Federal Grants in Changing Times

Alan Kirschner

Many organizations and institutions have been fortunate to receive federal funding for one or more projects. These many have been small one-year grants, but many have received grants that are large in relation to the size of the organization’s overall budget. Many of these have been multi-year grants.

These grants have allowed many organizations and institutions to focus on program delivery knowing that their funding is “secure.” Some organizations have been fortunate enough to receive state, federal and local funding. Yes, there are a lot of hoops to jump through and lots of paper work, but at the end of the day this funding has been vital to communities and educational institutions across this country. Some of the funding may have been highly visible.  An example would be the federal stimulus grants that helped inject funding into the economy in recent years. Yet most funding is invisible to the people who are benefiting.

Some organizations and institutions that do not receive government grants have felt challenged to compete with those who have access to such funds, even though they too had a valuable service to offer.

Now, many organizations that have depended on government funding are finding their very existence may be in jeopardy due to cuts in federal funding and the impact these cuts are also having on state and local funding.

In order to get a better perspective on what is happening in the area of government funding we turned to Alan Kirschner, President of Kirschner and Associates, a consulting firm that helps nonprofits with program development, capital campaigns and fundraising.

Saad & Shaw – Let’s start at the beginning. With so many people critical of the federal government these days some of our readers may have forgotten why the federal government has offered grants.

Alan Kirschner – The federal government makes grant support available in areas it deems important to the national interest.  Of course, what’s in the national interest varies with the times, political clout, and the availability of resources. Much federal grant support goes to the state, which in turn redistributes the awards to local governments and to nonprofits.

Federal grant support is used to support a range of activities, including scientific research, environmental awareness and protection, career awareness, educational access, access to housing, health education and many other activities.  Many of the innovations we take for granted were based on research funded by the federal government, such as the discovery of DNA.  Much of the progress we’ve made in elevating access to education for low income students has been through federal grant programs, such as Pell Grants and Head Start. Careers that are considered vital to our nation’s future, such as in science, technology, math and engineering, have been promoted for many years with the help of federal grant support to nonprofits.

Nonprofits are a significant beneficiary of federal support.  It is estimated that about 8% of the budgets of nonprofits nationally come from federal grants.  If we include fees from government services, like Medicaid and Medicare, federal support to nonprofits provides almost one-third of the budgets of nonprofits nationally.

Saad & Shaw – How has the process of applying for federal grants changed over the years?

Alan Kirschner – Applying for federal grants varies with the agencies involved and the type of program.  Generally federal grants require more paper work and more documentation than similar grants in the philanthropic world. It often requires more cultivation in terms of getting to know the people involved and their getting to know your organization. The reporting and evaluation are very similar to what major foundations require.

Saad & Shaw – You have a long history of working to secure federal funds for nonprofit organizations and institutions, especially historically black colleges and universities (HBCUs). Can you share with our readers what your experience has been over the years (with a few examples)

Alan Kirschner – I look at the federal government as simply the largest funder by far of the nonprofit sector.  They are like the Gates Foundation on steroids.  And they touch virtually all aspects of the work of the nonprofit sectors, not just those that a particular funder chooses to support. It’s very important from a nonprofit perspective to at least be aware of the potential for support from the federal sector.

Over the years what has surprised me about federal grants is the openness and flexibility of many federal agencies to award major grants that aren’t necessarily a part of a formal request for proposals (RFP). These are known as discretionary grants. Virtually all agencies have budgets which award discretionary grants and the individual awards can be sizeable – 6 and 7 figures.  Nonprofits should think about ways that by keeping within their own missions, they may be able to help address the goals of particular federal agencies.  When an agency sees that a nonprofit can help the agency achieve its bottom line by making a direct award to the nonprofit, it’s a win/win and the agency is more likely to consider a partnership.  The federal agency benefits by investing in a nonprofit that offers to make a measurable difference in its space, and the nonprofit benefits by carrying out its mission through support of the federal agency.

I’ve been involved with a number of such programs. For example, the Department of Defense was interested in expanding participation of minority serving institutions in their grant and contract programs.  They awarded a contract with the United Negro College Fund to increase participation of HBCUs in DOD programs.  HHS wanted to increase involvement of HBCUs in AIDS awareness programs.  Rather than working individually with HBCUs, HHS awarded a grant to UNCF to increase representation of HBCUs in AIDS awareness.  The Department of Energy wanted to expose students from low-income and underrepresented minority backgrounds to careers at DOE.  They awarded a grant to UNCF to administer a summer internship that exposed students to a variety of careers. Each of these awards came through discretionary grants administered by federal agencies.

Saad and Shaw – What about the current and future landscape? How have recent economic changes and changes in the political environment impacted government funding for nonprofits?

Alan Kirschner – With the federal stimulus funding over, current budgets for federal grants are tightening.  The prospects for future funding through the federal government are very uncertain.  The Administration may identify a few areas for increased support that are necessary to keep America safe and competitive. For the most part, federal grant support is almost certain to decline in the next several years and some of the budget cuts will be severe and many have already begun.

Saad & Shaw – What advice can you offer to organizations who are already seeing their budgets cut as funds are reduced?

Alan Kirschner –   It’s very important for nonprofits that have grown dependent on federal support to develop strategies for replacing federal funding with private dollars. It’s critical to have a plan for doing this.  Private philanthropy won’t be interested in replacing federal dollars.  New strategies must be developed to appeal to new funding interests.

Saad & Shaw – would you share with our readers an example of how an organization or institution has successfully transitioned from a dependence on federal funding, to other forms of funding?

Alan Kirschner – I would offer the example of the Partnership for Public Service, a national nonprofit that focuses on federal public service.  They had received federal support to encourage young people to consider federal careers.  As those funds were drying up, the Partnership developed a plan to seek support from foundations interested in higher education and public service.  Through this targeted strategy, PPS  received a larger, multi-year commitment from the Annenberg Foundation that exceeded what they were receiving from the federal government.  In addition to seeking private funders, consider whether it’s possible to develop a sustainable revenue stream through charging a fee for the service or activity provided.

Saad & Shaw – without naming names, would you share what has happened to organizations/institutions who knew they would be facing cuts (or elimination of funding), but did nothing about it?

Alan Kirschner –   It’s important for organizations receiving large federal grants to make sure they are in a position to cut a federally funded program without unduly impacting the rest of the organization.  Such programs should operate as fifth wheels, not as a core part of the organization’s funding. The organizations I’m familiar with that have been hit hard by federal cuts have either paired their federal operations as funding declined or were absorbed by other nonprofits.

Saad & Shaw – Where can our readers turn for more information about federal funding in specific and government funding in general?

Alan Kirschner –   The best source for federal grant information would be the website of the agency that your organization is interested in.  That will provide the most detail and should be most useful. Grants.gov is also a useful information source.

Saad & Shaw – Our last question, what words of wisdom do you want to share with our readers?

Alan Kirschner –  It’s never a good idea to be totally dependent on any one source of funding.  The federal government will remain the largest source of philanthropic funding in America even with dramatic cuts.  It will remain an important place to seek support. If you’re a current federal grant recipient, this is a time to renew your contacts with federal agencies and try to get as much information as possible about the prospects for continued support.    Your program people in the agencies can be advocates for your organization and the more you are on their radar the more likely you will be able to weather any coming storms. If your nonprofit doesn’t currently receive federal support, it’s important to recognize that federal grant research and development is a time-consuming process. It’s critical to have staff that can devote a significant portion of time to finding opportunities and following up.

To learn more about Kirschner and Associates call (301) 365-1773 or email a_kirschner@yahoo.com.

Let us know what you think. And, as always, have a FUNdraising Good Time! – Mel and Pearl Shaw

© Copyright Mel and Pearl Shaw. Mel and Pearl Shaw are the owners of Saad & Shaw. They help non-profit organizations and institutions rethink revenue sources. They are the authors of How to Solicit a Gift: Turning Prospects into Donors. Visit them at www.saadandshaw.com or call (901) 522-8727.

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