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Before granting to a nonprofit, private foundations often want to see a track record of the organization’s success. But what about funding brand new nonprofits that are just getting off the ground? How can foundations feel confident with providing seed money? In this issue of our Adapting Your Grant Approach Series, our Philanthropic Advisory Services experts share some tips on the best ways to approach funding a nonprofit startup.

Research, Lend a Hand & Accept Risk

Foundations can play an integral role in launching exciting and promising nonprofits. Here’s how:

1. Do your research. While it’s too early to measure proven success, you can certainly evaluate a fledgling nonprofit’s action plan, leadership and staff:

  • Does the organization have a sound mission and realistic goals?
  • Does it have a sensible plan of action?
  • Does it have research that validates a need for the services it plans to provide?
  • Do qualified individuals comprise its board and staff? Are their roles clearly defined?
  • Does it have a plan for measuring and reporting its charitable impact?

2. Consider in-kind support. If your foundation has the wherewithal to help a nonprofit beyond funding, consider offering time and resources such as management advice, programming support or hands-on volunteer help. This practice is known as capacity building and it focuses on improving a nonprofit’s overall systems and needs, such as how it might develop in size, efficiency and effectiveness through improved leadership, communications, fundraising and/or technology. It can be used to help nonprofits of any age, not just startups.

Examples of capacity building include:

  • Strategic planning and organizational development
  • Governance and leadership evaluation and development
  • Succession planning
  • Volunteer program development
  • Technology assessment and upgrades
  • Developing a communications and/or adaptive fundraising plan
  • Improved financial systems
  • Developing tools for measuring impact

Providing support in these areas can be very beneficial as it enables a nonprofit to improve its performance and achieve greater charitable impact with additional resources and staff it otherwise wouldn’t have. To provide the support, your board members can do so themselves if they have applicable knowledge to share, your foundation can hire experts to advise the nonprofit, or it can issue a capacity building grant to the nonprofit to fund the required assistance.

3. Be comfortable with risk. Risk for a foundation may mean that grantors are unsure of whether their grant will achieve goals set by the grantee or contribute to their foundation’s overall philanthropic goals or mission. Newly formed nonprofits often take innovative approaches to their work which can require experimentation that sometimes just doesn’t pan out. However, even when a grant doesn’t achieve a higher level goal, the gift almost always creates positive change in the world anyway.

While helping to launch an aspiring nonprofit has its risks, the rewards will likely be far greater, especially when charitable impact is achieved. Offer your support with careful forethought and enjoy the experience!

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