4 Myths about Applying to Family Foundations

There are over 80,000 foundations in the United States.  According to the Foundation Center, about half of those foundations are family foundations.  In 2011, there were 40,456 family foundations, and that number has increased since.  That same year, family foundations gave a total of $21,329,932,023 in grants, also nearly half of all grant funding.

private foundation grants

Family foundations are therefore both a prevalent part of the foundation funding world, and a critical source of funding.  The most recent State of Grantseeking report indicated that private foundations (which are not all family foundations, though they frequently are) were the most frequent grant funding source, with 78.5% of all nonprofits that received grants getting one or more grants from a private foundation.

So it's important for grantseekers to understand family foundations as a component of a grant portfolio and fundraising strategy.  Here are 4 myths about applying to family foundations:

  1. Family foundations only award grants to pre-selected organizations.  Many family foundations indicate that they do not accept unsolicited requests.  It's certainly the case that many foundations only give to pre-selected organizations.  But that's not the case across the board, even in some cases where the foundation indicates that it does not accept unsolicited requests.  If the foundation indicates that it does not accept unsolicited requests, do not send in a grant proposal.  But try to find out if the foundation's staff members (if the foundation has staff) or a board member would be open to a conversation to learn about your organization and how it would be a good fit for the foundation's grantmaking goals.  Not all foundations will be open to this, and by all means do not push it if the foundation does not want to meet with you, but in many cases, family foundations in particular simply do not have the bandwidth to handle a lot of unsolicited requests.  But they may well be interested in learning about new organizations, and may then invite an application or an LOI.  Be sure to follow whatever guidelines for communication the foundation prefers.
  2. Family foundations only award small grants.  Family foundations vary widely in terms of the size of their asset bases, and, in turn, the amount that they award in grants.  They also vary in terms of the number and size of grants they award.  Leaving aside the Gates Foundation, family foundations range from supporting one grantee to hundreds of grantees.  While some family foundations will give one large grant to one grantee, and others will give several small grants to a handful of grantees, the size and range of family foundations means that many of them are providing sizable grants.  The best way to find out what's possible with a particular foundation, if past grant information is not available on that foundation's website, is to look at the foundation's 990PF (the tax returns filed by private foundations) for the last two years to see how many grants the foundation awarded and the sizes of those grants.
  3. Family foundations only give locally.  Community foundations give locally - that's what they were designed to do.  In some cases, family foundations will be very dedicated to the community in which the donor or donor family grew up or currently resides.  But there are two trends that suggest that family foundations are increasingly giving nationally and internationally:
    • Donor interests are changing.  Foundations are able to determine their giving focus, and award grants to organizations that meet whatever criteria they set (and legal criteria, of course).  Family foundation interests and giving priorities are as varied as the interests of the donors who established the organizations.  It's not at all unusual for even a small family foundation to be making grants to organizations that are geographically distant from the foundation's office.
    • Family foundations are increasingly getting the next generation of family members (and sometimes even a third generation of family members) involved in determining the foundation's giving priorities.  Those second and third generation family members frequently don't live in the same area as the person or people who established the foundation.  In many cases, the foundation will still grant where it is located, and also grant to organizations that the next generation family members get to know where they live or where they have traveled.  Again, the best way to find out where a foundation grants, if it isn't listed on the foundation website, is to look at that foundation's giving history as reflected in its 990PF forms.
  4. With a small family foundation, it's easier to get a grant since the application process is less rigorous.  The fact that a family foundation is small doesn't mean that it's not sophisticated about its grantmaking, and it's a mistake to think so.  Some small family foundations are among the most engaged grantmakers, thinking strategically about how their giving, no matter how big or small, can have the greatest impact.  Thinking strategically doesn't necessarily mean having onerous requirements; some are very forward thinking in learning about potential grantees and developing relationships, and you can help them by doing your part to develop a good relationship.  Some family foundations have requirements that are not right-sized for the grants they are awarding, though the same is true for all types of foundations.  As with any grant pursuits, it's worth thinking about the net grant (the grant funding your organization will actually receive after the costs of applying for and managing the grant are taken into account). 

One common theme highlighted through the points above is that each foundation (whether family, corporate, community, or independent) is different.  It's incumbent upon the grantseeker to do research to find out about the specific foundation's giving priorities, preferences, requirements, etc. 

The other key theme that cannot be overstated is that building relationships is key to grantseeking success.  Regardless of the size of the foundation, who is on the board, and what the foundation's giving priorities are, building a relationship - and maintaining that relationship - is critical to getting a first grant, and to then getting subsequent grants.  Put yourself in the shoes of a family foundation board member or staff member.  Are you more likely to be receptive to a great proposal from an organization represented by someone who is a total stranger to you, or to a great proposal from an organization you've been hearing about because someone from that organization has taken the time and made the effort to engage with you about how the organization fits with your giving priorities and the foundation's grantmaking goals.  Relationships matter.  And your relationship-building responsibilities do not end once you have gotten the grant.  Keep building the relationship by keeping the funder in the loop throughout the life of the grant, and beyond.

Learn how PhilanTrack can help you build and manage relationships with family foundations and other funders. 

Request a demo

 

Image: Data from the Spring 2014 State of Grantseeking
Author: Dahna Goldstein
August 28, 2014, 10:30 AM

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