The 2020 pandemic year has turned into the 2021 pandemic, and many nonprofits continue to scramble to stay financially afloat. But now, hopefully their focus has turned from their own survival as a nonprofit back to providing programs and services.
Foundations and corporate philanthropy shifted in 2020 to allow nonprofits more flexibility in spending funding awards, so that they could divert those resources towards their operating costs. That trend that has weakened in 2021, as many foundations want to see a return to the kind of programs that show tangible results.
During the COVID-19 crisis of 2020, foundations upped their giving by 17%, for a total of $88.5 billion in contributions, which was about 19% of all contributions — the largest that has ever come from foundations. Social justice issues like racial equity and the wealth gap informed many foundation giving, and that continues.
According to Foundation Source data from fall of 2020:
39% of foundations shifted their foundations’ missions
42% increased their giving
For corporate giving, a recent McKinsey and Co. survey of 30 top U.S. companies revealed three overarching functions that it looks for from nonprofits:
The purpose behind their programs and initiatives
An ability to change and to try new things
Thorough knowledge of operations: your teams and processes
As we near the fourth quarter of 2021, trends in grant funding have stabilized from the rollercoaster of the previous year. So, Boost Midwest has identified the top 5 trends in philanthropic giving in a continually changing world.
Boost Midwest’s Top 5 Trends in Grant Funding
1. Programming over operating costs.
In 2020, grant funders understood the dollars they awarded for specific projects or programs in many instances couldn’t be spent because the pandemic made it impossible to start, complete or achieve their stated goals. And because many nonprofits were struggling financially, many foundations and corporations allowed those grants to be diverted to cover operating costs. But this is not a trend in 2021, so far.
Many funders now want to see a return to programming that shows results and are not as quick to allow grants to be converted if programming is canceled. Just as nonprofits want to return their focus to their primary mission, so do foundations and corporate giving want to see proposals for exciting programs and services. So be sure to include in your proposal:
The needs of the sector your nonprofit serves.
Long-term impacts on the sector and the need to support it.
A 3 to 5 year plan for recovery, possible expansion or improvements to programming, and how critical support is.
Any data, models, and community or stakeholder feedback that supports the program request.
2. Sustainability.
The challenges that nonprofits face as the pandemic months stretch deep into 2021 are profound. So grant makers are interested more than ever in the financial health and sustainability of the organizations it philanthropically invests in.
Donors want to know that the organizations they fund can weather crises from an operational standpoint and focus on using grant dollars for the programs and services they provide as their mission. Consider creating a sustainability plan that includes contingencies for funding if expected sources dry up so that programs and services continue.
Nonprofits can show they are working towards greater sustainability in the future by demonstrating:
Collaboration, or a willingness to collaborate, with other nonprofits.
A plan to improve the efficiency of your operation.
How you will build up your cash reserve for greater resilience.
Your ability to generate revenue in ways that don’t rely on grants.
3. In-depth planning.
Grant funders will be interested in your plan for the next 12 months when considering awards because of the pandemic-shaped question mark over 2021 and into 2022. The only thing nonprofits and foundations can be sure of is that nothing can be counted on for certain. That’s why creating an in-depth plan for potential donors is one way to show that your nonprofit is looking to the future while taking the current circumstances into account.
Boost Midwest knows that an in-depth plan for nonprofits right now may make the difference between receiving grant funds or being overlooked. So, we recommend detailing the following:
What services you want to provide.
What programming you can know your nonprofit can offer.
The number of people your nonprofit plan to serve by each program.
Multiple back-up plans for programming if your original plans don’t work out.
4. Broader support for social issues.
Foundations and other grant funders responded to COVID-19 and a year of reckoning with social issues around equity and justice by giving more freely and supporting a diverse umbrella of nonprofits. According to a report by the Center for Disaster Recovery, corporations accounted for 44% of COVID-19 funding in 2020 and foundation giving more than doubled.
Additionally, because of COVID-19’s disproportionate effect on communities of color, many grantors focused on those communities and on smaller nonprofits tackling social issues —35% of corporate and foundation COVID relief funds was directed to Black, Indigenous and people of color (BIPOC) communities.
These changes in philanthropy make this a good time to ask, What does this mean for my nonprofit? The answers may point to a shift in programming or new ways to serve and expand stakeholders.
5. Less federal aid.
The federal government distributed billions of dollar in relief aid during the COVID-19 pandemic. And many community organizations and grant funders stepped up, too, so services and programs that could continue, were able to.
Together, these unexpected funding sources helped nonprofits survive. But it’s unknown if further federal aid will come and many donors are feeling “donor fatigue.” For these reasons, Boost Midwest recommends organizations plan as though those rounds of financial aid will be slim to none for 2021 into 2022.
Boost Midwest knows that grant funding is essential for nonprofits to continue their work but the application process for grants takes expertise, time and knowledge of what grant funders are looking for in proposals. Using the latest information on the current philanthropic climate is one way we help nonprofits find success in writing and managing grants.
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Ready to learn more about how Boost Midwest can help you optimize your project management and operations? Schedule your free consultation call with us today using our Quick Schedule Link here.