Does Size Really Matter?

Since the beginning of the Fund, we have funded 75% of the applications.  There have been cycles, and even years, where that percentage has been as high as 90%.  Many funding partners have commented that their funding percentage is almost the opposite of ours, in that it is more typical for them to fund only 20-30% of their applications.  Another significant distinction between the Fund and its investors is that our average grant size is approximately $5,000 and the partners make grants at substantially higher amounts.

Fund grants are for very specific, time-limited management or governance projects.  Historically, we have determined that those projects should be fulfilled for a much smaller amount than an organizational program or service project.   Committee members believed consultants should be able to provide technical assistance for a market rate of $100-150 per hour, and generally complete their consultancy in approximately 40-50 hours. However, we also were open to an organization submitting for another phase of the consultancy, if the project required more work, and therefore, more money.

Over the years, we received negative feedback from consultants that the grants are too small. While most of our grants ranged from $2,500 to $7,500, sometimes we awarded only a portion of the requested amount, in order to stretch the Fund’s dollars, or to encourage the applicant to contribute towards the project through a match.  Although most of the Fund’s grants could be considered “administrative” in nature, none were for “general operations”, nor did they pay for programs, staff or standard annual expenses.

One financial trend might cause a concern for the future direction of the Fund…in 1995, grants averaged $5,817; in 2001, the grant average reached a high of $6,977; in 2005, the grant average dropped to $3,953; and, in 2013, grants averaged $3,526. That represents a 50% reduction in average grant size in the past 12 years. So, as the Fund aged, it was less able, or perhaps less inclined, to make larger grants.

Since the overall amount available to grant on an annual basis remained relatively stable over the past 5 years, (the possible reasons for the fact that it was not increasing in revenues will be discussed in another blog) and demand remained high, we worked hard to ensure that all applications with merit received at least some funding to get started in building their capacity. Certainly, not all consultants, agency execs, or even Fund Committee members agreed with this approach.  Some were very vocal about selecting “a few” organizations and concentrating our grants to those groups, enabling larger grants to be made.

What should be the criteria to ascertain grant size?  Nobody would argue that one size fits all.   Perhaps the challenge is determining when a “large” grant makes the most sense.   For 61% of  Fund applicants, those with budgets under $500,000, the idea of a major grant to build capacity, would be outsized or focus on adding staff, which did not fit the Fund’s criteria.  From one perspective, the Fund existed to leverage talent, ideas, and resources, not to provide them in the majority or entirety. On the other hand, it is widely acknowledged that nonprofits need a plethora of resources to develop into thriving groups, which have the capacity to fulfill their missions.

In hindsight or for the future, should the current grant range of $1,000 to $10,000 change?

6 comments | Add a New Comment
1. Karen Higgins | March 19, 2014 at 05:59 AM EDT

The range of the grants to me seems fair given what the Fund wants to accomplish. I just worry that the grants are getting smaller. Looking at the fund from both a staff person and a consultant point of view, to generate a worthwhile relationship and helpful materials, having 40-50 hours of consultant time allows for that to happen.

2. Rob Meiksins | March 19, 2014 at 01:03 PM EDT

These are very interesting questions and observations. A corollary might be to review trends in the size of grants that were requested: were agencies asking for less or more as the years went by? Relating that to how much was given might have some interesting results.

The old adage goes that it is not how big, but what you do with it. From my experience, a challenge has always been the contained nature of the projects funded. Having the wherewithal to do some capacity building is fantastic and the Fund was completely instrumental in raising awareness of the need to do so. But change does not happen in a few short weeks - the seed can be planted, but not nurtured. Longer term support and guidance is needed for that. Even though the Fund would often be willing to support a next step, there would inevitable be some lag time between the end of one project and the start of the next and there was usually a loss of momentum. It reminded me of Sisyphus, continually rolling the same rock up the same hill.

3. Brenda Peterson | March 20, 2014 at 09:39 AM EDT

We have been awarded NPMF Board development grants on many occasions. (Thank you!) The majority of the time the Board wanted more direction and tools than the grant time period could accommodate. So in our agency, longer periods of time with larger grants awarded $5,000 instead of $3,000 would have been more beneficial for our board. I also thought that the consultants would feel the need to give us extra time resources when they saw a greater need.

That being said, one of the grants we received was perfect (time amount)and the Board felt they received the education and tools needed to take them to the next step.

4. Linda Wade | March 20, 2014 at 03:31 PM EDT

I believe that the range should stay the same. If you are contracting an agency/consultant they already know that the agency that they are interested in them contracting them is on a limited budget and should be able to work within that budget. We here at Above The Clouds had stated that in the beginning and they were able to reduce their fee to fit into the awarded grant. I know that sometimes funders would like you to have matching grants for a project but sometimes just getting operating funds sets the tone if you are able to do that. I always appreciated the help from the Nonprofit Management Fund in all our endeavors.

5. Brenda Campbell | March 22, 2014 at 04:29 PM EDT

Since opening our doors in 2006, I believe that Make A Difference - Wisconsin has received four grants from the NPMF. The first project was funded in full and was absolutely critical to capacity building and the stabilization of a fledgling organization. The others were for partial funding and I note that two of those grants allowed for two phases of strategic planning. Frankly, I assumed that those decisions were made based on your assessment of the needs (and developmental stage)of the organization and our ability to leverage other support at the time of the request. And, you nailed it. One of the strategic planning grants was matched directly from the pockets of those serving on the board of directors, and I am convinced that having that \skin in the game\ leveraged an intense level of engagement in the process and implementation of the plan. I don't think I answered your question here, but I want you to know that the guidance and advice you provided throughout this process was just as critical to the advancement of the organization as the grants were. And greatly appreciated!

6. Scott Gelzer | March 26, 2014 at 04:39 PM EDT

Pat, having been involved in the earlier days of the Fund, I'd make several observations. First, the Fund has, over the years, made grants at the upper end of its guidelines or $8,500 - $10,000. I don't know if that's enough of a range from the Fund's average gift to be significant for study or not.

Second, the Fund did leverage significant regional and national funding in its partnership with the Funders Collaborative for Strong Latino Communities. As part of this project the Fund considered and awarded larger grants, many in the range of $25-$35,000 or even higher. Perhaps some contrast with those grants and those of the Fund would shed light on this question.

Third the Fund awarded mulitple grants in the same year and was also open to underwriting multiple phases of the same project. Would this be considered an effective alternative to larger, one-time grants?

Finally, I think a related question is something like this - in awarding smaller grants what opportunities, if any, might the Fund have missed?

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