 Reason for Hope? What Your Board Needs to Know About Government Funding If the seven nonprofit incomes sources[1] entered a popularity contest this year, the biggest loser would be government funding. As state legislators across the United States come to a close, sessions that caused widespread anxiety, it is clear that government funding has become unpopular. However, dismissing it entirely is a mistake. Even with current cutbacks, nonprofits will continue to receive significant government money. Grants.gov, the official website for US Federal Grants, lists 26 agencies that offer 1,000 funding opportunities. States, provinces, municipalities and others will continue to provide income. This article provides a board primer on government funding to help your leaders maintain a realistic perspective on this source. 1. Why do governments pay funds to nonprofit organizations? · The activity promotes the common good. · More bang for the buck. Nonprofits offer better or cheaper solutions. · Nonprofits provide services that increase the impact of government funding, i.e. support services for developmentally disabled or seniors. · Voters like the mission. Elected officials like happy voters. · An unpopular activity, like tickets from parking in handicapped spots, can be made more palatable by sharing the proceeds. 2. What are some examples of how government support has helped nonprofits? · Utah Judicial Council received $30,000 to support the creation of a Court Visitor Volunteer program to assist elderly and incapacitated persons appearing before the court on matters of guardian or conservatorship. · The Alberta Ballet Company receives $500,000 CA from Canada Council for the Arts. · The Florida Humanities Council awards $2,000 mini-grants to planning and execution of public humanities projects. 3. What types of support do government entities offer? Typically three kinds: a. Grants. Through a competitive application process, nonprofits apply for one-time funding. The application and subsequent contract outlines what the nonprofit will achieve with the funds. Often payment is divided into segments. b. Contracts. While the labels of "grants" and "contracts" are often used interchangeably, they represent two different arrangements. With contracts, again through an application process, nonprofits obtain funds to provide services. If the service is not performed, or less units of it take place than the contract allows, the nonprofit receives a reduced proportion of the award. c. Earmarks. Wikipedia defines an earmark as "a legislative provision that directs approved funds to be spent on specific projects, or that directs specific exemptions from taxes or mandated fees . . ." Generally, your legislator inserts an earmark into a budget or legislation that directs resources to your organization. 4. Is this a common source of nonprofit income? Yes, it is the second or third largest source depending on the reference. In size, government funding ranks after earned income and either before or after individual donations. Historically, governments represent 21 percent or more of all nonprofit income. 5. What are the benefits of government support? · Significant Money. Government funding ranges from around $20,000 and reaches to multi-millions. Individual donations, by contrast, start with $20 or $100 gifts. · High Need. Government funds often help pay for needs that have low individual donor appeal, but high societal need, like help for parents who abused their children, juvenile delinquents, or adults with mental health problems. · Persuade Few. You only need to convince a handful of decision makers of your work's merit, like county commissioners, panel members, and staff. In contrast, individual donor databases include thousands of names. · Renewal Opportunities. With contracts and grants, successful early birds often learn and successfully apply the rules of the game. These rules act as barriers that discourage new entrants.
[1] Mission earned income, individual gifts, government, corporate, foundation and other groups, other income and in-kind.
Read the rest of the article here... More Funding Resources Government funding is only one of seven sources. To learn about the other six, see Can Your Organization Obtain More Income? The 7 Sources This article on government funding is number three in a series about each of the seven sources. For the earlier issues, see Added Value Newsletter Archive For more on nonprofits and funding opportunities listen to our collection of audio downloads, especially Money-tastic #2: Non Profit Income Opportunities andMoney-tastic #3: Creative Revenue Streams for Your Non Profit.
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