Foundation Funding Demystified: Your Roadmap to Success

By Lauren Greene, Associate Consultant

Foundations are an important funding source for nonprofits across the country. As you are looking ahead at your philanthropic needs and considering potential foundation support, you need to have a good understanding of how foundation funding has changed over the last few years and how that might impact you moving forward.

How Has Foundation Giving Changed Over Time?

Giving by Foundations Hits Second-Highest Level on Record

Independent and Community Foundation Giving Increased in 2022

Foundations Returning to Pre-Pandemic Norms

Foundation giving was greatly impacted by COVID-19, uncertain economic climates, and social justice movements in recent years. During 2020 and 2021, many foundations gave more than the 5% federally mandated minimum, but we are currently seeing a return to pre-pandemic giving norms. Nonprofits will need to be aware of potential changes to the foundation support they receive, especially if they benefitted from a significant increase over the last few years.

The Rise of Trust-Based Philanthropy

This past year saw the continued growth of foundations using trust-based philanthropy to create more balanced and equitable philanthropy (see our blog post on Trust-Based Philanthropy in Action). Trust-based philanthropy can include making unrestricted gifts, removing invitation requirements from the application process, and reducing reporting requirements. These changes might seem minor, but they demonstrate trust in an organization and help to foster strong partnership between the foundation and the nonprofit.

So, what does this mean for you?

1. Do your research: There are hundreds of thousands of foundations, and it is important to carefully research which ones are the best fit for your work and organization, especially as many foundations are returning to their pre-pandemic missions and priorities.
2. Build relationships: One thing we regularly tell our clients is to pick up the phone. Prioritizing building relationships with potential funders will benefit you when it is time to apply. Update the foundation on your work, demonstrate the impact of their funding, and speak candidly about your needs. Regular communication will help you stand out in a competitive application cycle. Remember to use these opportunities to ask if the foundation has plans to change its giving this year – including changes to dollars given, the size of gifts, the number of grants or the application process. This information can help you plan and have the strongest application possible.
3. ​​Craft a compelling proposal: Research all grant application requirements and clearly articulate how the foundation’s support will make a significant impact for your organization. Make specific requests and follow all grant application requirements.
4. Demonstrate your need and your impact: A strong case for support demonstrates both your need and impact in the community, and is essential to your organization’s fundraising success. Spend time creating a compelling document to lay out your mission, vision, and needs. Use data to show your organization’s important role in your community and overall impact.

While foundation support is essential to the financial well-being of nonprofits across the country, it is important to remember to cultivate relationships with your individual donors, corporate donors, and other supporters. This will diversify your funding sources and ensure you have a strong footing no matter what the future brings.