that reject proposals by form letter, without giving specific reasons or explanation of why the proposal was not funded.
  8. Foundations that try to change what a nonprofit does, or seek to achieve marketing or public relations goals through support of an organization. This presents a strong temptation for the organization to deviate from its mission. (By contrast, the number one nonprofit frustration with private foundations is their failure to provide general operating support. Corporate grantmakers have been much more willing to provide general support, and tend to give many more but smaller grants than private foundations. However, corporations are increasing their preference for narrow subject areas and special project grantmaking.)
  9. Foundations violate their own grantmaking guidelines or procedures, stating that they do not fund in a particular area, but turn around and make a grant in that area.
  10. Grantmakers that communicate an arrogant attitude.

Developing a working relationship

Since grantmakers and grantseekers need to work together, these differences are rarely expressed openly. As in other walks of life, the most effective relationships are based on respect, trust, and candor. The difference in the cash position of the parties presents an inherent inequality, but need not get in the way a working relationship. Meeting with nonprofits outside of actual grant negotiations, conducting site visits and being available by phone help achieve accessibility.

88.5 percent of foundation grants are specific to a particular activity (a project, building, or equipment) and are generally limited to one to three years. While most organizations would prefer operating support, foundations exhibit a strong preference to select projects and negotiate their design, considering this scrutiny and selection activity as the key value they add to the process. The conflict between the foundation’s need to express their identity and the organization’s need for autonomy is unlikely to change; making yes-or-no decisions and setting conditions for support is the foundation’s primary mechanism of adding value.

Special projects are frequently designed and discussed in advance with foundations by their applicants, seeking to gain insight as to the likelihood of having a grant approved. While many projects are approved, the risky nature of the process and the need to design, segregate, start up and wind down projects is a substantial expense to the applicant organization. The added costs and dislocations required to implement special projects lowers the value of these funds to an organization (in comparison to operating grants). A too little discussed question is what foundations believe occurs after one of these projects ends.