Basics for Seeking Grants and Other Funding

Basics for Getting Grants and Other Funding

Every organization needs money. But in order to get money, before we can even start to address how to ask for money and where to get it, we have to talk about your organization, because people do not just hand out money. Ted Turner is not going to walk up to your door with a briefcase full of a million dollars. Your organization has to have certain things in line, legal and otherwise.

Mission statement

You cannot ask for money unless you can articulate a mission. A mission statement is essentially a task and a purpose. The mission of the International Committee of the Red Cross (ICRC) is to protect the lives and dignity of victims of war and internal violence and to provide them with assistance; to direct and coordinate the international relief activities conducted by the International Red Cross and Red Crescent Movement in situations of conflict; and to prevent suffering by promoting and strengthening humanitarian law and universal humanitarian principles. That is all they need to articulate their mission. Similarly, the mission of the International Federation of Red Cross and Red Crescent Societies is to inspire, facilitate and promote all humanitarian activities carried out by its member National Societies to improve the situation of the most vulnerable people, and to direct and coordinate international assistance of the Movement to victims of natural and technological disasters, to refugees and in health emergencies. These are well-defined mission statements, clearly delineating the task and purposes of the organizations.

If you as an organization do not have a clear, simple mission statement, then you need to start right there to develop one.

In USA, recognition as a legitimate charity

In order to be recognized as a charity in the United States and receive tax-deductible money, such as grants, you have to be registered and recognized by the Internal Revenue Service (IRS). Foreign non-profits also should get recognition as a 501(c)(3) charity by the IRS. The process for foreign NGO’s is the same as for nonprofits based here in the United States. Foundations, such as the Ford Foundation or Rockefeller Foundation, for instance, have to be very careful to check out where their money is going, especially with concerns about terrorism and NGOs affiliated with terrorism.

Essentially, the United States government has to recognize an organization as being legitimate and as doing something charitable before it will give corporations or individuals tax credit for giving money to that organization. Foundations in the United States only give large amounts of money to legitimate organizations that are registered and recognized. For foreign corporations, you can be located outside of the United States, but you have to be registered and recognized by the IRS. For example, the donor needs the IRS to know that your organization is legitimate, that is not a front for a government organization nor a front for a terrorist organization, such as al Qaeda. Money given directly to a government is not tax-deductible for a donor. Likewise, the U.S. government, at a U.S. treasury website, http://www.ustreas.gov/offices/enforcement/key-issues/protecting/fto.shtml and http://www.ustreas.gov/offices/enforcement/key-issues/protecting/charities_execorder_13224-a.shtml, lists organizations to which contributions are prohibited by executive order, as a result of being designated organizations connected with terrorist groups or supporting them. In essence, your relationship with the IRS is for the sake of the donor.

This is in reference to receiving funds from a U.S. foundation. It is another situation if the foundation is located in your country. For example, if your NGO is located in India, you can seek grants directly from the Ford Foundation in India, through their own offices, and not have to register with the U.S. government. This means those assets in the Ford Foundation in India are Indian assets, and you are working through the Indian government in terms of those grants.

The issue is dollar good going across borders. If your organization is only looking for resources, such as “We want doctors to come and serve our children,” or “We want teachers to come to our country and teach,” it still holds that if you are recognized as legitimate by the IRS, it makes it easier to get that kind of resource. The process for recognition is to apply for a 501(c)(3) tax exempt status from the IRS.

Programs and Budget

It is important to understand that most people, corporations, governments, foundations and individual owners give very specific programs, not general organizations. Once your non-profit is considered a legitimate organization, has a correct legal structure and is recognized by the IRS, the next important process that your organization has to do, before you ask for money, is to plan and articulate what it is that is going to be achieved. What are your programs? If you are writing a literacy program for youth, how many people are involved? What towns or villages are you visiting? How many children are going to be affected? How much is it going to cost? What do you do?

It all has to be written down on paper. There are a lot of organizations that try and raise money saying, “We’re going to eliminate x, y, z. We are going to eliminate AIDS in Uganda.”

“Great! How are you going to do it?” “Through a public education campaign. Through medical research. Through direct treatment of patients.”

“Are you doing abstinence sex education? What do you do?” So everything that you visualize has to be broken down into programs and budgeted as a program. It is important before people give you money; not only that you are legitimate, but that you can show that other people are providing you either money or resources as well.

Let us say that your organization works with the Pew Foundation in education and literacy programs. If you have people who are volunteering their time as instructors, or there is a company that is giving you the books, those resources can show on the budget. You may have what is called “in-kind contributions,” everything but money: volunteers, materials, a place where you can operate. You may have half of your total budget in donated resources and not money. So now if you are asking the Ford Foundation to give you $1 million, you are asking them to give $1 million towards a $3 million project. Thus, the donor is not the only one providing support, but recognizes that you have other resources and support.

What are those “in-kind contributions”? There are organizations in the United States that will give computer equipment for projects. They are dedicated to giving computer equipment to underdeveloped countries. That is all they do. They will put a value on that computer equipment and that will show on your budget. If you are operating out of somebody’s office, they are giving you office space. That office space is worth something. That would be in your budget.

The number one asset that is overlooked is volunteer labors. Volunteers here in the United States are recognized, depending on what they do, at the market rate for their work. When your organization gets a person to volunteer to do computer work, secretarial work, and so forth, that can be valued at $8 or $9 an hour, depending on what they are doing, and all of that counts in the budget.

Ethics and governance

Before asking for money, you need to identify what you do, what the programs are, and how much it costs. Another big issue for the non-profit, non-governmental organizational world is ethics and the legal/governance rules for organizations.

In the United States, for a non-profit corporation to exist legally, it is owned by a group of people, who run the organization. If you are a director on the Board of Directors of a non-profit organization, normally you do not receive financial compensation, but rather are seen as a person who can either get money for the organization (either directly, by giving money yourself, or indirectly, such as lending your name or finding donors) or provide expertise to the organization. By the same token, if you are a director, you may not be involved with the everyday activities of the organization; there is a paid staff. In the United States, that is one of the checks and balances that are in place for non-profit governance. The officers are held responsible to the board, which determines responsibilities and compensation for the officers, while the board itself is generally composed of dedicated individuals who are not compensated and are overseeing the welfare of the non-profit organization and its activities.

If your organization in another country has a different structure, you have to be clear to articulate how it is established. How do you make sure that the guy who owns the organization is not taking all the money and going to Paris? It is an issue of accountability and checks and balances. Usually, you also have a Board of Advisors and someone other than your officers who handles your books to make sure that the person in charge cannot use the money without anybody else knowing about it. In some countries, the owners may be the officers, and they do everything – get the money, do the work, spend the money, and so forth. In the United States, there are certain safeguards designed to make sure that an organization listed as a non-profit with the government has an acceptable system of checks and balances.

If your organization is of the type where the person in charge ultimately runs the organization, make sure that there is someone else to take care of the money. For organizations in the United States, there are generally accepted accounting practices, such as an audit every year, a third-party review by the board of finances, checks signed by two individuals, and so forth.

References

The foundation for this article are excerpts from a presentation by Theresa Rudacille (Director of Development, Empowerment Resource Network) on October 20, 2002 in at a WANGO Conference in Washington, D.C.