Capacity Building Series: Relationship Building with Funders (Part I)

Why do relationships with funders matter? Consider these facts: 

• Charitable giving reached a record high in 2020 with $471 billion donated to nonprofits. Foundations contributed $88.5 billion (Giving USA).
• More than 1.6 million nonprofits are registered in U.S. (Urban Institute, National Center for Charitable Statistics 2000).
• There are an estimated 115,000 foundations in the U.S. (Candid 2018).

So, what can a nonprofit do to stand out while also getting to know funders? In short, having a genuine connection with a funder can break through the competition. The goal is to build authentic relationships. At Methodist Healthcare Ministries, we know through experience that relationships built on false narratives, or projections of how you want others to perceive you instead of who you really are, won’t last. However, making connections by focusing on and prioritizing relationships and trust can help a funder get to know you. Remember, growing relationships is like any other organic process—they need tending on a regular basis.

Creating a Return on Relationship: Importance and Benefits of Relationship Building with Funders

You’re probably familiar with the term “Return on Investment” or ROI. What about ROR (Return on Relationship)? Ted Rubin, a social marketing strategist, trademarked the concept of Return on Relationship. Think about relationship building in terms of a Return on Relationship—there is value accrued due to nurturing a relationship. Relationships inherently are not financial assets; relationships are priceless.

Here are some ideas for increasing your Return on Relationship with funders:

Move beyond only being in a transactional mode with funders. Transactional actions can include questions about grant applications, grant guidelines, grant reports, etc. Instead, think of funders as allies. Funders want their current and prospective partners to succeed. So, find funder allies and then listen carefully to their suggestions regarding your partnership to get the most out of the financial support provided and, perhaps, support beyond the check such as capacity building services. Funders often have expertise, insight, and social capital you can use to be more successful. Many nonprofits and grantees miss out on useful opportunities because they are solely focused on just getting the money versus building a relationship.

Be transformative. Strive to interact in a transformative mode with funders. Being transformative is dynamic. It’s your organization engaging outside of the grant cycle time period. It’s storytelling – your organization’s current events, future plans, and outcomes; sharing ideas or ways to be more strategic. It’s important to set realistic expectations of how much time funders can spend with a partner or prospective partner, so keep balance in mind.

Initiate engagement. Be proactive and seek out funders. This is especially important when it comes to rural grant seeking & philanthropic deserts; funders likely won’t find you. You have to find them!  Some resources to help with rural grantseeking: 

• Rural Health Information Hub (https://www.ruralhealthinfo.org) 
• Texas Rural Funders (www.texasruralfunders.org) 
• Daily Yonder (https://dailyyonder.com) 
• Office of Rural Health Policy (https://www.hrsa.gov/rural-health/index.html)

Seek peer advice. Don’t forget your peer organizations in your relationship building strategy with funders. Search a foundation’s list of recent grant recipients. If a peer organization has recently received funding, reach out to ask how they established the connection. While grant seeking is competitive, your peer organizations will understand that foundations often have diverse funding interests and will trust you to build a relationship based on your organization’s unique programs and services. Incorporate the tips and feedback you receive from your peers into your cultivation strategy.

Understanding the “Foundation” of Foundations

Once you know the different types of foundations–Community, Private, Operating, and Corporate–you can then research how foundations operate and discover their “why” and/or purpose. Knowing this information can help you vet foundations and grant opportunities more appropriately. In your vetting process, look for alignment with organization type, programs, and services that have been funded. Research the typical grant award; grant periods (one year or multi-year); criteria for funding; funding restrictions; timelines; grant guidelines and application process, etc.

A community foundation is a grantmaker that serves a specific community or region. Distinct from a private foundation, which is usually funded by a single individual, family or corporation, a community foundation is a public charity that is funded by many donors and governed by a board that reflects the community it serves. Examples: San Antonio Area Foundation, Coastal Bend Community Foundation, and Community Foundation of the Texas Hill Country.

A private foundation is a non-governmental agency who might be an individual or family that establishes a private foundation to give money (and sometimes other resources) to nonprofits engaged in charitable activities. Examples: Meadows Foundation, Nancy Smith Hurd Foundation, and Anderson Charitable Foundation.

A corporate foundation is a private foundation whose money is contributed by a for-profit business. Think Home Depot or State Farm.

An operating foundation is a private foundation that provides public programming and services and charitable funding. Examples: St. David’s Foundation and Episcopal Health Foundation.

Be curious – Funders who don’t accept unsolicited proposals? Consider and approach funders who don’t accept unsolicited applications if they are a good funding fit for your organization’s work and mission. Many of these foundations are willing to consider new applicants but are using other methods to learn about potential partners to limit the number of proposals they have to review. Your organization deserves to be considered. Don’t dismiss a prospect just because you have read that they do not accept unsolicited proposals, especially if it fits your organization’s work and mission. It doesn’t hurt to ask. Don’t tell yourself no by assuming they’ll tell you no. If it’s a no, then let them tell you no. 

^{Source: https://help.candid.org/s/article/applications-not-accepted}

Look at the funder’s grant awards from the last several years to see its giving trends. The funder could be a good prospect if the funder awards grants to different organizations from year to year, has a similar funding priority to your organization’s mission, and makes grants in your geographic region. However, if a funder makes grants to the same organizations year after year, you might consider looking at other funders instead.

^{Source: https://help.candid.org/s/article/applications-not-accepted}

*In Part 2 of this blog, we will focus on a multitude of ways your organization can approach funders, initiate engagement, and maintain relationships with funders.

About the author: Chloé Laurence (she/her)

claurence@mhm.org

With a professional background working in education, mental health counseling spaces, and the nonprofit sector, Chloé serves her community through education, advocacy, and capacity building. She utilizes her love of learning and connecting with people in her work as a Capacity Building Specialist at Methodist Healthcare Ministries to support and empower our funded partners. Her mission is to strengthen our partners’ organizations so they can continue their incredible work building health equity and serving underserved individuals.