A foundation's guidelines can read like a rulebook with no author: a list of focus areas, a geographic limit and a deadline. Applicants are left to guess why a funder cares about one issue and not another, and why a strong proposal that fits the guidelines still gets declined.
Foundation priorities aren't random. They come from who holds the money, who governs it and what the foundation is legally required to do with it. This article shows you where to look, what a foundation's public filings reveal and how to use all of it before you write a word of your application.
Start with what kind of foundation it is
The Council on Foundations draws useful distinctions. A private foundation is a nongovernmental, nonprofit organization whose funds are managed by its own trustees or directors, and its money typically comes from one source such as a person, a family or a company. A corporate foundation is a private foundation that draws its grantmaking funds mainly from a for-profit business, and it is a separate legal entity from that business.
A community foundation is different. The Council describes it as a publicly supported, tax-exempt philanthropic institution that pools many donors' funds and serves a defined geographic area, usually no larger than a state.
Those definitions tell you where to look for priorities. A family foundation's focus often reflects its founders' interests and what its board decides. A corporate foundation's giving may be tied to the company's communities and business. A community foundation's priorities are tied to its place and to the donors who contribute. Treat these as starting hypotheses, then check them against the foundation's own materials.
Who actually decides
Decision paths vary a great deal. The pattern many foundations use is staff or a committee reviewing, then a board approving. One community foundation publishes its competitive process this way: its staff team reviews letters of inquiry and invites selected organizations to submit a full proposal, then holds a site visit. A committee of board members and community volunteers reviews the applications and the staff's recommendations. The full board gives final approval.
Other foundations are very different. Some have no staff, so the board itself reviews requests. Others give staff authority over smaller grants. You can't assume which model applies.
What you can do is find the foundation's published process and read it. The guidelines often say who reviews, how often the board meets and when decisions are made. That tells you who to build relationships with and how long to expect between submission and an answer. Talking to a program officer covers how to approach staff when they exist.
Use the payout rule to size the opportunity
Private foundations don't give away money entirely at their own discretion. The IRS instructions for Form 990-PF explain that a private foundation that isn't an operating foundation must pay out its distributable amount as qualifying distributions. The starting point is its minimum investment return, which is 5 percent of the fair market value of its noncharitable-use assets. A foundation that doesn't distribute enough can face a 30 percent excise tax on the undistributed income, according to the IRS.
That gives you a way to estimate how much a foundation needs to give. Say a hypothetical family foundation holds $20 million in assets that count toward that calculation. Five percent is $1 million, which is a starting point for what it must pay out in a year, before adjustments. If its grants typically run around $25,000, that is room for roughly 40 grants. If most of those go to organizations it has funded before, the number of openings for a newcomer is much smaller than 40.
This is an estimate, not a forecast. It does help you judge whether a foundation's total giving can plausibly support the amount you're about to request. These payout rules apply to private foundations. A community foundation is a public charity, so don't apply the same math to it.
Read the 990-PF like a map
A private foundation files Form 990-PF, and the IRS requires every domestic private foundation to make its annual returns available for public inspection. Three parts of that return are worth your time:
- Grants paid and approved. The instructions for Part XV direct foundations to list all contributions and grants paid during the year (line 3a) and those approved for future payment (line 3b). You can see who it funds, in what amounts and for what purposes.
- Application information. The same part asks the foundation to describe its grant programs, including restrictions by geography, charitable field and kind of recipient. If a foundation only gives to preselected organizations and doesn't accept unsolicited applications, it checks a box on line 2. That box can save you from applying to a closed door.
- Who runs it. Part VII covers information about officers, directors, trustees and foundation managers, which is useful for knowing who sits at the table.
Read three years of grants, not one. Look at the size of the typical grant, where recipients are located and whether the same names repeat. Finding foundations that fund work like yours shows how to turn what you find into a prospect list.
Look for signals of direction
Priorities shift in documents before they shift in guidelines. Read:
- The strategic plan or annual report, if one is published. Look for what the foundation says it is trying to change and what it says it has learned.
- Staff and board pages. A new program officer or new trustees can signal a new emphasis.
- Recent grants. A cluster of new grants in an area you hadn't expected is a signal.
If the foundation invites letters of inquiry, letters of inquiry shows how to use what you've learned to make a short, well-aimed first approach.
Your next step
Choose your top foundation prospect. Find out what type it is, read its guidelines for who reviews and decides, and, if it is a private foundation, pull its latest Form 990-PF. Write a paragraph in your own words: what does this foundation fund, who decides and what would make us a fit? Use that paragraph as your brief for any approach.
If a foundation does invite a full application, SoliContraX can help you get from its guidelines to a first draft built from your own materials, then finish it. Get started with SoliContraX.