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Private foundations may find themselves making grants to a variety of organizations to support their mission, but it’s important to understand that one size does not fit all. To get more guidance on this important topic, we asked our Philanthropic Advisory Services experts to share some of their tips on making grants to different types of organizations, which we’ll be covering throughout our new blog series. Up first, we’ll focus in on giving to large institutions, such as universities and hospitals, and cover two key considerations.

Find Your Point Person

As a funder, once you identify an organization you want to support, what’s the next step? In order to learn more and get the information you need to make a grant, you need to talk to the right person at the organization.

When considering a grant to a large institution, it’s a best practice to talk to the foundation relations staffer and not the staff person soliciting individual gifts. These types of organizations have a big development staff who work on fundraising, and they specialize in different types of funders. Make sure you reach out to the staff member whose primary role is working with private foundations.

The staff who work with individuals might be known as Development Directors, Directors of Alumni Relations or Institutional Advancement Staff. The foundation-focused staff are often Directors of Foundation Relations or a similar role. One staff member may reach out to alumni for checks, while someone else may work with high-net-worth (HNW) individuals or wealthy parents of current students.

Also keep in mind that foundation gifts and HNW gifts are different. With foundation gifts, there are typically proposals, grant agreements and recognition for the foundation. In addition, private foundations need specific information to ensure that the grant meets compliance needs before the grant is made. When it comes to HNW gifts, the individual writes a substantial check and the transaction is done—they’re not asking for reports or for any stipulations or programs, in other words. In larger institutions, the staff will understand these nuances in gifts, the process of getting funds from foundations, and what foundations may need for compliance or for their strategic agenda.

Don’t Sign On the Dotted Line

When making grants, it’s always a wise move to use a foundation grant agreement instead of signing a grantee’s pledge agreement. Private foundations benefit from using a grant agreement as it helps them clarify any terms and expectations. Foundations can use grant agreements as the appropriate mechanism for creating clarity when it comes to the terms of the grant, including details about the program and where the money should go as well as reporting and metrics that the foundation wants. Knowing that the grant funding is pending after a grant agreement is signed is also a benefit to the nonprofit organization, so both parties can mutually benefit from a grant agreement.

Sometimes organizations will present a foundation with a grantee’s pledge agreement that has their terms with what they want from the funding. Our experts recommend declining a request to sign a pledge as it may bind your foundation to unwanted or unexpected obligations.

A grant agreement is the key document that gives a foundation authority and control over the grant. Once funds are distributed, the transaction is complete. For foundations to protect themselves, be sure to be crystal clear about the terms of the grant upfront.

Foundation Example:

Recently, a foundation came to us and asked about this very topic. In this case, a grant recipient presented the pledge agreement as a requirement, but we advised against signing. For example, if the grantee is in a hurry to advertise that money came in, such as to raise funds for an upcoming match or a big event, there are ways to put it in writing that a foundation is working on this grant so that they can talk about it publicly to attract other funders.

Remember there are many ways to approach grantmaking and it’s easiest when the grantor and grantee can work together in partnership. At Foundation Source, our charity research tools put in-depth information on over one million nonprofits at your fingertips, so you can make informed funding decisions. If you have any questions in the meantime, our team would be happy to assist you!

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