The Importance of Funding Opportunities for Small Nonprofits
The nonprofit space includes organizations of all sizes, from large national and international organizations with hundreds of employees to tiny startups with one employee or no paid staff at all. They’re all working hard to solve an issue or serve a specific population, but it takes money to do so.
Unfortunately, there’s a lot of money concentrated in big foundations that’s often not accessible by those smaller organizations that are just getting started. Foundations want to grant money to organizations that can prove their ability to follow through and use that money to make an impact. Often times, that means the application requires multiple years of data showing that the organization has been successful with existing funds. And, in many cases, funds are restricted to programming rather than administrative costs.
That leaves many small nonprofits and especially startup nonprofits without the funding resources they need to be successful in the first place. Starting a nonprofit requires allocating funds for administrative efforts, like hiring an executive director, launching programs, and setting up an office location. Yes, nonprofit programming is what ultimately makes an impact, but it can’t happen without the administrative structure in place.
With the current structure, all of the foundation money ends up concentrated in organizations that have already proven their success while small startup nonprofits struggle to get off the ground. One way to shift this balance of power would be to set aside smaller grants for administrative and startup costs, costs sometimes referred to as “capacity.” It would be incredibly beneficial in helping communities implement much-needed programs.
Yes, there is some risk to granting funds to a startup organization. There’s the possibility of grants being awarded to nonprofits that don’t survive their first year or two in existence. But there’s also significant reward for those smaller organizations that did succeed and grow, as well as the communities they serve.
One great way to approach this would be a tiered grant program specifically for the cost of capacity, where startup organizations start with a small amount and can apply for progressively higher amounts in future years. Maybe it’s $2,500 or $5,000 to start the first year. That way it’s not burdening a startup organization with too much money or too much responsibility, but it is providing some funds for them to begin their work.
As with any grant funding, the organization would report on how they used those funds to assist with startup costs and how they plan to use future funds. Foundations could also create a support structure for startup nonprofits to help train them in administering the grant funding in a fiscally responsible way. By taking a more active role in mentoring startup organizations and helping them succeed in reporting and other efforts, the foundation helps ensure better use of funds overall.
Oklahoma is a very grassroots-oriented state, and we need to make some changes to the current foundation funding models to allow small startup nonprofits to succeed in our community.
If this is a topic that interests you, and particularly if you are looking at ways to support small nonprofits through your personal giving, here are a few book recommendations: